BloodhoundBlog

There’s always something to howl about.

Category: Real Estate (page 211 of 266)

February 14, 2007

Be a Visionary Investor: Think Big

by

Real Estate Investor

Author website

As I sit here in Ithaca, NY snowed in, I can only look out of the window and think about real estate. While that might be sad to some, to me real estate is truly a passion. As I eat my bagel I have been pondering what makes people like Bob Toll and Donald Trump different from Joe Everyday Investor or even from me. The answer is simple, vision (and about a million of today’s dollars in seed money, but you see where I am going). I really think they simply dream bigger than most.

Case in point, I am considering joining a long term partnership of investors. During my trip to Greensboro, my wife’s friend approached me about joining a group of local investors. All of these guys have been investing locally for about three to five years and have good market knowledge. At our first meeting two days ago we began to talk generally about our vision for the group and some of our financial goals. Right away, I felt a bit out of place. Most of the people in the group seemed to be thinking very short-sighted, more concerned with how quickly they could get money out than how quickly the group’s investment could grow.

This initial meeting really made me reassess my personal vision. The question I continually ask myself is, am I stretching myself far enough? As an investor, I have set specific life goals for myself. These tend to serve me personally better than setting goals in dollar value ($1 million before I am 30 for example). However, like most investors, at times I get so bogged down in the investments that I forget the goals. Before I know it, I am off track (sometimes ahead, sometimes behind). Luckily, my goals are certainly a stretch. Right now, the only difference between me and Donald Trump is 30 years of investing (and about three bankruptcies). I do not feel at all like that level of investing success is unattainable (even with less risk).

So why do I write this piece today. I write this to challenge you to rethink Read more

February 13, 2007

Is the Subprime Mortgage Market the next Enron?

by

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

An excerpt from one of my recent posts on The Active Rain Real Estate Network:

The sub-prime mortgage market is falling apart. Wall Street firms are being stung by the bad sub-prime loans they bought and have demanded that the sub-prime lenders buy those loans back. The sub-prime lenders didn’t have the money to do so. Those Wall Street firms simply swapped the debt for ownership in the firms. Once the camel got his nose underneath the tent, he didn’t like what he saw.

The sub-prime mortgage market is completely tightening its lending standards. The wholesale account executives, once compensated like a proven reliever for the Padres, are applying for night gigs as bartenders to supplement their income. The words “stated income” are becoming more politically incorrect than a racial slur. The NEW AND IMPROVED sub-prime lender will emerge as the prostitute who found God.

Here were some excerpts from some of the comments:

From Mikey:

Right now the lending standards are just taking out 100% subprime financing. Watching the rate sheets, low LTV stated deals are still plentiful. I think hard money can be a profitable niche, but it will remain a niche. The other thing limiting its growth potential is just the slowdown in real estate market in general.

From my buddy, Jeff Belonger in New Jersey:

Brian… some good points. But sub prime will always be there, in my opinion. I remember when it started hitting the streets hard back in 1994-’95. The strong will survive…
… But there will still be those few sub prime lenders that have been positioning themselves the last 2 years, not taking every piece of crap. Names like Equi First and Decision One will be around and they still have good products that Wall Street will invest in. Why? Because of their performance records and lack of loans that go into default

More importantly. Some of the e-mails I received today:

From a colleague in the Midwest:

Hey, do you know of something going on at New Century? Rumors are flying right now…

Unsolicited e-mail from my post:

i’m an account executive for a major subprime lender. i am seeing fear and panic in Read more

February 13, 2007

Is Your Broker Profitable? – “Rent-A-Broker” Shops

by

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

The 100%, desk fee model was made popular some 25 years ago by one HUGE national franchisor. There have been several companies that have adopted that model and had equal success. Essentially, the business model is along the lines of “rent-a-broker” for a flat fee per month. The term “rent-a-broker”, really isn’t fair because it implies that the designated broker isn’t supervising the transactions but I’ll use it for the sake of illustration.

The compensation proposition to the agent is that you get to keep 100% of your commissions and pay a monthly fee to the brokerage. There is an mutation of that model that charges a flat-fee per transaction but I think I’ll focus on the “rent-a-broker” model for this post. The best analogy for this model is one of a landlord and tenant. Like a property lease, there is a contract outlining the rights, responsibilities, and financial consideration expected from each party. In most markets with a median sales price of $250,000, the monthly “desk fee” would be approximately $1,000.

