I
am here to instruct you on the homebuying process and guide you on your
journey. I want you to be financially stable and prosperous, and I want
you to have a comfortable home. I began writing about real estate
because I wanted to save people from financial ruin as the real estate
bubble popped. Now, I help people like you through the homebuying
process because I want them to have sound financial advice and accurate
market analysis–two things in short supply in the Realtor community.
The only way I can ensure buyers understand the market and purchase the
right house for their circumstances is to guide them through the
process. I rely on like-minded agents I trust to treat clients with
caring, honesty and respect.
I will not be working with you
directly during your homebuying adventure because helping buyers obtain
real estate is a time-consuming business, and I have another full-time
job as a land development consultant. However, I am the navigator on
your journey, and I am always available by email to answer your
questions and address your concerns. The agent(s) with whom you will be
working are trained to do things the IHB way.
I want you to
have peace-of-mind. I want you to know your guide on your
homebuying journey is interested in your happiness and financial
well-being. I promise that you will be given our honest opinion,
factual market analysis, and you will not be pushed into buying
anything. This will be one of the largest and most important purchases
of your life. I want you to make the right one. I will not permit you
to be pushed or manipulated by distasteful sales techniques, and I
would rather forgo a commission than see you buy the wrong house at the
wrong time.
Many of you already know me. Some of you have been reading my writing for years at the Irvine Housing Blog,
and many have met me in person at our IHB block parties. You know the
person I am and what I have done for the community. I want you to have
the best representation possible, so when the time is right for you, I
hope you contact us. We are here to serve.
Larry Roberts — Irvine Housing Blog
Credentials:
Master of Science in Land Development – Texas A&M University 1994
Bachelors of Science – University of Wisconsin at Stevens Point 1992
I
have always worked in real estate. For a while, I wanted to be a golf
course architect, but I have spent most of my career as either a
development project manager or a land planning consultant. I design
master-planned communities, plan subdivisions and lay out commercial
centers. It is great fun.
I originally had a real estate
salesperson’s license in Florida 15 years ago, but I never saw myself
as a sales professional — until now. Right now, I perceive a need in
the community to have real estate brokerage services be provided in a
different way. I am dismayed by the practices of the real estate sales
community, and I want to change it. I am still idealistic enough to
think change is possible.
For those of you who follow my
writing on Irvine Housing blog, you know first hand the depth of my
knowledge on residential real estate. Many of you have read my book, The Great Housing Bubble. You probably also know that I publicly predicted the deflation of the
housing bubble, and I worked tirelessly to dissuade people from buying
homes during the market’s decline. I did none of this for money; I
wanted to serve the community. I still do.
Your
next email will be from Shevy Akason. I trust you will be as impressed
with him as I am. When I first met Shevy almost a year prior to
launching Ideal Home Brokers, I was dubious that any real estate sales
professional could be trusted to put the needs of their clients above
their own needs. When I learned that he was giving up potential income
by advising clients to rent rather than own during the deflation of the
bubble, I was intrigued. When I saw his passion to help people and his
genuine concern for their well being, I knew he was the right person to
lead the Ideal Home Brokers sales team. He is a good man; you are safe
with him.
If you have any questions or comments, please email me at larry@idealhomebrokers.com. I am here to serve you.
Thank you again for allowing us the opportunity to present ourselves to you. We look forward to working with you.
Sincerely,
Larry Roberts
When you are ready to buy or sell a house, we are here to serve you.
I have a number of small announcements concerning some of the new features of our expanded website. We have tried to keep the transition as painless as possible. Thank you for staying with us.
I have uploaded the full text, diagrams and end notes for The Great Housing Bubble. It is available in the library. I am planning to debut all 21 posts on successive Sundays come January of 2010.
Last week we rolled out the new IHB calculator on the weekend open thread. One of the suggestions was to put back in the feature where you could input your rent and determine how much house you can afford. I have added that back into the calculator. There is now a rental field that is automatically given a value based on the $100,000 income I use as a basis. If you overwrite one of these variables, the spreadsheet will recalculate based on your inputs.
