Americans are Riding on a Runaway Train

With a 20% decline in the stock market since it's peak last October, and with crude oil setting a new record each and every day, buying real estate doesn't have as much allure as it did several years ago. The reason being, plenty of buyers are waiting on the sidelines until the market nervousness of the market eases. The people that are buying these days, aren't being distracted by the headlines...Many of them have purchased before and are reading this as the time to jump in and negotiate a steal of a deal.

As an investor, this is a perfect market to buy. The most important thing is to have plenty of cash. As one of my client's so eloquently puts it, "Cash is King." Coming into a transaction with a heavy down payment, and solid terms can create flexibility in price. Especially with how slow the market is moving these days. The longer a property sits on the market, the more motivation one would think the seller has to unload. The vast majority of people do not have this kind of buying power which limits the choices they have. Another aspect of the market that is increasing with each day that passes is foreign investment. Foreign investors are parking their money in our country at a record pace because of the volatility of our economy and the dilution of our currency. Last year (2007) these international investors dumped $414 billion into securing stakes in American properties, companies, factories & stock. That number was up 90% from the year prior (2006). These investors accounted for over 25% of all announced deals.

For that small percentage of people who have almost infinitive cash reserves, there are opportunities to make money investing in real estate no matter what condition the market is in. These affluent investors know what a unique position they are in. While most Americans are riding their bikes to work, taking the bus, or buying motorcycles or mopeds to save on hefty gas prices, these savvy business men and women are finding ways to make more money. The term "the rich get richer" had to have come from somewhere...

Out of Water

Water is nature's candy. We all need it. Animals, plants, humans...H2O...

I have a property listed in an area that is zoned for horses...On that property, there are 4 horses that lived there, who are currently in the process of moving to Washington. The trailer was supposed to pick the horses up on Friday from what I understood from the owner of the horses and the house. Instead, here we are on a Sunday afternoon and the horses are still at the starting line, yet to even be loaded on the truck. These horses aren't racing horses like Big Brown, or my friend Gayego (I sold a property for his family)....but they are big horses....Big ones... When I showed up at my open house today, they were still at the property. Even though they were supposed to have left yesterday (Saturday). When I got there, their water tub (which is literally the size of a bath tub) was empty and knocked over on it's side. Obviously the horses were a little upset about the situation.

How can someone leave these horses without water in the heat of summer in LA? I am so ticked for these poor guys. They looked at me as if I was GOD when I started pouring the water for them...

Real Estate and Baseball - The Art of War

Tonight is the championship game for the 2008 College World Series. When watching the elimination game last night on ESPN, I started to realize many of the parallels between the game of baseball and the business of real estate.

The mental warfare that takes place on a baseball field reminds me of the viscous negotiations that take place during just about every real estate transaction. Almost as if the two sides are playing a game of chess. The world of real estate is very competitive. In fact, I think it is one of the most competitive industries in the World...Maybe just behind the oil business...And even then, someone owns the property that is being drilled...

The Art of War

1. Both sides are constantly looking for an advantage.


2. Neither side wants to lose.


3. Sometimes things get down right ugly.


4. One of Baseball's many great sayings is, "If ya' ain't cheatin', ya' ain't tryin'."


5. A lapse of concentration can cost you the game

Last night with their season on the line, the Fresno State Bulldogs stretched the series to the final game for a chance at the championship. Some of these players have already been drafted by major league teams in the draft which occurred not even a month ago. For them, they will soon become professionals and start earning a paycheck as well as getting a signing bonus. The other players who either aren't eligible because of their class status, or aren't good enough to make it to the next level will be playing in the game of their lives tonight. Nobody remembers who came in second place. It's all about winning the ring in Omaha.

These guys are learning life lessons as they go through this fantastic experience that we have grown to love called the College World Series. Seeing the expressions on their faces and watching the passion and drive they display with each passing moment makes me reflect on my experience playing college baseball. Many things that I learned on the field, I bring to the table during negotiations. Having a game face...calling somebody's bluff...

I love this game!

Both of Em'.

The Modern Day Gordon Gecko and Bud Fox

For anyone out there in the world that has seen the movie Wall Street staring Michael Douglas as Gordon Gecko, and Charlie Sheen who plays Bud Fox, this scene seems all too familiar. 2 extremely wealthy executives being dragged out of their buildings wearing handcuffs behind their backs. Their names are Matthew Tannin and Ralph Cioffi. These guys were falsifying information regarding the health of subprime mortgage hedge funds they were pitching to investors just before the real estate market went belly up.

One example is Cioffi extracting $2 million of his personal investment in The Enhanced Leverage Fund in March 2007, while still pitching a confident outlook to other investors to encourage them to come in with more money. If this Cioffi guy was so confident in this fund, why would he be lessening his exposure in his personal investment in the fund? The truth is, he and Tannin new that this fund was going south and they decided to save their own behinds rather than do the right thing. Now there are both getting burned.

It's up to their defense attorneys to attempt to bail them out of this mess that they have created for themselves, as well as the the industry in general. With the email paper trail that has been uncovered, it's not looking very good for either of them.

Oil, Oil, Oil - Realtors Do Some Serious Driving

The price of gasoline is pinching the pocket book of almost every American. Even the well heeled. Something needs to be done some time soon here (Ahhhhhhhhhhhhhhemmmmmmmmmmmm).

As if the real estate market needs another black eye...

People are resisting making purchases of property in areas where they will be forced to do more driving than they are already doing. The new trend that I am seeing with buyers is that they want to be closer to work. Especially in Los Angeles where one can easily spend 20% of their day in the little cubicle that us Angelenos call our cars. These days I am personally spending $4.65 /gallon here in the South Bay/Beach Cities area. I remember not too long ago paying under $2 / gallon. The new debate is now about drilling in some of these environmentally protected areas that have been under moratorium since 1981...We will see how that goes. I am not holding my breath.

Maybe in the year 2030 when gas is $9.95 / gallon and my kids are belly aching about fuel prices I can pull out the old, "I remember back in 08'..."

Escrows Crumbling Like a Game of Jenga

For the second time in as many months, I cancelled an escrow for a client. Many of the reasons that buyers bail out these days stem from the uncertainty in the market. People are scared of shooting themselves in the foot financially by purchasing now when values could very well dip further than they already have. That in addition to the tightening of the screws in the mortgage industry, has slowed the market to almost a stand-still.

Investing in Real Estate is a gamble...It always has been a dice-roll, even in an upswing market. If it was so easy to make money buying and selling property, everyone would do it. Now more than ever, buyers need to make calculated decisions on the property they purchase and the price that they pay...My clients think they will be able to purchase the same home in a year or two for 10-20% less than the dollar amount that was on the table when they decided to withdraw their bid. Time will tell...

The United Arab Emirates

Dubai is where all of the action is these days. If you are a builder and you want to play with the big boys, then take a trip to the United Arab Emirates. All the key players are leaving the states and moving international with their investments. This location is so hot, and so well located that most builders are calling this a sure thing. I have had first hand dialog with a developer that has quadrupled his investment in just six short months. All you have to do is have the courage, know how, and resources to make the dream become a reality.