Real Estate Ramblings

Thanksgiving Weekend Leftovers

James Yoakum (Brown McKinney Real Estate Company) — Mon, 30 Nov 2009 07:40:59 -0600

I'm just back from a very nice Thanksgiving back home in Kentucky, and as I catch up on the latest news in the world of Philadelphia real estate I thought I'd link to some of the most interesting things that I'm reading so you can catch up on what's been happening as well.

1. News of the tax credit expansion is getting out and you may have questions about it - get some of them answered here and call me if you have more - there's no time to waste if you want to get this credit, I wouldn't expect them to keep extending it forever.

2. Interest rates are still crazy low - the national average for a 30-year fixed mortgage is 4.82%, and it's even lower (4.32%) for 15-year fixed rate loans which I think are a great option for buyers who can afford slightly higher payments and want to take a more conservative approach to homeownership. In the Philly area TDBank is quoting a 4.625% 30-year fixed loan and offers even better rates for certain qualified buyers.

3. Depending on which report you read and how you read it, national home prices in September either rose slightly or drifted along flatly. With the holidays coming up I would expect limited transaction data to lead to a few more months of inconclusive data, with big swings due to the rush to close before the tax credit's original expiration date of 11/30/09 (it is now extended through April 2010). Once we start seeing January and February 2010 data we should have a better idea of whether housing is going to start the long slog towards recovery or remain weak due to continuing high unemployment and weak overall economic growth. Retail sales numbers for the holiday season will provide an early glimpse of comsumer sentiment that may foreshadow housing market performance going forward.

4. The cautious return of the Commercial Mortgage Backed Securities (CMBS) market (Example 1 and Example 2) is a good sign for commercial real estate, but there's still a long way to go before fundamentals justify jumping head first into anything but the most conservative commercial deals.

That's my news update for so far - let me know what issues are jumping out as the big drivers in real estate going into December and 2010, it's the time of year to look back at what we've learned and get ready for what's coming.

Considering Real Estate Investing?

James Yoakum (Brown McKinney Real Estate Company) — Mon, 16 Nov 2009 16:15:11 -0600

If you've ever stayed up late watching infomercials and thought "maybe I could make millions in real estate..." then you'll appreciate this website: www.landlordmentor.com. It seeks to provide much of the information that you would learn from the Real Estate Riches style programs without any of the gimmickry or sales pitches (it's a purely free, informational website written by a guy in Texas). While the site doesn't claim to be for everyone, it does give you in depth information about one successful investor's experience and does a good job of setting expectations at the right level - specifically that you can make lots of money in real estate, but it requires hard work and dedication, just like anything else. I also think the way this investor writes is much more entertaining than most used-car pitch get rich quick programs.

I'm still working my way through the website now, reading what he has to say and thinking about how it does or doesn't apply to the markets I work in (mainly Philadelphia). I'd be happy to discuss the finer points of real estate investing and the particular things to watch out for in the Philly market with anyone who's interested, just give me a call or email.

A Second Chance for First Time Buyers

James Yoakum (Brown McKinney Real Estate Company) — Mon, 16 Nov 2009 10:14:24 -0600

Over the past couple of weeks events have conspired to give first-time home buyers a second chance at snagging the deal of a lifetime! First the $8,000 tax credit was extended through April 30th of 2010 and expanded to include a tax credit for some repeat buyers, letting them in on the fun a bit as well. Additionally, mortgage rates have again dropped solidly below 5% - one banker I work with is quoting 30-year fixed-rate mortgages at 4.875% this morning, and they offer even lower rates for qualified first time buyers. Finally, there is still an abundance of housing inventory available, at least in the Philadelphia neighborhoods where I work. Everything from bargain-basement fixer-uppers and distressed condos to fully renovated or new construction townhomes, duplexes, or triplexes.

If you've been on the fence about buying or if you thought you missed the boat think again. I'd be happy to discuss your personal situation and help you decide whether or not it makes sense for you to buy in this once-in-a-lifetime market.

Investors Coming Back... Did They Ever Leave?

James Yoakum (Brown McKinney Real Estate Company) — Wed, 11 Nov 2009 13:43:15 -0600

According to a survey from Move.com the percentage of homebuyers who classify themselves as investors has doubled since March - going from 5.6% to 12.1%. While we could certainly argue about their survey methods and definitions of investors, I think that this survey does capture the general trend of investors 'coming back to the market' after a period when it just didn't make much sense for many smart investors to be closing deals. It's not that the investors went away, or weren't looking for deals, it's just that they couldn't actually get to the closing table.

