Friday, January 16, 2015

PHOTO OF THE DAY: Vicious Vermin Vandals

Having worked in the real estate business for over 10 years, I have seen a lot of things.  But every once in a while, something comes along that shocks the senses.

During a recent storm, I got a call from a tenant saying that her ceiling was leaking.  We knew the roof was older but we hadn't had any problems with leaks.  The roof was in decent condition so we didn't expect any problems.  However, when we went to inspect the roof after the storm, here is the surprise that awaited us:

Whoa!  Somebody tore a giant hole in the roof.  As we scratched our head wondering who would do such a thing and why, a closer inspection revealed the culprit.   

Teeth marks were found in the wood shakes and it appears raccoons are responsible for unprovoked damage to the roof.  

Here you can see two other discolored areas where the raccoons began tearing into the roof before settling on a final area.  Fortunately, the roof lath stopped their progress.

If you see any raccoons in the Eccles Historic District with slivers in their gums,  we want to talk to them.

Tuesday, January 6, 2015

CHARTS: Real Estate Market Movements in 2014

As we start 2015, I thought it would be appropriate to review what happened to the market in 2014 and do some prognostications for the coming year.

Here is our perennial chart showing sales volume since 1995.  The white trend line shows us a 12 month moving average to help filter out the seasonal volatility.  As you can see here, we appear to have reached a relative plateau in 2014 relative to previous years.  After the market troughed in 2011, volume significantly increased until late 2013.  Since that time, the number of homes sold has only increased moderately.  Although sales aren't increasing, this level of sales volume is indicative of a healthy marketplace.

The year-over-year monthly comparisons show us the moderate pace of sales growth (with the odd exception of September).  Charts from 2012 and 2013 showed consistent double digit increases in sales.

This next chart shows how long it takes to sell a home priced at fair market value.  You can see the winter high of 120 days in January of 2012.  Although there is definitely a seasonal aspect to the time on market, the trend toward shorter market times has been very strong.  Very low interest rates and low prices combined to spark competetive buying in early 2013.  Hence, the very short market times.  We have now moderated to the mid 50's which is again a healthy place for the market to be.

For 2015, I expect more of the same.  Prices should slowly increase with inflation (look for another post on prices soon) and sales volume should plug along as usual.  Of course, any major political or economic events may change this prediction, but I don't foresee anything on the horizon that will affect the market significantly in this calendar year.

Conditions are good for buyers and sellers in this Goldilocks marketplace.  If you are looking for a home or want to sell yours, CONTACT ME, and lets make sure your needs are met.  

Saturday, January 3, 2015

Photo of the Day: Wind Event Wonders

I recently returned from a vacation to discover that Ogden has experienced a significant wind event in our absence.  When we left town, the snow was half a foot deep.  When we returned, the snow was missing from our front yard.  Another clue was that our front porch furniture had been rearranged or was missing (to be found in the back yard).

Realtor sign posts and hardware are made to withstand the elements and I have never really had problems with wind events such as these causing problems for my signs. But, in a first for me, one of my posts took a real beating this time.  It takes quite a bit of force to bend a sign like that.

For a trip down memory lane, you can see video from the giant wind storm we had in 2011.

Wednesday, December 31, 2014

Things To Do In Idaho: The Blue Heron Inn

Our family recently escaped to Idaho for a much needed vacation over the Christmas holiday.  While we were with family, my wife and I decided to leave the kids with the grandparents and escape for the evening to a bed and breakfast.  Our search ended when we found the Blue Heron Inn.

The Inn is located just north of Rigby, ID on the banks of the Snake River.  Room rates are reasonable between $130-$180 per night and they include a delicious home made breakfast cooked by the owners.    

We happened to choose a less busy time of the year and a room was readily available.  Despite that, it didn't mean the setting was any less stunning.

Our room had an uninterrupted view of the Snake River.

The following morning we were rewarded with a beautiful sunrise and an outdoor temperature of -10ºF.  The river waters were choked with ice but their relatively warmer temperature put off steam in the ultra-cool air.

If you are looking for a great getaway in southeast Idaho, I strongly recommend the Blue Heron Inn. Booking reservations online is simple and the location won't disappoint.

Friday, December 19, 2014

INCOME PROPERTY: When Cash Cows Become Vicious Alligators

In 2008, I began attending regular lunches with a group of real estate investors in Weber County.  It was a great place to meet people with similar interests and share opportunities and best practices among each other.  I met many of my best and most loyal clients at these gatherings.

