Phoenix housing boomed with the housing market and then crashed hard with the subprime mortgage crisis. Now things are looking up again in the state. It seems as though when the national markets go up, Phoenix goes higher, and when they go down, Phoenix goes lower..
This makes Phoenix one of, if not, THE best place to invest in real estate. You can buy properties for cheap when the market is rough, then rent them for amazing cash flow and tax breaks, all the while riding it out to realize some significant gains from appreciation.
Phoenix is volatile, but for the cash flow investor, that’s good news!
Phoenix rental rates are up 18% in the last 12 months, making it one of the greatest places in the nation to invest in cash flowing real estate! Couple this with the fact that Arizona continues to grow with education across the valley as well as being one of the premiere retirement spots in the world as baby boomers are approaching retirement and rapidly moving towards Phoenix. Values and rental rates are increasing along with a greater demand for rentals, as unfortunately, foreclosures still plague the state.
“BPO” stands for “Broker Price Opinion.” It is a report for the given value of a property, that a real estate agent will give to a lender to determine what to do with a property where they have a loan. And it is just what it sounds like, an opinion! All they do is quickly glance at the recent solds in the neighborhood, and go to the house to take pictures(they are at the property no longer than 10 minutes – a time frame that no buyer would feel comfortable making a solid offer in, given that it is not enough time to do any due diligence on a property to see what it has/needs.
Without going into too much detail here, let me just tell you I met both an appraiser and a BPO agent at a property yesterday, on a property valued somewhere in the $2 million range. Because I met both the agent doing the BPO, and the appraiser, the property will close because they have a keen understanding of what is really going on, since I took the time to enlighten them. Can you imagine if I just left it up to the opinion of the two people who had spent no more than a couple of hours looking at the subject property?!(and in cases of cheaper house, taken no more than maybe 20 minutes analyzing the value!)
And then this morning I met another BPO agent on another property we are doing a deal on, valued around only $100,000. The property probably would have came back to the bank with a broker price opinion at $130,000 or more if I hadn’t been there to meet the agent, in addition to sending her comps and letting her know the listing history prior to her arriving at the property. I also took the time to make sure she actually looked at all of the systems in the house and pointed out needed repairs. Had I not been there the agent would have not seen any of the needed repairs or structural issues to the house. These things have a significant impact to the buyer and many agents fail to realize they have two ends of each short sale transaction to work, not just the buyer, but the bank too!
If you were to ask a room full of real estate agents what the biggest factor is in the success of a short sale transaction, I would presume you would hear dozens of different answers. Answers ranging from how severe the homeowners hardship is, to how much money in retirement accounts the homeowner has, to whether or not the person that is on the loan actually ever lived in the house or was just a cosigner, or the most common…”who is the bank?” I would like to think one or two agents would get it right, but would be surprised to hear much more than that. While these factors do play a role in the short sale settlement, they are not THE most important factor.
The answer is simple, and it only contains three letters: BPO. The BPO is the hinge of the entire short sale. If you have a high BPO you are probably not going to close your short sale, unless that is of course, if you can get another BPO ordered and have enough time to go through that process. I have seen more short sales go to foreclosure because the BPO was not addressed properly then any other reason for short sale transactions not closing.
It takes approximately 10 minutes to comp a property(look up current home sales) and send that email to the agent who is processing the BPO, prior to them arriving at the property. It takes usually no more than an hour to drive to the property, meet the agent there, and then tell them where your offer is and the listing history, shake their hand and walk away. Sometimes you may leave the property feeling like you are going to get a high-value, and sometimes it will be the opposite, where you will leave feeling energized and know that you are going to have a slam dunk deal when the bank finds out they are getting more money out of the transaction after their closing costs then the true value of the property.
Setting up properly and processing the BPO correctly as the listing agent will be the deciding factor in 90% of short sales. I don’t care what the hardship is or how much excess cash the seller has, or even how much assets they have or none of that. I care what the value is and what the net is to the lender. Since I do have control over these things, contrary to popular opinion, I close consistently the short sales I take on.
It’s not rocket science.. Influence what you have control over. This is no different than anything else in the real estate business or for that matter, life.
