Today’s Gift is Today

Each day has 86,400 seconds and we do not get this time back at the end of the day. Spend your time wisely and do not dwell on all of the negative economic news of the day. Today, there are opportunities but we will recognize these chances only with a positive frame of mind. Why not start today by investing in others?

U-2 Spyplane Flight Video

http://www.linkedin.com/news?viewArticle=&articleID=88405278&gid=1836254&articleURL=http%3A%2F%2Fangellaraisian%2Ecom%2F1016%2Fu-2-spyplane-flight-really-cool%2F&urlhash=K9VG&trk=news_discuss

This video was forwarded from a LinkedIn Group Discussion. It is relatively long to watch but it is worth watching. This will give us all a chance to reflect and contemplate on the true meaning of Thanksgiving.

Multifamily Projects

Andrew Hefe, CEO of Crescent Resources has stated that his company is on scheduled to emerge from bankruptcy in early 2010. He has indicated the real estate development trends to be inconsistent but is much more optimistic about apartments. He has indicated that multifamily projects will be a significant opportunity for real estate investment and development in the next several years. His predictions:

35% of the population will be unable to purchase homes and will have to rent

Multifamily housing will be essential to meet the demands of population growth

There is a lack of supply and the demand will exist.

For those of us in the trenches, what do we do with this glimmer of wisdom?

I am a strong advocate of rezoning for value and searching for the "needle in the haystack". Review the zoning maps in your community.
Highlight all of the multifamily, high density, and commercial retail areas.
Analyze the highlighted areas for land still zoned residential within higher use locations.
Most likely it is a left over parcel and not a large parcel. A 3-4 acre site can produce an apartment complex that most multifamily developers will consider.
Undertake a due diligence investigation of the property. If it doesn't make sense, walk away and do not spend any more time on trying to make it work.
If it makes sense, contact the owner - maybe they will want to partner with you to increase the value through rezoning.
If you have found a property that seems to make sense and if you need a second opinion on what to look for, contact me.
For those that follow me on this blog -- no charge for advice! I invest in others.

Unemployment Now at 10.2% and Rising

We are in a spiral that can only be broken by federal policies that encourage banks to become a community partner rather than running scared of federal oversight. Lending has always been a risk but minimized with sound judgment. We can’t get out of this economic depression without money flowing from banks to small businesses.

Banks are not lending money

Our economic problems become past history when we see positive job numbers

We won’t see positive job numbers until small business starts hiring

Small business represents 56% of our Gross Domestic Product (GDP)

Small businesses can’t obtain capital from banks NOW scared of risk

Small business are not hiring

Banks are not lending money

And we start all over again.

Brace for a difficult 2010. Real estate development is a high risk-reward industry. When do you think banks will again lend money for construction of homes, commercial/retail, mixed use, or any other real estate development project????

New Social Media Video

http://realestateopennetworkers.ning.com/forum/topics/social-media-roi-socialnomics?groupUrl=socialnetworking101&


New Social Networking Video to further reinforce the need and importance to be ahead of the curve and not swim against the current of social media.

Get in the game!

What will happen to Interest Rates?

If you are thinking about real estate investments as an alternative strategy, remember that interest rates begin to rise as a way to curb inflation. The key is to know when interest rates may start to trend upward. March 2010 seems to be a key date when the Fed decides to stop buying mortgage securities and if private investors do not pick up the slack - the result will be higher interest rates. Expect over 6%. Which by the way is still a low interest rate but the increase reduces how much you may qualify for a home mortgage. According to the National Association of Realtors:

Nov 20, 2009 Interest Rate @ 5.15% Median Home Price $174,900

March 2010 Interest Rate @ 6.00% Median Home Price $159,250

So in four short months while we are waiting for the Super Bowl after the holidays, our ability to buy a higher priced home disappears. To invest in real estate, remember the "perfect good storm" - low interest rates, depressed home prices, and willing sellers due to an over supply.

Foreclosures, short sales and low priced homes with LAND should be your target market.

Due Diligence Report - Maps & Plans

The following list of map or plans are invaluable in the site analysis work required in land acquisition.

Water and Sewer Maps – these maps can be obtained from the municipal water and sewer department or your community could be served by private companies. In either case, plans illustrating the location of existing water and sewer lines exist in some fashion – if only for maintenance purposes. Also, seek to obtain the capital improvement plans showing the future water and sewer extension projects. It is easier to follow water and sewer but the land cost may reflect the availability of the utilities. Ask for a paper print for your future reference. For water distribution, the size of the main and its location plus fire hydrant locations will be sufficient for the initial assessment. For the sewer line; location of the line, manhole locations and line invert elevations rim elevations and sewer line size are essential to determine if the PIQ can be served by gravity sewer. Note: the elevations shown on the municipal plans must be in the same datum as your topography map to make a quick assessment if the property may be served by gravity sewer.