Now the number of deals that make sense is increasing, for at least two reasons. One reason is that investors are getting a better sense of when and how the economy will recover. For several months late last year and earlier this year the economy looked like a bottomless pit and when you can't predict future economic growth it's hard to be confident enough to invest even at fire-sale pricing. The second reason that more investors are getting to the closing table lately is that 'fire-sale' pricing is becoming more common, even if it's still not as common as some would like. This is luring cautious investors off the sidelines. As more distressed owners (often banks with REO portfolios) realize that they are going to be the ones to eventually take a hit they are becoming more motivated sellers, preferring to get out of their real estate positions sooner rather than later.

For the savvy investor we've reached the beginning of the 'bottom' that we've all been waiting for. Start looking now and you should find plenty of great opportunities over the next 6-24 months. When you start to surveys showing that 25-30% of homebuyers consider themselves investors you should probably start slowing down or selling. Part of the reason for the real estate crisis was, after all, that seemingly every-other home sale was to an 'investor,' many of whom ran up prices without regard for basic fundamentals.

Tax Credit Expansion Passes in Senate...Take it to the House!

James Yoakum (Brown McKinney Real Estate Company) — Thu, 05 Nov 2009 12:25:23 -0600

The extension and expansion of the first-time buyer tax credit (now for some other buyers as well) passed through the Senate yesterday and should get through the house and onto the President's desk soon. The details of the expansion are:

$8,000 tax credit for first time buyers extended to those under contract by April 30, 2010 with 60 days to close after that.

Income limits increased to $145,000 for single taxpayers and $245,000 for married couples, with phaseouts beginning at $125,000 and $225,000 respectively.

Eligibility for up to $6,500 in tax credit is extended to repeat buyers who have lived in their home for at least five of the past eight years. These are typically the move-up buyers who will be selling to first-time buyers so this should really help to get the market moving for a few months (and of course lead to a bubble that has to deflate come next summer).

To be eligible for either credit the price of the home being purchased must be under $800,000.

If you're thinking of buying or selling this extension creates a limited-time window where the market should be quite active - strike while the iron is hot.

$100 House...Trick or Treat?

James Yoakum (Brown McKinney Real Estate Company) — Fri, 30 Oct 2009 12:44:52 -0500

It may sound like a trick given that it's the day before Halloween, but this house in Darby, just outside Philadelphia could turn into a treat for a lucky essay writer. The owner is conducting an essay contest with a $100 entry fee - the prize for the best essay a free house. Check out this Daily News article for details.

Tax Credit Extension Still "Tentative" but Hopefully...

James Yoakum (Brown McKinney Real Estate Company) — Thu, 29 Oct 2009 13:32:04 -0500

The latest word on the $8,000 first-time-buyer tax credit is that it will be extended for a few more months, and that it will be at least partially expanded to some buyers beyond just first-timers, although the criteria they're using are a bit weird. The excerpt below is from Realtor.org:

"Lawmakers in the Senate have tentatively agreed to extend the existing $8,000 tax credit for first-time home buyers and also offer a new $6,500 credit for existing homeowners who have lived in their current residence for a consecutive five-year period in the past eight years. Home buyers must be under contract by April 30, 2010, and close before July 1. House Democrats have expressed concern about the cost of the tax credit for the government, and allegations of abuse have resulted in an IRS probe of the program..."

Hopefully they'll settle on something soon so that buyers who are out shopping now will know what they're dealing with, and those thinking of selling will have some idea of what to expect in terms of traffic from potential buyers.

Tax Credit Extension Likely

James Yoakum (Brown McKinney Real Estate Company) — Wed, 28 Oct 2009 09:59:52 -0500

According to Senator Bill Nelson (D-FL) passage of an extension to the first-time buyer tax credit seems likely. The most likely format for the extension will be an extension of the current $8,000 tax-credit program through March 31, 2010. After that the maximum tax credit would be reduced by $2,000 per quarter through the end of 2010. This seems like a reasonable way to ease the housing market off it's tax-credit addiction. It hasn't passed yet, but buyers who are rushing to close by November 30th - the current expiration date - may be able to breathe a little easier knowing that additional time is likely on the horizon.