Many of you have requested IHB Fundamental Value Reports since I made them available this week. If you have not seen them yet, check out our Reports tab.
IHB Recent Listings
We have brought back the recent listings in the sidebar. They are pulled directly from the MLS and run through our IDX system.
IHB Recent REOs
We have also added a recent listings of REOs to the sidebar, again from our IDX system and the MLS.
We have partnered with Foreclosure Radar to provide you with the latest search technology for finding foreclosure properties. Watch your favorite property work its way through the system.
… with shaky finances to get loans, and in effect setting up a potential repeat of the housing bubble fueled in part by no-questions-asked subprime loans. …
After the housing bubble popped, we’re lucky to still have a functioning financial system. And
because millions of working Americans now depend on 401(k) …
Booming supply feeding investment-driven buying in the face of rising borrowing costs are familiar ingredients, pointing to a housing bubble collapse in the …
Low interest rates, along with a loosening of controls, is largely blamed for the US housing bubble earlier this decade that eventually triggering the …
To silence sceptics, Greenspan told the country not to worry about the housing bubble: …any bubbles that might emerge would tend to be local, not national, …
My publication preaches how the
speculative credit binge of the recent period laid the foundation for
the stunning collapse of stock and real estate prices. …
“There is a real estate bubble in the luxury apartment tower market in Tel Aviv, but overall in Israel there is no such bubble,” Atias told Army Radio. …
Real Estate News | BiggerPockets.com (blog) – Oct 5, 2009
That is the possibility that the real nova real estate bubble might still be ahead of it. In other words, people who buy now might be looking at some major …
The sale generated eight bids for a limited liability company holding a portfolio of construction loans and real estate that was owned by the Chicago bank …
Beds 2 Baths 1 full 2 part baths Size 2,000 sq ft ($1,195 / sq ft) Lot Size n/a Year Built 2007 Days on Market 1 Listing Updated 10/1/2009 MLS Number S591166 Property Type Condominium, Residential Community Airport Area Tract Plza
Enjoy the luxury of height in this fabulous penthouse offering unobstructed breathtaking city light and natural reserve views. This special residence boasts over $280,000 in interior finishes and upgrades inclusive of Royal Oyster marble flooring and tectured carpeting, three professional built-in cabinets, Audio-Visions theatre sound system throughout, Snaidero Italian cabinetry, granite and marble baths, Classy Closet cabinet systems, European wall treatments and 19 foot vaulted ceilings with a stainless steel ballister. Enjoy resort-like amenities at The Plaza Irvine including a Concierge service, convenient on-site retail, 2 pools, spa and cabana area, state-of-the-art fitness center, and an outdoor grill / fireplace area for dining. This is a special opportunity to live in luxury and so close to the areas renowned shops near Fashion Island, fine area restaurants and sought after beautiful beaches and coastline cities.
Obviously, there was no housing bubble. This property surely has appreciated 20% since the savvy buyer purchased this in late 2007… Not!
Nothing you can make that can’t be made. No one you can save that can’t be saved. Nothing you can do but you can learn how to be you in time. It’s easy.
All you need is love. All you need is love. All you need is love, love. Love is all you need.
All you need is love… and a 42″ flatscreen, a new Cadillac Escalade, Pergo wood floors, granite countertops, stainless steel appliances, weekends in Vegas, vacations in the Seychelles…
Do you remember the Castle at Kron and Ecclestone Circle? Or perhaps the monstrosity at Angell and Michelson? Or the Joke on Karen Ann Lane? The trend in over-improvement during the bubble is most noticeable in the omnipresence of pergraniteel.
During the bubble, the more you spent, the more you made. People
actually believed that adding common improvements — something anyone
could do to their own taste — would add more value than the
improvement cost. Flippers made money because they were there; breathing was the only prerequisite to success. Skill
and financial acumen had nothing to do with it, as evidenced by the losses they took when they were left holding the bag.
Home improvement and flipping shows became so common, they developed
their own channel. Like moths to a flame, fools flocked to flip houses.
The infamous flops are profiled here.
Today’s featured property is another one where you have to ask yourself, why?
Why did someone take an ordinary house — overpay for it — then proceed to demolish it in favor of something that is vastly over-improved for the area. This makes no sense. If this made sense, we could drive our entire economy on building and rebuilding homes… wait, we tried that once, didn’t we?
Beds 5 Baths 4 full 1 part baths Size 3,990 sq ft ($298 / sq ft) Lot Size 7,020 sq ft Year Built 1979 Days on Market 7 Listing Updated 9/25/2009 MLS Number P704661 Property Type Single Family, Residential Community Northwood Tract Cust According to the listing agent, this listing is a bank owned (foreclosed) property. RE-BUILT IN 2007. JUST UPGRADED. FRESH PAINT, NEW CARPET, NEW APPLIANCES. CUSTOM LIGHTING. MOVE-IN READY ! ! !
This owner buys the property for $640,000 on 4/7/2005. By the time he finished construction, he hit the peak of the housing market. Unfortunately, he did not find a mark(et) for his monster.
Washington Mutual loaned this guy $1,200,000 on 1/12/2007. I imagine there is a fair amount of mortgage equity withdrawal in that number. Then on 8/24/2007 he got a HELOC for $250,000. WTF was WAMU thinking? The builder made his profit.
The rest is history…
Foreclosure Record Recording Date: 10/10/2008 Document Type: Notice of Sale (aka Notice of Trustee’s Sale) Document #: 2008000471693
Foreclosure Record Recording Date: 06/13/2008 Document Type: Notice of Default Document #: 2008000285894
Where are you going With the long face pulling down Dont hide away like an ocean But you can see, but you can smell and the sound Of your waves coming down I am no superman not at all But I have no answers for you I am no hero, and thats for sure But I do know one thing Where you go, is where I want to be Where are you going? Where do you go?
There are a number of important people who played a role in The Great Housing Bubble. Some of the more famous ones have written books or had books written about them. There are men like the Tan Man, Anthony Mozilo, who are infamous in housing blog circles, but who emerged from the bubble wealthy and with limited legal problems. Today, I want to look at a couple of D-List players who failed spectacularly. These are colorful men who will be footnotes in housing bubble history.
Casey Konstantin Serin
Casey Serin was the infamous blogger of I am Facing Foreclosure blog. He purchased nine properties in a few months during early 2006 using liar loans. He rolled the dice on the housing bubble, and came up snake eyes.
He has managed to get a Wikipedia entry made about him as he has made a career out of his failure. The following is a list of Serin’s known mainstream press coverage in reverse chronological order.
Casey Serin has come to epitomize everything that went wrong with the real estate bubble. At least he understands the importance of positive cashflow now…
Jon Ronson interviewed Casey with his trademark wit on BBC Radio.[22] While in Australia, Casey Serin appeared on Top Shelf Radio with Robbie Buck[26]. The Official IAFF (I Am Facing Foreclosure) Theme Song received 400 plays in one day during Serin’s rise to fame — a small example of his cult-like status among bloggers. Apparently, Casey is still trying to cash in on his infamy. The latest attempt is a book called The Foreclosure Code Book. Having gone through it nine times, he is certainly an expert on foreclosure now.
David Lereah
David Lereah was the chief economist for the National Association of Realtors during the housing bubble. He wrote about about the virtues of investing in residential real estate just as the market was peaking. He was as wrong as wrong can get and as public as one could possibly be. I cringe when I think about it.
In his heyday, there was a blog devoted to watching for his fall. With his fall from prominence, the blog isn’t updated as much as it used to be. It will sit there like a dormant archive of his misdeeds waiting to strike him down if he rises up again.
BTW, did you know that David Lereah wrote a book touting tech stocks that came out in early 2000? This man’s timing is amazing. He managed to write two books that came out right at the peak of their respective financial bubbles that were totally wrong!
For the sake of contrast, let’s compare David Lereah with Robert Shiller, an author who also had books come out at the peak of the NASDAQ bubble in early 2000 and the peak of the Great Housing Bubble in 2006. Robert Shiller correctly called the top of both financial bubbles and laid out a conceptual framework that better explains asset price movements.
Robert Shiller was right, and he was very publically right at the perfect time. David Lereah and Robert Shiller are the outliers — the two extremes of being wrong and being right.
It hasn’t turn out well for Mr. Lereah. I was interviewed for a Wall Street Journal follow up that appeared on the front page of the print version in January of 2009. It was a hit piece; Realtors’ Former Top Economist Says Don’t Blame the Messenger.
Mr. Lereah admits to one mistake: believing there would be no national
housing crash. “I have to take the blame for that,” he says. “I never
thought it would be as bad as this.”
{insert humorous quip that disguises my gloating over his demise} Nobody saw the collapse of housing prices back then, right?
So where is David Lereah now? From the WSJ article:
Mr. Lereah now works in a small upstairs office that doubles as an
exercise room. He has started his own company, Reecon Advisors, that
puts out a weekly newsletter on the housing market and provides
consulting services. “I feel I have such a refreshing view now because
I’m not representing any interests,” says Mr. Lereah.
He charges $495 annually for the newsletter, and currently has fewer than 50 paying subscribers
So the most powerful real estate economist in the country is now making $25,000 a year ($495 x 50) and working out of his exercise room. How the mighty have fallen…
Beds 2 Baths 2 baths Size 1,123 sq ft ($312 / sq ft) Lot Size n/a Year Built 2005 Days on Market 1 Listing Updated 10/2/2009 MLS Number S591293 Property Type Condominium, Residential Community Airport Area Tract Watr
According to the listing agent, this listing is a bank owned (foreclosed) property.
Experience the urban OC lifestyle in the sophisticated community of WATERMARKE providing you with amenities such as Concierge sevice, fitness center, pool, spa, tennis, movie room, etc.
Casey Serin made nine purchases similar to this one. The property was purchased on 8/26/2005 for $501,000. The owners used a $400,800 first mortgage and a $100,200 second mortgage; there was no downpayment. They refinanced in April of 2007 and took out $12,000. I imagine they needed some help with the payments…
On 9/21/2009 HSBC BANK USA NATIONAL ASSOCIATION bought it at auction for $427,500. Just as in Casey Serin’s case, the lenders are the ones who absorbed the losses from the speculation.
Balance in the System
In a way, the Casey Serin’s of this world do serve as a check and balance on our banking system. When lenders are not regulated — and really stupid — the Casey Serins of this world rise up and cause such enormous losses that it brings down the whole system. Casey Serin was not trying to break the law (he did most of his malfeasance in ignorance); think about the scope and scale of the fraud that was perpetrated. Very little was ever caught.
Good financial regulation may or may not have prevented The Great Housing Bubble. Absent any future regulatory changes, the only thing standing between us and another housing bubble is the willingness of lenders to inflate one. How long before they lose their minds again?
Irvine doesn’t have any great cashflow properties. Today’s is cashflow positive, but it is still have to believe in appreciation to pay these prices for small condos.
I’m givin’ up, on everything Because you messed me up Don’t know how much you Screwed it up You never listened That’s just too bad Because I’m moving on I won’t forget You were the one that was wrong
Investment wisdom of yesteryear has been forgotten. People started drinking kool aid and convinced themselves they can make and spend a fortune through real estate appreciation alone. They were wrong. This mistake caused The Great Housing Bubble, and the result is foreclosure, ruined credit and even bankruptcy. Most have not learned this lesson yet.
{book5}
Time to Payoff
When people examine investments, they often look at rates of return to compare between asset classes. Rates of return are a valuable metric. When thinking about retirement finance, rates of return become less important than steady cashflow. We need a new measure of success for reaching your retirement goals: Time to Payoff. The Time-to-Payoff is the amount of time it takes to retire the debt used to acquire the asset (house). It is a handy tool of those who use Accelerated Amortization.
Today, I want to look at another feature of cashflow investing: debt retirement. In Real Estate, Cashflow Investment and Retirement I noted, “… you can take the excess rent and put it toward the mortgage paying off the debt more quickly. Remember, the goal is to have maximum free cashflow in retirement, so you want to pay off those debts.” Retiring debt is part of the cashflow investment mindset; it is diametrically opposed to speculation.
Paying off debt is as difficult as dieting — there is always a temptation — whether it be spending or eating. The success rates for debt retirement are no better than they are for weight loss. Perhaps we should have a TV Show for the Biggest Saver.
Calculating Time-to-Payoff is a challenge. It requires looking at the available sources of cashflow and the impact the property has on its owner. There is a level of cashflow that can be diverted toward debt service that otherwise does not impact the owner’s life.
For example, if a property is about $600 per month cashflow positive before debt or taxes, the debt service payments can actually be closer to $900 per month before the owner is truly cashflow negative. How can this be? Isn’t paying out $300 a month more in payments making you cashflow negative? Not really. Part of that payment is equity that is paying down debt, so that is not a true expense. The interest will be tax deductible for most wage earners, so the owner can adjust paycheck withholdings to compensate for the difference in payment. In short, the property has no net financial impact on the owner.
If the property is cashflow positive — which it must be for this analysis to work — there will be money that can be put toward debt service. If the maximum available cashflow is put toward debt service, how quickly does the loan amortize? That is Time to Payoff.
If you invest in the Time-to-Payoff way, your property investments will have no impact on your financial life — plus or minus — until you retire. There is no demand on your income to service the investment, and there is no net benefit for you to spend on your lifestyle. Let’s just say, it isn’t a lifestyle alternative many people were choosing during The Great Housing Bubble.
{book2}
IHB Investor Report
A few weeks ago, we introduced IHB Investor Reports. After reviewing the comments and some further reflection, we have updated our reports to include new features — one of which is the Time-to-Payoff calculation. Today’s featured property is as close to an investor property as I could find here in Irvine. The deal still isn’t very good unless you are betting on appreciation.
One of the changes we made was to run the report based on what we believe to be the most likely transaction price. It does nobody any good to run a report based on an asking price that is either WTF high or so low that you know 20 bids will be over the ask. The comps are what guide short-term pricing.
Another feature we added is a chart showing the impact of different downpayment and interest-rate scenarios. Rather than run multiple financing scenarios, I set up the spreadsheet to automatically run 165 of them and report the results in terms of cash-on-cash rates of return. What you will notice is that low downpayments and low interest rates increase returns at any given price. BTW, you don’t want to know how it is calculated…
We are up and running and ready to serve. If you want to see an IHB Fundamental Value Report for either your own home or a house you are looking to purchase, you can request a report at our newest navigation stop: Reports. You will be automatically signed up for our introductory emails and our periodic newsletter when you request a report. In order to avoid responding to robot submissions, we will process your
request when we receive confirmation from your email address.
Beds 1 Baths 1 bath Size 471 sq ft ($276 / sq ft) Lot Size n/a Year Built 1976 Days on Market 359 Listing Updated 8/3/2009 MLS Number F1786080 Property Type Condominium, Residential Community Orangetree Tract Cm
According to the listing agent, this listing may be a pre-foreclosure or short sale.
Charming end unit. Lower level one bedroom with full bathroom and kitchen. Inside laundry. Living room and patio area overlooking water stream and soothing sounds of a waterfall. 1 car port. Association has pool, spa, tennis courts and clubhouse. Excellent location next door to Irvine Valley College. Near 5 and 405 Freeways, Irvine Spectrum Entertainment Center, Business District, Shopping. Located in Building # 12.
I
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