Due Diligence Report - Maps & Plans

The following list of map or plans are invaluable in the site analysis work required in land acquisition.


Aerial Photo – a recent aerial photograph provides information not readily understood via plans, maps or site visits. The aerial will provide property use relationships and the overall development approach of the immediate surrounding area. Vacant parcels are also easily identified. If the location selected is Priority A, the cost of an aerial photo will vary but a recent aerial in Charlotte with labels was less than $500. Most on-line aerial photo’s lag development but with the downturn, the aerial photo’s may catch up with the development activity. If the site is infill, online aerial photo’s should be sufficient. This element of the due diligence package is essential to the overall analysis of a site.

Soils Map – the Soil Conservation District maps delineate the soil characteristics for every county. These maps provide an overview of the type of soils found in a location. The maps are dated by use of old aerial photo’s with soil types delineated. The key is to locate the PIQ on the aerial, sometimes not an easy task. Use a detailed road map to assist in this effort. After locating the property on the soils map, record the soil type on the property and use the Soil Conservation District soil descriptions and classifications to assess the positive and negative aspects for development operations. As an example, the report may indicate a high water table for a specific soil type. This would impact development costs; may alter the building foundation design; be classified as a wetland soil type; or the site may have rock 10” below the surface. Study the map and the soil types. This document is an overview and should be followed-up with a strategic soil investigation program onsite by using test pits and soil borings. The onsite investigation will further define the soil types and assist in delineating the extent of the soil types found on site.

Due Diligence Report – Maps & Plans

In today’s technology and the need for local government to keep pace with the information flow and development changes in their community, most local municipalities post online their ordinances and maps. Compile maps and plans available online and locate the subject property on each map or plan. There are some plans which can only be obtained from a regulatory agency but it is worth the effort. Analyze the property location and the site characteristics to determine the development potential.


Street Map and Community Amenities – nothing new here except find the best possible map to show the benefits of the community; features, schools, shopping, offices, employment centers, highway system, parks, etc. Locate the property on this map for future reference and distribution. The best resource is the Chamber of Commerce.

Topographic Survey or GIS Map – the more advanced municipalities will have flown topography maps for their jurisdiction. Topo from an aerial is much more reliable than GIS. In either case, the engineering office at local government will have topography maps for your use. Buy the necessary topo maps of the PIQ. Ask for adjacent property topography and adjacent development plans, if available. Also, ask for the construction plans, if any, for the frontage road servicing your property. Evaluate the information for consistency in elevations, land features, and property lines. Review low areas for wetlands, flood plains, jurisdictional streams, and/or poor soil. Delineate areas not suitable for development purposes. Severe grades, excessive non-buildable areas, or road frontage issues may hinder a cost effective development approach. Do not force the issue but be exhausting in the analysis of the information. You are determining the priority of the site for development potential.

Real Estate Investing Stats

According to the Move.com Survey:

12.1% homebuyers plan to purchase a home as an investment property
Foreclosure buyers account for 25% of consumers interested in purchasing a home
42% of foreclosure buyers regard their purchase as an investment
52.6% of those responding to the survey are ages 32 to 49
58.2% expect to pay 20% or less than market price for a foreclosure
38.5% expect a 25% or greater discount
73% expect their properties to appreciate 10% or more in 5-years
28% expect their purchases to appreciate 20% or more in 5-years

Investing in real estate at below market prices may be an excellent alternative in the use of money. The home can be rental or fixed up for re-sale. Remember, the first time and first move-up markets (or workforce housing) will continue to be the driving force behind the market recovery. In Charlotte, NC there are 5,946 homes on the market below $120,000. Check on the inventory in your marketplace - it is time to seriously consider real estate as a component of your investment strategy.

Never Forget

Due Diligence Report - Maps & Plans

I am an advocate of rezoning for value. Simply stated, buy land with a less valuable use classification and rezone the property to its highest and best use. As an example, buy agricultural use property for land located within a commercial area. If the rezoning to commercial is successful, the value of the property has increased in value. The real estate development business is a risk reward industry. To assess the possibility of rezoning for value, the zoning map and master plan are important public documents to be researched.

Zoning Map - this map is posted online by the local municipality. The map will show all of the zoning districts within the municipal boundaries. Locate the subject parcel on the zoning map and determine the assigned zoning classification for the property. Also, make note of the zoning classification for the immediate surrounding and adjacent properties. Assess trends and changes in zoning for the surrounding properties. Also contact the zoning or planning department and seek information about their intention of revising the zoning map for the town.

