Thinking about a Short Sale? Don’t think too long!!

I fall into a large group of homeowners who have been “on the fence” about short-selling their homes during this economic downturn.  The short sale & foreclosure process is a very complicated one, and each transaction has its own set of unique circumstances that sets it apart from the rest.  The decision to short sell a home is anything but an easy one.

I’m writing today to inform the reader of a VERY important change in the law that is taking place at the end of 2012, which should make it easier on homeowners to make up their minds.  On December 31st, 2012 the Mortgage Debt Relief Act of 2007 is set to expire.  For those who haven’t completed their short sale or foreclosure transaction prior to this date, there will be a significant financial impact!

The Mortgage Debt Relief Act of 2007 allows taxpayers to exclude income from the discharge of debt on their principal residence.  Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.  In layman’s terms; if you have a $350,000 mortgage on your primary residence and the lender agrees to let you sell the home for $200,000 without recourse, the $150,000 “forgiveness of debt” does NOT have to be claimed as income!  In any other loan scenario, it is almost always the case that an individual would have to claim this money as income on their tax return!  Well, that’s exactly what is going to happen when this act expires; individuals who sell their homes for less than they owe will have to claim the difference as income on their tax returns!!  These amounts are often VERY significant, and can result in tens of thousands of dollars due to the government in income tax.

The short sale process is a long & complicated one.  If you are thinking about going down that route with your own home, I would highly recommend beginning the process as soon as possible.  There are qualified third-party specialists that can assist you during the process and negotiating on your behalf, often at no cost to you.  If you have any questions in regards to the short sale process, or the expiration of this Act, please feel free to reply to this post or call Matt at 541.389.7910…. I’d be more than happy to help.

Thanks for reading!

Micro-Housing: A Paradigm Shift of the American Dream

A couple weeks back, I wrote an article called “It’s Not the Size that Counts”; a short piece about buying homes based on factors beyond size & $/square foot.  However, I’m beginning to think that the article should have been entitled “Size Matters”.  Let me explain.

Most of you may not know that I am a LEED Accredited Professional.  This is a designation by the US Green Building Council for someone who has taken the steps and demonstrated the abilities to qualify as a “Green” professional in the building industry.  I have a passion for sustainability, and very much agree with efforts to protect our natural resources by using them wisely & efficiently.

My passion for sustainability, and my continued interest in following the latest trends, has brought to light a recent “boom” in the real estate industry.  The trend is commonly being referred to as “micro-housing” or “pocket-neighborhoods” and is a realignment of the traditional mindset, “bigger is better”.  These micro-homes are designed to maximize efficiency & minimize impact.  They commonly range anywhere from 400-1000 square feet, and the small acreage communities that these homes are found in usually include a significant common area with green space and some sort of community garden, clubhouse, and/or storage facility.  The benefits of these home designs include lower utility costs, smaller building footprint allowing for maximized green space, lowered construction costs, and an overall simplifying of the hectic, over-consuming American lifestyle.  It also embraces the idea of community, which is an American tradition that seems to have died in recent decades.

 

An interesting fact I learned in researching micro-housing is that 60% of home buyers today are 1-2 person parties.  Why then, are we looking for these huge homes that have formal dining rooms which are rarely used, more bedrooms than we know what to do with, and yards that simply consume our time & money to maintain?  I think this trend is encompassing an important paradigm shift, which many American’s are embracing after the recent crash.  Perhaps the rebirth of America’s housing industry will begin with a newer, healthier approach to the way we live and the homes we choose to live in.  Here are some related sites if you are interested in further information on the micro-housing trend:

http://www.cottagecompany.com/default.aspx (My Personal Favorite)

http://pocket-neighborhoods.net/

http://rosschapin.com/Projects/PocketNeighborhoods/PocketNeighborhoodsOpener.html

Thanks for reading! Please comment with your thoughts!.

Best,

Matt

R-E-S-P-E-C-T

I’ll start by admitting bias on the subject of this article.  I am, after all, a real estate broker.  However, I can also claim to have spent many years on the other side of the table; selling everything from bare land to industrial buildings and having to pay commissions on every single successful transaction.  In no way is this article meant to be a sales gimmick or to promote my business in any way; it is simply an expression of my honest belief based on my experience in the matter.

Hire a Realtor, but probably not this guy!