One client in particular moved here from California and began to aggressively acquire properties as the market turned downward.  I arranged for many transactions, most of them seller financed, as this particular client built a growing portfolio of properties.  This client indicated their plan was to cash flow the properties and invest in capital improvements to build equity.  That seemed to make sense.

However, by 2010, I distanced myself from this client as I learned more about their business practices and how they were operating.  They were obtaining funding from private investors based on the promise of what I considered unrealistic returns.  One particularly interesting 'trick' they used to facilitate their operations was to offer no-deposit lease terms to tenants.  The idea was that by reducing the deposit, they could increase rents proportionally or even more.  Since income property value is based on rent rolls, theoretically, this trick should increase the value of the property they owned.  If the value of the property was worth more, they could show this as an increase in equity and thus present it as evidence of their wise use of their investor-partner's funds.

The problem, of course, is that deposits are a natural and necessary part of responsibly managing property.  Also, according to the Rule of Three, there are natural limits to the price a tenant can pay in rent.  So, this client attempted to defy gravity, so to speak, by raising rents, dumping deposits, and hoping that everything would go well.

As you can imagine, they didn't go well.  When I spoke to the client's property manager in 2012, he indicated they were experiencing a 20% vacancy rate.  That was remarkable when the ambient market vacancy rate is just 4% for tenable property.  Whatever gains they were making on higher rents were being lost through punishing vacancy rates.

The other problem was that tenants had no incentive whatsoever to keep up the condition of the property.  When these tenants left, the client spent much more than was necessary to repair the units because the tenants abused the places without restraint.  And of course, since the tenants were typically low income, collecting from them for the damage was nearly impossible.

Thus, over a period of time, the business model began to unravel as investor-partners began to question their return on investment. Major cracks in the edifice began to show themselves in 2013.  At that time, this former client mailed keys back to the seller of a property they had bought via seller financing in 2008. Since that time, the former client's name has appeared on the Notice of Default list frequently as they have stopped making payments on their mortgage obligations.

Yet, in all the chaos that has descended on the portfolio of this former client, we made an interesting discovery.  Some of these properties in foreclosure have ended up with 2nd and 3rd mortgages on them.  Even more shocking, the loans came from private retirement accounts.  Finally, to ad insult to injury, many of these loans were made within weeks of the borrower defaulting on their first mortgage obligations.  It appears that while the Titanic was sinking, someone was been running up the tab at the bar.  In such situations, the private IRAs have no hope of recovering their investment as their collateral is wiped out at the foreclosure auction.  It is a sad sight.

Investors like cash cows that that produce profit each month after all expenses are considered.  The opposite of a cash cow is an alligator which is a property that needs to be fed money each month to keep operating.  It appears that this former client purchased what he thought were cash cows and through unwise decisions mutated them into vicious alligators.  These alligators have eaten their owner alive and it appears it was a feeding frenzy.  


Monday, December 8, 2014

INFERNO: Ginormous 1.3 Million SQFT Apartment Fire

I don't typically post about real estate events in other states.  But, after seeing photos of this event, I thought it was worth sharing.

Downtown Los Angels is experiencing a residential construction boom at the moment.  A particular developer has been building giant structures in interior urban neighborhoods.  One such project was called the Da Vinci.  It is/was a 1.3 million square foot giant.  Here are several photos.  The first is a rendering of what the finished project would look like.  The next couple are of it of it under construction.

Unfortunately, that much wood makes for excellent kindling.  Somehow, nearly the entire structure caught fire at same time.  Here is how that looked on the Los Angeles skyline.  More shocking photos can be found HERE.

Needless to say, authorities are investigating.

Wednesday, December 3, 2014

FOR SALE: Super State Street Commercial Building

I recently listed this perfectly located commercial building on State Street in Sandy, Utah.

Located at 10763 S. State Street, this property sits on .52 acres.  The structure is block construction and has over 3600 SQFT inside including an additional 400 SQFT of mezzanine storage.  The building currently houses an outdoor recreation and sporting goods business.  The front area outside the store is currently used as a display but it is permitted to be converted to additional parking if needed.

If you are interested in this property, CONTACT ME for more details and current pricing.  

Tuesday, November 25, 2014

Dirty Demolition: Lath and Plaster Removal

When we look at our walls, we don't typically think too much about what they are made of.  Contemporary construction uses a gypsum/paper sandwich that we call sheetrock.  But, before the mass production factories could spit out millions of square feet of gypsum board, home builders had to use another method to create flat and attractive wall surfaces.

The materials used up until the 1950's involved cedar lath and plaster.  Typically, two-inch cedar strips were tediously tacked to wall studs with small gaps left between them.  Then a base coat of rough plaster mixed with horse hair was laid over the cedar.  As the plaster squeezed between the lath, it created a grip to keep the plaster in place.  Then usually, a top coat of finer plaster was laid over the rough base coat to create a smooth finished surface.  That surface was typically wallpapered as was popular at the turn of the century.  

With remodeling older homes, removing lath and plaster is sometimes necessary to easily access electrical wires and plumbing. I recently had the privilege of removing some distressed lath and plaster in my own basement. 

 I only needed to remove about 80 square feet of ceiling plaster.  But, with us inhabiting the basement it was necessary to take precautions so I would not inundate our furnace with dust or have to give all our storage boxes a bath afterwards.  

Plastic sheets were hung to contain the dust. A dust mask and disposable clothes were necessary as well.  The ceiling came down in short order but the mess it created was immense.  I removed 8 large (strong 3mm thick variety) garbage bags of debris.  Each weighed in excess of 50 pounds.  

How yesteryear's craftsmen installed this stuff in the first place is remarkable to me. They had to be work horses to do the job, I am sure.  Fortunately, it doesn't take too much skill to take it down.  

Underneath that formerly white mask and formerly black hat, I am smiling.  


Thursday, November 20, 2014

JUST SOLD! Arts & Crafts Duplex Restoration Project

I just closed on the sale of this property at 2539 Orchard Ave. in

This property was a wild ride for sure.  My client reclaimed the property from a previous owner after a default on a seller financed note.  The previous owner mailed the keys to us signed a deed giving the property back to my client.

That is when the fun really started.  We inherited a delinquent tenant who was notorious for mischief.  Prior to my client taking the building back, when the other unit in the building went vacant, she posed as the landlord and rented the unit out.  You can imagine the real landlords surprise when he discovered this sometime later.  However, for some reason, the previous owner never evicted this diabolically entrepreneurial tenant.

When we took possession of the building, this nefarious tenant asked that repairs be made to the property.  We instructed her that we could not make repairs but we were willing to let her break her lease and leave without consequence.  But, if she wished to stay, we would reduce the rents by $100 and she would be required to pay while she was there.  Unfortunately, she wanted repairs made and to live there rent free.  So, we proceeded with an eviction.

During this time we listed the property for $119,900.  We received an offer for $110,000 which requested seller financing on a 15-year note. But the buyer didn't want to move forward with the eviction being in process.  Later we received an offer of $100,000 from another buyer.  He didn't care about the ongoing eviction and moved forward.

All kinds of interesting things happened after that.  The furnace in the vacant unit was condemned; the tenant stayed until the sheriff showed up to lock her out; and, after leaving all of her belongings for us to store, her friends returned two weeks later to kick in the front door and steal a dresser drawer with some 'personal valuables' in it.  Despite all this, we were able to close the transaction for $97,000 on a 12-month seller financed note with the buyer placing $20,000 as a downpayment.

Despite the trauma, the home will doll up beautifully.  The buyer intends to restore the property as a home again.  Built around 1910, it was originally a 3,200 SQFT home for a well-to-do family in the area.  The original woodwork, fireplace, and lead glass are salvageable.  The hardwood floors can be brought back.  The community looks forward to seeing this gem of a home restored to its former luster.

If you are looking for a vintage home to restore in Ogden, CONTACT ME, and lets find one that will work for you.  I will handle all the sticky and unseemly transaction details so you don't have to worry.

Monday, November 17, 2014

Ogden's Architectural Dynamo: Leslie Hodgeson

The Standard Examiner recently had a front page write up on one of Ogden's most prolific architects, Leslie Hodgeson.  Ogden's cityscape is littered with monuments designed by the man. Interestingly, the lot our house sits on was owned by Mr. Hodgeson when it was purchased by Henry H. Hudman who built our home.  I am curious to find out if Mr. Hodgeson was the architect as well.

You can read more about the amazing Ogden structures designed over Mr. Hodgeson's 40-year career in this great photo illustrated write up: