Posted in Real Estate

Your Big Why and Planning the Future

A while back at an event I got the opportunity to sit across from a couple of brand new investors. As I usually do, I asked them what they were investing in; they admitted that they were newbies and weren’t really sure where to begin. We discussed their level of knowledge and expertise, and I found the conversation drifting away from real estate and more into the lifestyle design arenas. I started asking them about their “Big Why” – why were they wanting to leave their corporate jobs, what they wanted to do with their time, and what would make them happy.

We started putting a dollar value to that lifestyle and level of comfort. I saw their eyes get a bit wide as the reality of what they were up against hit them. I quickly reassured them that real estate was a great choice to attain the lifestyle they envisioned if they were willing to work hard and put in the hours, but how? We didn’t get into too much detail on the spot, but we talked about breaking those big goals down into time frames and smaller milestones. We discussed assigning how many and what type of deals could get them to those milestones, as well as what were they comfortable doing and how their personalities would help them to achieve their goal. They made notes on what types of marketing and how many offers they would have to make each month, week, and day in order to acquire the number of properties to hit their goals.

We then went back to their “Big Why” and discussed if it was really big enough. By that, I meant to talk to them about whether their choice to pursue real estate would be big enough to get them up and out of bed every day? Big enough to push them to tackle that daily task list? Big enough to hit those smaller goals knowing that as each milestone is hit that they are that much closer to the lifestyle and freedom they want? They made some more notes, and I think they had some talking points to consider as they pursue their real estate vision.

So what is your “Big Why”? Why are you a real estate investor? Is it big enough to get you out of bed each morning with a smile on your face, ready to face the day? Is it big enough to motivate you after 3 months of busting your butt without finding the right deal? This isn’t something you can come up with overnight if you haven’t spent any time on it already, so let your mind wander. Dream big! Dream really big and write it down. Look at it every day and see yourself living that lifestyle. Then break down how you will get there. Get really specific, all the way down to daily tasks. Now you’ve put goals and milestones on paper and you have created a map showing you how to get to that big dream and lifestyle you desire.

To be honest, this isn’t easy. The dreaming part of this puzzle may be easier than identifying the “Why”, especially when you analyze and determine if your “Why” is a solid vision to which you can remain dedicated. Nevertheless, I promise, if you work hard to identify the “Why”, develop your vision, and stay focused, you will be set up to achieve the vision you set for yourself.

Posted in Real Estate

Rookie Mistakes To Avoid When Investing In An Apartment Building

An apartment building can still be a good investment today. Why? For starters, there are still a lot of people who are still looking for homes to rent. In addition, the units of an apartment building do not just have to be spaces for residence or homes for families and individuals. By getting the right permits, units in an apartment building can be rented out as commercial spaces.

First-time buyers of apartment buildings will certainly have high expectations regarding this particular investment. This is mainly because they will invest a significant amount of money for this venture. As such, if you want to make sure you will own the right apartment building that can help you find success in the field of property rentals, make sure you avoid these common (and costly) rookie mistakes:

Not looking into the history and reputation of the apartment building’s builder or developer.

As a first-time owner of an apartment building, the last thing you want to happen is to stumble upon some structural problems or system failures. As such, it is important to check the background, capability, and reputation of the company that constructed the whole property. Going online and asking companies or individuals that have worked with the property developer is a good way to get some ideas about their competency. If the property developer has a good reputation and has stellar reviews about the properties they built, chances are, it is quite safe to buy a building that they constructed.

Buying a property that is located in an unpopular area.

When purchasing an apartment building, keep in mind that aside from your budget, an important factor you have to consider is its location. Real estate experts say that it is a good idea to buy a property in an area that is improving since buying in a declining location will simply result in high vacancies and rent drops.

Not having sufficient cash flow and reserves.

As a newbie investor, if you are not confident with your reserved funds, you have to get into deals that will create a quick cash flow only. Avoid going into deals that won’t provide a cash flow from day one even if that transaction promises a huge potential profit since you may be put at risk of being unable to pay the bills.

In addition, make sure you have enough cash reserves. Failure to do so can get you involved in different complicated situations. As a property owner, keep in mind that a lot of unexpected issues can happen. As such, you need to have a reserve fund that is adequate to pay for these emergencies.