My origin for this topic came about one week ago, when my wife received a call from her father telling her that his neighbor was interested in selling her home and that we should come over to pay her a visit.  Having met and dined with the homeowner before, I was comfortable knocking on her door and letting her know that I would appreciate the opportunity to list the home for her, or at least help her in any way I could through the selling process.

I had no expectations, and discussed the issue with her in a very casual & non-threatening manner….. so her response surprised me.  “Why would I pay somebody for something I can do myself?!” she said, followed by “my son is very good at selling things, and is going to put it on Craigslist.”

Now, I have to admit that I have also questioned real estate commissions before, and whether or not a certain realtor has actually earned the monies collected at the close of a transaction.  I’m sure there are instances in which this argument is valid. 

I continued the conversation with little questioning and no confrontation.  However, as I politely said my “thank you’s” and “goodnights”, the only thing I could think of was that this woman was making a HUGE mistake.  Not by simply not hiring me, but with her stubborn mentality that she could take this on by herself.

It is a Realtor’s full-time job to connect buyers and sellers.  If you do your research, you should be able to find a good Realtor who has superior knowledge of local real estate values, laws, and other related topics.  They pay the dues, attend the meetings, and network within a community that allow them do their job efficiently.  They have access to information that will give you a strong advantage in buying or selling your home.  They will help you get your home in selling condition, suggest improvements, hold open houses, post signs, put out flyers, attend MLS meetings, research comparables, etc. 

If a Realtor’s commission is a great concern to you, I suggest you simply factor it into the purchase price or listing price of your home.  I can guarantee that you will not regret spending the money for the professional services and peace-of-mind that they will bring to assisting you in what has become a very complicated transaction process.  Who knows, you may just get lucky by putting up a FSBO sign on your property & posting a local Craigslist ad, but at some point along the way, you will regret not having a professional by your side to help answer the difficult questions that will inevitably arise in your real estate transaction. 

I’m not asking that you give your business to a Realtor (although I obviously recommend that you do), but I am asking that you give your respect to their profession and expertise.  It should also be noted that, more often than not, the commissions they collect are very much earned & deserved.  This is especially the case in the current market, which is flooded with short-sales and foreclosures that require lots of work and produce very little profit.  If your planning on buying or selling any kind of property, do yourself a favor; hire a Realtor!

Love Thy Neighbor... BEFORE Buying

You know, it often happens that in our search for the perfect home, we can so easily get caught up in focusing all of our attention on the home itself.  I’m sure there are hundreds of thousands of horror stories from buyer’s who have purchased a property only to later find out that there are “issues” in the surrounding environment.  Planes flying low overhead, coyotes in neighboring fields that howl through the night, barking dogs at the neighbor’s house or even, the neighbors themselves.

You just never know what you’re going to run into when moving into a new neighborhood and, thus, acquiring new neighbors.  Maybe the Dad next door plays blaring electric guitar in his garage every evening, or the kids new drum set is in his room right next to your master.  Perhaps the 5-bedroom home next to you has turned into a rental for local college kids who like to party late into the night.  Maybe there’s just something “off” with the family across the street.

There are going to be situations like this that are just unavoidable.  Life has a way of throwing things at us that are unexpected.  However, we can all save ourselves potential headaches and hedge our risk of “neighborly” disturbances by simply taking an evening to walk the block, introduce yourself and talk with the neighbors BEFORE you purchase a home.  Ask questions like “Are there any issues with the neighbors?”, “Do you do things together as a neighborhood?”, “What do you like best/least about this neighborhood”, etc.  It’s a quick and simple way to bring some peace of mind to what could be the biggest purchase of your life!  Have fun with it; grab your spouse or a friend, make a cocktail or pour a glass of wine for “the road” and head on out….  You never know what you’re going to find!

Scrapbooking: it's not just for Grandma!

I’m going to keep this post short… just a little thought from my personal experience. 

We all want to live the “American Dream”, but the truth is we all have different visions of what that dream looks like.  About three years ago, I began compiling a notebook of photos & ideas for my absolute dream home.  The notebook is separated by tabs labeled “Exterior”, “Kitchen”, “Master Bath”, “Hardware”, etc. and in each category I’ve cut out magazine articles, clippings, and pictures of home ideas that I really really like and would someday like to incorporate if I’m fortunate enough to build a custom home.

