What are we talking about?  What fortune?  The fortune is found when you buy a home in a desirable community like Serrano in El Dorado Hills for less than $310,000!

Visit our Valentine's Day open house on February 14, 2010 from 1-4PM.  There will be treats for your sweet tooth in addition to the "fortune" that awaits you here. 

Serrano is a beautiful gated community incorporated into the hilly landscape and it boasts it's own private golf course. Main street shopping is nearby but is far enough away to have you feel like you are away from it all.

4101 Ironwood Drive, El Dorado Hills, Ca 95762 is your "fortune" destination. This single family home is listed for just $308,000 and has 1,733 square feet. By way of comparison, single family homes in El Dorado Hills with square footage between 1,500 and 2,000 square feet have an average list price on actives and solds of $323,000.   

Thar's gold in them there hills!  Call your El Dorado Hills experts today to help you find yours.

Imagine living in an upscale community in California near a private golf course with many wineries nearby. Main street shopping is moments away and you actually know your neighbors.  This is Serrano, located in beautiful El Dorado Hills in El Dorado County, CA.

El Dorado Hills has many homes for sale. In December 2009, there were 222 listed but only 50 sold. That's just 22.5%. Why?  The reason is there is a large gap between what sellers want for their homes and what buyers are willing to pay.  Even so, the price per square foot on the ones that did sell was $161.  The sold psf in El Dorado Hills has been increasing since October 2009. 

Your El Dorado Hills market experts have a home in Serrano that just came on the market.  It has 4 BR and 2 BA.  The average price per square foot for similar homes was $182 in December 2009 and the average days on market was just 31, selling at 97% of the list price! With a list price of just $308,000, this Serrano home is one you have to see. 

To schedule your private viewing, call Sheryl at 916 282 6399.  Open House information will be coming soon.

You may be hearing that it's a buyer's market. Since real estate is a local business, to know the market, you must dig deeper than national or even regional statistics.  Folsom, CA is a highly desirable, family oriented community which is located in the Greater Sacramento Region. 

In Folsom in December 2009, there were 64 single family homes sold at 94% of the list price. The average days on market for the same month was 76 and the average price per square foot was $169.  There was only 2.4 months of inventory. Because inventory defines the "market", when the inventory is less than 5 months, it is considered a seller's market. 

Now, let's look at the condo statistics for properties built since 1995 in Folsom. There were 13 sold at 97% of the list price. The average days on market was 136 days and the average price per square foot was $146. There was only .7 months of inventory in December 2009. Clearly, the seller's market for Folsom condos is even stronger than for single family homes.

Consider the Rivage community in Folsom. This is a condo community in Empire Ranch, a golf oriented community in Folsom.  1502 Rivage Circle is listed for $245,900 and boasts 3 BR and 3 BA plus a bonus room.  That is just $140.76 psf.

This means you can live in this highly desirable area, near the Empire Ranch Golf Course and realize the value at less than $141 psf.  Yes, even in this seller's market, values can be found when you work with  Folsom market experts.

 

The September 2009 issue of DS News, the publication dedicated to the default servicing industry, makes some startling statements about the commercial REO's that are coming on the market.  It states that residential REO companies are beginning to get commercial REO's and they are turning to their existing network of residential brokers for the disposition of these asset.

In a traditional market, when it came time for the disposition of commercial real estate...

The rest of the story...

Last Tuesday, the buzz about the .75% cut in the Fed's rate (also called the prime) started. People got on the phone to their mortgage lenders asking if now the time to refinance their home loan is. As a result, there is a lot of information about what that rate cut means to residential loans.  However, I've seen nothing about what the cut in the prime means to commercial loans, especially not in simple terms.

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You had a vacancy in your center and after a few months, you finally have a new tenant.  Hurray!...or is it?

As with all of real estate, it depends.  Let's look at what that new lease might do to the value of your shopping center.

I. Local or National: If you signed a local tenant, that means you've said no to a national one, in practice.  Investors generally prefer the stability of a national or regional tenant, so when there is a choice, go national.

II. Market Rent: Your agent has shared with you what market rents are but no one has agreed to pay your rent so you accepted less rent to lease the space.  Let's look at one scenario of how this might affect you.

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Real estate fortunes are made by people who buy low and sell high.  The question is, how do you know when it's low?

You would have to be under a rock to miss that our economy is having challenges.  Listen, anytime the government even thinks about giving the people money rather than collecting it in taxes, you know we are in trouble.  So,

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Last week the Housing Price Index came out with the 3^rd quarter housing appreciation numbers. The great news is that Sacramento real estate has appreciated in value 56.9% over the past 5 years.  Do you realize that represents an average growth rate of 11.38% per year over the past 5 years?  So, if you bought real estate in the Sacramento MSA in 2002 or before, you made a great investment.

Of course that's only part of the story.  As you read in Found In Translation, Sacramento real estate has been continually dropping in value since the market peak of the 3^rd quarter of 2005. So, if you bought in 2005, you bought at the top of the market and your property is likely worth less now than when you bought it.

For Sacramento commercial real estate, particularly retail properties, this does not bode well for property values. The old adage that "retail follows rooftops" is true. In 2003-2005, throughout Sacramento you saw a glut of new homes going up. In Elk Grove, Roseville, Folsom and Natomas, new retail was everywhere because that is where most of the homebuilding was occurring.

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The Secret to Creating Certainty with Commercial Real Estate
11.08.2007

When does 3 = 1? The answer is in commercial real estate. When looking at the commercial real estate market, we must actually look at 3 different markets.

I. The space market: This is the physical space that exists in the market. The measure of the space market generally comes in the form of absorption rates.  In the space market, the goal is to predict the future by looking at supply and demand in an area.  This is never more critical than in retail properties. As there are more people in an area, more retail is required.  As people migrate away from an area, retail will die. As current and future retail property owners and developers, absorption rates are critical as is looking at the migration of the population in a geographic area.

II. The capital market: As much as you love real estate, it is only one of several places where you can invest your money.  Stocks, gold and bonds are examples of other places where you can invest.  To determine where to invest your money, you will generally compare the rate of return you can get from alternative investments.  Once you set your desired rate of return, you can then evaluate which investment is the best vehicle to get you there.

III. The property value market: This is the market where cap rates come into play. Any change in the income or expense of the investment will change the cap rate, because the cap rate is only a "snap shot in time".  However, as savvy investors know, you make your money in an investment 2 ways: 1. Buy it right and 2. Control expenses.  These are both functions of the property value market.  In addition to operating expenses, you will also want to stay aware of legislative and tax law changes.

In order to be successful with your commercial real estate investment, you must be aware of all 3 markets. When you are, you will begin to see when it is time to make your move, either into or out of a market and/or investment.

Working with a qualified professional is an important part of your process. You need to choose wisely as there are very few professionals who are well versed in all 3 markets. After all, you can make a deal by considering just 1 of the markets, like say the property value market (ie: cap rates). However, the question becomes, do you want to make a deal or do you want to make a great investment?  

Choosing a professional with the CCIM designation puts the expertise on your side so you can make a great investment. That foundation is what helps to give you certainty with commercial real estate.

The 2nd Annual Sacramento Strip Mall Conference was held this week.  The conference was full of ways for retail property owners to make money.  As your retail real estate expert, I will share a few of them.

1. Charge for your monument signage. Make the fee agreement an addendum to the lease. This gives you additional revenue, which increases the value of your real estate.  It gives the tenant a way to advertise their business to every car and person that passes the site.

2. Monitor your tenants sales volume monthly. If you begin to see a trend emerge, as the property owner, you can step in to assist rather than wait until the tenant goes out of business. This right should be included in your lease.

3. Use your strip mall for fundraisers.  This is a wonderful addition to the community.  Since the residents are the ones who frequent your centers, give something back.

4. Charge for an exclusive from a small user.  In some areas, there are many vacancies.  If the tenant is desirable and brings value to the center, you may opt to give them an exclusive when they pay a higher lease rate. 

5. Green construction will soon be mandatory.  As you make improvements to your center, consider green construction.  You will be ahead of the curve and bring value to your center.

6. Right now, there is a battle called mega grocery, cheap price vs. high experience, high price. As a result, some of the largest grocery chains find themselves in the dreaded "middle".  To address the consumer need, many grocers are renovating their stores. If these chains are your tenants, be aware that once the renovations are complete, property owners are realizing significantly increased rents from those tenants at lease renewal.

7. Be cautious with new construction. Tenant driven retail is preferred over spec retail.  Know who the retailers are that are looking to expand in your area and get into relationship with them.

8. There are 2 new categories in the "Structure of the Retail Market". They are "big box" at the top of the model (that is bigger than malls) and "convenience retail" at the bottom of the model. As our residential dwellings shift from single family homes to multi family (which includes high end condos), so does the need for retail. The convenience retail category will become the giant of the future.

9. If you are developing, know the process.  it will go a long way toward getting your plan approved.  Skipping a step in the process can really cost you.

10. The fundamentals in the Sacramento commercial real estate market are very good.  Cap rates are increasing interest rates are still low.  Some property owners are in trouble due to the shift in the market. This combination makes Sacramento real estate a great "buyers" market for the savvy investor. Work with an investment real estate broker who offers information, education and communication so you can capitalize on the "deals" that are available in today's market.