Posted in Real Estate

The Power of Momentum

3 Steps That Will Guarantee Your Success

I am a big football fan. I watch every Bronco game, and the one thing that really stands out to me week after week is that momentum can often times win or lose a game. When a team can get the momentum on their side and stay motivated and consistent, they should always win the game. They only lose if the momentum shifts. Real estate is no different.

Once you get the momentum, you need to stay motivated. When you start to experience success, the last thing you should do is take it easy, which is probably what you will want to do. It is a good idea to reward yourself for your success, but do that and come back focused.

Sometimes it is hard to get the momentum in your favor because you are not sure what activities will get it going. Momentum always starts with a single success and builds from there; and it should be able to build as your confidence goes up. You should feed off your accomplishments. Here are three sure fire steps to get momentum in your real estate business.

Set your goal

This needs to be a short term goal that is challenging but realistic. Short term is thirty days or sixty days at most. An example would be to have a house under contract in the next thirty days.

Believe you have already accomplished your goal

I cannot overstate the power of this. You will accomplish the goals you believe you can, or better yet, believe you already have accomplished. The concept is simple, but the implementation is challenging. If you have never done a deal how can you believe that you will have one in the next thirty days? There are several strategies for this, but something that I have used with a lot of success, are affirmations.

Affirmations are statements that are repeated to yourself over and over until you believe it to be true. This works best when the statement is specific, personal, in the present tense, and positive. It is even more affective if the statement includes the goal as if you have accomplished it with the steps you took to get there. Here is an example of a statement that could be used to get a deal in the next thirty days:

“I got this house under contract that will net me $30,000 within a thirty day period by calling at least ten potential sellers every day from lists including, FSBOs, FRBOs and foreclosures.”

Once you have structured a quality statement print it out and put it in your car and one on the bathroom mirror. Say it out loud at least fifty times a day.

There are entire books and home study courses teaching this stuff, and all of it works. I recommend studying the law of attraction and picking up one or two strategies that works for you.

Massive action

Do ten times as much as you think you need to. If you think you need to knock on twenty doors a week or make ten calls a day, do that, but also send out mail, put up signs, call all potential referral sources and go to networking meetings. Focus all of your energy on accomplishing this one small goal.

To me, massive action means not watching any TV, not hanging out with friends, and not going out to eat. To me, massive action is working long and hard hours on productive activities. To me, massive action is doing what others are not willing to do. I know this is harsh, but it is temporary and could be necessary to get the momentum going. I like to compare this to flying a plane. The plane takes ninety percent of its energy to get off the ground but once it is in the air it stays consistent and gets results.

Once you accomplish your goal, set another one and do this process again. The momentum will build and once you have it you just need to maintain. While you maintain the momentum you need to stay consistent with your activities. I want to be clear that maintaining is not the same as massive action and you will not be working as hard, but if you feel the momentum start to slip, I suggest starting the process over again. It is really amazing how easy success comes when you get momentum that you can build on.

Posted in Real Estate

Luxury Real Estate’s Technology Boom

These days it seems as though technology advances at the speed of light. Blink twice and the next breakthrough is available. It’s not just about phones or computers-cutting edge technology is now available in every field to make life easier. Nowhere is this more evident than in the luxury real estate market. Innovations can be found in every room of the house. From state-of-the-art security systems to tech-laden bathtubs, the high-tech home is the new dream home.

The smart home is arguably the most influential development in home technology. The idea of controlling various systems (such as lighting and heating) remotely has been around a few years now, but more products are now available that integrate into the connected home network. Home security systems, door locks, and smoke and carbon monoxide detectors can keep you safe, while programmable thermostats, window shades, and beds keep you comfortable. There are also products to keep you entertained, such as TVs, sound systems, and lighting. Refrigerators, ovens, and crock-pots are all operable with a push of a button. Imagine riding home from work in your self-driven car, making sure your lights are on, the kitchen is a comfortable 73 degrees, and your dinner is ready the minute you step in the door.

Some homes are outfitted with technology down to the studs. With smart glass, your windows can darken themselves or turn into a movie screen. Other options include solar-thermal cladding to reduce heat loss, self-healing concrete so your driveway never gets a crack, and anti-bacterial tiles to keep your bathroom squeaky clean. Even building materials themselves are advancing with the digital age. Homeowners want it all when it comes to technology, and contractors and builders can provide it for them.