To inquire about referring Joshua Gayman a short sale in the Arizona area or for assistance with negotiating a short sale of your self or for a client, or if you are a homeowner and another state just looking for guidance and true counsel, give me a call – I’d love to chat!
The median sales price for homes in Phoenix AZ for Apr 12 to Jun 12 was $112,000. This represents an increase of 23.7%, or $21,432, compared to the prior quarter and an increase of 31.8% compared to the prior year. Sales prices have depreciated 52% over the last 5 years in Phoenix. The average listing price for Phoenix homes for sale on Trulia was $282,323 for the week ending Jul 04, which represents an increase of 0.4%, or $1,251, compared to the prior week and a decline of 0.1%, or $357, compared to the week ending Jun 13. Average price per square foot for Phoenix AZ was $200, an increase of 159.7% compared to the same period last year. Popular neighborhoods in Phoenix include Camelback East, Deer Valley, Paradise Valley, North Mountain, Maryvale, and Alhambra.
Two Rumors have been going around the Phoenix real estate market: 1.foreclosures are rising and 2. there is a “shadow inventory” of foreclosed homes the banks are sitting on.
Foreclosures are down big time in Phoenix and while we still get the occasional blip up here or there, the trend has been consistently down since the start of the year. Comparing the number of foreclosed homes for sale in January of 2012 to January of 2009 – the supply is down 92%. There will always be foreclosures, but the numbers are consistently dropping and the forecast is more of the same.
And then shadow inventory.. Shadow inventory is the homes that the banks have taken back and are sitting there vacant being held off the market in an effort to control pricing. The banks in Arizona do not have some stash of houses they are holding back. The thing about real estate is that changes of ownership cannot occur in secret – they require a public recordation to transfer ownership. So this persistent rumor is more attributable to errors in counting and tracking foreclosures than anything factual. What happens is that many houses are vacant due to homeowners vacating the premises prior to the bank actually foreclosing. I’ve walked the neighborhoods and door knocked the pending foreclosures and it is amazing how many houses are vacant.
The Phoenix market is hot and the opportunity to invest is still one of the best in history! This is a choice, and it’s not an easy one. The easy choice is to continue doing what you’re already doing. The hard choice is to beginning the process of changing your mindset—the process of choosing to be rich by investing in Arizona Real Estate. Call me. This starts with increasing your financial intelligence. Through these endeavors you will change your mindset.
I challenge you to invest in Arizona Real Estate. Will you accept the challenge?
From Facebook: “Comping a property this morning I found only one active and it had been on the market for six days. I contacted the listing agent on it to find out if they had received any offers yet to find out they have 15 offers and most are over list price! Nothing new for those who are in the market but just thought I’d throw it out there so everyone knows that no it is not cooling down yet!! Prices in the Phoenix metro area are up 32% since last August!! And one of the biggest metropolitan areas in the country there are less than 8000 homes on the market that are active and of those MANY have offers already on them just not accepted yet. % at 3.6 r u kidding me?!“
Following the trends of the past 2 years, March saw a significant increase in the number of sales that closed compared to the prior month in Phoenix. Last month saw an increase of 22.1% over February. That followed a 12.6% increase in the prior month. The number remains impressively high in light of the continued shrinking inventory.
For buyers and investors in Phoenix, this means that competition for homes continues to be very high. We are seeing more and more situation where there are double-digit offers on a single home.
This means inventory remaining on the market, and continued competition for value-priced properties. We MUST continue to carefully work TOGETHER to understand the market AND to understand how we can compete with the market demand and other buyers right now.
We have been watching a statistic very carefully here in Phoenix to determine if the increase in average sales prices was just a blip or a trend. From all indications, we can now see a trend, and that we hit the bottom of the market in August. Since then, we have seen a 20.8% increase in the average sales price. March saw an 8.97% increase over the month of February. This is the highest price we have seen in Phoenix since June of 2010! The average sales price increased from $172,603 to $188,088.
New Phoenix home sale listings were up 7%, which is generally normal for March. However, it was still the 4th lowest month in the past 36 for new listings to come on the market.
If you have any questions about real estate investing in Phoenix or Arizona, please send me a quick message.