Home for Sale - 4br - West Oak Lane - $79,900 - Great Financing Available

James Yoakum (Brown McKinney Real Estate Company) — Tue, 20 Oct 2009 11:11:57 -0500

James Yoakum | Brown McKinney Real Estate | 215-825-2250 x.1002

1912 Colonial Street, Philadelphia, PA

End-of-Row West Oak Lane Home - Lots of Space - Charming Block -
Convenient to Everything

4BR/1.5BA Townhouse

offered at $79,900

Year Built	1928
Sq Footage	1,188
Bedrooms	4
Bathrooms	1 full, 1 partial
Floors	2
Parking	None
Lot Size	1,306 sqft
HOA/Maint	$0 per month

DESCRIPTION

This four-bedroom West Oak Lane house is perfect for a handyman owner or first-time buyer looking for a bargain. Needs some minor updating, but is move-in ready. It features three real bedrooms and a fourth smaller bedroom that's perfect for a kid's room or office.

Situated on a quiet, tree-lined block just steps from Stenton Ave. & Ogontz Ave for easy access to shopping, transportation, etc.

Sun-room off the kitchen with southern exposure and access to the private back yard and deck. Great for relaxing on a summer evening. Clean, spacious basement for storage.

Call to learn about great financing options that can make this home very affordable. Monthly payments could be as low as $400. Call James at 267-496-7739 for showings.

see additional photos below

PROPERTY FEATURES

- Central heat	- Hardwood floor	- Tile floor
- Living room	- Dining room	- Dishwasher
- Stove/Oven	- Basement	- Balcony, Deck, or Patio
- Yard

OTHER SPECIAL FEATURES

- Custom sunroom and deck create a backyard oasis!

- Great financing available - Own for less than renting!

- Brand new roof with 10 year warranty!

- A quiet block but close to everything!

ADDITIONAL PHOTOS

Exterior Front	Kitchen
Sunroom & Deck	Sunroom
Bathroom	Dining Room

Contact info:

James Yoakum

Brown McKinney Real Estate

RS305324

215-825-2250 x.1002

For sale by agent/broker

Equal Opportunity Housing

Posted: Oct 20, 2009, 7:57am PDT

Enjoying the Fall in Philly - The Great Outdoors in the City

James Yoakum (Brown McKinney Real Estate Company) — Tue, 20 Oct 2009 10:36:15 -0500

With the Phillies one win away from another visit to the World Series it's easy to enjoy being in Philadelphia this fall. Making it even better are the numerous options for getting outside to enjoy the changing leaves and natural beauty. This online slideshow from Philadelphia Magazine highlights 9 local options for taking in the autumn beauty. Some of these hikes are within some of Philadelphia's most interesting urban neighborhoods, allowing for a day of hiking followed by a night out on the town all within the same zip code. My personal favorites from this list are:

The Schuylkill River Trail - starting at the Philadelphia Museum of Art this paved trail is great for biking or running and easily accessible from Center City, Fairmount, East Falls, and Manayunk. People-watching along this trail is almost as much fun as checking out its numerous sculpture gardens and skyline vistas (on the West side of the river).
Forbidden Drive - easy to get to from Manayunk, East Falls, Mt. Airy, or Chestnut Hill, Forbidden Drive offers a great mix of natural beauty and local history. See where the Battle of Germantown was fought, explore historic Rittenhousetown, have brunch at the charming Valley Green Inn, or if you're brave go for a swim in Devil's Pool. For a more strenuous hike take one of the clearly marked trails leading up into the woods on either side of the Wissahickon creek.
The Manayunk Towpath - located just behind bustling Main Street Manayunk is this historic towpath along the Manayunk Canal. You can follow the towpath from Manayunk through Roxborough and all the way into Montgomery County to Conshohocken and beyond. It's great on foot or on a bike, and you're likely to see fishermen, kayakers, and plenty of fall foliage along the way. If you're thirsty after a long hike Manayunk offers countless options for a refreshing drink, some such as the Manayunk Brewery have outdoor seating right along the canal.

One great place to see nature that isn't on this list is the John Heinz National Wildlife Refuge in Southwest Philly. Even though it's just across I-95 from the airport this 1200 acre preserve can seem miles away from the hustle and bustle of the city. It offers ten miles of hiking and biking trails along with a nature center so that you can learn about the various wildlife you encounter (I've seen turkey, deer, osprey, blue heron, and even snakes). The lake is home to several species of fish as well although my efforts to catch them usually come up short. So, before it gets too much colder get out and enjoy the natural side of Philadelphia.