Smart homes are climbing to the top of “must have” lists around the country, and many sellers are ready to deliver. In fact, in a survey of more than 500 luxury real estate agents, 60% said they are seeing more smart home features in listing descriptions than two to five years ago, with agents also noting these features help sell homes faster. High end now means high tech-an oven ought not be just stainless steel; it must also let you adjust the temperature from across town with your tablet. There’s no better, or more desirable way to deliver the comfort and extravagance of luxury real estate to buyers than with smart, up-to-the-minute technology.

Posted in Real Estate

Strange Trends in Real Estate

For most people, the word “house” conjures certain images found in childhood drawings. If you have a building with mostly right angles, a single front door, a few chest-high windows, and a chimney, you’ve probably got a prototypical home. However, real estate is a changing field, and people are seeking unique housing options that don’t quite fit inside the box.

Tiny Houses

By all definitions, tiny houses possess most of the features of their more spacious counterparts, just in a much more condensed way. A favorite in both rural and urban areas, tiny houses are as much a choice in dwelling as a statement of one’s principles. While there is no presently agreed-upon size restriction before a domicile is no longer “tiny,” 500 square meters is an accepted point in some circles. Got a few too many boxes of t-shirts weighing you down? Tired of walking such great lengths to get to the light-switch before bed? Trying to keep your real estate tax down to a minimum? A tiny house might be for you.

Passive Houses

Not entirely in another world from tiny houses, passive houses are for those trying to reduce their environmental impact. Less a set of aesthetic rules and more an internal set of standards to maximize energy efficiency, this enterprising style is making considerable in-roads in the real estate market. Originating in Germany in the late 1980s, the style has slowly found a niche amongst people with a penchant for all things “green.”

Staples of these energy-efficient dwellings are superinsulation, airtightness, advanced window technology, solar techniques, and many others. Passive houses incorporate the entire system of real estate, so even the landscaping is efficient. For example, trees that shade parts of the dwelling appropriately and wind-reducing hedges can be a part of the design.

Treehouses

Perhaps living in trees will never constitute a substantial amount of the real estate world, but there is no question that they are gaining popularity. From increasing prevalence as an airbnb destination to a full-time paradise for more intrepid souls, life in a treehouse offers a lot of simple perks, as well as some drawbacks. Clearly for the more adventurous, many treehouses are entirely off the grid, and many of them are not quite up to code. Even a cursory internet search will reveal numerous forums on the subject of whether or not certain dwellings are legally allowed to be inhabited. Treehouse owners have to contend with being mindful of protected trees, wildlife protection acts, and other tight restrictions. If all of the criteria are met, however, the resulting home is something of a nature-lover’s paradise.

These alternative designs and ideas scratch the surface of present trends in housing. While they aren’t likely to replace conventional homes any time soon, they might be an indication of where things are headed.

Posted in Real Estate

4 Advantages of a Virtual Doorman System

Virtual doormen are fast becoming a popular alternative to hiring a regular physical presence for many commercial properties, and their popularity is also rising for residential buildings. The reasons for this are numerous, as are the many advantages that this kind of service can offer.

Although there are several concerns that people may initially have with this kind of remote solution, the reality is that if put in place effectively, people can benefit from the following plus points that automatically come with adopting this kind of system.

Firstly, one of the main advantages of a virtual doorman solution is that it is far less expensive than hiring a physical presence when it comes to commercial properties. Many commercial buildings like to have a physical security presence, but in some cases this can be costly for something that is not entirely necessary.

A virtual system is a more affordable option as it involves only using the service when someone tries to enter a property to make a delivery or carry out some other necessary task. A link is established by video and audio so that identification measures can be made before access is allowed; this means that no full time staff member needs to be employed to complete this identification task.

A second major advantage is for tenants, rather than commercial building owners or users. Millions of parcels and packages are attempted to be delivered each year, yet often the tenant is not present to accept the delivery and therefore this results in a failed delivery.

This is especially important considering that so many people do their shopping online these days, meaning more and more parcels are being delivered at hours when people are at work or at school. A virtual doorman can assist in this instance, allowing parcels to be delivered first time, every time.

This can save a great deal of time and stress, especially if the delivery is urgent. Many residential property owners looking to improve the experience of their tenants would be wise to consider using this simple and highly convenient solution in their buildings.

Another major advantage is that this type of system can actually be used for different reasons other than allowing access for deliverymen. Although the delivery of packages and parcels is a major issue for many tenants, so is allowing repairmen to enter the building for work, or allowing access to emergency services.

