Paul J. Frank: December 2007 Archives
This is an educational and informative book on fixing up houses for profit. The down to earth realistic approach aligns with my reality of real estate. It's not one of those books where you find a seller and try to assume his mortgage which isn't assumable or talk the seller out of his equity or do some kind of confusing creative financing because you don't have any cash nor the means to get financing. This book explains how "cash is king" and how to get it if you don't have it.
The book goes through all the steps to successfully run a property rehab business. The author explains that if you want to get top dollar you have to add some sizzle items to make your property special. To get top dollar you just can't slap a coat of paint on the walls and put it back on the market. I've seen many poorly done rehabs where this was done. Because of it, the property stayed on the market longer racking up carrying costs and then it sold for less further eating away at the profits. Learn how to make your property special so it stands out in a crowd so it will sell faster and for more money.
I highly recommend this book. It's obvious that the author has hands-on experience and has rehabbed many properties. You will learn from his experience on how to run a successful rehab for profit business and be put on the path with other professionals who actually rehab properties and not just talk about it.
If you want to learn more about the book, rehab techniques, or the author go to his website at http://www.rehabwiz.com/
The book goes through all the steps to successfully run a property rehab business. The author explains that if you want to get top dollar you have to add some sizzle items to make your property special. To get top dollar you just can't slap a coat of paint on the walls and put it back on the market. I've seen many poorly done rehabs where this was done. Because of it, the property stayed on the market longer racking up carrying costs and then it sold for less further eating away at the profits. Learn how to make your property special so it stands out in a crowd so it will sell faster and for more money.
I highly recommend this book. It's obvious that the author has hands-on experience and has rehabbed many properties. You will learn from his experience on how to run a successful rehab for profit business and be put on the path with other professionals who actually rehab properties and not just talk about it.
If you want to learn more about the book, rehab techniques, or the author go to his website at http://www.rehabwiz.com/
This question was asked on Linkedin.com and this was my response:
Real estate is local so some areas have hit bottom and many areas have not.
A good indicator is when the days on market start declining and the absorption rate is six to seven months or less.
The absorption rate is derived by dividing the active properties on the market by the number of homes that have sold in the last 12 months so if no new homes come on the market the inventory would sell in x number of months.
In my town of Foxboro, MA at the height of the market the absorbtion rate for single family homes was 2 to 3 months. It went up to around 8 to 9 months and now this morning, Nov. 25, 2007 it is at around 6.5 months. I'd say my home town is getting near the bottom or is close to the bottom.
The days on market for the first six months of 2007 in Foxboro were 164.12 days and the second half of the year so far the days on market is 144.44 days.
The stats came from my local MLS.
If you want to really get into this you could look at different price points and see if the lower end is doing better than the higher end or vice a versa.
Real estate is local so some areas have hit bottom and many areas have not.
A good indicator is when the days on market start declining and the absorption rate is six to seven months or less.
The absorption rate is derived by dividing the active properties on the market by the number of homes that have sold in the last 12 months so if no new homes come on the market the inventory would sell in x number of months.
In my town of Foxboro, MA at the height of the market the absorbtion rate for single family homes was 2 to 3 months. It went up to around 8 to 9 months and now this morning, Nov. 25, 2007 it is at around 6.5 months. I'd say my home town is getting near the bottom or is close to the bottom.
The days on market for the first six months of 2007 in Foxboro were 164.12 days and the second half of the year so far the days on market is 144.44 days.
The stats came from my local MLS.
If you want to really get into this you could look at different price points and see if the lower end is doing better than the higher end or vice a versa.
This question was asked on Linkedin.com and this was my response:
Real Estate is local. So the bottom is going to be different for different areas.
Even in the Boston area the better perceived towns will bottom out first and the lesser perceived towns will follow. It also differs depending on what price range you are in.
People were moving farther away from Boston to find affordable properties and now these people are not having to go so far. The towns closer to Boston and the Boston neighborhoods are benefiting from this migration back to the center. The towns farther out will suffer.
It's hard to over build in Boston. We don't have large tracts of land to build large number of homes. The towns south and west of Boston have restricted growth of homes through the increase of lot sizes that reduce the number of lots per acre. The towns have done everything to reduce density. The Commonwealth has done what it can to push back. So, what ended up being built due to this struggle have been 55 and older complexes and rental units in the towns that still have less than 10% of their housing inventory deemed affordable. Once you hit the 10% threshold the Commonwealth fast track permitting doesn't apply. The other area of growth is areas around train stations which gets special treatment/incentives by the Commonwealth.
The macro is having an effect but the micro economics of an area also has an effect on the real estate market. You have to look at both for each area to see the overall effect.
Real Estate is local. So the bottom is going to be different for different areas.
Even in the Boston area the better perceived towns will bottom out first and the lesser perceived towns will follow. It also differs depending on what price range you are in.
