My New Blog

I've had more time on my hands lately since my appraisal business has slowed down as a result of the mortgage crunch. It has given me time to reflect on the real reason I became a real estate appraiser, which was to learn about recognizing good investments when I see them. Well folks, I'm seeing them now and I'm starting to invest! 

My plan is simple, as most good real estate investment strategies always are. First, I find properties that are going through some sort of distress sale. I then number crunch them for a cash flow (mortgage, insurance and tax costs compared to rental income), and then contact the listing realtor directly and put in your offer. I recently purchased two properties that were 150% and 175% below the previous purchase prices in 2005 and 2006. This is a good example of how inflated prices were, and the inflated prices had prevented investors from having a positive cash flow. Historically, mortgage costs exceeded expected rental income 2:1 on a new purchase, and that made for a horrible investment unless you could count on appreciating equity returning your money in the future, and of course you could, to a certain extent, when values were rapidly climbing. Those days of a large increases in your equity band are gone, at least for the next 6-8 years.

I have done many weeks of late night research on SoCal neighborhoods that have multiple distress listings (REOs, Short Sales, Foreclosure, Trustee Sales), and there are very few pockets of neighborhoods in Southern California that offer properties that can be purchased as an investment and which provide a positive cash flow. But they are there, and they are growing. It just takes some effort.

Lastly, for those of you out there that are not investors but just looking for a place to call home, the time is now. There are lots of good deals, even some great deals if you do your homework. It will only continue to get better (or worse depending on how you look at it).