A virtual doorman solution can assist in both of these two cases, and in fact entry to a property can restricted in any way that the building owner likes. This can involve using more or less stringent security checks, and can allow access for any number of reasons. This tailored approach can be very efficient in allowing repair work to be carried out or allowing emergency services in during a crisis.

Fourthly, a major advantage of this type of system is that it allows building owners to take advantage of the latest technologies, which are improving each and every day to be safer and more secure. The aiphone intercom systems now used in virtual doorman services mean that identity can be checked in a number of ways.

These technologies are sure to improve in the future, which means that investing in this type of system now can only bring further security gains and advantages in the coming years too. This is another convincing reason why choosing a virtual doorman could be a great choice for modern day property owners.

These are just four of the major advantages of investing in a virtual doorman service. From allowing commercial property owners and tenants to gain significant benefits in the way of allowing access to deliverymen, repairmen and the emergency services, the popularity of this solution looks likely to grow in the future too.

Doorman24 is a service provided by Visentry LLC and is a result of 12 years of experience in remote video and audio monitoring. Visentry LLC was founded 12 years ago by experienced security professionals to address the needs of businesses for cost-effective services for perimeter, asset, data and critical infrastructure protection. Visentry introduced a unique and groundbreaking service, named Virtual Sentry, which delivers around-the-clock, real time remote video and audio monitoring service. Virtual Sentry integrates “intelligent” video and audio technology with the most comprehensive central monitoring station. Based on its experience with Virtual Sentry which is presently installed at hundreds of customers, Visentry developed Doorman24 to provide an affordable and technologically advanced solution for remote access services for residential and commercial buildings.

Posted in Real Estate

Residential Log Cabins Offer Great Summer Fun

Residential log cabins have become extremely popular lately. It seems that simplicity is making a comeback in an age of interconnected clutter. But what is it about residential log cabins that attracts so many people? For the majority of us, these cabins offer a vista into the world of minimalism. For any summer traveller looking to get away from it all, this is a perfect world to enter.

Enjoy nature inside and out

Whether it’s fishing, hunting, hiking or just enjoying the warm summer air, a residential log cabin will be where you want to go. It offers a pleasant retreat from the day’s activities, and when evening comes, you’ll love the wooden atmosphere as you settle in for the night. The natural interior makes you feel at home in a world where so much of living is manufactured. You have the perfect place to find peace from the constant noise and movement of modern day life. You can enjoy your world at a slower pace and make sure that you don’t miss a thing.

Summertime is, for most, the only chance we get to break outside of the workplace and drop into nature. Residential log cabins are the perfect place to spend long summer nights with those you love. They offer small, quaint style at an affordable rate, and they bring traditional class with a modern flare that you can customize. Most people love the rustic façade, but who’s to say the interior should follow suit? In a residential log cabin, you can feel free to add your personal touch and fulfil your wildest interior design dreams. Just peruse Pinterest for five minutes, and you’ll be swamped with brilliant décor ideas.

Holidays are better with a residential log cabin

Residential log cabins can make for a great destination holiday with cabins strewn all across Europe. But for those who might already own a good plot of land, building your own cabin won’t take too much trouble, either. Of course, if you aren’t up to the task of chopping your own logs, there are plenty of contracting companies who will survey your plot and build you your dream residential log cabin very quickly and at a fraction of the cost of a traditional brick and mortar house.

Do you have a tight holiday budget? Residential log cabins can be rented or bought, but neither option is going to break the bank. Unlike lavish country summer homes, residential log cabins offer just enough space for what you really need. Most cabins register in the range of 6m by 11m, though you can certainly find options larger or smaller in order to accommodate your needs. Residential log cabins are either fixed or mobile, but even the mobile models can fit four bedrooms, an en-suite, a lounge, a kitchen, and a dining room. More economical living quarters means more time together as friends and family and less time spent paying energy bills or cleaning the empty spare bedroom.

Making the right choice

With the demand for residential log cabins so high, the hard part is choosing what you want yours to look like. You can definitely opt for the traditional A-frame style, or you can take a modern twist and find something that is a little more elegant, striking, or charming. Some designs allow for plenty of natural light, allowing you to bask in the sunshine (which is the reason you took a summer holiday in the first place, right?), and others bring out the sights and sounds of the woods, making you feel as if you’re in the middle of a thicket.