The broker/owner, really doesn’t have to provide much to the agent in terns of advertising or office space. Essentially, the only expenses associated with the brokerage would be the three administrative salaries and a small office space (with conference room and copier). I’ll pull the administrative costs from my post about the traditional model:

Let’s analyze the annual expenses. Receptionist, operations assistant, and sales manager salaries will total $130,000. We gross that number up 115% to include payroll taxes and benefits for a total of $149,500. This is a traditional model so you should figure on $12,000 for advertising. Throw in the rent and facilities charges of $75,000 for a 2000 sq. ft. office, $12,000 for supplies and $12,000 for phone/internet, equipments lease and we are approaching $260,500.

Some of the costs will be recouped by “a la carte” services. Five individual offices could be rented to agents for $1,000 per month and the supplies and equipment costs could be passed through to the agents. The real Read more

February 13, 2007

Hillary Clinton and Rotarian Socialism: What’s wrong with the NAR?

by

Suburban Phoenix Real Estate Broker

Author website

Business Week’s Hot Property wrote yesterday about the NAR’s having gotten into bed with Hillary Clinton — who is “sponsoring a bill that bars commercial banks from hiring real estate brokers/agents” — but that’s just the tip of the iceberg. The National Association of Realtor is routinely, habitually, congenitally anti-free market.

I’m doing the prep work to defend the traditional practice of real estate, but this is my radical yelp: The original and on-going purpose of the NAR is anti-capitalist. The organization was formed to limit entry into the residential real estate business — to push Chester the Barber and others out of the business. The NAR wrote the original state real estate laws to achieve this goal — however poorly. This on-going legislative campaign against banks competing for real estate transactions is just more of the same: “Protecting” mediocrities from fair competition.

It seems never to end. If you’re a member of the NAR, you get hit with spam about once a month about some vitally important piece of anti-free market legislation: Coerced health insurance for real estate brokerages, keep WalMart out of banking, keep banks out of real estate. The NAR is hardly alone in making appeals for legislation, so it is perhaps easy to forget that legislation is imposed by force of arms. What the NAR is doing is taking control of the massive firepower of the Federal government and deploying it to hijack potential competitors.

It’s a protection racket — vicious, awful, evil crime — dressed up in Brooks Brothers suits.

We are apt to think of Communism as being Capitalism’s natural enemy, but there is another, perhaps more insidious foe to unfettered laissez faire. I call it Rotarian Socialism, just to give it a name. Rotarian Socialism is legislation written by and for the membership of a politically-powerful elite. Most of the criticisms you hear about Capitalism are in fact criticisms of Rotarian Socialism.

Truly free markets require freedom, not laws. I have argued before for getting rid of the real estate licensing laws — or, at a minimum, eliminating the broker level of licensing — and for eliminating the real Read more

February 12, 2007

Podcast: Dustin Luther’s Real Estate Weblogging Seminar Part III

by

Suburban Phoenix Real Estate Broker

Author website

This is the third of three podcasts of Dustin Luther’s Real Estate Weblogging Seminar.

The recordings for these podcasts were made by Rudy Bachraty of the Sellsius Real Estate Weblog.

Dustin is best known as the founder of Rain City Guide. Dustin works as a technology evangelist for Move, Inc. As evidence to his commitment to weblogging, he has a weblog devoted to internet real estate marketing, and this particular series of seminars are sponsored by Top Producer.

Rudy’s initial recordings suffered from some quality issues, most notably his distance from Dustin and some random electronic interference. BloodhoundBlog’s intrepid audio engineer Allen Butler (himself a top-producing Realtor) was able to scrub the audio to bring Dustin’s voice forward. The recordings still suffer from some defects, but 99%+ of the intellectual content has been preserved.

Technorati Tags: , , ,

February 12, 2007

The Carnival of Real Estate . . .

by

Suburban Phoenix Real Estate Broker

Author website

…is up at ReyEstate. This week’s winner is a fanzine article about Emmitt Smith, who is Dancing With The Real Estate Stars.

We entered Kris Berg’s podcast interview with Redfin.com CEO Glenn Kelman. I have an inkling the podcast went unaudited at ReyEstate:

The “Kissing Booth” was in full operation this week and Redfin’s CEO Glenn Kelman was charming the crowd. You can find the fluff slappy happy write-up on BloodHoundBlog…

That sounds just like us.

We have actually listened to the podcast, so we know why Kris deserves to win this week’s Carnival of BloodhoundBlog.

As a reminder, we’re hosting next week’s Carnival of Real Estate Investing.

Technorati Tags: , ,

February 12, 2007

Why Small Investors Should NOT Stress About Interest Rates

by

Real Estate Investor

Author website

Interest rates and the small investor, is there really an effect? Beyond the obvious cost of borrowing, I have wondered if the small investor really notices a change in the Fed Funds rate. While I am not going to make the same mistake of asking you all to humor me, I am going to try to show that the small investor is less sensitive to smaller changes in rates. I am also starting with the assumption that smaller investors tend to invest in markets with higher cap rates.

First, let’s get some things clear so we are starting from the same page. If we consider the value of commercial real estate, we can approximate it with a simple formula, Net Operating Income (NOI) divided by the cap rate. Additionally, let’s assume that the cap rate acts as a proxy for investor demand. This makes sense because NOI is simply based the rents collected, while cap rate is the return investors will accept for those rents. In markets with very low cap rates, investors are willing to pay more for rents now because they expect a higher rate of future rent growth than lower cap rate properties and/or they expect lower volatility in those rents or they expect even lower cap rates in the future (appreciation).

Next, let’s think about investing. Most investors try to leverage their properties as much as possible. Banks understand this, so they enforce strict standards. Typically investors can get 80% Loan to Value terms, as long as Debt Service Coverage Ratios (DSCR) comes in at 1.2. The DSCR is simply NOI/Debt Payments. In markets with lower cap rates, this becomes more important because the higher value creates higher debt payments. This situation creates a cap rate floor for smaller investors, who have less financing options. Investors who focus on $1 Million and under properties do not have the same access to financing because their loans are not as profitable and harder to move in the securitization market.

Then, we have to analyze the effect of a 1% change in interest rates on loan terms. Looking at a $500,000 loan with Read more

February 12, 2007

Would You Stop Me At The Altar?

by

Real Estate Marketing Executive

Author website

Yesterday, on ActiveRain, I wrote a review of the first chapter of Marjorie Garber’s book, Sex And Real Estate. I have decided to take it one chapter at a time, to highlight the intricacies of her work on the different aspects of love and levels of emotions that consumers have around the concept of home.

This is not a new book. It has been out for several years. If you’ve not read it, you should. If you have, it’s worth revisiting, given the changes that have occurred in the real estate market since it’s original release in 2000.

I focused my attention on the “love at first sight” aspects of the house as beloved. It is said that more than 50% of home buyers experience this overwhelming desire. For that reason, I believe that a seller’s agent has a responsibility to maximize the home’s appeal to this emotion and the buyer’s agent has a responsibility to minimize it. I wrote:

“It seems to me that one of the key benefits a buyer’s agent can bring to the table is the wisdom of an objective third party perspective. They are there to protect the “suitor” from what Freud called, “the overestimation of the object.” Like a good friend who warns you to take your time with a torrid new relationship, a good buyer’s agent becomes the voice of reason, the best friend who’s not afraid to tell you the truth about your new girlfriend. “

And interesting and valid comment came from Martin Rodriguez, a mortgage specialist in Valencia, CA. The post was speaking to real estate agents, but he came at it from the loan officer’s perspective.

“You (or Marjorie Garber) bring up an interesting point that I’ve found myself answering on more than one occasion. Clients will often call and ask me for my opinion about the house they are buying. As a mortgage broker I try not to get involved with the selection or the decison making of the buyers new home. Heck, I’ve never even seen the house, so why are they asking me? However, this question Read more

February 11, 2007

BloodhoundBlog week in review: Podcasting a wider net . . .

by

Suburban Phoenix Real Estate Broker

Author website

Years ago, long before I met Cathleen the Leggy Blonde and came to be so joyously entwined if not actually entombed in matrimonial and connubial bliss, I wrote an essay about personal ads at the dawn of the age of five-hundred-channel television. But now, in the blink of a decade, we are on the verge of five-hundred-thousand-channel television, a net.wise video niche for every conceivable itch.

That goes for BloodhoundBlog, too, by inches and hours, in fits and starts. By tomorrow, we will have published ten audio and video podcasts in the few scant weeks since the start of the year. And there are many, many more to come. On top of everything else we might do, mega-producing Realtor Russell Shaw has committed to doing a complete step-by-step mega-production course in podcast form. You’ll be able to download his hard-won advice and review it until Russell’s expertise becomes your own.

Our podcasting prowess made news twice this week. First, Kris Berg posted a forty-five minute podcast with Redfin.com CEO Glenn Kelman, asking him the kinds of tough questions only a seasoned real estate professional would know to ask.

Our Redfin coverage was robust and then some. I wrote a companion piece to Kris’ interview, and her husband, San Diego Realtor Steve Berg posted a great list of follow-up questions for Kelman. The next day, I wondered What if Redfin gave a PR offensive and nobody came? And Redfin.com ended up winning this week’s Cheez Whiz Prize: Redfin.com’s CEO Glenn Kelman: “What if the parasites had to eat the parasites?”

Our second bit of podcasting news came from recordings of Dustin Luther’s Real Estate Weblogging Seminar. The original recordings for these podcasts were made by Rudy Bachraty of the Sellsius Real Estate Weblog. Dustin is best known as the founder of Rain City Guide, although he works as a technology evangelist for Move, Inc. Rudy’s initial recordings suffered from some quality issues, but BloodhoundBlog’s intrepid audio engineer Allen Butler (himself a top-producing Realtor) was able to scrub the audio to bring Dustin’s voice forward.

So far, Part I and Part II of Dustin’s seminar have been posted. Read more

February 11, 2007

DOM Trickery

by

Realtor, Audio Engineer

Author website

Recently, there have been discussions about the ethics of agents who attempt to manipulate Days On Market in an attempt to remove stigma from a property. This discussion over on Active Rain really got me thinking, and I wanted to get the pulse of people’s feelings concerning this issue. Indulge me for a moment while I pontificate:

So what, exactly, does the tracking of DOM actually accomplish? Is it a tool that buyer’s agents use to determine value for their clients? If a home is on the market for 365 days, does it mean that the home is over-priced? Absolutely. However, let us say for the sake of discussion that you take a client to a home because they saw pictures of the listing on line, and thought it looked nice. So, you take them out to the listing, and they fall in love with the home. Now, as a professional agent, you have a duty to your clients to protect their interests. When they say to you that they love the property and want to write an offer, they are relying on your expertise to help them make a good decision. Would you advise them on what price to offer simply based on DOM? Of course not. In fact, to determine a good price for your clients to offer, would you take into consideration the DOM at all? You shouldn’t, as it has no relavance to the home’s value. To come up with an equitable offer, you would simply pull the comparable sold properties, and advise them of this. You would then advise them that the price you have suggested is what the property will likely appraise for, and that unless they want to pay part in cash, they should offer within this range. Paying any more would be unwise. However, an unwise person could pay whatever they want for a property if they have cash, they just need to sign a disclaimer that you advised them against it (someting I did repeatedly in the hot market of 04-05).

Now, can DOM stats help us to determine market trends? I would submit Read more

February 11, 2007

Podcast: Dustin Luther’s Real Estate Weblogging Seminar Part II

by

Suburban Phoenix Real Estate Broker

Author website

This is the second of three podcasts of Dustin Luther’s Real Estate Weblogging Seminar.

The recordings for these podcasts were made by Rudy Bachraty of the Sellsius Real Estate Weblog.

Dustin is best known as the founder of Rain City Guide. Dustin works as a technology evangelist for Move, Inc. As evidence to his commitment to weblogging, he has a weblog devoted to internet real estate marketing, and this particular series of seminars are sponsored by Top Producer.

Rudy’s initial recordings suffered from some quality issues, most notably his distance from Dustin and some random electronic interference. BloodhoundBlog’s intrepid audio engineer Allen Butler (himself a top-producing Realtor) was able to scrub the audio to bring Dustin’s voice forward. The recordings still suffer from some defects, but 99%+ of the intellectual content has been preserved.

Technorati Tags: , , ,

February 10, 2007

Redfin.com’s CEO Glenn Kelman: “What if the parasites had to eat the parasites?”

by

Suburban Phoenix Real Estate Broker

Author website

It’s been a Redfin week for us. Kris Berg recorded her podcast with Glenn Kelman last week and I spent much of my spare time this week dealing with it. Allen Butler dealt with the audio quality, and then Cathleen and I went through the recording, pulling out apposite quotes for my own post.

I think we did the BloodhoundBlog idea credit, though: Kris demonstrated that an informed insider can ask much more pertinent questions, digging much deeper, than can mainstream journalists.

I’d like to cite another Redfin post as the first-ever recipient of the Odysseus Medal. Marlow Harris of 360 Digest gave us “Thank you, Mr. Kelman” yesterday, and I think it is a particularly good example of the real estate weblogger’s art.

Marlow has been on top of Redfin from the very beginning. Some of my first links from BloodhoundBlog were to Marlow’s Redfin posts. But all that notwithstanding, yesterday’s post was excellent irrespective of content: Rich in detail, peppered with links, written in an engaging, can’t put it down style. This is a level of quality unsurpassed on the RE.net.

And the winner of this week’s Cheez-Whiz Prize is… Redfin.com. I have never bought Kelman’s charm offensive, and events since Kris Berg’s interview seem to bear me out. (As a side note, Cynthia Pang, Redfin’s PR maven, was nothing but sweet and painstakingly efficient throughout this process.)

First, to claim to have reformed is easy, it’s the actual reforming that’s hard. We are what we do, not what we say we do. A common dodge of recidivist miscreants is the insistence that their behavior is not bad, it is your own misunderstanding of the good intentions motivating that behavior that is at fault. If you listen to the podcast, you will hear Kelman resort to that defense again and again.

Can you hear Eric Burden singing? “I’m just a soul whose intentions are good. Oh, Lord, please don’t let me be misunderstood.” The song is about a wife-beater. It’s worth your while to remember that style of rationalization for egregious behavior.

Abandoning whatever hope he might have had to extend an olive branch to the Read more

February 10, 2007

Podcast: Dustin Luther’s Real Estate Weblogging Seminar Part I

by

Suburban Phoenix Real Estate Broker

Author website

This is the first of three podcasts of Dustin Luther’s Real Estate Weblogging Seminar.

The recordings for these podcasts were made by Rudy Bachraty of the Sellsius Real Estate Weblog.

Dustin is best known as the founder of Rain City Guide. Dustin works as a technology evangelist for Move, Inc. As evidence to his commitment to weblogging, he has a weblog devoted to internet real estate marketing, and this particular series of seminars are sponsored by Top Producer.

Rudy’s initial recordings suffered from some quality issues, most notably his distance from Dustin and some random electronic interference. BloodhoundBlog’s intrepid audio engineer Allen Butler (himself a top-producing Realtor) was able to scrub the audio to bring Dustin’s voice forward. The recordings still suffer from some defects, but 99%+ of the intellectual content has been preserved.

Technorati Tags: , , ,

February 9, 2007

Russell Shaw podcast wish list . . .

by

Suburban Phoenix Real Estate Broker

Author website

Russell Shaw is eager to do more podcasts, and I think we’re all eager to hear more from him. His plan, essentially, is to offer a full-blown training regimen — without the fees, without the seminars and without the extra-cost upsells.

We’ll do these in audio podcasts, although we may also shoot some video. At some point, we may put together a mini-symposium so that Russell can take questions from the audience.

Here’s the cool part: You can have what you want. If there is a particular topic you would like for Russell to address, say so in a comment.

We’re building lists of topics that we will knock out four or six hours at a time. We’ll chop those down into topical chunks, and then I’ll build an index of everything.

It’s possible that a sales training seminar will have more rah-rah-rah enthusiasm. But these podcasts will emanate from the real-life experience of a working mega-producer, and they’ll be yours to listen to as many times as you want — for free.

So: Do please get busy. Russell is working on his own list of favorite subjects, but you will think of topics that everyone else will miss. In the end, we’ll all be richer for the experience…

Technorati Tags: ,

February 9, 2007

Travel through time as you learn to take your Zestimate with 1.027631 grains of salt . . .

by

Suburban Phoenix Real Estate Broker

Author website

The Sunday New York Times will have a feature on hi-tech real estate, but you can see it today through the miracle of Google.

Not hugely interesting, more a catalog of press releases. Kristal Kraft gets a chance to strut, which is fun.

And: Zillow.com says you have to take their Zestimates with a grain of salt, which must be why none of them ends with three zeros.

The gist of the article is that information is more valuable to home buyers than pumpkins (who knew?), but, taking account of that, there is a huge omission: ShackPrices.com, the leader of the pack in deep info. Zillow should just buy them so they can get the kind of press attention they deserve…

Technorati Tags: ,

« Older posts Newer posts »

Inventing Real Estate 2.0

Welcome to BloodhoundBlog, the national real estate industry marketing and technology weblog written by, for and about real estate professionals. Better yet, welcome to the wired world of real estate. We are busily inventing Real Estate 2.0 – technology, marketing, service and salesmanship. Like all Bloodhounds, we are smart, frisky and fiercely independent. We've built a spot on the earth – beloved over all – where each one of us can be who we are, no matter who that might be. We are committed to an idea of excellence that will flush the bums, the con-men and the crybabies out of the real estate industry. If you yearn to have your failures excused, your moral lapses absolved or your boo-boos kissed, seek elsewhere. But if you are sick to death of mediocrity – welcome home. Read all about us, subscribe to our feed and steel yourself for the hunt. We work hard, we play hard, we learn everything we can – and we bow to no one.

Media Contacts