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RE Investing

Power Outages and the Location of your Home

By | Buyers, RE Investing, Sellers, Sonoma County info | No Comments

Have you ever noticed that if there is a major power Street with Powerlines outages, some neighborhoods seem to be without power longer than others? And sometimes a neighborhood   close to an urban area might be longer out of power than other areas. I noticed in our area, parts of Fulton and the Russian River area tend to be out of power longer than the direct surrounding area.

Coming from the Netherlands where all power lines are in the ground moving to an area with power lines above ground was something to get used to. They are part of a street view,  sometimes blocking a view or going over part of a property, affecting the desirability of a property. Power lines above ground are more vulnerable to outages during storm or Powerlines blocking a viewwhen a trees falls on a power line or a pole holding the power line is hit by a car. Researchers at Carnegie Mellon University, Pittsburgh, Pa., have concluded that the average U.S. electrical utility customer experiences 214 minutes of power outage each year. The research also indicates that the U.S. ranks towards the bottom among developed nations in terms of reliability of electricity service. The last Superbowl had a 30 minute power outage.

Super-Bowl-2013With that said, to a certain extent one can predict whether a neighborhood will have shorter or longer power outages in case of a major power outage. The PG&E website gives some good guidelines: “First hazardous situations, such as downed wires. After that the focus is the largest number of customers and on repairs that will restore service to critical facilities such as hospitals, water pumping stations and police and fire departments.

Should you desire to do so, you can make this part of your due diligence before you decide to move to a certain neighborhood or area. If you know upfront that the neighborhood you decide to move to is always the last one the power is restored, invest in a good generator or an other alternative power source.

Mirjam

To Buy or not to Buy…

By | Buyers, Economy, Interest rates, Investing in Real Estate, RE by the numbers, RE Investing, Wine Tasting | No Comments

Operation Twist is the economic policy from the FED:  at their last official meeting in August, the policy making committee decided to keep interest rates low until 2013 …

This is good news for buyers… There is a time window to benefit from low interest rates… Time to get once’s financial house in order…

Some might think that waiting to buy is a better option, they decide to stay on the sideline… Smart idea???

Well depending on your situation: if you rent a home you pay for someone else’s  mortgage. Why rent when you can buy? All the first time home buyers I have been working with recently end up paying less in mortgage than in rent…

Will home prices go down further? All Real Estate is local. While the higher end in Santa Rosa/Sonoma County is expected to loose some more value in the coming time, the lower prices homes have been fairly stable in the last years.

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But what if home prices are coming down a little further? You never know when the market has hit bottom until it goes up again. At that point there will be a lot more competition.In the mean time: you have to live somewhere, might as well pay your own mortgage and take advantage of the tax benefits when owning a home…

Bottom line: the current market in Sonoma is a great market for buyers: although the inventory is low, there are great homes coming on the market all the time. There is no such thing as the perfect home. But right now there is the luxury of not having to worry about interest rates going up dramatically.

Last note: in Netherlands most rental homes are owned by the government, our first home after we got married was government owned. Home ownership is becoming more common but not like in the USA. It’s called the American Dream for a reason.

Have a great weekend and enjoy harvest season in Sonoma County: the first weekend is the 13th Annual Wines and Food Affair

Mirjam

Real Estate and Inflation

By | Buyers, Economy, RE Investing, Sonoma County info | No Comments

When you buy a home you stop inflation on your housing expenses. What does that mean for you? leerdam.jpg

Ask your grandparent, your parents, maybe a neighbor who has lived in his/her house for 30 years: what did they pay for their house, OR for how much did they pay in rent… Get it? The first home we bought when we lived in the Netherlands was on the Tiendweg in Leerdam . It was built in the 1930-s and these homes initially sold for a whopping 3,000 to 5,000 Guilders each… Right now this around 445,000 Euro (Euro is 2 guilders) Back to Sonoma County, the homes in Montgomery village in Santa Rosa, when these homes were built in the 1950-s they sold for the unthinkable price of 5,000 Dollars, considered expensive in these days.

But then again, ask the same grandparents, how much they paid for a loaf of bread…

My CPA George Hougthon uses as rule of thumb: every 30 years add a zero, to both buying a house and renting a house… Looking back in history: the time when people rented a house for $200 a month is not that long ago… Right now expect to pay $2,000 a month to rent a house…

Buying real estate is smart, inflation is just one reason… And think about investing in real estate in the context of inflation. Investing in real estate is a smart way to built a nest egg.

What are your thoughts?

Mirjam

Due Diligence

By | Buyers, Disclosures, Economy, RE Investing | No Comments

For all of us in Sonoma County the name Clem Carinalli is a familiar name. Once a name of trust and reliability, now a name connected to scandal and swindle. This morning’s Pressdemocrat has an interesting article about the shock of the investors.

Interestingly, halfway in the articles, several investors did admit that they also have themselves to blame by not doing their due diligence as to the investments they were making.

Due diligence… related to Real Estate, many times used in the CAR purchase agreement we generally use and the disclosures being given to sellers and buyers.

It used to be ‘buyers beware’ and sellers/agents were not statutary obligated to disclose anything they know about a property and affects the desirability of a property. However… always and I mean always read your disclosures, if you don’t understand what you are reading, talk to your Realtor, Mortgage broker, Home Inspector, Pest Inspector, Escrow officer etc etc. Not only do you have the right to do so, you also owe it to yourself to do so. These professionals are there to help you. Sometimes they might ‘assume’ that you understand every document you sign and read, please don’t hesitate to ask, the only ‘dumb’  question is a question not asked.

For myself, I have included a copy of the purchase agreement as wel as some general disclosure documents in a Buyers Guide I put together for my buyer clients. Quite frankly I hope they take the time to read it and mark the items they don’t understand. I love working with people who like to educate themselves as to what they are doing.

harvest.jpg   It is a beautiful autumn day in Sonoma County, enjoy it.

Mirjam

SBA Stimulates Small Businesses

By | Economy, Financial news, RE Investing, SBA Funding, Sonoma County info | No Comments

 

                                                        Mark Quinn provided a very informative presentation at the April 1 meeting of the Sonoma County Alliance held at the Santa Rosa Golf and Country Club. The Sonoma County Alliance is a county-wide coalition of business, agriculture, labor and individuals incorporated to encourage a healthy economy, maintain a sound environment, protect private property rights and promote a responsive political process. Their monthly forums seek to maintain a visible force in community affairs; engage elected officials in dialogue regarding the establishment of public policy; provide a forum for its membership concerning land use and development, housing, taxation and allied matters; and increase membership interest and participation in legislative and political affairs on a countywide basis.


Mr. Quinn discussed the recent changes to the SBA 7a and 504 programs in addition to discussing a new program entitled  the “American Recovery Program” that will be available in the next 6 weeks. These programs are the backbone of loans for working capital as well as real estate and business acquisition for small businesses.

According to the SBA website www.sba.gov, “The U.S. Small Business Administration (SBA) was created in 1953 as an independent agency of the federal government to aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation.”  The Obama Administration has specifically set aside funds to stimulate the small business economy since it is recognized that small business is critical to our economic recovery and strength during this recession. Large companies are shedding jobs and it is small businesses that hopefully will add jobs under the government stimulus plans.

Some if the program changes that Mr. Quinn discussed where 1) increase funds of $50M distributed to non-profits for the SBA Micro loan program 2) SBA 7a fees waived which are normally passed on to the small business from banks and the increase from 75%-90% guarantee to banks, and 3) the potential of the Dept of Treasury to buy 7a loans on the secondary market where some banks pick up added revenue. He also introduced the American Recovery Program which will be a new SBA program that will provide “short” term loans specifically for business that may be facing short-term cash flow problems during the recession. Loans will be up to $35,000 and the SBA will pay the first year interest and payment due for the first year.  Further details forthcoming in the next few weeks for this program.

Mr. Quinn acknowledged that more resources are needed for the department to assist in processing loans and streamlining the process however it is up to Congress to fund SBA’s activities. He was hopeful that some additional funds will be increased for operations under the stimulus plan since the SBA heavily depends on it SBA “preferred” banks to really carry the burden of local underwriting, processing and outreach.

Denise Beeson works with Small Business Owners and Real Estate professionals specializing in placing commercial loans including SBA with preferred lending institutions and private money financing.