Should you utter the words Phoenix with Investment yet?

I believe it is time.
Couple of key indicators are pointing the needle back to Phoenix.
It's been a long time since the red hot investor needle was pointing to the desert.

So, what is it that has changed?

1. Builders have virtually stopped building. Limiting the increase in supply.
2. Inventory is shrinking. Sales are up 60% Nov-Dec 08 and 135% 07-08
3. Population is still increasing faster than national rates. 2.5% projection vs 1% US
4. Still plenty of jobs to hold in the population. Only 6.3% unemployment. US 7.2%
5. Affordability of homes. Median prices come down, renters gravitate toward buying.
6. Investor levels are rising. No one wants to be the first and be wrong.
But if you wait too long, you are the last and hold all the regret.

Not only have builders stopped building, many have gone out of business. Those that are still in the game, have lost the large credit lines that allowed them to stretch their reach from 100 homes per year, to 1000 homes per year. This will keep the new housing inventory to a level of normalcy. Also, the population projections appear to be lower than the previous decade. Builders get overzealous with building permits when population expectations are above 3% growth rate.

Housing monthly inventory index is shrinking. Part of it has to do with the builders not building. But that seems to be offset by the massive foreclosures that are piling up. What is changing is the buyers are buying again. Prices have reached affordable levels that have made home buying attractive again. The question of rent vs buy now is being answered with BUY!

The actual number of houses on the market is fluctuating at 45,000 to 48,000. Which is not a low number. How the monthly index is determined, is by the amount of buyers entering the market each month. Stats are showing sales keep increasing. In Phoenix the monthly index has been slowly dropping and now is at a 10 month supply. In many markets around the country, the montly supply index has simply been increasing all year and the national average is now over 11 months supply.

Prices have been pounded in Phoenix, and there will be more foreclosures, which will keep these prices low. Investors have taken notice. The rate of investors in the market this month is 15%. A number Phoenix hasn't seen since 2005. Investors were part of the problem for the Phoenix decline, but mostly speculative investors. Combined with over-building, and a sub prime lending spree. This time investors are looking at an attractive 1% price to rent ratio. Cash flow is the difference. Let's face it. Rent doesn't change that drastically in 3 years. But prices in Phoenix have been a roller coaster. They have now rolled back to roughly half of their peak.

Properties like this example are available:
Avondale, West Valley Suburb.
Master Plan Community
Homes all built post 2000
Variety of home prices ranging from $120k-$400k
2005 levels, homes were minimum $200's
One bank owned REO cuts the $99,000 mark.
3 bedrooms, 2 baths, tile floors, covered patio.
Rent estimates $900-$1000

1% Price to Rent Ratio = Cash Flow

Since, today's investors are less speculative, and more cashflowcentric, then this is a healthy addition to the reason Phoenix could be on the road to recovery sooner than later.

Some of the markets that were first to bust, are going to be the first to recover.
Phoenix will be one of those markets, the signs are already pointing in the right direction.

Foreclosures don't have to be ALL CASH buys

Usually, you have to pay all cash to get some of the best deals in the foreclosure realm.

Below is the webinar presentation from 1.22.09, where we show you how you can buy great foreclosures with little to nothing down.

Inside are examples of New Properties, Bank Owned, and REOs that are remodeled and rented.
There are also examples of portfolio financing and 30 year fixed conventional financing, specific to individual properties. We have solutions for clients that have over four investment loans too.

Importantly, where do we have these opportunities? Inside the presentation, 3 markets are presented. Atlanta, Charlotte, and Memphis.




For more information about properties, financing and market specifics, please email me at Steve@NorthPointGroup.com

The solution to your real estate problem.

Here's a chronology that we are all too familiar with:

1. You bought real estate and it went up in value
2. You found a renter that covered your expenses
3. Time goes by, things are smooth, but your rate went up
4. You begin the pain of negative cash flow, but you live with it
5. You want to refi and you discover you CAN'T because you lost value!
6. Your tenant just informs you that they are moving out
7. You want to sell and cut your losses

Daily I run into this problem with random clients, my past clients, or even myself.

I don't blame people that want to sell. It's in our human nature to flight to safety.
If you put in a down payment, you want to get some of it back before it's too late, right?
Holding on to an investment that everyone says will just keep going down in value, with no exit strategy is just insane. Everyone wants their strategy to be, "buy low and sell high." But if you bought in the last 5 years, and want to sell 2008 or 2009...You are doing exactly the opposite.

So, if you take a look back at an investment and realize you bought high. SELL HIGHER! Don't sell low.

Didn't I say I had a solution?

The solution lies in holding on to the asset, gaining more income, but at the same time, putting the actual plan of selling into action.

The Lease Option.

What is it?
A renter that pays a premium rent with the intent to purchase your home.

Why does this work?