Master Plans – each jurisdiction will have an overall growth management plan illustrating the uses for areas and property within its jurisdiction. This plan will delineate uses i.e. Residential, Industrial, Commercial, etc. The master plan does not specify the zoning but designates the use. The master plan changes periodically and in some cases must be updated every 5 or 10 years based on local ordinances or state law. The property should be consistent with the master plan or consider a master plan change application. This may present a more difficult and lengthy regulatory process but most jurisdictions permit this option.

The due diligence report map and plan section will be posted on my blog over the next several days.

Due Diligence Report – Maps & Plans

In today’s technology and the need for local government to keep pace with the information flow and development changes in their community, most local municipalities post online their ordinances and maps. Compile maps and plans available online and locate the subject property on each map or plan. There are some plans which can only be obtained from a regulatory agency but it is worth the effort. Analyze the property location and the site characteristics to determine the development potential.

The following list of map or plans are invaluable in the site analysis work required in land acquisition.

Property Boundary Survey – at this point in the site analysis work, you may not have contacted the property owner. Thus, visit the municipal engineering or public works office and ask for surveys for the subject property or adjacent properties. There will be surveys available in and around the subject site unless the site is located outside the infrastructure core. This survey will illustrate boundary line problems i.e. cores, overlaps, access easements, rights-of-ways, utility easements, etc. The results will show the constraints to developing the site. While you are at the government office, request a copy of the road construction plans for the property frontage road.

Tax Map - this is an important overall map showing how the subject parcel fits like a puzzle with surrounding property. The tax map will give you lot number, blocks, parcel ID numbers and other references that can be used in deed research, tax information and prior ownership history. This map needs to be studied for development and ownership trends. Disneyworld land was massed by Disney using the tax map to find separate land owners and quietly purchasing property to assemble a large contiguous land area for the theme park.

The due diligence report map and plan section will be posted on my blog over the next several days.

New LinkedIn Group

I will be managing a new subgroup "Charlotte Real Estate". This subgroup is within the LinkedIn group - Network Charlotte. There are over 4,300 members in Network Charlotte and the subgroup will concentrate on issues, topics, data and industry news specific to the Charlotte real estate market. What is good about this group is that there will not be any listings nor promotiuon of services on the discussion board. If you are interested in the Charlotte market, please join this new LinkedIn group.

What is the definition of a Real Estate PERFECT STORM?

1. Interest rates remain under 6% and some sellers are contributing to closing costs

2. Home prices are at the bottom and home appreciation will come again

3. Inventory is at a peak!! Over 2,500 single family homes on the Charlotte MLS under $100,000. A buyers market and sellers are willing to negotiate price

4. Federal government may contribute $8,000 to the buying of your first home or $6,500 if you have lived in your current residence for at least 5 consecutive years in the past 8 years. The credits cannot be used on homes more than $800,000.

This is my 4th recession and have been in the real estate industry during these recessions and I have not experienced a real estate Perfect Storm – we are living this opportunity today but we know when it will end. April 30, 2010.

Someone told me that it is a lot to think about! What is there to think about. It will not get any better than this. If you believe real estate will regain its value over time by appreciation and you will stay in your new home for over 3-years, you should take advantage of this perfect storm.

Home Buyer Tax Credit Extended & Expanded

Legislation may be signed by the President on Friday! The following article from Business Journal provides an overview of the provisions.

http://washington.bizjournals.com/washington/stories/2009/11/02/daily94.html?ana=e_pft

Let’s take a hard look at this federal program. $8,000 tax credit for first-time home buyers is extended to April 30, 2010. Income eligibility is raised to $125,000 for individuals and $225,000 for joint.

Congress has added a $6,500 tax credit for owners of existing homes who buy a new principal residence. Owners must have lived in their old home for at least 5 of the past 8 years.

This tax credit will disappear in 5 short months!
Assume it will take a month to close (the system will slow the process down) since there will be a flood of activity. This will leave you ONLY 4 months to consider buying, locating the right home for you, and negotiating a contract of sale. Not a lot of time and if you procrastinate, the opportunity will pass you by.

Remember, you need to get on the real estate band wagon!
Interest rates remain under 6%
Home prices are at the bottom
Inventory is at a peak!!
This is a PERFECT STORM.
Ride the benefit – after all, when is the last time anyone wanted to give you $8,000??

Due Diligence Report - General Section

A due diligence report on vacant land is used to assess property for investment opportunities. The report will include a comprehensive analysis of the property. The essence of a due diligence report is to document what is known about the property. This report will assist buyers and sellers of real estate for development purposes.

As with any report, the initial section will be to outline the general overall description of the property. The following information would be essential components of the “General” section of the due diligence report. Additional sections will be posted on my blog.

