Interestingly, I have over 10 years of experience as a real estate salesperson and attorney and have yet to write a post on the mechanisms of real estate sales. An understanding of real estate sales can be useful in informing the perspective of a real estate investor. Real estate salespeople have an intimate understanding of market activity, market trends and asset valuation that can prove valuable to all real estate investors.
Monday, August 6, 2018
Tuesday, July 31, 2018
Change Is A Coming: How Current Economic Conditions Should Affect Real Estate Investment
Many economist and market pundits are predicting a market downturn, beginning
some time in 2019 or 2020. All of the indicators of an overheated boom seem to be
present--increasing margin debt, decreasing dividends, stock market price
inflation and increased levels of corporate debt. Essentially, low interest rates
have made credit more accessible. As a result, businesses are using credit to buy back some of their outstanding stock. In response to the relative decrease in availability of stock,
stock market prices are rising, increasing household wealth across the nation.
Spurred on in part by technological development, the economy seems to be booming at
present, but it is important to note that mechanism that is fueling this increase in wealth is debt.
Friday, July 27, 2018
How To Approach A Defaulting Second Mortgage
Default
happens, hopefully not often, but it is a fact of lending. Upon default,
however, a holder of a second mortgage must find an objective, value-driven
manner in which to evaluate its options. Unfortunately, in many instances second position lienholders opt for one of two extreme
approaches—accepting a nominal amount in exchange for the release of the lien
or demanding an unreasonably high sum for satisfaction of the lien. Both
approaches are harmful for different reasons. Despite such prevalent behavior, with proper management, a defaulting second mortgage can provide a lienholder with a number of
options.
Wednesday, July 25, 2018
Real Estate Crowdfunding
Real estate crowdfunding has been a hot topic for the past few years and continues to gain notoriety. Praised for its flexibility and low barrier to entry, crowdfunding enables investors to directly invest in real estate properties
without having to amass the funds necessary for a mortgage down-payment. For
an amount as low as $500, in some instances, investors can contribute to a pool of investor capital that will enable a real estate entity to acquire a
property. Open to both accredited investors and the public at large, crowdfunding
offers access to the risks and rewards of direct real estate ownership in a
passive manner with relatively little out-of-pocket costs.
Monday, July 23, 2018
Real Estate Asset Managers
In the real estate industry, there are
many different professions, each with its unique role. I have focused
on different real estate professions in the past on this site, so let us take a
look at more obscure and lesser known profession--the Real Estate Asset
Manager.
Role of a Real Estate Asset Manager
Although the title Asset Manager has multiple meanings in the world of finance, the Real Estate Asset Manager has a specific task—to manage properties resulting from mortgage default or property acquisition on behalf of a real estate investor, whole loan investor or mortgage servicer. Typically, real estate asset managers maintain a network of vendors, such as contractors, real estate brokers, real estate marketing companies and appraisers in order to maintain, market and sell properties under their management. Resultantly, much of the role of the Real Estate Asset Manager consists of vendor management.
Most real estate asset managers work with mortgage servicers through either a client
or a subsidiary relationship. For example, Altisource, the nation’s largest real estate
asset manager, is an independent but related company to Ocwen Loan Servicing, one of the nation's largest mortgage servicers, whereas SingleSource, another well-known real estate asset manager, is a wholly
independent company that is hired by some of the largest loan servicers. Given
the size of the whole loan portfolios of the larger mortgage servicers, many
find hiring a real estate asset manager more cost effective than building and
managing property vendor networks and tracking sales activity.
Thursday, February 23, 2017
Property Maintenance Laws and Lending
The fight against property blight is a battle that has been waged for many decades. Some areas of the nation, have struggled with abandoned properties and even abandoned neighborhoods since the shrinking of the nation’s industrial sector beginning in the 1970’s. Other areas became intimately acquainted with blight as a result of the wave of foreclosures that took place at the end of the first decade of the century. However it may have arrived, the real estate finance market is certainly now affected by the palpable concern of property blight and has had to adjust to attempts to mitigate its damaging effects.
Why Worry About Blight?
To be clear, blight is a real issue that can lead to a number of undesirable effects. Abandoned properties that are poorly maintained cause safety issues. Poorly maintained building systems and structure will eventually fail at some point, causing unsafe buildings. Overgrown landscaping leads to health concerns. These health and safety concerns become a problem for neighboring properties, as neighbors must then focus on how to curb the spread of these issues onto their properties. More generally, well-maintained properties inspire a pride of ownership that carries over to neighboring property owners. The opposite is also true—abandoned and poorly maintained properties drain the neighborhood of pride of ownership and lead to less diligent maintenance throughout the neighborhood.
Sunday, January 22, 2017
In the Weeds: How a Multidisciplinary Approach to Real Estate Can Lead to Increased Success
I once had a conversation with a coworker in which I expressed my frustration regarding the siloed view of real estate that many real estate professionals seem to employ as a matter of course. I complained that so few real estate professionals truly attempted to view real estate as a multifaceted asset and instead cared only to focus on their specialization within the industry. I wondered out loud how productive the industry could truly be if, in addition to their own professional perspectives, appraisers attempted to see the industry a little more like attorneys and attorneys tried to orient themselves to view the market like investors and investors like Relators, etc.
My coworker listened politely until I was finished and wisely stated that the reason such cross-pollination of perspectives was not present in the real estate industry was that everyone was too “in the weeds” in their various roles and on their various projects to even attempt to take such a view. It was at that moment that I realized that I realized that my coworker had accurately described a condition that plagues much of the real estate industry—myopia. Indeed, many real estate professionals become so great at their specialization that cannot see the forest for trees or better yet, the weeds.