The Virtual Real Estate Team's Blog by The Virtual Real Estate Team

America is drowning in debt

Debt debt debt, debt. For those of you old enough to remember the opening music to Dragnet, it always had an ominous tone. You knew something dramatic was about to happen. So it is with the credit crisis. Notice I didn’t say sub-prime or mortgage crisis. It goes way beyond that. So much attention has been paid to the coming bailout of Fannie Mae and Freddie Mac, we have forgotten what got us here. Modern Americans, unlike their counterparts in the 1950’s not only don’t save money, they live on a sea of borrowed money. Want a house beyond your ability to pay? Get creative financing. Have to have furniture and a new boat? Finance it. Need a vacation with the family? Put it on Visa or Master Card. Don’t use American Express because you have to pay that back quickly. I recently did a short sale who had a first and second mortgage. When he got behind, the “workout specialist” at the mortgage company recommended that ..(read more)

The New Math of Real Estate Values

How did 1+1=3 become the standard of real estate value in 21st Century America? First, you take a government who prints money like a Monopoly Game factory. Next you add in financial institutions that are concerned that they are not making enough profit. Add the housing industry to it, let it skyrocket in values in states like Florida, Arizona, California, and Nevada, and then create high risk mortgages (ssh, don't tell anyone), package it to Wall Street, and then don't let your conscience be your guide. In 2008 we have just the beginning of the mortgage mess. It started with sub-prime loans going bad, the stated income loans following, adjustable rate mortgages with accelerator clauses, and negative am loans, and you have continuous flow of foreclosures through 2011. It doesn't stop there, since those same bankers gave easy financing to whatever developer wore a great suit that day, and you have areas so overbuilt that it will take 3 to 20 years to absorb ..(read more)

San Diego Real Estate Investors meeting

I have been speaking at real estate investors meetings now for 4 years. Mostly I go to California but other states are on the list too. San Diego is just about my favorite city to present Oklahoma properties in. The city is beautiful, has a casual laid back attitude, normally flawless weather, and great people. Presently residential and commercial investments in Oklahoma in 2008 is quite a contrast to almost any other state. A representative from Florida were touting 60% discounted pre-foreclosures at 20% down with $94 per month positive cash flow. We were offering lower price property at full price that with 20% offered $294 per month positive cash flow. This is the big difference in the last year. The bubble markets have deflated to prices where they should be, and Oklahoma is still a higher value than in the previous 3 years. In Oklahoma you can trust the values and our foreclosures are actually going down rather than up. Our inventory level is stable where Florida, ..(read more)

Going Green in Real Estate

What a difference a year makes in energy prices. Oil is skyrocketing, and natural gas has doubled in the last year, and the prices look to go higher. Americans have had years of cheap energy, and unfortunately we don't respond to a future crisis until it becomes a present crisis. From the cars we drive to the houses we build, change is essential if future generations in this country will have any quality of life. It can start simply. Years ago I was shaving over the sink with the water running. While performing this act i was thinking about what I had to do that day. After I finished I realized that water had been running for ten minutes. Ten minutes of clean water wasted. From small things big things one day come. I realized that we Americans take too much for granted and it was time to live the conscious life. Take the electric car. Tesla Motors has created an electric powered sports car that 0 to 60 MPH is in 3.9 seconds. Top speed is 125 mph, and cruising ..(read more)

Top Ten Reasons to like $4.00 Gas

First of all, thank you to Amanda Ripley of Time Magazine for doing an article on this. Reason No 1 With higher energy prices, manufacturing jobs will come back to the United States. Cheap energy combined with cheap labor made multinational companies go overseas so that shoppers at Wal-Mart could pay less. Now with high transportation cost, the good ole USA looks good. Reason No 2 In places like Phoenix and L.A. the philosophy was drive until you can afford, so we built out not up. Urban sprawl will stop because depreciation is huge in the "exurbs". When you add in the cost of gas for the daily commute, the far out house is not so cheap anymore. Reason No 3 Companies are experimenting on a four day work. Why not work a few extra hours during the day when you can now spend three free days with your family. Reason No 4 Less Pollution! People are driving less, have stay at home vacations, and Reason No 3 saves money. ..(read more)

The NBA is coming to Oklahoma City!

