Data speaks 10 times louder than opinions. I heard this award winning author economist speak in a new way about real estate investing. His completely numbers driven approach to investing went against everything I had learned. It piqued my curiosity and caused me to look more deeply into his proven strategy.
Reproduced with permission from Robert Campbell, author of Timing the Real Estate Market.
Housing Prices Are Still Rising – But at a Rate-of-Climb that Continues to Slow
U.S. home prices rose in April, but the rate of annual gains has continued to fall from previous months. This is shown by the chart to the right, which shows the year-over-year returns from three major home price providers – the National Association of Realtors (N.A.R.), Case-Shiller, and the Federal Housing Finance Administration (FHFA).
While the annual numbers continue to worsen, the month-to-month valuations are still rising in all three home price indexes. This steady downtrend in market momentum suggests that this years’ high demand spring-to-summer selling season (that started in April) may turn out to be decidedly underwhelming, even though home prices should continue to rise in the summer months.
The Case-Shiller 20-City Index – which is represented by the darkest (and smoothest looking) line on the chart – rose 10.8% in April compared with 12 months earlier and continues to show the highest year-over-year gains of any of the home price indexes. With an annual gain of 12.4% in March 2014, the 20-City Index fell to its lowest year-over-year gain in 13 months. Continue reading
When Mr. Jerry Brown was sworn in office in 1999 as Oakland mayor, one of the first steps which he took was to unveil “Economic vision 10k” for the residents of Oakland. He laid down the vision and implementation road map for the residents of this region and promised that their living standards would have a positive change. Continue reading
Cost segregation is a relatively new practice that allows businesses to divide a building into multiple asset classes. Specifically, it is a tax planning strategy for both owners and renters that identifies tax savings and uses accelerated depreciation deductions to provide the most benefit to cash flow.
Depreciation deductions allow a portion of the property costs classified as real property to be reclassified as personal property, with lower depreciable lives that increase the owner’s depreciation deduction. Real property is typically depreciated over 39 or 27.5 years compared to reclassified property which may be depreciated over 3,5,7 and 15 years. Continue reading
While apartment building values are not driven by the same market factors that move housing prices, there is an undeniable correlation between the two asset classes. When single family home prices begin to slow, apartment building owners should take notice.
Home prices across the country continued to decline for the first part of 2014, according to data released recently by NAR and Case-Shiller. Despite the fact that last year was the best year on record for the Home Price Index since 2005, the dip has already increased concern that the market is slowing. Some economists attribute much of the slowing to seasonal factors. This information correlates with other data showing that the market is slowing- the National Association of Realtors Existing Home Sales report, showed a 5.1% decline in sales activity in January, and the National Association of Homebuilders also indicates a similar decline in builder confidence. National Home Price Index vs. San Francisco Home Price Index With Febuary being the fourth consecutive month that sales activity has decreased nationwide on a monthly basis, many institutional buyers are beginning to show some hesitation. While nationwide the index drops, San Francisco still shows growth, reminding us that real estate indicators and cycles need to be examined regionally.
Last week I closed the fastest deal of my life, in just three days! That is not to say that this was a goal of mine but here is how the story unfolded.
I met a new client named Ken who was an extremely savvy technology professional who was in a 1031 exchange and needed to close within 30 days. He had pointed out a property or two that he liked and one of them looked promising. It was a fully renovated duplex on the Oakland-Berkeley border.
1212 12th Street – 6 Units Oakland. Two and three bedroom units with off street parking.
I generally like to go in the direction that my clients are already headed so when Ken pointed out this property to me I immediately jumped on board, got us into contract and the inspection process underway. As the already-fast escrow unfolded we got bogged down with the lender who could not quite move fast enough. On top of that challenge, we learned that the duplex had a defective “non-livable” unit that was turning out to be an even bigger problem that the Berkeley building department was not willing to overlook.
1031 Exchanges and Extensions
Due dates for completing a 1031 Exchange are hard and fast, usually. Once you close on the sale of a property, you’ve got 45 days to identify a new property and 180 days to complete the close of a replacement property. In the event that you don’t meet those deadlines, your exchange will “fail” and you won’t be qualified for the tax deferral. However, when disastrous events such as; hurricanes, tornadoes, wildfires, floods or terrorist acts occur, the government may issue tax relief extensions, which conjointly can extend your 1031 deadlines.
This outstanding apartment unit was renovated and turned over by Nick Myerhoff and Myerhoff & Associates. Rents went from $950/mo to $1575/mo. The project took approximately 30 days at a cost of $8900.
This small studio apartment was also turned over by Myerhoff & Associates. It had not been updated for almost twenty years. It needed virtually everything except a bathroom.
We took rents from $650 to $950. The renovation included new windows, floors, fixtures, cabinets and counter top. We also rearranged the layout of the kitchen and added compact appliances.
Oakland, California, located on the west coast, has been considered as the effective center that merges and portrays the rich culture of Africans with Americans. In the early Fifties Oakland was an entertainment hub and later during the Sixties with the advent of the Black Panther Party, the blacks increased in population and fame.
First Fridays in Oakland
At present Oakland is occupied by both blacks and whites in equal proposition along with the contributions from Asian and Latino respectively. This diverse in population has ignited a cautious mind amongst the people of Oakland origin regarding the identity of black’s revolutionary culture. There has been a decline in the black population in most of the cities like N.J. Washington, Atlanta, D.C. and Newark, which has stirred a sense of alarm in the Oakland City.
Excellent 1 bedroom with loft, renovated
This property was a target of mine starting about five to ten years ago. It’s a unique 1920’s style three story building right across the street from Alta Bates Medical Center in Oakland on Telegraph Ave.
Coved living room with dark wood stain
When I first saw the interior lofts it caught my eye and I knew there was something special about the property. It’s been about a year since I purchased the building and have renovated nearly all the units. Rents have gone up over 25% in less than a year.
This building was shown to many investors but nobody really saw the potential like I did. In fact I ran this opportunity buy a few of my investor friends and everybody balked at the building. But eventually I found the right partners and took down this excellent 9-Unit property for $670k. It’s worth nearly $900 now just one year later.
Professional steel staircase provides access to sleeping loft
The social and commercial landscapes of Oakland have changed rapidly in the last ten years. This is due to both deliberate changes designed to encourage business growth, as well as unconscious changes in public perception.
The Enterprise Zone program was developed by the California State Legislature to stimulate business and employment growth in targeted areas.
The City of Oakland received an initial 15-year Enterprise Zone designation in 1993. The Zone was renewed in 2008. Oakland businesses in the Zone – from large manufacturing companies to small neighborhood restaurants – can reduce their state taxes by taking advantage of Enterprise Zone benefits.
“Oakland’s dining, arts and retail scenes have blown up in recent years, attracting more visitors to the city and earning it the title of coolest new kid in the country. Kelley Kahn, the city’s director of economic and workforce development, said Oakland “is ripe for hotel growth.”
Kahn argued that there’s enough developable land in the form of empty parking lots and buildings for new projects, as well as solid room and occupancy rates to justify financing. In fact, demand for hotel rooms grew by 6 percent over last year — the highest of anywhere in California.”
–San Francisco Business Times
photo credit: nautical2k photopin cc