1. Property Description and Ownership
Include name, address, city, phone number and email address – a complete contact list for the owners of the property would be a great reference. The property description will be a location description or directions to the property.
2. Legal Description
This is important for researching the property in public records. For this purpose, a Lot and Block, or Parcel Identification Number would be sufficient. Try to obtain a metes and bounds description of the property from the owner.
3. Tax Map and Parcel Size
The local municipal tax records/maps will have references to include in the report. The parcel size is typically stated in acres.
4. Master Plan Compliance
Visit your local municipal government Planning Office and find the parcel on the Master Plan approved for the community. This will outline government’s future overall growth patterns for the subject property and surrounding areas. Having your vision for the property consistent with local government would be the politically correct approach. Consistency is not always the case and amending the Master Plan may be the only way to develop property to its highest and best use.
5. Future Road Alignments & Right-of-Way Dedications
Obtain from local government their future plan for new roads, road realignments and expansion of road rights of ways. Determine how their plan effects the subject property and the surrounding area.
6. Review of Phase I Environmental Study, if available
If a Phase I environmental study has been prepared for the subject property and the owner provided a copy, review the findings in detail. This report, if not available, would be required by lenders and essential from your point of view.
7. Site Pictures
Walk the site and take enough pictures to document the site characteristics, adjacent properties, and existing roads. You can’t take too many photos. Include the essential overall site photos in the report. An aerial photograph is very important in assessing how the property is situated with the overall growth pattern of the immediate area. Check public and online sources first and if not current, retain an aerial company to fly the site and take sufficient photos from several perspectives.

12 Rules of Networking

Kim Albritton of Black Belt Business Profits shared the 12 rules of networking in the Pittsburgh Business Times. I have added my comments to reinforce how the rules may be applied.

1. Don’t try to sell
Most people mistakenly stroll into a meeting with the idea they need to find someone to sell to. Don’t do it on social networking sites.

2. Give before you get
I have found this rule to be true and establish yourself as a giver first to build your connections. And contribute to discussions with quality insight.

3. Understand that it’s network
Power networkers work at it and they set aside time to think about whom they know and how people in their network can help each other. And how they can help their connections.

4. Be interesting
Be fresh and convey information that your professional network can use – on a daily basis.

5. Set goals
Establish your goals for each social networking site. Work at networking daily to reach your goals.

6. Throw a Connection/Networking get to together
Agree with your contacts that you’ll meet for lunch and everyone will bring their contact list. Basically turn your contacts into appointments and projects/work.

7. Be interesting.
This one’s important enough to mention twice.

8. Make it easy to refer to you
So, you have succeeded and found a strategic partner who wants to refer people to you. Be specific and easy for someone to introduce or refer you to another connection/client.

9. Play matchmaker
Spend some time each week to think about whom you can match up within your network. Then make the introductions. This works and it expands your SOI. Remember Rule #2.

10. Say thank you
If you get a referral or introduction from someone, say thanks. Send a personal note.

11. Test alliances quickly
Don’t waste time on people who don’t understand networking is reciprocal. If someone is trying to sell you something that is not relevant to your, move on.

12. Have a system
Make your life easy and have a system for starting conversations, meeting with partners the first time, following up and making introductions. As an example for every connection, I have a standard written response thanking them for the connection and willingness to network together on projects of mutual interest.

Define Affordable Housing

What is your definition of affordable housing?
Is it workforce housing or housing for first time home buyers?
Or, housing provided only by Habitat for Humanity or Housing Agencies?

Affordability is dependent upon the monthly COST someone can manage owning and maintaining a home - not the price of the house. With mortgage interest rates below 6% and home prices pre-2002 levels in most markets, you may want to investigate homes available in your market.

As an example, in the Charlotte, NC MLS region, there are over 2,500 homes listed with a sales price below $100,000. The housing cost on a monthly basis will be less than renting an apartment. Don’t you think there is an investment opportunity or first time home buyer opportunities in all markets?

You have to get in the game!!

First Time Home Buyer Tax Credit Extension Vote this Week

Source: National association of Realtors®
Who Qualifies?
First-time home buyers who purchase homes between January 1, 2009 and December 1, 2009.
To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

Which Properties Are Eligible?
The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Will the Credit Be?
The maximum allowable credit for home buyers is $8,000. Each home buyer’s tax credit is determined by two factors:
The price of the home—the credit is equal to 10% of the purchase price of the home, up to $8,000.
The buyer's income—single buyers with incomes up to $75,000 and married couples with incomes up to $150,000—may receive the maximum tax credit.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?
Yes, some buyers may still be eligible for the credit.The credit decreases for buyers who earn between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $95,000 for singles and over $170,000 for couples are not eligible for the credit.

Will the Tax Credit Need to Be Repaid?
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale.