New Realty News

Time Lapse House Build (faster)

When the family and I moved to Land O Lakes in April, 2007, we moved into a brand new subdivision with many houses still being built. With an empty lot right across the street from us, I set a camera in the boy’s window and started taking pictures. Over the course of 4 months I took about 400 pictures. I then cropped and categorized the photos, trimmed the collection down to about 300 photos, and created a time lapse photography presentation of the construction process using a FREE program from Microsoft, called PhotoStory, and put the process to music performed by DJ The Joker, called “The Way I Build My House”.

General Real Estate Schools of Thought

One real estate school of thought talks about doing a lot of analysis. This real estate school of thought advocates studying a lot of factors which are generally linked to economic indicators. This real estate school of thought evaluates the economic indicators in many different ways. It takes its cues from a number of financial indices and how they are expected to perform in the near future. This real estate school of thought evaluates various socio-economic indicators at all levels – Global, national and local. This real estate school of thought evaluates inflation and things like value of money today and value of money next year etc.

It uses all these evaluations in order to come up with predictions on how real estate industry is expected to fare in the next few years. So, this real estate school of thought tries to determine the buying power of people in order to determine the course of real estate prices. When it comes to evaluating the real estate trend with regards to a particular place (i.e. locally), this real estate school of thought takes into account various local factors like the unemployment rate, the industrial development in the region, the change in tax policies and any events that might affect the real estate prices in the area. It also takes into consideration the surrounding areas and the real estate trend in those areas.

So, this real estate school of thought is really followed by arch real estate consultants/investors who know a lot about finance and put all that knowledge to use in determining the trends for real estate industry. However, that is just one real estate school of thought.

The other real estate school of thought doesn’t consider those factors at all. According to this real estate school of thought, real estate is always lucrative at all times and at all places. This real estate school of thought advocates looking for great deals. It’s this real estate school of thought that asks you to go to public auctions, look for distress sales and foreclosures, find motivated seller, rehab and sell, etc. So, this real estate school of thought focuses on getting the information about the best deals in town and taking advantage of them to make good profits.

So, those are the two real estate schools of thought and following either or both calls for time and effort (if you are to make any profits out of real estate investments).

With Retirement Funds Low, Lifestyle Downgrades Ahead

RISMEDIA, July 31, 2010—(MCT)—If you’re a baby boomer, the odds are high that you’ll exhaust your retirement savings after 10 or 20 years of retirement, according to the latest Retirement Readiness Rating report released by the Employee Benefit Research Institute.

Nearly half of older boomers—those now aged 56-62—and some 44% of younger boomers—aged 46-55 now—are at risk of not having sufficient income to pay for basic retirement expenses and uninsured medical expenses, according to the study.

The study, which assumed that boomers would retire at age 65, also found that lower-income retirees are most likely to run out of money after 10 and certainly 20 years of retirement, while higher-income retirees are least likely to run out of money.

To wit: 41% of those in the lowest income quartile are likely to run short of money after 10 years of retirement, and 57% after 20 years. Meanwhile, just 5% of those in the highest income quartile will run out of money after 10 years, and 13% after 20 years.

So, what to make of this study?

In reality, most Americans don’t run out of money; they run out of lifestyle. As they age and spend down their assets, they typically reduce their living standard.

“For the most part, people do not completely run out of money when our software says they will,” said Stephen L. Deschenes, senior vice president and general manager for the annuities division of Sun Life Financial’s U.S. operation.

“They do not run full-speed like Wile E. Coyote off the cliff and only then realize that they are out of terra firma. Rather, they take action either to spend less or work more or some combination to forestall running out,” he said.

Other research finds a high likelihood that Americans will be forced to spend less. After factoring in healthcare and long-term-care costs, the National Retirement Risk Index, produced by Boston College’s Center for Retirement Research, finds that some 65% of American households are at risk of not having enough money to maintain their living standard in retirement, according to the index.

A point to consider about the retirement readiness study: It assumes boomers will retire at age 65. That’s not likely to happen. Most boomers, assuming good health, likely will work past age 65, according to Sun Life Financial’s Unretirement Index.

According to that index, the portion of Americans who plan to work past age 67 is higher than ever: a record 55% plan to work full- or part-time, up from 52% one year ago. And the percentage planning to work full-time past age 67 reached a new high of 28%, up from 19% one year ago.

There was also a sharp rise in workers who said they will need to work longer than planned because of the economic crisis, according to Sun Life. Sixty-five percent said they will have to work more than one year longer, compared to 54% in the last index. And 27% said they will have to work more than five years longer, compared to 24% in the last index.

But the bottom line from all these studies: Saving more and perhaps reducing your standard of living now might be the only way to be reasonably certain you’ll enjoy any standard of living later on.

According to the Employee Benefit Research Institute, to improve the chances of being one of the nine in 10 households that maintains its standard of living in retirement, younger boomers in the lowest income quartiles will have to save, on top of what they already save, an additional 25% of compensation every year, while those in the third income quartile will have to save an additional 15% per year. Those in the highest income quartile catch a break and don’t have to save any more than they already do.

The story is a little better for older boomers though. Those in the lowest income quartile have to save an additional 25% per year, while those in the second income quartile need only save 15% more and those in the third income quartile need save just under 5% more. As with early boomers, late boomers in the highest income quartile catch a break again. They don’t have to up their savings to have a 90% probability of maintaining their standard of living in retirement.

(c) 2010, MarketWatch.com Inc.

Distributed by McClatchy-Tribune Information Services.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

Copyright© 2010 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.

Pricing Your Kitchen Remodel – 5 Factors to Keep in Mind

RISMEDIA, July 31, 2010—Homeowners who are looking to remodel their kitchen should keep the following factors—that can significantly affect the price of their remodel—in mind as they begin to make plans to upgrade their kitchen.

According to Kitchen Tune-Up, homeowners should pay attention the following five factors before they begin a renovation.

1. Wood species or cabinet covering material. The material that covers the cabinet will effect the overall pricing of a kitchen renovation, but not as much as you might think. A stainless steel clad cabinet will be the most expensive and a melamine (thin plastic laminate) surface will be the least costly. Cherry is usually about 7-10% more than oak, while hickory, oak and pine usually run very close in price. Unusual cabinet woods like alder, mahogany, fir, rift cut woods, redwood, teak, etc. will usually cost more than common oak or pine.

2. Kitchen layout. The layout of the kitchen and the cabinet configuration will largely affect the price of a remodel as well. For example, a lazy susan will cost more than a sink cabinet, a stack of drawers will be higher priced than a one drawer/two door base cabinet, a U-shaped kitchen costs more than an L-shape with an island and a wall oven/cooktop combination makes the kitchen cost about $1,000 more than a free standing range. Setting a budget to design within can often save homeowners many hours of re-design.

3. Cabinet door style. A door with many details will usually cost more than a simple door. If an arch is added to a square panel, homeowners can expect to pay more. A door with lots of grooves or molding generally cost more than a simple door and a full overlay door (door that covers almost the entire cabinet face) costs more than a traditional overlay door. Doors set inside the cabinet frame (called inset) cost more than doors that are mounted over the cabinet frame.

4. Type of cabinet finish. The type of cabinet finish you choose will vary the pricing of a kitchen remodel as well. Painted cabinets will run 10-15% more than a standard stain finish and glazes or layered finishes will run 7-15% more than a standard stain due to the extra labor.

5. Cabinet construction methods and materials. Don’t skimp in the area of cabinet construction in order to save money on your kitchen renovation as better construction methods make a kitchen durable. In fact, cabinet construction may be 60% of the entire cabinet cost.

For more information, visit www.kitchentuneup.com.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

Copyright© 2010 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.

New Lead-Safe Practices to Increase Home-Remodeling Costs

RISMEDIA, July 31, 2010—(MCT)—Local contractors say a controversial new federal safety rule will increase home-remodeling costs in Manatee County, Florida, but by how much is a matter of debate. Beginning October 1, 2010, contractors will be required to take additional precautions when renovating structures where children could be exposed to lead dust from old paint. The new “lead-safe” practices apply to work on homes, day-care centers and schools built before 1978, when lead paint was banned for residential use because of health risks.

Contractors say they will comply with the new regulations but will pass the cost of compliance onto customers.