1. Lease-Option Tenant pays more rent. This lessens your cash flow problem. In some Lease Option agreements, the rent is increased by a much higher level, and that rent is given back to the tenant in the form of price reduction, or down payment, or closing costs. Whichever is the norm in that market.
2. Avoids Vacancy. Whenever you sell, it should be vacant. Buyer's do not enjoy looking at homes that are tenant occupied. And in today's market, it will take a lot longer to find a buyer than a renter. But a Lease Option Tenant will live in the unit until they buy it. No sell vacancy period.
3. Sells the property at future value, not today's loss. Tenant will sign up to buy the property at the value you want today, but not until tomorrow.
4. Reduce Realtor Fees. This is almost a guarantee in every market. You can do this yourself, if you have the time to find a renter. You just make an amendment to your rental agreement. Most Property Management companies can do this as well. They will charge extra, but it's heck of a lot cheaper than 2 Realtor commissions.

The pickle that most people are in, where this solution may not work for, are the ones where the loan has gotten out of control. Rate is adjusting 2pts every time, or the loan has a balance due, or the Neg Am is at recast (if you don't know what this is... good :-))

If you fall into this category, a loan modification can solve that problem for some people.

If you are facing $400 negative output every month on your investment property, all you have to do is Lease Option for $200 more than your current rent, and Loan Modification for $200 off your current payment.

Now you are breaking even again. I am not going to tell you that it is easy. But losing $50,000 is not easy to swallow, either.

Leased for 2 years, Positive Cash Flow

5101 Powell, Blue Springs, MO

$165,900
2 year renter until Nov 2010
$1300 per month
$183 Positive per month
12 Miles to Downtown
1 mile to Bass Pro, Independence Mall, Costco, Lowes
1 Block to Blue Springs Lake
Schools, 8,9 and 10 out of 10 http://www.greatshools.net/

WHY BLUE SPRINGS?
12% population growth, (2x the national average)
Population 53000 people
Household Income $74,000 year
Median price home $174,000 (Affordable)
19% job growth projected next 10 years (Sperling Best Places)

Why Kansas City?

1. 2.5 million people
2. Income is 20% higher, and cost of living 20% lower than both national averages
3. Diverse economy. Federal (IRS, Reserve, Leavonworth) Tech, (Garmin, DST, Cerner), Telecom (Sprint, Verizon), Manufacturing (Hallmark, GM FORD HARLEY), Finance (HR BLOCK, American New Century), Logistics (YRC, BNSF and KC Southern Intermodals)
4. 17 Fortune 1000
5. 48% renter occ, and of those 75% renters live in units 25 years or older. (demand for new housing)
6. 75% of builders build less than 100 homes per year. (no mega developing, or major national builder presence)
7. Positive net migration of 1.2% per year past 10 years.
8. Job growth expected to reach 3% per year in 3 years
9. 4 billion invested in downtown econ, and total of 7 billion including the metro area
10. Great quality of life amenities and high end retail not seen an many other Midwest cities from Dallas to Chicago.
11. 6^th smartest city by Kiplingers. And 2^nd highest college grads in Midwest behind Chicago.

Thinking about investing in Temecula, CA?

WE DO!

Temecula may have its share of foreclosures. But that doesn't mean it's a bad real estate market. Sometimes, prices get ahead of the median incomes in the area, and that makes real estate unaffordable. Affordability is a key index for a healthy real estate Micronomy.

A Purchase at the peak of this market may have led to disaster, but we predict as prices have declined, affordability has reset itself again. And the fundamentals of this area between Orange County, San Diego and the Inland Empire, make for a strong recovery.

Incomes, Education, and Job Oppornities are impressive in all categories.
Expect steady appreciation in the future, however, nothing volatile or exuberant that led to our recent decline.



Presentation shows demographics, statistics, geography and quality of life.

If you are interested in opportunities in the Temecula Market, give me a call immediately. Or stay tuned to the blog for more.

Steve Roesch
Market Advisor
503-213-3550
Steve@NorthPointGroup.com

New Construction, Bank Owned and Financed at low down

Total Down at closing = $2,000
$175,000 Price. Appraised $195,000.
Originally priced well above $200,000
Builder could not sell in time before the bank took them back. Now the bank wants to finance for you, Owner or Investor, for $2000 down.

Located on a quiet street in Atlanta Metro, Georgia.
These are big 2000+ square feet, 5 bedroom, 3 bath houses.
Complete move in ready, blinds, fridge, landscaping.
If you want to rent it out, or rent it, the market rent is $1200.
2 Homes just like this are rented for $1200 in the neighborhood.
The Mortgage payment will be $948 for the next 3 years.

If you live in Atlanta, you know about the wonderful reasons to live there.
Which is why over 1 million people have moved there in the last 7 years.
The most growth for any city in the US during the same time.

Foreclosures without the headache

$128,000 priced
You Pay = $98,000 = Discount


Down = $2,000 = Low Down
Rented = $1,000 = Cash Flow
1 Yr Lease = Removes Vacancy Factor
Remodeled = No Additional Capital Needed

Finance 75% of original price and only put $2000 down.
The remainder is your discount on the house. 24% discount!!!

Rented $1000 per month until Jan 31, 2010.
Positive Cash Flow by $83-$163 per month after all expenses and management fees

Since its rented for the first year, which means no vacancy, then $163 x 12 is $1956
That’s the down payment back right there, returned in 1 year

6831 Collier
4 bedrooms
Remodeled
Close in Atlanta, 15 min. to downtown
1 mile to Walmart-Publix-RiteAid-Hollywood Video-Riverdale Plaza
Already Rented.

Atlanta Top 10
1. Georgia gains the 4^th most population in 2008. US Census.
2. Atlanta adds 1 million people in the last 7 years. Highest Growth in the US.
3. Atlanta is home to the world’s busiest airport,
4. 22 of the Fortune 1000 HQ. 5^th highest concentration of the Fortune 500
5. One of the most preferred cities to open or expand corporations by CEOs
6. Huge Rental Demand. Nearly 50% of residents are renters.
7. HQ for many mega-corporations like: CNN, Coca-Cola, UPS, Home Depot, Delta, Turner, COX and more.
8. Lots of Government jobs including, GA State Capital, Military Bases, Federal Reserve Bank, and the CDC (center for disease control)
9. Home to 5.1 Million people
10. Attractions for all, such as: NFL Falcons and Major League Baseball Braves, SIX Flags Amusement Park, Nascar at
Atlanta Speedway, and the Nations Largest Aquarium

Click to Enlarge the Cash Flow Analysis.

Put up $2000, and receive $100 per month in return

How about this for a business opportunity?

1. You invest $2000, up front
2. In return, you will get between $89-$163 per month in return
3. You will have your $2000 back in 1.6 years.
4. You keep receiving payments until you ultimately own a $118,000 asset
5. At which point, your monthly receivalbe will now increase to $600 per month
6. Each year, your monthly income may increase 3%, depending on market conditions
7. Each year, the value of your asset could also increase about 3% per year depending on market conditions

Yes, this is a Real Estate Transaction, and it sounds too good to be true.
But it’s not. Take a look at this example:

Just under 10 miles from downtown Atlanta

$118,000 home for $90,000,
That’s $2,000 down and $88,500 borrowed at 6% 30yr fix.
WE CAN FINANCE THESE TERMS
Rents are $925 for similar properties
Beautifully remodeled.
Previously foreclosed on, provides for deep discounts.

Georgia gains the 4^th most population in 2008. US Census.
Atlanta is home to the world’s busiest airport, and 22 of the Fortune 1000 HQ.

Steve Roesch
Market Advisor
Cell: 503-318-6351
steve@northpointgroup.com

Low Risk Foreclosures for $7,000

Let's talk foreclosures...

What's on your foreclosure wish list?

1. Deep Discounts
2. I don't want to buy bulk
3. Built in Quality Tenants with Cash Flow
4. No Surprise Liens
5. No Repairs Needed
6. And I want the ability to use financing for leverage

The majority of foreclosures usually come with a discount. But you're lucky to get one other item off the wish list. And, the deepest discounts are usually found if you buy in bulk.

Everybody wants to get a deal.
But if you have to go Deep into your pocket, to get a Deep discount, it's not much of a Deal.

Let me show you how you can acheive your foreclosure wish list and still have a Great Deal.

Example:
Foreclosed Duplex
Wholesaler Acquires in Bulk for Deep Discount
Title Cleaned, Property Rehabbed, Professionally Placed Tenants.

$130,000 appraisal

Numbers of the Deal:

$104,000 Price and Only $7,000 Down
$1150 Rent Per month, Total for both sides
$165 ++Cash Flow per mo. after all necessary expenses and foreseen maintenance

$7,000 is the total cash investment for Down Payment, repairs, lease up expenses, start up vacancy, etc
$97,000 is the loan with 30 year fix loan at 6% rate (rates change daily, not guaranteed)

Where are these Deals located?

We have similar programs like this in several markets across the US.

This duplex is located in the Atlanta Metro. Specifically, Covington GA, just 30 minutes East of downtown Atlanta.

Atlanta Accolades

One of the highest ranked cities for jobs and population growth in the country
over the last decade.
Huge Rental Demand. Nearly 50% of residents are
renters.
Home to the World's Busiest Airport and HQ for many
mega-corporations like: CNN, Coca-Cola, UPS, Home Depot, Delta, and more. About
27 of Fortune 1000 are HQ here.
Lots of Government jobs including, GA State
Capital, Military Bases, Federal Reserve Bank, and the CDC (center for disease
control)
Home to 5.1 Million people, and attractions for all, such as: NFL
Falcons and Major League Baseball Braves, SIX Flags Amusement Park, Nascar at
Atlanta Speedway, and the Nations Largest Aquarium.

Call me for more Markets and Deals, or Follow the Blog