Unlike the draughty old wooden homes of yesteryear, modern residential log cabins are built with your comfort in mind. Though the classic single-layer wooden wall is still available, those who want to live year-round in their cabins have the option to build them with a dual-layer wall, or “twin skin,” with up to 50mm of insulation between two wooden walls. This ensures a healthy, comfortable temperature no matter what the weather is like outside. And speaking of weather, Mother Nature can’t harm a well-built cabin as much as a traditional concrete structure. Residential log cabins are sustainable and durable through heat, snow or rain. Some traditionally built cabins have been standing for over 300 years. Talk about reliability!

Residential log cabins also require a fairly low amount of maintenance, which means that they will not demand too much of your time. You’ll be able to relax more often than you will have to work to keep your house in good shape. The natural strength of the wood protects it from the common elements far better than brick or concrete homes. Most residential log cabins call for limited preparatory maintenance just before winter, but beyond that, nature will not distract you from what you want to do most.

People who have the pleasure of owning and living in log cabins have described them as inviting and warming. Others have said that hey evoke peacefulness. For some it’s the smell of fresh perked coffee and baked bread that comes to mind whenever they’re inside. The other most appreciated feature is the ability to incorporate a truly personal decoration style ranging from very rustic to modern/contemporary. As for visitors who get to spend some time with their friends living in the woods, they compare it to paradise, and the proud owners agree as they could not imagine living anywhere else.

So many people love their residential log cabins, yet despite all the praise they get, these cabins seem to be one of the best kept secrets of summer fun. If you haven’t given much thought to the idea before today, now is the time to seize the opportunity and find yourself a summer residential log cabin. You never really know what it’s like to live, sleep, and dine in a cabin until you’ve experienced it first hand, and once you enjoy a few nights away from it all, you’ll have a tough time going back to reality.

Posted in Real Estate

Time to Get Out of Real Estate

Talk about exquisite timing.

Even today, a decade after the fact, the leveraged buyout of Equity Office Properties Trust remains one of the largest of all time: $36 billion for nearly 600 office buildings in New York, Washington D.C. and dozens of the nation’s largest cities.

But in late 2006, some wondered if the billionaire who sold the REIT was being a little rash. After all, the real estate boom was in full swing, and the S&P 500 was primed to hit new all-time highs. “Is he cashing out too early?” asked a Bloomberg headline when the deal was announced.

We all know the answer, of course.

Billionaire Sam Zell deftly sidestepped the coming real estate carnage. Then, with prices at generational lows a few years later, Zell bought hundreds of apartment complexes at dirt-cheap prices.

And today? Well, that’s the ominous part…

Once again, Zell is selling his real estate holdings. Last fall, he unloaded a quarter of his portfolio, buildings totaling about 23,000 rental apartments, to Starwood Capital Group for more than $5 billion.

Zell next sold off apartment buildings in South Florida and Denver, with complexes in Phoenix, Boston and other metro areas expected to be sold before the year is out.

“No one has ever accused me of not being a realist,” Zell told CNBC’s talking heads recently.

Reality Bites

Few things are more real than the threat of rising interest rates. Concerned about the Fed’s late-to-the-party threats and distorted capital markets drunk on years of zero-interest-rate policy, Zell is getting out while the getting is still good.

In the past few months, new-home sales hit their highest level in eight years. Pending home sales rose by the largest percentage gain in a decade.

Even home flipping is back in vogue again. RealtyTrac, measuring 2015 data, estimated a 75% increase in active home flippers – the highest since 2007.

Nationally, the average gross profit on a flipped home was $55,000 – the largest since 2006.

But for the realists like Zell, the widening cracks in the facade are plain to see.

For instance, apartment rent is starting to come down in New York and San Francisco – two of the hottest markets in the country. There is simply too much supply and not enough demand.

A few weeks ago, the head of the Federal Reserve Bank of Boston warned about overheated speculation in the commercial real estate market. “We care about potentially inflated commercial real estate prices,” said the bank’s president, Eric Rosengren, “because they might risk a bout of financial instability.”

Translated from “Fedspeak,” Rosengren was saying: Get out now.

Even those ultra ultraluxury homes in the $100 million and up range aren’t selling. It’s a rarefied market, for sure, but The New York Times recently noted that a record 27 properties, each with a nine-figure price tag, are languishing unsold on the market. According to figures kept by Christie’s International Real Estate, 19 such homes were on the market in 2015 and 12 in 2014.

Late last year, I wrote about one of those massive palazzos here in Florida – the beachside $159 million, 60,000 square foot Le Palais Royal. It’s still for sale.

Perhaps the extra gold leaf they painted on the front security gate will help.

Beware the Peak

I can’t see Sam Zell taking up residence in Le Palais Royal. But then again, he sold his office properties in 2006, and watched the market crack wide open a year later. Now he’s unloading his real estate portfolio again, so, who knows?

If history repeats, Zell just might find his next great distressed real estate bargains in the palatial homes of the (once) superrich – dazzling jewels of the “new” gilded age now past its prime.

Posted in Real Estate

Real Estate Statistics Explained

Basic Real Estate Statistics Explained

We are going to define some of the basic real estate statistics that get thrown around on a regular basis. To do that, we will use one real estate market, located in Hood County Texas. Even more granular, we will use the single family numbers for homes in Granbury Tx, a small town of approximately 8,000 residents which has seen substantial real estate growth in the past 12 months. It is important when reviewing real estate statistics to use a group of numbers large enough for consistency, but granular enough to tell your story.

The statistics that we will be referencing are true and accurate for the year discussed but are being used to define the real estate statistic itself.

We have chosen Granbury Tx as our example because the growth of the local real estate market there make the statics stand out.

Anytime you are evaluating statistics, especially in real estate, the source of the numbers are extremely important. In most instances, the MLS (Multiple Listing Service) provides the most accurate numbers when referring to real estate. This is because they have all listings by all local real estate brokers in their database. For the sake of explanation of the data, we will be looking at the numbers for home sales in Granbury Tx, directly from the MLS. These numbers are meant to give an example of how to read the statistics themselves. Anytime you evaluate real estate numbers, its important to pay close attention to how the numbers are gathered. In this instance, we will be using ONLY single family properties in the city of Granbury.

Basic Real Estate Statistics

    • Number of Sales – This one is pretty self explanatory. It is simply the number of single family homes sold in a particular month. In January of 2015, they had 51 single family homes sold. One thing to pay attention to when looking at this statistic is are they using the Under Contract date or the day the property actually went to closing. These two dates are usually between 30 and 60 days apart, so its critical that you know which one is being referenced. In addition, many of the homes that get calculated, if you are using the “under contract” number may not actually close! In our example, we are using the number of homes that actually closed. In January of 2016 they had an increase of over 49% which brought the total to 77 from 51. Growth of that level is very seldom ever seen.
    • Sales Volume – Sales Volume is simply the total amount of dollars spent on single family housing within that month. Once again, when reviewing this statistic, its important to keep the property types consistent. If you are comparing two areas to see which one has grown more and you include vacant land in the number for one area, you must include it in the other too. As previously mentioned, our examples only include single family properties. With Number of Sales looking at the units, you would expect the Sales Volume to go up appropriately, but in this instance, it went up even more than the units (by percentage). The total Sales Volume of single family homes in Granbury in January of 2016 was $15,191,500 as opposed to the January of 2015 number of $9,281,915. That is an increase of over 63%. Because the Sales Volume went up at a larger rate than the number of units, this reflects the average home sale being much larger in 2016 than 2015.
    • Months of Inventory – This is a commonly referred to statistic when examining a real estate market. This statistic refers to at the current rate of sales, how long will it take to sell through the existing level of inventory. This reflects the supply and demand for the market. In our example, in January of 2015 the level of inventory was 9 months and in January of 2016 it had dropped to 6 months. That is a 33% drop in available inventory! This means if you are looking to buy a home in Granbury Tx, it will be a little tougher in 2016 as there is less inventory available to buy.
    • Median Days To Sell – This stat simply refers to how long it takes for single family properties to be put under contract. Don’t let the “to sell” confuse you. To accurately show the demand for active homes, you really want to track how long it takes to go “under contract”. The process of acquiring final lender approval, insurance and getting to a closing can vary on a variety of factors. In January of 2015, the Median Days to Sell was 88. That number dropped by over 30% to 61. Once again, this tells you if you are looking for homes in Granbury TX, you better get your offers in quickly as the most desirable homes are going fast!
    • Average Price – This statistic can be derived in a variety of ways. We are going to use it in its most raw form and simply be the Average Price of Homes Sold within that month. Be careful when looking at this statistic printed anywhere as how the user defines the date sold can vary. Needless to say, Average Price can be used for active homes for sale or for the homes that sold. The Average Price of ACTIVE homes for sale is generally a pretty useless number as you can list a home for any price, without any possibility of it ever selling. Many homes listed for sale are at unrealistic prices thus the Average Price of Active homes for sale can fluctuate dramatically and give little insight into the market. You will want to look at the Average Price of SOLD homes. In January of 2015, the Average Home Sale was $181,998 and it jumped to $199,888 in the same month in 2016. This is an increase of almost 10%. This is not a number that truly tells the increase in home values across the board, but simply of the homes sold in that month, what the average was.
  • Median Price – The Average Home Sales Price can be skewed by a variety of factors. All it takes is one 5 million dollar home sale to throw those numbers off. To get a better view of the overall increase in value, it can be better to look at the Median Sales Price. Median Sales Price takes the number that is perfectly in the middle. For instance, if you have 11 homes that you are using in your statistic, you would take the sales price of the 6th one. This leaves 5 homes sold higher and 5 homes sold lower. In this instance, they are pretty close as the Median Sales Price increase from January 2015 to 2016 was 9.69%. This shows that we didn’t have the Average Price skewed too much because of an extremely large or extremely small sale.

There are hundreds of ways to look at the same numbers, when referencing to real estate, so be very careful to read the fine print on exactly what numbers they are using. When making comparisons, you will want to make absolutely sure that both are referencing the same property types, dates etc. It like the old saying says… there are lies, damn lies and statistics.

Posted in Real Estate

Pressures That Dominate Real Estate Value

When people usually think of real estate value they think of two forces; supply and demand. Yes, this is correct; however supply and demand only fall under the one of the four main categories that drive/depress real estate value. Supply and demand fall under the economic category of influences in real estate value. The other three include; social impact, government subjection and environmental forces.

When looking at social impact, there are a few things one would want to consider determining the effect it will have on real estate value. Most of all the value would fluctuate accordingly with population characteristics. This tie into the potential for demand in the economic section of value; the more demand, the more value a property can derive. Population however should be looked at in more depth by breaking down the sample by age and gender, rate of household formation and partition, as well as analysis of the social values such as education, law and order, and lifestyle preferences. Careful consideration of these factors will help establish trends in what would be reflected in real estate values.

Next is the government subjection, accounting for a large aspect of real estate value. This includes political and legal activities on several levels of government. These government influences have the power to overwhelm natural market forces such that you would find in the economic category. Government has their hand in providing facilities and services that affect values as well as a one of the main contributors to patterns of land use (zoning, by-laws, etc). The following are some things to look out for when assessing the government subjection of a market; fire and police services, garbage collection, transportation arrangement, utilities, zoning, building codes, health codes, and fiscal policies. Also the legislation that is set forth by the governmental factor must be accounted for, this would include; rent control laws, rights to farm, rights for managing forest, rights to agricultural land, restriction on ownership, new development laws, control of hazardous and toxic materials, and laws affecting investment power, loan terms, and mortgage lending institutions. All in all this is quite the category and its understanding will provide for a great idea of where values are currently and where they are headed.

In addition to the social impact, as well as government subjection, the environmental forces also play a part in real estate values. These can be natural or man-made and are analyzed by observing several aspects. Climatic conditions (snowfall, rainfall, temperature, humidity) would be an obvious one that would affect the values of building somewhere as well as maintenance and carrying costs, as well as the quality and type of build. Topography, soil and consideration of any toxic contaminants would also be of great importance as well as natural barriers, such as rivers, mountains, lakes, etc.

Just to get out of the 4 factors of real estate value; it is important to mention that there are some overlying factors that would be part of 2 or more of the categories. Once such factor is location, this is the link of a property in time/distance to any given origin or destination of a resident/user of the property. Location could fall under for environmental and economic, if not all categories. Due to the area and property type, properties access to public transport, schools, hospitals, stores, employment, suppliers, recreational and cultural facilities, parks, and places of worship would of importance.

This would also lead us back to the economic factor of influence on real estate value. The fundamental aspects to look for here include: employment, price levels, wage levels, industrial and commercial expansion, mortgage credit availability and cost, stock of vacant property, stock of improved property, occupancy rates, construction costs and rental/price trajectories of existing properties.

And there you have it, the 4 major pillars of real estate value; social, governmental, environmental, and economic. Taking a deep look at each of these sections one would assemble the entire spectrum of current real estate values and more importantly future real estate values.