“Any government regulation such as this inevitably costs the customer or end user more money,” said John Kiernan, owner of Kiernan Remodeling & Design Inc. in Bradenton, Fla. “If you’re a pre-’78, you’re going to pay more.”

But how much is unknown and hotly debated.

Kiernan estimated $500-$2,000 per job, depending on the size and scope. The National Association of Home Builders said its members’ estimates average about $2,400, including an extra $60-$170 for a window replacement. But the Environmental Protection Agency counters that it might be as low as $8-$167 because some required equipment can be used in multiple jobs.

The agency issued the rules in 2008 because more than 1 million American children a year are at risk of being poisoned by lead-based paint. Exposure can lead to learning disorders, behavioral and reproductive problems and, in extreme cases, brain damage or death. The government estimates 38 million U.S. homes built before 1978 contain some lead-based paint.

Under the rules, contractors and their employees must take an eight-hour training course and become EPA-certified as lead-safe. In buildings with lead paint, workers will have to wear special outfits with air filters, goggles and hoods, protect work sites with heavy plastic, clean work areas thoroughly with special vacuums and post warning signs.

Violations carry potential fines of up to $37,500 a day, EPA said. The requirements don’t apply to homeowners doing their own renovation work.

The new requirements took effect April 22, 2010. But the agency since has twice postponed enforcement of them after contractors complained that the government had not provided enough trainers to help them meet the April deadline.

The EPA and health advocates questioned that, noting that 160,000 people had been trained by that date.

“I think it’s a change, and whenever you have a big change like this you are going to have pushback from the industry,” said Rebecca Morley, executive director of the nonprofit National Center for Healthy Housing.

Copyright (c) 2010, The Bradenton Herald, Fla.

Distributed by McClatchy-Tribune Information Services.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

Copyright© 2010 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.

LNR Completes Recapitalization as Vornado Takes 26.2 Percent Stake for $116M in Cash

July 30, 2010
By Barbra Murray, Contributing Editor

Vornado Realty Trust has benefited from LNR Property Group’s recapitalization process by grabbing a 26.2 percent interest in the company through a cash infusion of $116 million and an agreement to convert a $15 million mezzanine loan into equity. With the participation of Paramus, N.J.-based Vornado and others, Miami Beach-headquartered LNR, a diversified real estate company and special servicer of commercial mortgage loans and CMBS, has achieved a comprehensive recapitalization of its balance sheet.

Vornado represents just one piece of LNR’s recapitalization endeavor. LNR managed to raise an aggregate $417 million in equity from a list of participants, including affiliated funds and managed accounts of iStar Financial Inc., Cerberus Capital Management L.P. and Oaktree Capital Management L.P. With the new equity, along with the assistance of a little cash on hand and the elimination of an outstanding $450 million of Senior Notes issued by Riley HoldCo Corp, LNR’s parent company, LNR has whittled its debt down from $1.3 billion to about $425 million.

The $116 million that Vornado plunked down for a sizeable stake in LNR was not the only financial commitment the REIT made this week. Vornado joined forces with Geyser Holdings in an agreement to acquire four long-term ground leases and the corresponding underlying real property parcels at Atlantic City’s Boragata Hotel Casino and Spa from MGM Resorts for $73 million.

How to Budget for Home Maintenance

RISMEDIA, July 31, 2010—New homeowners oftentimes stretch themselves financially when having to pay the initial costs that come with purchasing a home. While it is important to focus on these preliminary expenses, homeowners must be aware of the financial requirements that come with maintaining the home. Here, Dan Steward, President, Pillar To Post discusses how homeowners can effectively budget for home maintenance.

Dan Steward
President
Pillar To Post
www.pillartopost.com

Enthusiastic new home buyers often stretch financially to cover a home’s initial deposit, closing costs and any cosmetic touchups.

However, buyers frequently focus only on those first costs, overlooking the financial requirements of maintaining the home over time. Providing some guidance to your clients regarding realistic maintenance costs will help them transition smoothly into ownership of that house.

According to industry standards, homeowners should have 1% of the purchase price of their home in savings for improvements and surprise expenses. While this minimum will help ease through maintenance costs, a 2-3% cushion is far more prudent.