Now, it’s up to you how far you wish to take this little “scrapbook” idea, but I would strongly recommend that you start building one of your own.  Even if you never desire to build a custom home, the book will be very beneficial when you wish to rent or buy.  It’s always a bit of a challenge to understand a buyer’s vision, and sharing this scrapbook with your agent will give them a very detailed and specific understanding of what you are looking for in a home.

Just a small idea that takes very little time but could have big rewards in the end.

Comment if you have similar ideas that will help buyers and/or sellers of real estate!

Hope everyone’s enjoying their Spring Break!

They Just Don't Make 'em Like They Used To

Vintage is always in style.  In fashion, design, architecture and society, it seems the ol’ phrase “history repeats itself” holds true.

Lately, I have been spending some time in the areas of midtown and downtown Bend, really soaking in the historic charm that this town hides behind its more modern appeal.  Bend is filled with a rich history as a mill town, a ski town, and a town that sat for years and years just waiting to be discovered for all its natural resources and inherent beauty.  This history is shared in the walls of many homes scattered throughout the town, and it’s a shame that the character of these homes is often not appreciated to the level that it should be.

I’ve recently acquired a listing on a great mid-century home on 9^th Street in midtown Bend.  For those familiar with the city, the home is a block North of Hwy 20 at the base of Pilot Butte.  In walking through and taking pictures of the home, it struck me that the character of this home simply cannot be copied.  There was a different mindset in those days, of which the current perspective would restrict any designer/remodeler/architect/etc from replicating.  The kitchen boasts ORIGINAL Thermador appliances, with a matching stainless steel counter-top.  Offsetting these steel components is a blue-ish linoleum counter and wallpapered walls with drawings of soldiers & horses.  There is a unique trim design throughout the home, and the doorknob on the entry is located in the center of the door!  Everything works together and it looks AWESOME!!  But seriously, these designs just couldn’t be found in the inventory of today’s retailers.

It’s my opinion that there exists fantastic opportunity in revitalizing the character of these homes by embracing their original finishes.  I’m not talking remodel here, as that would go completely against what I’m trying to say.  If you find the right property, it should only require minor repairs, and maybe a few, appropriate updates.  I’ve been told that the original materials for many of these homes were stored in their crawl spaces; so if wallpaper is peeling or there’s a section of carpet that needs replacing, it might be the case that you can simply install the extra material and maintain the integrity of the home’s era-specific character.

My 9^th street listing is just an example of some incredible opportunities out there right now in this niche market!  These homes have incredible “bones”, meaning they are built VERY well, but are often not appreciated when looked at with a “modern” perspective.  This means that they are commonly undervalued.  Find your inner-hippie, get in touch with your beatnik side, and have some fun finding embracing the “vintage” of mid-century properties!  Like they say, “they just don’t make ‘em like they used to”!

As an fyi, the 9^th Street home is listed at $149,900 (price recently reduced!).  It’s 1,596 sq.ft., has 3 bedrooms and 1 bath.  It is a short-sale, and a fantastic opportunity in a great location.  If you’re interested, or know somebody who would be, feel free to give me a call at (541) 389-7910 or email me at mrobinson@hunterproperties.info

Thanks to all who've been reading!

Best,

Matt

Don't Be A Square!

It’s no secret that times have changed.   Manners, cassettes, and Michael Jackson have been replaced by terrorists, Twitter, & Justin Bieber.   Some view our current society as a step forward from the olden days of simpler times, while others think we are continuing to lose the values that made America the great country that it is.  Wherever you stand, there is no denying that our world is changing, and so must our mindset if we are going to succeed in this new economy.

Before becoming a licensed Realtor, I spent my professional career as a land developer in the Central Oregon region.  I entered the market in the final year of chaotic profits & furious appreciation.   My associates were driving Lamborghinis & wearing diamond Rolex’s…. things were good, reeeeally good.  However, as we all know, things quickly turned for the worse and I found myself in the center of the worse real estate crash in U.S. history.

During the past couple years, I have been trying to find opportunities for development, but nothing has “penciled out” (land values and construction costs did not align and allow for profit with market prices of homes, multi-family units, or commercial spaces).

It is my opinion that the days of lucrative profits in the land development industry are gone.  There will always be profits to be made in this industry, but not the margin of return that developers have experienced historically.  Yes, there will still be the occasional deal that combines luck and timing with a significant profits, but they will be MUCH harder to come by and will require a lot of work, research, and CREATIVITY.

Which is why I write this article today; to share my thoughts on “creative development”.  Profits in this new economy are going to come from thinking outside of the box and differentiating yourself from the competition.   The industry does have its barriers to entry, but I feel like creativity allows ANYBODY to make money in real estate.

Don’t have the equity to purchase a home?  Why not try fixing up mobile homes?  The mobile home market has not attracted significant competition, because profits are slimmer in these relatively cheap assets.  However, mobile home manufacturers often create contracts with buyers that allow them to upgrade after a certain number of years.  When they get these mobile homes returned, they often get rid of them for pennies on the dollar.  Create a relationship with one of these manufacturers in your area, and talk with a mobile home park owner about them paying for the costs of relocating your renovated home.  Park owners will often work with you in an effort to revitalize their communities and replace old rundown homes with newer units.

Or how about this idea for a commercial space profit center; purchase an old abandoned warehouse (the bigger the better!) and fill it with old shipping containers!   You can purchase these containers for cheap, and retrofit the interiors with hip, urban-industrial finishes.  Then rent the spaces out and use excess warehouse space for community kitchen, lounge, restrooms, etc.  Perhaps even throwing in amenities like a small gym, lobby-area for guests, and/or showers & locker-rooms… anything that will attract entrepreneurs to your space.

There are several ideas like this out there right now; the trick is coming up with your own “out of the box” idea or figuring out how to make one of these ideas economically feasible in your own community. 

So, instead of just thinking about purchasing a home, apartment complex, commercial building or land for a real estate investment, get creative and discover new ways to make money in real estate!  If you don’t, it’s likely you won’t succeed as these new economic times continue to unfold!  

Would love to hear some clever ideas from the readers out there!  Leave a comment…. Don’t be a square!

Best,

Matt

It's Not the Size That Counts!

We’ve all, at times, been drawn into the idea that BIGGER is BETTER.  Whether it’s our flat-screen TV’s, our biceps, or our bank accounts, our culture is simply obsessed with having the latest and greatest….. and biggest!  In no industry can I think of this theme being more relevant than the world of real estate.

In this era of opportunity, I want to issue an important note of caution.  I’ve been watching as buyers have been snatching up homes with impressive square footages, sometimes letting the price-per-square-foot figure blind them from the quality of product they are purchasing.  Right now, newer homes in Central Oregon are selling for as low as $65 per square foot, and in some cases even less!  I’m sure that figure drops below $50 when you look at short sales in severely distressed regions like Florida & Arizona.  At that price, it’s hard not to put strong consideration into purchasing a home; simple calculations prove that replacement costs would be considerably higher, and the land is essentially free!

However, I want to remind buyers of the classic Real Estate term “Caveat Emptor”….. Buyer Beware!  A lot of these “steals” are homes that were constructed during the heyday of real estate development; a time period when production was high and, often, the quality compromised.  In other cases, the homes were constructed as the market was tightening and builders were cutting costs (and quality) in every way fathomable.

There are so many incredible deals out there right now, why not be selective, and picky about quality?  Quality will save you in the long run…. Ever heard the saying “buy nice or buy twice”?  As a LEED AP, a “green” certification, I can attest for the fact that homes design is trending towards efficiency, not size.  Homes of the rich are being designed to fit needs, not exceed them, and construction methods for these homes are retreating back to the American tradition of higher quality.

I urge buyers to take note of the “little” things when looking at homes.  Do the drawers open and close smoothly?  Are the appliances decent?  Look closely at drywall & countertop seams.  Are the doors & hardware sturdy? If these “small” aspects of a home express attention to detail, it’s likely that larger issues such as insulation, window R-values, framing methods, and so on, will be of a quality that will bring years of hassle-free enjoyment.  Instead of saving up-front and forking out money for maintenance issues every season, pay a little more now and rest in the fact that your biggest investment will bring decades of comfort & value to you and your family. 

As an example, my parents recently built their “dream home” of over 12,000 square feet.  Did it bring happiness and prosperity?  No, their big home brought nightmarish utility costs, massive maintenance issues (and time & expenses), and huge tax bills!  These are all costs you’ll end up living with if you choose to purchase a big home just because it’s cheap.