Oklahoma City finally has a major league franchise. Yesterday the group from Oklahoma City who bought the Seattle Sonics and the WNBA Storm reached agreement on the buyout out of the last two years lease at Key Arena. The Sonics, with a name change, will start playing here this Fall. This is a huge gain for our city. Take out all the reports about billionaire owners hijacking a city, and the 120 million dollars we allocated for the improvements of our 20,000 seat Ford Center, and what you have is a tonic for a city that for the longest time had an inferiority complex. With the diversification of our economy, and the billions spent on our downtown revival, Oklahoma City can enter the next level in attracting new business. When the New Orleans Hornets played here for two years after Katrina, we ranked 9th in the NBA in attendance. NBA stars like Shaq said it was like playing in a rapid college atmosphere. More importantly, the 35 home games brought in an estimated $150,000 per game to ..(read more)

Update on the Oklahoma Investment Market

Oklahoma has been one of the shining examples of how a state's residential and commercial building market can prosper while most state's are experiencing a downturn. Forbes rated Oklahoma City as the number One recession proof city in the U.S. www.salary.com just rated Oklahoma City 9th and Tulsa 12th as the most favorable cities out of 188 cities surveyed for the ability to build personal wealth. In Oklahoma City Tinker Air Force Base has a planned expansion of 16,000 in the next nine years. Outside of Tulsa Google is building a 600 million dollar media center a Pepsico is expanding it already largest bottling plant 1.5 million square feet. Last week The Federal Bureau of Housing Enterprise Oversight put Oklahoma at 9th in housing quality with out state still appreciating in 2008 where 47 states did not. Oklahoma also continues to decrease in foreclosures defying national trends, and our inventory level is stable and biased towards a sellers market. Contrast ..(read more)

New Housings Stats are good for Oklahoma

The last year has been extremely difficult for the national housing market. Recent statistics saw a drop in the average price of a home in 43 states. Fortunately, Oklahoma was not the of them. This is not to say are market is flying, in fact no market is flying, but to post any gain in 2008 is good. According to the Federal Bureau of Housing Enterprise Oversight, Oklahoma ranked 9th in the country for a one year gain measured at the end of march 2008. Since 2000, Oklahoma has made a steady, but below the radar rise to the top echelon in housing markets. For those who bought in California, Florida, Nevada, and Arizona in the last five years, most gains have been wiped out ind in most of these states, homeowners have lost ground. Investing in Oklahoma is not like having a home act like an ATM machine, rather it is both a tax break, and a gradually increasing in value asset that is stable and dependable. No one can predict the future but if the next seven years are like the ..(read more)

Commercial Investment Opportunities

With the mortgage meltdown that started last year, financing investors for residential properties has become more difficult. Fannie Mae has cut their guidelines on maximum investor properties from 10 to 4. Even before the mortgage crisis my team and I started getting a commercial real estate education from the CCIM institute. I have blogged about this before. Commercial investing is more about jobs, and residential investment is about population growth. Both can have a correlation but both markets don't move in lock step. For instance, I have been in the Phoenix area e times in the last year and residential is in a slump but commercial is booming. In Oklahoma and Texas, residential is stable and in Oklahoma especially commercial is booming. We have chosen the office condo market for its stability. These are commercial units that look like houses. In Northside Oklahoma City we have one of the lowest vacancy rate in the U.S. at .4% vacancy. With a robust job market where Oklahoma ..(read more)

Meet our Pre-Foreclosure Specialist

I knew that Charlene Humphreys was good at pre-foreclosures also known as short sales, but after reading reports from Inman News and Realty Times, I didn't realize how good. Both publications reported the difficulty in getting these workouts approved, in fact they said that only 10% of current negotiations are successful. Imagine my amazement when I asked Charlene what her percentage was, 90% she replied in a quiet assured voice. WOW! To say she beat the averages was an understatement, but I asked her why it was so out of sight in compared to the national average. First, many people go to the Internet and Google a specialist. Often this turns out to be a sham clearing house type operation who just want to get a referral fee out of a local agent. They don't care that the agent has no expertise in this field. This work is not for the lazy, the uneducated, and for anyone with a lack of aggression. Most good short sale specialist like Charlene are not only trained, they have many ..(read more)

Notes from the Los Angeles Conference

What a wonderful conference. The only problem I had was the traffic in Los Angeles on a Friday, or maybe any afternoon. For an Oklahoman, gridlock is not fun. The conference was in San Gabriel which is 30 miles from LAX. Once we got there, we knew we were in a different world. Almost all the signs are in Chinese, and most of the people we saw were Asian. The conference was attended by around 700 to 800 people most who were Asian, and the majority first generation immigrants. After the meetings were done I got on the Internet to find Chinese language Cd's. The courtesy and respect I received needs to be reciprocated, so I want to be able to learn some key words and phrases because they deserve my respect in kind. I was also impressed with the work ethic, as well as the desire to build wealth, but not material things. The desire to provide for the family also goes beyond money. I have a Chinese couple coming into town tomorrow, and they are bringing their children at great ..(read more)

I love L.A.

I head to Los Angeles in the morning. I just got back from speaking at a seminar in San Francisco, so I get to experience the "joys" of airports and traveling again. I will say that Southwest Airlines by comparison is my favorite way to fly. First, they don't charge for extra bags or even the first one! Second, they seem to get you there on time. The group I speak to is the Global Real Estate Group. Many of the4 participants are naturalized citizens, especially a large Asian contingent. Many Asians, especially those still in China want to invest in the United States. We have screwed up a lot of things overseas, but we are still a beacon for capital investment. It is a pleasure to present Oklahoma since our state is defying the trends of foreclosures and excessive inventory. We still have positive cash flow with 10% down. I will also be presenting equity positions for 50 new Choice Hotels in a seven state area. Bust the most exciting offer will be commercial office ..(read more)

The new rules of foreclosures and excess inventory

Back in the bad old days of the wage and price spiral, inflation was the chief culprit to the downward cycle that eventually brought housing values down. We just couldn't afford the interest rates. In 2008 and beyond a new problem has emerged. One thing that hasn't changed is that the more foreclosures you have in a market, the more investors want to buy them. These investors don't want to pay as much as a homeowner who lives there, and the more the percentage of rental property, the less the value of homes, the lower the tax revenues, and the more affected the job market becomes. Lower prices with less tax revenues kill the ability to hire police, fireman, and maintenance. However, another problem makes this a self-perpetuating problem. Many areas like California, Florida, Arizona, and Nevada are setting on huge inventories of homes. Besides the foreclosures, builders and developers in partnership with banks were building homes and condos that are being finished in 2008 without a ..(read more)

Visitors from Israel

One benefit from the weak dollar is that foreign nationals are wanting to buy property in the U.S. With our currency devalued it results in a 20% to 40% reduction in cost of the property. I had two gentlemen in from Tel Aviv to look at property. They were real estate developers in their country, and they were on a five city tour that besides us included Dallas, Atlanta, Raleigh, and Denver. They felt that our market was the most attractive based on quality of construction, price, rental amounts, rate of return, and quality of market. It is easy to show property to out of state and out of country buyers, but what do you do about food? Sometimes in a place like Oklahoma City you want to take them to the most sophisticated restaurant in town. So what did they want to eat? They asked for a steak, but not only a steak but an atmosphere that was "quaint Oklahoma". So we went to Cattleman's Cafe in the old stockyard district. The decor has not changed in over 40 years, ..(read more)

What's Up with Interest Rates?

The headline of hope would be what's down with interest rates. Certainly we know that there is inflation pressures because of energy and food cost going up, and the Federal Reserve has intervened lately to stop a spreading credit crisis that could have had similar results we saw in the 1930's. The past two versions of the Federal Reserve has printed lots of money to bail out the dot com bust, fears resulting from 9/11, and now the mortgage meltdown. We have stopped the panic that could have been the return of the 1930's, now can we avoid the high interest rates of the late 1970's and early 80's? I remember those times as a retail stores owner. I was paying 22% interest at the bank and had a home with an adjustable rate mortgage starting at 14.5%. Oil was an inflation adjusted $100 per barrel. I don't think that is coming back. First, energy cost will probably get worse before they get better, but we should see demand eventually coming down because of price. I ..(read more)