A home inspection will help prospective buyers better understand the condition of the house, gaining insights and recommendations from the inspector during the inspection. At Pillar To Post, we also deliver a detailed, computerized inspection report onsite, so buyers have a printed guide available for future planning.

A home inspector will estimate the age of major structural components and systems, providing the buyer an indication of each item’s anticipated lifespan. A furnace, for example, often lasts between 12 and 15 years and a water heater lasts from ten to 12 years. Understanding the current age of any particular system will allow buyers to calculate approximately when they’ll be due for major repairs or replacement.

LivingWithMyHome.com offers a list of approximate life expectancies of home components as well as cost estimates, useful as a tool for financial planning of homeownership. Our company, Pillar To Post, sponsors this site in response to questions from prospective home buyers across North America regarding how much they should plan to spend on ongoing maintenance costs.

Once the buyer has completed the home inspection, negotiated the price according to information gained in the inspection and possibly had the sellers repair or pay for needed upgrades, it’s time to plan the maintenance budget for the future.

Home buyers should plan for big-ticket costs across a five-year timeline, budgeting for major expenses, such as roof repairs, new air conditioners or plumbing upgrades. The best plan is to sock away those funds, rather than relying on borrowing from banks. As the credit crunch has deepened, banks have nearly stopped offering home equity lines of credit, so counting on a loan for needed repairs is a risky strategy.

This brings us to timing of repairs—when small problems pop up, it’s important to address them before they become large-scale projects. A minor leak on a window frame can seem innocuous, but with repeated rains that leak can turn into window rot and even mold.

Again, this is where preparedness in budgeting can make all the difference—the ability to correct a minor problem immediately will likely mean a lower-cost repair and a less-demanding repair job.

Buying a home is one of the largest investments most people ever make. Helping your clients plan successfully to have a strong, positive home-buying experience will create the most beneficial outcome possible for them and for you.

Now, back to the monthly expenses. Estimating these regular costs often trip up new home buyers as well. Many people, particularly former renters, are accustomed to paying rent and likely utilities, phone, Internet service and cable.

As a homeowner, however, there will be other utility costs such as water, sewer and trash collection. Then there are property taxes, homeowner’s insurance and possible homeowner’s association dues.

Home buyers can also have seasonal, recurrent expenses such as snow removal and lawn service that should also go into that five-year budget. Helping your customers understand not only how to find and purchase their ideal home, but maintain it as well is the value-add service you can provide that will benefit them for the future.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

Copyright© 2010 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.

Economy Watch: Most Metro Areas Suffering More Foreclosures Than Last Year

July 30, 2010
By Dees Stribling, Contributing Editor

Courtesy Flickr Creative Commons user respres

According to foreclosure specialist RealtyTrac, 154 of the 206 U.S. metro areas with populations of at least 200,000 saw more foreclosure activity during the first half of 2010 as they did in 2009. Slightly more optimistically, however, foreclosure activity decreased in nine of the 10 metros with the highest foreclosure rates.

“We’re seeing early signs that foreclosure activity may have peaked in some of the hardest-hit markets,” James J. Saccacio, RealtyTrac CEO, said in a statement. “[But] the fragile stability achieved in many local housing markets hinges on improvements in the underlying economy, specifically job growth. If unemployment remains persistently high and foreclosure prevention efforts only delay the inevitable, then we could continue to see increased foreclosure activity and a corresponding weakness in home prices in many metro areas.”

Las Vegas is still the foreclosure champ, but even Vegas saw a decrease in activity between 1H09 and 1H10. During the first half of this year, the metro area saw 6.6 percent of its housing units (one in 15) receiving a foreclosure filing, more than five times the national average. A total of 53,525 Las Vegas properties received a foreclosure filing during the six-month period, a decrease of nearly 15 percent from the previous six months and a decrease of nearly 9 percent from the first half of 2009.

Citigroup Settles SEC Subprime Charges

Citigroup agreed on Thursday to settle Securities and Exchange Commission claims that it put on a happy, lying face to regulators and shareholders regarding its holdings of mass amounts of subprime mortgage investments in the summer and fall of 2007. Those holdings were a ticking bomb, and then an exploding one, necessitating government intervention to save the too-big-to-fail financial institution.

Specifically, the SEC charged that “in response to intense investor interest on the topic, Citigroup repeatedly made misleading statements in earnings calls and public filings about the extent of its holdings of assets backed by subprime mortgages. Between July and mid-October 2007, Citigroup represented that subprime exposure in its investment banking unit was $13 billion or less, when in fact it was more than $50 billion.”

And how much did Citigroup, whose net 2Q10 income was $2.7 billion, have to pay for these SEC-alleged misdeeds, without admitting or denying them? The company will pay a $75 million penalty, while former CFO Gary Crittenden agreed to pay $100,000 and former head of investor relations Arthur Tildesley Jr. (currently the head of cross marketing at Citigroup) agreed to pay $80,000. Wrist, meet slap.

The Next Frontier in Retail Development: Charging Stations

California might have a lot on its plate these days, but some public entities still seem to have a longer-term view. In a decision that certainly will affect patterns of energy usage and production of greenhouse gases–but which might also change patterns of real estate development, once that starts again–the California Public Utilities Commission said on Thursday that electric-car charging stations will not be regulated as investor-owned utilities. That will allow for a much proliferation of such stations.

California is likely to be a major market for electric vehicles during the ’10s. Companies such as Better Place, Coulomb Technologies and Ecotality Inc. are already poised to install charging stations statewide in both private and public locations, such as multifamily residential properties and retail locations.

Wall Street had a roller-coaster of a day on Thursday, with the indices eventually ending slightly down. The Dow Jones Industrial Average lost 30.72 points, or 0.29 percent, while the S&P 500 was down 0.42 percent and the Nasdaq declined 0.57 percent.

Fitch: CMBS Cumulative Defaults Up to 9.5 Percent

July 30, 2010
By Allison Landa, News Editor

Fitch Ratings is reporting that defaults on fixed-rate conduit U.S. CMBS loans are continuing at a record pace, with cumulative defaults rising to 9.5 percent through June 2010.

According to Fitch, the 133-basis-point climb from the first quarter is consistent with the firm’s expectation of an 11 percent cumulative default rate by the end of the year.

“Not surprisingly,” the firm wrote in a report on Friday, “recent vintages are driving the pace of defaults. … Loans are considered defaulted if they have been reported 60+ days delinquent at least once.”

Fitch managing director Mary MacNeill said in the report that large, highly leveraged loans are adding to the rising rate of defaults, with 14 loans greater than 100 million defaulted in 2010.

Hooters Taps Colliers to Lead Expansion

July 30, 2010
By Allison Landa, News Editor

Courtesy Flickr Creative Commons user espensorvik

Hooters of America, Inc. has selected Colliers International to help spearhead an ambitious expansion agenda. The restaurant chain says it plans to increase its location count by at least 15 to 20 percent annually over the next several years.

Currently, Hooters has more than 455 locations worldwide, with restaurants in 29 countries on six continents.

“Hooters … plans to expand its footprint in all 29 of those markets,” Patrick Duffy of Colliers International told CPE. “In addition, Hooters has signed franchise agreements to enter Turkey, India and Japan as its first foray into those nations, and is starting to look for sites there. Hooters also has plans to enter other countries in which it does not currently have a presence.”

Duffy said there were several compelling reasons to expand at this time, including the fact that the costs of real estate is down substantially over what the company saw in 2004 to 2008.

“Now is an excellent time for tenants to negotiate long-term leases,” he said. “Existing Hooters restaurants have performed well through the global recession and the franchisees are confident that as the world economy improves, they will see stronger performance still.”

He added that it can be a challenge to explain the restaurant’s casual beach-theme concept to some people unfamiliar with the chain, but that that challenge can be overcome with education and collateral material showing what he called “the family and clean, fun atmosphere that Hooters provides. .. Hooters is one of the world’s most recognized brands and offers customers a place to unwind, watch some sports, eat some comfort food and be served by a smart, attractive, personable, iconic ‘Hooters girl.’”

The restaurant’s ideal locations range between 3,000 and 5,000 square feet, with a flexible design concept that alllows for freestanding or in-line locations.

“The real estate requirement of a Hooters restaurant … works in many different venues,” Duffy said. “For example, Hooters recently opened a restaurant in Prague in a building that was constructed in the 1300s.”

The first Hooters opened in 1983 in Clearwater, Florida.