The average person, if they even have a retirement account, have a 401k which is investing in mutual funds. Don’t be average. Take responsibility and have some control 🙂 – Josh
Get a Financial Education and Stop Thinking Like an Employee
Years ago I had a conversation with a young man about 401(k)s. “I have a question for you,” he said. “I’ve read that you say 401(k)s are the worst investments, but I don’t understand why you say that.”
“What is it that you don’t understand?” I asked.
“Well,” said the young man. “Most employers match your contribution. For instance, my employer matches up to four percent of my salary. Isn’t that a hundred percent return? Why is that a bad investment?”
“It’s a bad investment,” I said, “because it’s your money to begin with.”
He looked puzzled and perplexed.
“Listen,” I said, “if it weren’t for 401(k)s, your employer would have to pay you that money as part of your salary. As it is, they still pay it, but only if you give up four percent of your existing salary in to a retirement account where you have no control. And if you don’t, well the employer comes out ahead. It’s your money, but they’re in control.”
Thinking like an employee
The young man still didn’t look convinced, but I could tell he was thinking hard about it. The reason this young man and many others don’t understand my reasoning is that they only think like employees. As an employer, I know that if it weren’t for 401(k)s, I’d have to pay that money to employees in their salary in order to be competitive.
For me, as an employer, a 401(k) is an advantage because I don’t have to pay the money unless an employee opts in, and if they leave my company too early, I don’t have to pay because they aren’t vested.
A recent study confirms what I’m saying and should help those of you who still find this logic confusing or not convincing.
A 401(k) steals your money
A recent study confirms what I’m saying and should help those of you who still find this logic confusing or not convincing. According to Steven Gandel, a study issued by the Center for Retirement Research indicates that, “All else being equal…workers at companies that contributed to their employees’ 401(k) accounts tended to have lower salaries than those at companies that gave no retirement contribution…In fact, for many employees, the salary dip was roughly equal to the size of their employer’s potential contribution.”
Translation, companies that don’t offer 401(k)s must pay a higher salary to compete with companies that do. Those company’s employees simply get their money as part of their salary rather than having to match it and save it in a tax-deferred retirement plan where they have no control and have high fees.
No financial intelligence? Stick with the 401(k)
Control is an important aspect of investing. As I mentioned, with a 401(k), you have no control over your investments as you generally invest in funds and indexes controlled by brokers, who are controlled by bankers, who invest in companies that are controlled by boards — all of which you have no control over.
If you want to be rich, you must have a financial education and control over your money and your investments. This is why I like to invest in my own business, purchase real estate and create products. I have a lot of control over those investments. Generally a good matrix is the more control you have, the higher your potential return. The less control you have, the lower your potential return.
Of course, it takes high financial intelligence to invest in things where you have control because you have to make a lot of important decisions. This is why being forced into a 401(k) probably isn’t a bad thing for most people. This is because most people have little-to-no financial education and wouldn’t know what to do with the extra money other than save it or spend it.
But I expect the average Rich Dad reader to be head and shoulders above the average person in terms of financial intelligence. The reality is that if you’re investing in a 401(k), you’re not making a return on your employer’s match. You’re simply getting what is owed you by your employer.
For some, this might be the first time you’ve ever thought of this. For others, I’m probably preaching to the choir.
Some questions for the Rich Dad community
If you’ve avoided the 401(k) trap, what ways are you using that money to build your wealth outside of a 401(k)?
I’m constantly asked how to use leverage in different ways in a wealth strategy – and I’m glad people are asking because leverage plays a huge role in every successful wealth strategy.
Leverage is simply doing more with less.
Here are 3 of my favorite forms of leverage.
I think systems are one of the most important and powerful features of a wealth strategy.
Systems are simply the process or procedures to complete specific tasks. Systems provide the detail of the who, what, when, where and how something will be done.
Think about a franchise. One of the greatest values a franchise offers is its systems. The systems provide all the details about how to market, sell, fulfill and everything else involved in operating that franchise. A franchisee simply has to follow the systems.
Let’s say you invest in rental real estate. You should have systems for:
– Identifying the property to buy
– Purchasing / financing the property
– Renting the property
– Maintaining the property
– Reviewing the performance of the property
Systems don’t have to be complicated. They just need to document what needs to be done in a clear manner. Systems can be as simple as a checklist.
If you are just starting your wealth strategy, you may wonder why you need systems if you are doing everything.
Here’s 2 reasons why you need systems:
Your systems are the place to document the specific details of what needs to be done. They are also the place to document your best practices – your trade secrets. As you learn better ways to do things, document that in your systems.
Your systems enable you to leverage your time by making you more efficient while still getting the results you desire.
Many people start off doing everything themselves, but they usually have a goal to grow their wealth and hire others do the work. If you want to do this successfully, systems are imperative. Systems communicate your specific expectations without you having to be there.
Many people have wealth strategies that never reach their full potential because they are not able to give up control.
With systems, you don’t have to give up control. You’re giving up the specific tasks, but you are still in control. You control the systems.
When your systems are created, used and monitored properly, they will tell you when things are working and when they aren’t working. This allows you to focus your attention where it is most needed – this is a huge form of leverage in a wealth strategy.
#2: Your Wealth Team
Systems definitely take time to create. You don’t have do it all yourself though. This is where your wealth team comes in to play.
One of the best examples of leverage in a wealth strategy, and also one of my favorites, is a wealth team.
A wealth team is a group of advisors, coaches, mentors, employees, vendors and other contacts who assist you in building your wealth.
With a wealth team, you can leverage your time by hiring advisors, coaches, mentors, employees and/or vendors. But the leverage doesn’t stop there. This is just the beginning. You can also leverage your wealth team’s contacts, their resources, their knowledge – the list goes on and on.
Use your wealth team to help you create your systems. Leverage their resources and expertise to add value to your systems.
Once you’ve created your systems, share them with your team members so they can be part of the systems and contribute to the success of your wealth strategy.
Software is a wonderful form of leverage. Software allows us to do more with less every day.
Software can be an integral part of effective systems. When used properly, software can streamline many tasks while providing better information and results.
Software can be the driving force behind the systems. It can notify the who about the what, when, where and how. And, it can provide real time reports about how the systems are working. These reports are what help you stay in control.
How do you know what software to use?
Leverage your team’s knowledge – ask them what software you should be using. And, if you truly want to leverage your software with your systems, have a team member who is committed to integrating the two.
Using Leverage in Your Wealth Strategy
Think about how you use these 3 forms of leverage in your wealth strategy and identify ways that you can leverage them even more.
Focus on your wealth!
Founder & CEO
****This post is related to short sales. A short sale is a real estate transaction where a property is sold, but the liens on the property are negotiated so that they are released from the property for a “short” pay off.
Short Sales are not real estate 101. I would say they are a 300 or 400 level class when it comes to real estate. If you would like more information on short selling a property, buying a short sale property, or investing in short sale properties, go to my real estate website and get in contact with me.
I am new to ShortSaleSuperstars. I have used it as a reference a few times and known about the site for over 6 months, but just decided last week that I need to get involved more with internet blogging for my real estate business. Since I specialize in negotiatiing short sales, I thought it important that I join networks online that pertain to short sales. It looks like this is the best there is, so I am diving in 🙂 – I will do my best to comment on as many questions and forum posts as I can, and I would hope that people would reach out to me with their short sale issues. I love helping other agents get their deals approved, at great terms, and with full commissions. Lately, I have been getting 8% on most of my short sales. While most agents would probably tell you that this cannot be done, or isn’t legal, it simply requires some knowledge and information. Anyways, on to the topic of my first post….
While attending a short sale seminar in Las Vegas last week(shoutout to ShortSaleGenius and Trent Chapman), I observed that many agent’s/negotiator’s questions all sounded very similar:
“I have this weird short sale….”
“I know but the bank told me…..”
The solution to almost every single question is the same, ESCALATE! More specifically, get the RIGHT message to the RIGHT person at the bank.
It is always about the numbers. Getting the right message to the right person will mean you are going to very “high-up management.” When you get to this level at any bank, the mind-set of the person who are communicating with is solely about the numbers. They want to know what the value is and what is their net. If you have run the comps and you know that your value is in line, then you simply need to get the message to the right person, and explain to them that they will lose a lot more money if they foreclose on the property instead of accepting your short sale offer.
Remember, it’s not personal, and it’s not emotional. The bank wants as much money as they can, that is the name of the game. Your job as a Realtor/Negotiator is to make sure the numbers get communicated to someone at the bank who has the authority to make the right decision.
Written by: Joshua Gamen
Gold hit an all time high of $1,633.80 per ounce on Friday! Driving up the price is the result of central banks buying gold and coincidentally(sarcasm) the decline in value of the dollar. The drama in the white house regarding the debt ceiling has had quite an impact on the price of gold lately, as has the news that the US can’t keep perfect credit by devaluing it’s current debts from printing more money. But what is really key here, is that the central banks(the people who print pieces of paper that people use as money around the world) are buying gold.
Silver has been idling around $40 per ounce this past week or so, and looks to continue it’s descent upwards along with other commodities including oil which is at a price of $95.70 per barrel and approaching $4 per gallon. The increased price in silver, just like gold and oil, is an economic reaction to the depletion of value in the US dollar. This is because value does not leave the planet, it simply transfers between different asset classes. Right now the money is flowing out of the dollar and into gold, silver, oil, real estate, food, etc.
I am holding to my recent prediction of silver hitting $200 per ounce by October 2012. If silver hits $200 per ounce, that would put gold at a price of $8,156 per ounce based on the current ratio of silver to gold at roughly 41 ounces of silver to 1 ounce of gold. Strong projection, but I’d like to get some talk going on about the subject. With Federal Reserve Chairman Ben Bernanke recently telling Congress they are working on doing more of the same thing(creating debt for free, devaluing the currency, buying back treasury bonds, QE3…) along with the possible default on the US debt, a credit rating downgrade of the US, and rising prices in oil and gold, I think it’s a harsh reality we could face. What it would ultimately mean would be very bad for the poor and middle class, inflation..
Debt Ceiling – Credit Downgrade
The politics are what they always are, a battle for power.
The reality is, they’ve argued over the debt ceiling being raised for too long and it has already took effect on the credit rating of the country. The reality is that a credit rating downgrade will be just as catastrophic as a default on the debt. The stocks will tank, the dollar will free fall, and gold will surge.
Tho many me be interested to see who wins the heated debate over the hot topic between the Democrats and the GDP, the truth is as Robert “Rich Dad” Kiyosaki puts it: ” that no matter who wins this battle, the war may already be lost—and the American public will be the casualties.”
Like I said, politics are a battle for power – Here is the fact:
WE HAVE A BIG DET, AND WE CAN’T PAY IT BACK. SO IF WE PILE MORE DEBT ON THAT, WE WON’T BE ABLE TO PAY THAT BACK EITHER. The Credit Rating Agencies know that we can’t pay this debt back, even tho they have took this long to finally admit it. According to the Wall Street Journal:
Moody’s Investors Service, Standard & Poor’s and Fitch Ratings have all warned they might cut the U.S. credit rating. S&P, in particular, has said it could move even if a debt-reduction deal is met and the $14.29 trillion federal debt ceiling is raised.
S&P has cited $4 trillion in debt reduction as a figure that would be appropriate for keeping the triple-A rating. S&P has also said it wants a credible agreement, meaning one that has bipartisan support.
Neither side is close to a $4 trillion figure. And given the wrangling, the chances of strong bipartisan support for any deal seem unlikely, investors said(“Downgrade Threat Looms”).
..Now, the question shifts from what will happen to what am I going to do now that I know what is happening.
The definition of insure is this: “to guaranty against future loss or harm.”
The US dollar is a commodity. Everything going on right now is sending that commodity to the tank, and since it has no intrinsic value as it’s physical body(paper), it will now stop until it reaches zero. Now, you can have your political beliefs on everything and that’s fine, but you wouldn’t buy a house without insurance, and you wouldn’t drive your car without insurance, so why do you hold your money as a piece of paper with no insurance? Gold and silver are insurance to the dollar.
My point is that it’s not about what I want to be money, right? We all have ideas of what we want or think should be money, it’s about what probably is going to be money.
Meanwhile it remains a perfect storm -a good one 🙂 – to invest in real estate! Prices are still low while sales are high. Most important is that interest rates remain at all time lows, making the oppertunity to leverage and cash flow abundant. We’re getting it done with outstanding returns here in Phoenix, AZ. Give me a call if you are interested in doing some investing – 623-252-3234, let’s talk.