Philly No. 2 Sports Town in the Nation...Go Phillies!

James Yoakum (Brown McKinney Real Estate Company) — Fri, 09 Oct 2009 13:53:30 -0500

So Philadelphia only managed 2nd place in these rankings of America's top sports towns, but with the Phillies playing in October for the third time in three years I"m not complaining. Too bad the town that beat us out was cross-state rival Pittsburgh! First they host the G-20 Summit, now they're the number one sports city in America? Don't let it go to your heads Steelers fans - the Eagles have a better record so far without even settling on a starting quarterback. Also, when was the last time the Pirates were even worth watching?

What does this have to do with real estate? Nothing really, just wanted an excuse to say GO PHILS! If they keep winning World Series it can't be bad for the real estate market right?

Potty Talk - The Value of Additional Bathrooms

James Yoakum (Brown McKinney Real Estate Company) — Tue, 06 Oct 2009 16:57:22 -0500

This article from Realtor.org says that adding an additional bathroom to a home or remodeling an existing bathroom can be a good investment for homeowners - adding more to the value of the home than the cost of the addition or renovation. This contrasts with many other home improvements that, on average, fail to recoup their costs upon sale.

My experience in Philadelphia certainly supports this article - I find that an extra bathroom or half-bathroom greatly increases a home's attractiveness to buyers. Since most Philadelphia rowhomes originally had only one bathroom, you can set your house apart from competing properties by adding a second bath or even a small powder-room. To be truly valuable though I think an extra bathroom needs to be conveniently located (not in the basement) and big enough to be practical (not a converted coat closet).

If you're thinking of selling soon it may be worth the cost to squeeze a second bathroom into your floor-plan.

Mortgage Rate Hedging a Difficult Task

James Yoakum (Brown McKinney Real Estate Company) — Mon, 05 Oct 2009 08:08:13 -0500

This article from Marketwatch.com discusses using interest-rate-tracking ETFs (Exchange Traded Funds) and options on those ETFs to hedge the risks of mortgage rates rising before home-buyers have locked them in. While this particular approach might not be the perfect solution, today's historically low interest rates do make mortgage rate hedging something that is in high demand from savvy potential buyers who are looking to buy soon, but not soon enough to lock in at today's super-low rates (4.75%!!!).

As this article highlights, a 1-point rise in mortgage rates right now could cost a buyer of a $200,000 home $1,300 per year for 30 years. That's certainly an exposure worth hedging, but the ETF strategy described in this article has two major flaws:

1. These ETFs are not directly linked to mortgage rates and so provide an imperfect hedge against rising rates. Because of this indirecty correllation, this strategy will always have some risk of moving in the wrong direction relative to mortgage rates and making the home-buyers' situation worse instead of better. The fact that rates can rise for esoteric reasons related to the buyers' individual credit and local market conditions further increases this risk.

2. This ETF hedging strategy pays out once - when you sell the ETFs or exercise your options. This is an imperfect hedge against rising mortgage rates that have a negative impact over 30 years. This scheme would need to be combined with a long-term strategy to spread the gains from your hedge out over the life of your mortgage so that these gains can be used to offset higher payments every month.

Of course the simplest mortgage rate hedging strategy may be to simply lock in a rate and buy a home ASAP, although this obviously raises other issues. I'm interested in hearing about any other mortgage rate hedging strategies that may be out there.

Mortgage Rates Below 5% Again!

James Yoakum (Brown McKinney Real Estate Company) — Sat, 03 Oct 2009 07:57:32 -0500

Rates on 30-year fixed mortgages have dropped back below 5%! One local lender that I work with is quoting 4.74% for purchase loans this morning and they usually offer even better rates to first-time buyers. If you're thinking of buying this could be a perfect time - prices are still low but showing signs of bottoming out, there are loads of houses on the market, and interest rates are amazingly favorable. Happy house hunting!

Philly Unemployment Up - Region Still Relatively Strong

James Yoakum (Brown McKinney Real Estate Company) — Fri, 02 Oct 2009 13:28:16 -0500

The unemployment numbers for the Philadelphia region that came out this week don't look great but they could certainly be worse. In Philadelphia county August unemployment rose to 10.5% from 10.3% in July - worse than the national unemployment rate which just hit a 26-year high of 9.8% for September. The Philadelphia region as a whole is doing better though, clocking in at an 8.3% unemployment rate - up just slightly from 8.2% in July. On a county-by-county basis there's pretty big range with a low of 6.6% in Chester County and the 10.5% high in Philadelphia county.

So what does all this mean for the local real estate market? As I've discussed in previous posts, the housing market and commercial real estate markets are both strongly tied to employment and until we start seeing new job creation it's unlikely that we'll see much increase in demand for real estate. Thankfully the strong suburban job markets should provide continued stability to the market and prevent further decreases in real estate activity. Additionally the City of Philadelphia looks like it will avoid major budget cuts and layoffs which would have likely been a big hit to the local real estate market. Overall I'd say we're in for several more months of slogging along at the current slow pace of sales and stagnant pricing. On the bright side - as soon as the employment picture does start to look brighter we should see some of the pent-up demand in the real estate market return to the table.

For further discussion of local employment trends see this article in the PBJ.

The Philadelphian on the Roof(Deck)

James Yoakum (Brown McKinney Real Estate Company) — Wed, 30 Sep 2009 10:58:54 -0500

This article from today's Inquirer describes a couple of nice roof decks in Philadelphia. Roof decks have been a growing trend in Philly for years, and why not - the typical Philadelphia rowhouse is great for many reasons, but an abundance of private outdoor space is not one of them.

I often think about finding a creative way to use to the top of my house for more than just keeping the rain out, but so far I've found it easier to take advantage of my friends' decks and avoid the expense and maintenance involved in constructing my own. My favorite roof deck is one where you can get a good view of 4th of July fireworks and where you can host a good size party without fear of anyone falling off.

If you're considering buying a house with a roof deck a few things to consider are:

1. Many Philadelphia roof decks were built without permits. While it's not a major deal-killer to have a non-permitted roof deck you'll want to know whether or not your roof was built to code. An 'illegal' roof deck could cause issues with insurance claims or roof warranties.

2. Roof decks make roof repairs and maintenance much more difficult and expensive. Be sure that the roof under the deck is in good shape and accessible for maintenance because that's what's ultimately keeping your house dry.

3. As highlighted in the article, if a roof deck isn't easy to access and an enjoyable place to hang out you'll never use it. Don't let a cramped, difficult to reach roof deck influence your housing decision too much. Only truly outstanding and functional decks really add long-term value to homes.

4. Electricity and a small wet-bar on the deck make roof parties much more fun and are more common throughout the city than you would think!

Center City Retail Still Kicking

James Yoakum (Brown McKinney Real Estate Company) — Fri, 18 Sep 2009 10:56:18 -0500

As national retailers go bankrupt left and right and retail real estate owners hustle to maintain profitable occupancy and rent levels, Center City Philadelphia continues to enjoy a relatively healthy retail market. Sure there are still empty storefronts in Center City, but the restaurant scene rivals any other city of comparable size in the country, and national and local retailers continue to open up shop, offsetting the few who have been forced to shut down during this recession. A few of the big names that have recently come to Center City include Barney's CoOp, Esprit, and three new high-end steakhouses - Butcher & Singer, Del Frisco's, and Union Trust. These types of tenants continue to pay rents that would have seemed astronomical just a few years ago, even if they're slightly down from the peak.

The Center City District (CCD) along with several other local business organizations just launched a great website aimed at making it easier for retailers and real estate investors to research Center City Philadelphia and find available retail space for lease. This article from yesterday's Inquirer also provides a realistic, but still encouraging review of the local retail scene.

Center City has a lot going for it, including forward thinking boosters like the CCD who are doing everything they can to attract new businesses. As it becomes clear how our national and local economies will emerge from the recession Center City should provide plenty of opportunities for savvy retailers and the savvy real estate investors who lease space to them.

Chestnut Hill College Expansion - Good News All Around

James Yoakum (Brown McKinney Real Estate Company) — Wed, 16 Sep 2009 09:29:36 -0500

Chestnut Hill College, a picturesque college in the Northwest Philadelphia neighborhood of Chestnut Hill, recently announced plans to expand its campus from the current 45 acres to a total of 78 acres. It will grow its footprint to include the 32 acre property known as Sugarloaf across Germantown Ave. from the college's current main campus. The expansion project will add 10 new buildings, cost $500 million, and allow the school to expand enrollment from 900 to 1,500 undergraduate students.

While some Chestnut Hill residents are wary of the additional traffic and loss of green space that will accompany the school's expansion I think that overall a growing Chestnut Hill College can only serve to bring more life and vitality to what is already one of Philadelphia's most vibrant neighborhoods. Much like Penn did in the 1990's and Temple is doing now, Chestnut Hill College's growth, if well-managed, can serve as a catalyst for growth and progress in the larger Chestnut Hill community.

It sounds like the college is putting plans in place to deal with residents concerns. The expansion will add between 700 and 950 new parking spaces, more than offsetting the increased number of student vehicles even assuming one car per student. The initial plans also call for a 10 acre buffer of green space around the new campus' edge. Initial plans also call for the construction of four new dormitories which should lessen the new students' impact on the rental market in Chestnut Hill. With so many great examples of town-and-gown cooperation right here in Philadelphia I have every confidence that Chestnut Hill College will be able to use the lessons learned by Penn, Temple, and Drexel to expand its campus while simultaneously having a positive impact on its surrounding community.

Sources http://www.philly.com/inquirer/home_region/20090915_Chestnut_Hill_College_plans_major_expansion.html

http://chestnuthilllocal.com/issues/2009.09.10/news1.html

Philly Zoning Code Made Slightly Easier

James Yoakum (Brown McKinney Real Estate Company) — Thu, 10 Sep 2009 13:54:30 -0500

Philadelphia's zoning code is ridiculous. It's a patchwork accumulation of hundreds of years worth of laws piled on top of each other and it's sorely in need of a massive overhaul to make it more uniform and comprehensible to the average property owner, investor, or developer. Not to mention that it's out of touch with the demands of modern Philadelphians who often prefer more mixed-use neighborhoods with a diversity of architectural styles, property uses, and densities.

That said, given that it's not changing anytime soon it's very important to have some understanding of the basics of Philly's arcane zoning rules. The best resource I've found for this so far is http://www.phillyzoning.com. It explains things in plain English, and since it's actually run by a zoning attorney it is always quick to tell you when it might be time to call in a legal expert. Philadelphia zoning is one of the few arenas in which it's almost always worth the cost to engage the services of an attorney if there's any uncertainty whatsoever.

Lots Going on in North Philly

James Yoakum (Brown McKinney Real Estate Company) — Wed, 09 Sep 2009 12:23:05 -0500

Just wanted to bring this great article from today's Daily News to your attention - lots of great information about various developments going on in North Philadelphia. There's also an article in today's Inquirer more specifically about Temple's efforts to recenter its campus along North Broad Street. It will certainly be exciting to observe and take part in the changes taking place in North Philadelphia over the coming years.

Lots of People in Parkside

James Yoakum (Brown McKinney Real Estate Company) — Tue, 08 Sep 2009 16:30:24 -0500

West Philadelphia's Parkside neighborhood is blessed with some of the most beautiful architecture in the entire city, an unbeatable location adjacent to Fairmount Park, and easy transit access to the Center City and University City job markets. Most of the beautiful old buildings along Parkside Ave. date back to the 1876 Centennial Exposition that was held in Fairmount Park and reflect the grandeur and promise of Philadelphia at that time.

In more recent times Parkside has had a rough time, with much of the neighborhood succumbing to abandonment, deferred maintenance, and crime. However a bit of information from this article about the Please Touch Museum, which recently moved to Memorial Hall just off Parkside Ave., gives some reason for hope that the neighborhood may be able to stage a comeback. The article states that in less than a year of operation, 660,000 people have visited the Please Touch Museum. This is great for the museum itself - more than triple the number of visitors it had during its last year at its old location - but may be even better for the Parkside neighborhood as a whole. With this many people coming through the area, investment dollars can't be far behind. The city's attempt to brand the area as the Centennial District and the arrival of the new Lowe's and Shoprite-anchored shopping center at 52nd & Lancaster should also help to create a true sense of place in a neighborhood that's just waiting for a catalyst to kick-start its revival towards its former glory.

Local Govt. as Buyer of Last Resort

James Yoakum (Brown McKinney Real Estate Company) — Fri, 04 Sep 2009 12:53:06 -0500

This article from Globest.com brings news from Florida that local municipalities are finding the bargains in the South Florida commercial real estate market too good to pass up. The town of Sunny Isles Beach (which I visited in May and is absolutely lovely even in the midst of a cratering condo market) recently paid $9.4MM for two commercial properties that it plans to tear down to make way for a new park.

The combination of high demand for more public, open space in South Florida and distressed real estate owners willing to take lowball prices for their properties has allowed several of these transactions to go through in the Miami area. I've also heard talk of similar things happening in California - another area where real estate prices and speculative building soared and then collapsed over the past decade. It's too early to tell whether similar situations will become feasible in less-distressed markets, such as Philadelphia. It's also questionable whether Philadelphia's city budget would allow for the purchase of these types of properties, but there is a lot of federal stimulus money coming to town that will have to be put to some use since its guidelines don't allow it to be added into the city's general fund.

As a property owner or investor, it's good to keep in mind that for the right properties, there's often some price at which a local (or even state or national) government entity wouldn't mind being the owner. Not a bad buyer-of last resort when it works.

More Incentive for Philly Landlords to Maintain their Properties

James Yoakum (Brown McKinney Real Estate Company) — Wed, 02 Sep 2009 13:47:34 -0500

After a recent tragedy in which two people fell from a Center City fire-escape the city's Department of Licenses and Inspections (L&I) is feeling pressure to prevent the same thing from happening again. They announced today that they will be conducting spot-checks on multifamily buildings to look for major code violations and safety hazards. This should be a great incentive for multifamily property owners to take better care of their properties and hopefully will make Philadelphia's tenants safer and happier.

Given the huge number of dilapidated properties in Philadelphia, I think the ideal solution would be for L&I to conduct regular, thorough property inspections of all multifamily properties in the city and strictly enforce safety codes. While this would obviously be a very expensive endeavor for both L&I and property owners, it could pay for itself if L&I sold 'property condition reports' to potential tenants or charged landlords for an 'L&I Seal of Approval' that would allow them to charge a rent premium.

Profiles of Five Successful Investors

James Yoakum (Brown McKinney Real Estate Company) — Tue, 01 Sep 2009 16:38:38 -0500

This article from RealtyTrac profiles five investors in different parts of the country who are still having success at short-term investing or flipping. Flipping was hugely popular during the real estate boom of 2002-2007, and many people who got the timing right made gobs of money by buying properties cheap, fixing them up a little, and then reselling them in a matter of months (or sometimes just a few weeks).

For the most part the bursting of the real estate bubble has forced flippers to switch to a more conservative buy-and-hold strategy of real estate investing. Not because there aren't great deals out there, but because the resale market is unpredictable to the point of making flipping an extremely risky strategy if the long-term hold numbers don't give you a "Plan B" on every deal. The five investors profiled in this article have found ways to make flipping work even in the current market though, and a few of the common threads running through their stories are:

1. In depth, up-to-the-minute knowledge of their local real estate market. They know exactly what they can sell a property for post-rehab, and therefore what they can afford to pay.

2. An established network of professional partners (attorneys, real estate agents, contractors, bankers) to keep their transactions on track and prevent major losses due to snags in the process.

3. Creativity to constantly discover new ways to profit as the market dynamics evolve.

4. The readily available capital to make cash offers on properties, close quickly, complete high-quality renovations, and structure creative financing deals for buyers.

5. All of these investors are targeting their sales to the largest part of the market - right now first-time home-buyers looking for quality, affordable housing in convenient locations. Selling to this broad market segment removes much of the risk associated with trying to flip higher-end properties that are not actively trading in most markets right now.

Even following these rules, flipping is a very risky strategy, but as with any investment strategy, the surest way to reduce risk is to increase your knowledge-level.

Open Window for Sellers

James Yoakum (Brown McKinney Real Estate Company) — Tue, 01 Sep 2009 15:24:28 -0500

If you need to sell your home, but have been waiting for the market to recover now may be a good time to take a shot at selling - especially if your home is one that would appeal to first-time buyers rushing to close deals before the November 30th expiration of the first-time buyer tax credit. You're still going to have to price your home very competitively to sell it in today's market, but if you anticipate selling in the next 12-18 months, the time between now and November may represent a brief window where you can earn a premium thanks to the tax credit. The message is also clear for investors who may be working on rehab projects that will appeal to first-time buyers: finish that rehab ASAP and get it on the market now so that buyers can share their tax credit with you in the form of a higher sales price!

Potential home sellers shouldn't think that only buyers can benefit from the tax credit - use it to get the best possible price for your home and take advantage of the great deals still out there for 'move-up' properties.