People were moving farther away from Boston to find affordable properties and now these people are not having to go so far. The towns closer to Boston and the Boston neighborhoods are benefiting from this migration back to the center. The towns farther out will suffer.
It's hard to over build in Boston. We don't have large tracts of land to build large number of homes. The towns south and west of Boston have restricted growth of homes through the increase of lot sizes that reduce the number of lots per acre. The towns have done everything to reduce density. The Commonwealth has done what it can to push back. So, what ended up being built due to this struggle have been 55 and older complexes and rental units in the towns that still have less than 10% of their housing inventory deemed affordable. Once you hit the 10% threshold the Commonwealth fast track permitting doesn't apply. The other area of growth is areas around train stations which gets special treatment/incentives by the Commonwealth.
The macro is having an effect but the micro economics of an area also has an effect on the real estate market. You have to look at both for each area to see the overall effect.
That's right! Market History of the property and Days on Market or (DOM) are two great pieces of information to have to be able to negotiate a great deal as a buyer. Why's that?
Time is a lubricant that greases the seller's motivation to sell. When a property comes on the market the seller is full of expectations of a quick sale at full or near to full price. If the property is priced correctly it will happen. If it doesn't happen it's only with time and with feedback from the market does the seller realize that the market has rejected the initial offer. For the serious seller, s/he will adjust the price to better align their property with the market.
This is where the market history comes into play for the buyer. In MLSPIN, the multiple listing service for my area, they compile the market history for the listing of the property. Changes to the listing sheet such as going under agreement and then coming back on the market or price changes with the date of the change are noted in the market history of the listing. This info. is available to the agents only. So, if you are working with a buyer agent they should be sharing this information with you as part of their fiduciary duties.
When you look at the market history in conjunction with the DOM you get a good picture as to the motivation of the seller. For example, if the property has been on the market for 155 days and no price drops and no accepted offers in a declining market you will have a strong sense that the seller is not serious about selling and they are waiting for someone with "sucker" tattooed on their forehead.
Which reminds me of a story. I showed a multi-family to this couple one day. The husband had all kinds of artwork on his body which you could see when he wore shorts and a T-shirt. After looking at the property we were in the backyard discussing the property which needed a ton of work. It was in rough shape. This couple thought the property was way over priced. They were asking out loud how the seller could ask that kind of money for the property and without thinking I said, "They are looking for someone with sucker tattooed across their forehead." Upon which the wife said, "My husband has a lot of tattoos but that isn't one of them." We had a good laugh over that one.
On the other hand, if you see the property has been on the market for 155 days with no accepted offers and the seller has been lowering the price consistently over that 155 days then you get a strong sense that they are motivated to sell the property and should be more welcoming to your lower priced offer.
You, as the buyer, armed with this information with your buyer agent will be better able to read the motivation of the seller and therefore negotiate from a stronger position. Unless you have "sucker" tattooed across your forehead find out the Market History and Days on Market on a property before making an offer.
Time is a lubricant that greases the seller's motivation to sell. When a property comes on the market the seller is full of expectations of a quick sale at full or near to full price. If the property is priced correctly it will happen. If it doesn't happen it's only with time and with feedback from the market does the seller realize that the market has rejected the initial offer. For the serious seller, s/he will adjust the price to better align their property with the market.
This is where the market history comes into play for the buyer. In MLSPIN, the multiple listing service for my area, they compile the market history for the listing of the property. Changes to the listing sheet such as going under agreement and then coming back on the market or price changes with the date of the change are noted in the market history of the listing. This info. is available to the agents only. So, if you are working with a buyer agent they should be sharing this information with you as part of their fiduciary duties.
When you look at the market history in conjunction with the DOM you get a good picture as to the motivation of the seller. For example, if the property has been on the market for 155 days and no price drops and no accepted offers in a declining market you will have a strong sense that the seller is not serious about selling and they are waiting for someone with "sucker" tattooed on their forehead.
Which reminds me of a story. I showed a multi-family to this couple one day. The husband had all kinds of artwork on his body which you could see when he wore shorts and a T-shirt. After looking at the property we were in the backyard discussing the property which needed a ton of work. It was in rough shape. This couple thought the property was way over priced. They were asking out loud how the seller could ask that kind of money for the property and without thinking I said, "They are looking for someone with sucker tattooed across their forehead." Upon which the wife said, "My husband has a lot of tattoos but that isn't one of them." We had a good laugh over that one.
On the other hand, if you see the property has been on the market for 155 days with no accepted offers and the seller has been lowering the price consistently over that 155 days then you get a strong sense that they are motivated to sell the property and should be more welcoming to your lower priced offer.
You, as the buyer, armed with this information with your buyer agent will be better able to read the motivation of the seller and therefore negotiate from a stronger position. Unless you have "sucker" tattooed across your forehead find out the Market History and Days on Market on a property before making an offer.