My suggestion: Find a home that fits your needs & lifestyle (obviously considering future plans). Don’t get drawn into a 5-bedroom home if you and your wife are settled with one child.  If you’re an aging bachelor with no plans to marry, you probably don’t need the mother-in-law quarters.  To an extent, choose quality over quantity….. And make sure that the builder cared about the home as much as you will!

Is It Time To Buy??

This home is listed for $399,000 right now... On Awbrey Butte!
I'm thinking about making an offer!

The past several years have been, well, poopy..... to put it in PG terms.  We've all been affected by the economic changes, at both the national and local levels.  However, I know a long list of people who still have a significant balance in their bank accounts, and I know there are hundreds of thousands of investors out there wondering "is it time to invest in Real Estate yet..... have we hit the bottom?"

Now, I am not going to pretend to have the magic ball here.  I would roll my eyes at even the most educated economist who claims to know what real estate's immediate future holds.  In Central Oregon, I think we will see a year or two more of foreclosures pouring onto the market, so we won't see these opportunities going anywhere in the near future.  However, I am fairly confident that prices have finally stabilized and buyers are starting to act on the incredible deals that are out there right now.

I am one of those people who has finally "got off the fence" and am considering purchasing a home for investment purposes.  Though short-term profits exist, my approach is more of a long-term one; I'm in the market for a personal residence that will fit the needs of my growing family as my wife and I settle into our marriage and begin to make babies!  I am beginning to discover that the absolute steals, the bank owned properties that have minimal risk in investment, are getting snatched up FAST!!

Now, here's my opinion on whether or not you should get in on real estate investment right now: YOU SHOULD HAVE THE LIQUIDITY TO PUT 50%+ DOWN ON THE PURCHASE PRICE!!!  I firmly believe this for several reasons:

1) If the economy rebounds in the next 5-10 years, and you want to capture the equity in your investment, you've likely paid 80-100% interest on the funds you have borrowed!  That's a difficult percentage to make up for in appreciation!!  The longer-term loan you apply for, the more front-loaded the interest expense will be.

2) After what we've just been through, why wouldn't you want to do this?  Yes, interest rates are low, but refer back to point #1.

3) .... and this is coming from a Realtor; you shouldn't be investing in real estate right now if you don't have the extra cash to do so!!

That's right, I think there's safer investments out there that will produce a solid return for you.  There is always the risk-return ratio to consider in any investment, but I definitely believe that the front-loaded mortgage interest is commonly misunderstood and needs to be STRONGLY considered when purchasing real estate.  If you are not comfortable putting a VERY significant down payment on your home, you should rent.... at least for now!

More to come!

Please let me know what you think by leaving COMMENTS!

Best,

Matt

Hi There!!

Friends, Family, Associates, Acquaintances, and Random Browsers,

Welcome to the first C.O.R.E. (Central Oregon Real Estate) Investor post!  For those not familiar with me, Matt Robinson, let me provide a bit of a background to establish some credibility:

I am a native Oregonian, and one of the rare few who decided to become a Husky!  I graduated from the University of Washington in 2005 with an honors degree in Finance.  I then made the move over to Bend, Oregon to work for my father's business partner in land development.  I purchased my first home at the age of 26, and right at the peak of real estate appreciation in Central Oregon.  After a year of "fun" development (a.k.a. making money), and a year of uncertainty, I witnessed one of the greatest real estate crashed in US History first-hand.  Initiated by the economy, and made worse by the tragic suicide of my boss, I suddenly found myself as the sole employee of a development company with over $100 million in debt (on about $15-10M worth of assets).  My father, a multi-family developer in the Greater Portland region, and I spent two long years working with various lenders to finally reach a resolution that allowed us to walk away with all of our personal assets and narrowly avoid bankruptcy.

It was a learning experience beyond comprehension (does that makes sense?), and out of incredibly unfortunate events has come wisdom and a desire to harness what I've learned to capture the boundless opportunities that exist out there, even within a tiny demographic like Central Oregon.

What I'd like to do with this blog is create weekly posts that demonstrate various thoughts on approaches to investing in Central Oregon Real Estate (CORE).

Thanks to those who follow, and I look forward to a prosperous future for us all!

Blessings,

Matt