I Survived Real Estate 2009- The Norris Group

I Survived Real Estate 2009- The Norris Group

Radio Part 1, Part 2

Bruce Norris Visiting SJREI

I am very interested in hearing what Bruce Norris will share regarding the current status of the California market , and what the next 2 years will be like for investors. For the investor who has been looking and waiting to buy here locally, his Saturday, October 3rd workshop should be considered a must attend event. Bruce will be presenting this timely and an incredibly useful day seminar to our members and local investors. Bruce will share the exact blueprint that The Norris Group is using to make money in TODAY'S California market. For those who are not familiar with him, Bruce Norris is a real estate investor who has been operating at a very high level, buying and selling over a thousand properties in his 30 year career. He has been involved in, and understands well, nearly every area of the financially or physically distressed single family home market - either for buying to hold or to flip.

As a precursor to Saturday, Bruce will be providing to the SJREI his annual Northern California Market Update, this year at two locations. We already have 175 people signed up to attend the evening meetings so sign up early to secure your seat. This event will sell out. On Wednesday, September 30th at our debut East Bay meeting at the Four Points by Sheraton in Pleasanton, and on Thursday, October 1st at our San Jose meeting at the Biltmore. His market timing forecasts have been very accurate in the past. As serious investors, we owe it to ourselves not only to know where our local real estate market stands now and where it is heading, but most importantly, we need to know when and how to take action!

Bruce Norris at the SJREI & More

I have included a very interesting article below in the Real Estate in the News section, click on the link below for details specifically the article entitled "30 billion home loan time bomb set for 2010". This article does a great job explaining the status of the approaching potential wave of mortgage defaults, and the likelihood of a second round of foreclosures that may occur in around the Bay Area. I believe that we may begin to see yet another sea-of-change in our local housing market - one that investors should be prepared for and ultimately to be ready to take advantage of.

Real Estate in the News: $30 billion home loan time bomb set for 2010, sfgate.com Homeowners who 'strategically default' on loans a growing problem, latimes.com California Joblessness Reaches 70-Year High, nytimes.com California home sales fall 12 percent in August, sfgate.com

Challenges Facing the Multi-family Housing Industry

The commercial real estate sector is the next shoe waiting to drop, possibly creating another crisis for the US economy. Many of the commercial loans coming due were packaged by Wall Street, and sold as bonds. We saw how this played out in the residential mortgage backed securities market, undoing that sector and ultimately triggering a global recession.

$700 Billion of commercial mortgages are being challenged by the massive downturn, and from what we are seeing so far the outcome is not pretty. Driving this reversal of fortune is the fact that commercial properties are no longer generating enough cash flow to make principal and interest payments, never mind the other expenses that come with owning property. The other issue is the inability of owners to refinance loans as they mature pushing them into foreclosure. This is a segment that we need to keep an eye on, so next week at the Mid-Peninsula meeting we will host Michael D. Pierce who currently serves as President of the California Apartment Association in Sacrament,o and has served as a member of the Board of Directors of the Tri-County Division of the California Apartment Association since 1991. In addition, Michael holds the designation of Certified Property Manager from the Institute of Real Estate Management.

Michael is also a frequent public speaker on the subject of the rental housing market, management, operations and ethics. He will address the economic and political challenges facing the apartment industry locally and throughout the state of California. He will also discuss the opportunities that currently exist in the marketplace as well as potential future issues facing the industry. Michael will wrap up his presentation with a discussion of the current state of the multi-family sales environment and a questions and answer session. Mark your calendars!

Where is the inventory?

In Pittsburg, CA where we purchased a house last year, there were 530 foreclosures and there are 15 Real Estate Owned (REO's) on the market. This does not add up - where are the houses?Here are a couple of interesting perspectives:

1. The banks are holding onto them until the market gets stronger, and they can make a larger profit on the sales.

2. The banks don't need the money - they have the bail-out money and don't need to do anything rash.

3. Banks don't want to flood the market causing further price deterioration.

4. The local governments don't want the property taxes to be completely annihilated, and they have already been impacted by the huge reduction in property tax dollars collected.

5. Someone I spoke with in Sth. CA who is an investor says that the banks are hiring people to manage the properties which means that they are in the real estate business! Essentially, they have choices - they got our tax dollars and can now react as rationally as they like to protect their business models even if it means exploring other areas they previously have not.

6. Another insider shared that the wholesale packages being sold are requesting the wholesaler to sell for .80 cents on the dollar or more, and they have to sign a contract to that effect.

It is all very interesting stuff. Foreclosures are on the increase and at some point things will change. Hopefully at that point investors will have a chance to participate fully in this recovery.