There’s always something to howl about.

Month: June 2008 (page 4 of 7)

Investors are coming back to the Phoenix rental home market — and with the right business plan they’ll make money

This is my column for this week from the Arizona Republic (permanent link).

 
Investors are coming back to the Phoenix rental home market — and with the right business plan they’ll make money

Rental home investors are coming back into the Phoenix real estate market, and this is a good thing.

The last time we had a substantial run on rental housing, results were not so sweet. Investors came to Phoenix with the idea that price appreciation would make up for any monthly losses they might take on their rental homes. It’s plausible they were right — in the long run. In the short run, negative cash flow and declining values, coupled with adjustable-rate or negative-amortization loans, drove many of these homes into foreclosure.

And this accounts for much of the inventory the new wave of investors is drawing upon. The difference is, the prices for these homes have declined enough that they can be — at least potentially — cash-flow positive.

Why only potentially cash-flow positive?

Because too many investors adopt the worst of the cartoonish characterizations of capitalism when they resolve to become landlords. They pick the cheapest properties in the worst locations and rent to the least-qualified tenants, living through one eviction and repair nightmare after another.

Here’s a strategy for making more money from a rental home — much more peacefully.

There are dozens of costs associated with rental housing, and your business plan should take account of all of them. But your biggest potential losses are always going to be vacancy, tenant acquisition, repairs and resale value.

It makes much more sense to me to buy a property that can command premium rents and will sell at a premium price when you’re ready to move on. Location matters, as do the livability and lifestyle factors of the specific home. You want to pick a home that will stay rented.

I think it’s a good idea to charge something less than the market rent. This will give you a broader array of tenants to choose from, which will enable you to select tenants with good credit who will treat your property like their own.

With the right house Read more

Redefining Mortgage Disclosure

Jeff Corbett announced that he launched Ratespeed this week:

What is it? An anonymous, automated, transparent, mortgage program and interest rate pricing pre-qualification Search Engine widget, thingy.


Why is this important? For the first time anyone can transparently access wholesale direct mortgage interest rates and program quotes without having to talk to a licensed mortgage professional first. Yep, this is important to a lot of people.

I”ve been thinking about how to improve a mortgage shopping experience for consumers and am enthralled with both Jeff’s offering and the Zillow Mortgage Marketplace. Both platforms are trying to better display information to consumers about loan terms. Zillow approaches it from a “live market” while Jeff Corbett focuses his efforts on yield spread premium.

I think the answer lies in a combination of a suggestion Todd Carpenter made, about eliminating all yield spread premium disclosure, and the Bank of America No Fee Plus Mortgage. I demonstrated how the No Fee Plus Mortgage was no real bargain today, after I visited my bank.

There is an answer. Isolate one variable; rate. Make loan originators guarantee all third-party fees, as well as their fees, when quoting mortgage terms. ABN-AMRO (now Citigroup) tried this some 3-4 years ago when they offered the “Guaranteed One Fee Mortgage“. When you do a side-by-side comparison with rates and loan programs matched up, you’ll get a true cost of credit if the originator is required to manage the closing costs and disclose them as one fee.

Banks or brokers will only disclose two things to the consumer: rate and one fee. It would be stupendously simple to understand.

The just-exactly-how-dumb-are-you Realtor-spam of the day: Effection might come at a high price, but at least it’s fleeting

This one came to me as real-world spam, and it has a cloying kind of plausibility to it:

Hmm… That’s almost kindasorta a good idea, isn’t it? Laptop in the car? Maybe not so much. Wi-Fi-enabled PDF? They’re out there, but the iPhone.2 is going to EDGE every other hand-held device to the sidelines. In fact, both types of iPhones are Wi-Fi-enabled, but we know that Wi-Fi is going to be Wi-ped out within a few years.

Even so… Let’s go to the videotape:

I don’t actually hate this idea, but the pitch to the consumer boils down to this: “Your Realtor is too lazy to service your flyer box, so let’s sell him a high-tech gimmick so he can express his laziness in a different way.” I like the idea of doing more to sell listings, but I hate every variety of the brains-not-included plug-n-chug solution.

But that’s as may be. How much does it cost for an effectioNet.com eLapTopTour web site?

Holy cow! They might be plug-n-chug, but they’re cheap: $65, $85 or $95.

But wait. As Tom Waits says, “The large print giveth and the small print taketh away.” Witness:

effectioNet’s pricing schedule is very simple: we lease the device for a fee of $50 per month.[…]

We do require a $150 deposit, fully refundable on return of the device intact, and, we offer a 6 month minimum lease.

The program works on a first month’s lease of $50 + $150 deposit. Then an auto deduction will be taken each month for the balance of the term. We take PayPal and/or all major credit cards.

Townes Van Zandt said, “If you want good friends, they’re gonna cost you,” and effectioNet’s affections are going to run you $365 minimum. Per listing. What will you have at the end of your six month minimum lease? Fond memories.

So let’s say this is demi-semi-sorta plausible. The idea behind the product is kind of half-baked, especially since we already know how to do much better single-property websites than this plug-and-chug upchuck. If we’re committed to the idea but not the execution, what might work better instead?

You can buy new-in-box Mac Minis for $600 Read more

Speaking in tongues: Parsing structured data on the fly

This is not ProjectBloodhound material, at least not first semester stuff. But if you find yourself running into highly structured data — such as the reports from a spreadsheet or a database application — you have the ability to easily manipulate that data in PHP.

This is a simple example, but you don’t have to limit yourself to doing simple things. Imagine a data structure like this:

Name[tab]Phone Number
Cathleen Collins[tab]602-369-9275
Greg Swann[tab]602-740-7531

In the file the code shown here as “[tab]” would be an actual tab character, and this kind of data goes by the arcane name of: A tab-delimited file.

Most programming languages were written by exacting people with abstract and elegant reasons for everything they did. PHP was written by overbooked programmers who needed to pound out new web pages as quickly as possible.

In consequence, PHP is optimized for dealing with highly structured data. Here is a short program that will take a tab-delimited phone number file as input and output reformatted phone numbers into the HTML stream. In other words, this code could produce a dynamically-updated phone list in what what might otherwise be a static web page:

<?PHP
auto_detect_line_endings;

$fi = fopen("PhoneNums.txt","r");
$line = fgets ($fi, 4096); // throw away fieldDef line

echo ("<b>Phone Numbers</b><br>");

while (!feof($fi))
    {
    $line = fgets ($fi, 4096);

    list ($Name, $Phone_Number) = explode ("\t", $line);

    if ($Name)
        {
        echo ("$Phone_Number <i>($Name)</i><br>");
        }
    }

fclose ($fi);
?>

There is one line that makes all the difference for this kind of work:

    list ($Name, $Phone_Number) = explode ("\t", $line);

The stuff between the parenthesis are our known field names, and we’re using them as variable names for clarity’s sake. The explode function will create an array of separate fields from the text stored in the $line variable, splitting the fields on the tab character. The list function then inherits the array just created by explode and assigns each field to the appropriate field name variables. We only have two fields Read more

The just-exactly-how-dumb-are-you Realtor-spam of the day: Piggy-back riding through the grave-yards of real estate

Okay, we’ll start with a certified Vegas-quality stand-up joke:

So I got this piece of spam email that said, “Make love to your wife like a pro!” I thought that sounded like a good idea, so I locked her in a closet and stole her purse. [Ba-dum-bump!]

This

is a charming discussion by Carl White of how you can “grave rob” the Yellow Pages ads of all of your failed former competitors by “piggy-backing” on their disconnected phone numbers. This is sleazy, but it’s clever enough that I signed up for the free tips, just to see what else he comes up with. In due course he will become yet another by-the-month training guru, but I will never pay him one red cent. But for sheer chutzpah, this guy is hard to beat.

(If you’re having a hard time wrapping your mind around the morality of this issue, consider the ethical implications of being lied to on a first date. If you answer someone else’s phone line, even if that person is out of business, you are starting a relationship with a lie. What other lies should your clients expect from you? And if you are honest in all other respects, why would you undermine your credibility in this way?)

I’ve had a bunch of email this morning from people passing along their ludicrous spam. Keep ’em coming. We’ll knock them down one by one.

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Who wants to play the ProjectBloodhound game? Teri and I are avid to inflict some excellence on a few hapless volunteers, provided you will pitch in your own unique Social Media Marketing skills

Hunter Jackson came up with the idea of revisiting ProjectBloodhound the other night, and that was a stroke of pure genius. It gnawed at me as soon as he brought it up, and I wasn’t alone: Teri Lussier was thinking along the same lines.

Here’s why: Even though we documented our thinking in RealEstateWeblogging101.com, we think differently now. There are things we’ve come up that we want to deploy, and there are a host of half-germinated ideas we want to bring to flower.

On my own plate:

  • Teri and I need to rebuild TheBrickRanch.com to make it engenu-friendly
  • Cathy has plans for me to build weblogs for our handy-man, for our doggie day-care provider, etc.
  • I have had as a post-Unchained project the daunting task of moving all of our existing weblogs over to WordPress Multi-user

The last project subsumes the others, and it also creates a ProjectBloodhound opportunity. I have thought that, while implementing WP-mu, I would build a prototype of a perfect-in-the-abstract hyperlocal real estate weblog — best practices in everything.

And that’s where it all comes together. I kindasorta hated Project Blogger, because it seemed to me to become just another cliquescene beauty contest, and we never win anything like that. But I didn’t care about that, anyway. We got a frolicking book out of our efforts, for goodness’ sakes, influencing a bunch of real estate webloggers along the way.

And we can do our own thing now, with no contest to cause distractions: Invite one or a few wannabloggers over to play with us, help to build weblogs, help to build a Social Media presence, help to launch people who want to do better into a better orbit in their home markets.

What’s in it for us? By helping them, we’ll help ourselves. There are things that each of us could be doing better. By going through everything in detail, we can figure out what we should be changing in our own marketing.

But: There’s a catch: I’m overbooked on blue-sky projects, and Teri doesn’t want to do this alone. We want to bring the best of everything we have at BloodhoundBlog to this effort, so we Read more

Roger that…

I stare in wonderment at my mail; not my e-mail—that constant leaky faucet of unfiltered real estate industry drip, male performance and enhancement spam, and odd social bric-a-brac from people with whom I occasionally exchange pleasantries—but my real mail. My U.S. Postal mail. The mail that Roger, my letter carrier, donned in his crisply pressed blue striped government issue uniform and pith helmut, delivers at or around 10 o’ clock each morning, except Saturdays. That’s how he likes to be referred to, or so I surmised from the money-holder envelope/holiday note he left in our mailbox last December…
 
To:        The Petros and The Klopeks

Re:        Merry Christmas 

From:   Roger, your letter carrier.

The Klopeks are our next door neighbors (three generations, mostly female, under one roof) who sold me and my wife the house we currently live in. I actually deliver their mail a few days a week because after almost a year in the neighborhood, Roger still doesn’t understand the property changed hands and we are not all one big happy Italian/Polish family sharing two houses on the same oversized lot, although we’ve all told him as much on more than a few occasions–the Klopeks and the Petros both. In defense of him though, the property was subdivided at the settlement table last August (where Roger was not present) with the main house (The Petros) and the coach house (The Klopeks) receiving separate PINs.  Anyway, Roger is a super-genius compared to the folks at the City of Chicago Assessor’s Office who, after an equal span of monthly correspondence and phone calls, likewise can’t figure out the difference between a Petro and a Klopek. I tip them nothing at Christmas.

Roger is clearly not of this Midwest culture but rather from the Philippines, or Singapore, or some Pacific Rim territory where dentistry is not a component of the universal health system and where the name ‘Roger,’  I suppose, is American for something else, and extended families are the norm rather than the exception. My father (who doesn’t live with us) has a Dell customer service rep, also named Roger, assigned to his extended service account who is definitely from, and still in, the Philippines.  Then there was the fellow behind the Hertz counter in Honolulu last Thanksgiving but as I think back now, I’m pretty sure his name may have been Patrick–but Read more

Missing The Opportunity To Achieve Excellence

When Going The Extra Mile Simply Makes Good Economic Sense

When my best friend asked his mother what she wanted for her 70th birthday, she instantly said, “To be with my family.” He offered her a European cruise or other similar possibilities… but she stood firm. Family is what she wanted.

So he began the process of planning the event.

We talked about some different scenarios, as he requested that I photograph the event – and I wanted a venue with some decent locations to use as a background.

Since many family members would be coming in from out-of-town, a nice hotel needed to be selected… and when he told me he was considering the Hilton in Charlotte – I laughed and said, “I stayed there last week… nice place, for sure.”

After researching his options, my friend realized that the Hilton could be a one-stop shop, as they had all the facilities he needed right there at the hotel. The family could come to town, enjoy a nice dinner, enjoy the family, propose a few toasts and hear a speech or two… then do a little dancing – and never have to leave the hotel.

One of the items on the agenda was a multimedia powerpoint presentation featuring images taken throughout his mother’s life… complete with music that she loves. He had worked hard to put this presentation together – and looked forward to his entire family being able to enjoy it.

When we arrived at the hotel, we began to inspect the facility as well as the grounds. We were a little disappointed with the landscaping, as outdoor watering restrictions were literally killing the grass and plants – but it is what it is.

In the banquet hall, the Hilton staff was setting up the tables. The projection screen was up – but no projector could be found. We wanted to get the projector set up early to avoid any problems with the presentation… so we asked the staff to find our projector.

The manager came to our banquet room to inform us that if we wanted a projector – he would be happy to rent us Read more

Contra Cammarosano: “You will know when BloodhoundBlog has attained its goals when there is no more carney-barker jive to be found anywhere in real estate.”

This is a response to a comment that grew up to be a post:

Louis Cammarosano: “[I]f it wasn’t for “Vendor” Zillow, Unchained Phoenix would have shown a loss.”

No, we would have done the show in a different facility, without food. Zillow.com paid for our guests to have a much better experience than they would have had otherwise. I’m very grateful for this, but it had nothing to do with what were doing. If we can, I want to pay for Orlando entirely from receipts, so that we will have heard the last of these specious charges.

Louis Cammarosano: “The anti vendor rhetoric falls flat when your conference was sponsored by one and you have become one yourself.”

Falls flat for whom? Is there anyone reading this who thinks that we are casting about for a way to make milch cows out of Realtors and lenders, in the way that virtually everyone associated with the Inman.com/Realtor.com/Move.com world seeks to milk Realtors and lenders? I’m completely serious. If you really think that, let me know, because I will want to dial up the anti-vendor/anti-broker/anti-NAR rhetoric quite a bit. I am sick to death of putatively self-employed business people being swindled by one huckster after another, and I am doing everything I can think of to put a stop to it. If I haven’t made that abundantly clear by now, the fault is mine, and I will mend my ways with renewed vigor.

I actually agree with the point you don’t quite make: Zillow.com — and possibly some other vendors fully within the Web 2.0 world — don’t deserve to be lumped together with the other companies making up the milking-machinery branch of the Inmanosphere. What can one say about this grievous injustice? How about: Dang.

BloodhoundBlog is a very costly endeavor. Our bandwidth needs are huge, so our hosting fees are fairly high. BloodhoundRealty.com absorbs all of that, along with any other costs associated with running this site. But those numbers pale when compared with the labor value — and the market value — of the content accumulated here — provided by me and by three dozen Read more

A Different Business Model For Your Consideration

At Brown and Brown, we’re undergoing moderate to extreme changes in our business model. Extreme at home, mild to moderate away from home. We’re leveraging our Rainmaking ability through these changes. Below, I’ll address what we’re about to launch in our own backyard.

At home we’re eschewing the 3% listing side fee for a relatively modest monthly fee.

The fee will be $500-1,000 monthly, ’till sold. The buyer’s agent will still get 3%, sometimes more. Properties sold in 90 days or less will save, on average, five figures. This model is custom designed for our specific client profile locally, which is an income property investor who should be taking that equity to places out of state. (Preferably by around 4:30 yesterday afternoon.) Our niche has been 2-4 unit properties, but we’re gonna market hard to SFR’s/condos/townhomes also, if they’re rentals.

It’s my belief this model will work incredibly well for house agents. Here’s how I see it working for them.

1. Massive Old School and 2.0 marketing. The methods really aren’t important as long as you’re hanging cat skins by the dozens on the wall. Once the pipeline is full, entrance and exit, it’ll become almost self perpetuating. Not really, but close enough for jazz.

Thought

The marketing? We’ll be using postcards/snail mail with warm call follow-ups. ‘Course we have a distinct advantage when calling. House agents can’t convince a homeowner to sell. We can. They don’t live there. If we can convince them they should sell/exchange through our experience, expertise, and general all around charm, they’ll list. We’ll be using other methods, but that’s another post.

2. As many buyers’ agents as required. In the current buyer’s market, maybe more than I’d need when things normalize. Then again, depending on your market, ‘normal’ may mean the explosion of pent up demand lookin’ for a place to light.

Thought

Another advantage for Brown and Brown in San Diego. We have no need whatsoever for even one buyer’s agent. We think it’s silly to invest here, so we won’t be representing buyers. We couldn’t sleep at night if we put folks into San Diego Read more

BloodhoundBlog evangelism: How, by working together, we are going to reinvent real estate representation, convert the best real estate professionals to the wired life and put the bums out of the business

First, this is important: The easiest way to get someone to BloodhoundBlog is to type “BloodhoundBlog” into any web browser. The “.com” will be assumed by default, and BloodhoundBlog.com redirects to the full address of the weblog. If there is someone you work with whom you would like to see get involved in our world, all that person has to remember is that one word: BloodhoundBlog.

Why is that important? Because you are the most important factor in BloodhoundBlog’s growth. We don’t even have Google working for us right now, but it doesn’t matter. We have always grown on the strength of the content and on the strength of very bright people like you reading, commenting on, subscribing to, linking to and recommending that content.

Last night I looked in on Cheryl Johnson talking about the coffee-table books we build for high-end listings. One of the comments was an eye-opener for me:

Thanks for the BLOODHOUND link, I had not run across them yet and man what a good read, blew my 30 min quick.

Of the weblogs written by actual working real estate professionals — Realtors, lenders, investors, technologists, vendors — BloodhoundBlog has the deepest penetration: Most pages, most Technorati links, etc. It’s easy for me to forget that new people are coming on line every day — and that they have no automatic way of knowing about BloodhoundBlog.

So far, we have depended on viral effects to be found by those folks. But I want for people like Cheryl’s commenter to find us. You want it, too: It’s the people who care about doing their very best who will matter most to the world of real estate, going forward. We are each of us here for our own reasons, but, at the same time, we are all of us here out of a shared commitment to excellence. When you run across someone like the person who posted that comment, you need to send him or her here like a BloodhoundBlog evangelist. Not for our sakes, but for your own.

There’s more. After weeks of phone tag, it seems all but certain that we will not Read more

Ultra Basic GTD (Getting Things Done) for Solo Warriors.

I’m a big fan of GTD.  More than any of the dozens of books I’ve read on goals and time management, Getting Things Done by David Allen enriched my life and changed my outcomes.   Most of the sentences in Getting Things Done can be followed by “no shit.” But, as my friend Julie Harris says, sometimes the “no shit” points are the most important.

All of us 2.0/3.0 agents here can do well to follow Jeff Brown’s stellar advice.  But execution is the key, Just…do it.

Kludges are very helpful when we’re trying to get something finished.  Worrying about if this is the ‘latest,’ productivity tool is usually a waste of time.   Having dead simple tools like dry erase boards and index executed zealously is WAY more useful than having a half ass implementation of the worlds most perfect solution.  I rock a Hipster PDA because there’s something unignorable about index cards.  You can turn a Palm/Iphone off, but if you have things to do, they will be reflected in the stack of cards you’re carrying. Is it as slick as an Iphone?  No, but since I made the damn thing it works.

Instead of having calendared reminders, I took a sheet of paper, and made a basic table: 

Monday Tuesday Wednesday
Blog Post

Call 20 Past Clients

Post to Facebook Groups

5 LinkedIn Questions answered.

Blog Post

contact 10 financial planners

contact 10 attorneys
send e-zine

…and so on.  Click for a full version. Both 1.0 and 2.0 activities are on the list.  If you’ve got a solid plan, it’s one of the easiest ways to force yourself to execute.  If I’m behind, I have a VISUAL reminder.  What’s hard is setting a realistic schedule and trusting it…that’s another post altogether.  (And yes, I have a monthly version and a quarterly version, too…this has kept me from needing an assistant because I have my tasks laid out in a linear fashion.)

My page It’s laminated #70 card stock so it has some weight. I use a  Vis a Vis wet erase marker to mark things Read more

Zillow Mortgage Must Verify Consumers To Become A Marketplace

Mike Mueller is leaving the Zillow Mortgage Marketplace. A poor consumer performance review drove him to do just that.

From the consumer review on Zillow Mortgage:

Rating: 1 / 5
Comment: I asked for conforming quote, got sent jumbo quote with huge fees. I even specifically noted the request in the ‘notes’ section due to the newly raised conforming loan limits. If a lender cannot start off paying attention to the customer’s needs there’s no reason to go further.
Reviewer: srg418

Is Mike a crybaby? Hardly. Mike Mueller’s one of the real pros out here and that’s what has me worried about Zillow’s mortgage offering. In their effort to be consumer-centric, they are forgetting that the the “truth” lies in a lender’s opinion of the borrower. If the truth (in this case) is the loan terms, then why are we letting consumers wreck lender’s reputations for delivering it?

Mike delivered the unpalatable news that the “new” jumbo conforming rates were different from the conforming rates. I did that about two months ago to a customer and was equally admonished for my “deceitful tricks”…until the customer started applying for loans. Fortunately, the customer was fair-minded enough to tell me that he funded his conforming-jumbo loan with another lender…at a higher rate than I quoted him. Nobody won- he paid more and I lost money because of his inability to deal with the reality of mortgage guidelines.

The problem lies with the one-way mirror used on Zillow Mortgage Marketplace. Like a perp in an interview room, mortgage professionals are criticized by consumers with predetermined bias. It is the bias of “needing to be correct” that stems from an inadequacy to deal with the truth. That sort of bias convicted Ruben Carter and I’m afraid that it hung Mike Mueller as well. Now, Mike won his case on appeal and fortunately it didn’t take 22 years for the truth to come out. From David G, in the comments thread:

I’ve deleted the review. Borrowers on Zillow can only rate lenders that they’ve worked with but I must Read more

Don’t hang Vlad Zablotskyy out to dry: Making a donation to his legal defense fund is what matters most right now

Here’s what doesn’t matter:

Here’s what matters:

Of the money Vlad Zablotskyy has had to spend so far on legal fees, three-fourths of every dollar has come out of his own pocket.

It doesn’t matter who says what about whom. It doesn’t matter if this issue draws more attention up the food chain. It doesn’t matter if people write posts or post the donation button.

But it does matter if you hang Vlad Zablotskyy out to dry.

I don’t know if the cause is cowardliness or cliquishness or simply cluelessness, but I have been all but completely dismayed by the response of the RE.net to this vicious attack on one of our own. A few principled people stepped up to the plate right away — last week, but also in the months leading up to last week. A far greater number have ignored the issue, with the result that Vlad has found more vocal champions outside the real estate weblogging world.

How sad for us that Vlad is willing to stand as a martyr for our right to speak as we choose, and we can’t even be bothered to make a donation in his defense — much less stand up on our own two legs and cry havoc — not even when we’re offered choice bribes for doing so!

We’re alone right now, you and I, just words on phosphors silently invading your mind. I don’t care if you’re a coward, or if you’re clique-ridden or clueless. It suits me fine to think that you’ve been distracted, and you’ve been meaning all week to make a donation. That’s perfectly wonderful. Read more