Star Trib Features New Listing
Looking for a great home in the middle of high-demand Linden Hills? Check out today's Star Trib real estate section:
http://www.startribune.com/homes/sell/34819879.html?elr=KArksLckDiUvckDiUiD3aPc:_Yyc:aULPQL7PQLanchO7DiU
The home that goes with the dramatic Living Room is 3929 Washburn Ave. South, just two blocks south of Lake Calhoun; it has 4 BR's, 2 Baths and over 2,200 FSF. List price will be $479,900.
Look for it on the market right after Thanksgiving!
Saturday, November 22, 2008
Friday, November 21, 2008
Watch the Denominator
"Context, Context, Context"
I've got numerous clients, savvy investors all, who are beginning to nibble on distressed properties, including multi-family units like condo's. For those so-inclined, the new mantra is "context, context, context."
That plays out two ways.
First, multi-family units typically bear a pro rata share of their building or complex's common area charges. To take just one example, I just sold a Minnetonka townhome in a 22 unit complex that had a $300 monthly association fee.
What if suddenly one-third of those units went into foreclosure? (They didn't, and won't -- the complex is extremely well-run, is in a great location, has low turnover, etc.)
The complex would still have the same expenses, but they would be divided across a smaller base. At the very least, the foreclosure units would likely fall behind on their share of the townhouse association's dues, crimping its ability to perform things like standard maintenance, snow removal and lawn care, etc. Such is the stuff of vicious (as opposed to virtuous) cycles.
The other consideration when scouting an investment is to know what's around you. One foreclosure on a block -- or in a building -- likely isn't fatal. But a couple can signify a very dangerous trend, and more than a couple probably isn't worth the risk, especially when there are so many other choices.
Fortunately, a good realtor, using the tools provided by MLS, can advise clients accordingly. In my case, being a CPA/attorney is a good start when it comes to assessing the financial strength of any given building or development (though I'm careful to advise clients who get that far to consult someone who's licensed and has practiced within the last decade!).
I've got numerous clients, savvy investors all, who are beginning to nibble on distressed properties, including multi-family units like condo's. For those so-inclined, the new mantra is "context, context, context."
That plays out two ways.
First, multi-family units typically bear a pro rata share of their building or complex's common area charges. To take just one example, I just sold a Minnetonka townhome in a 22 unit complex that had a $300 monthly association fee.
What if suddenly one-third of those units went into foreclosure? (They didn't, and won't -- the complex is extremely well-run, is in a great location, has low turnover, etc.)
The complex would still have the same expenses, but they would be divided across a smaller base. At the very least, the foreclosure units would likely fall behind on their share of the townhouse association's dues, crimping its ability to perform things like standard maintenance, snow removal and lawn care, etc. Such is the stuff of vicious (as opposed to virtuous) cycles.
The other consideration when scouting an investment is to know what's around you. One foreclosure on a block -- or in a building -- likely isn't fatal. But a couple can signify a very dangerous trend, and more than a couple probably isn't worth the risk, especially when there are so many other choices.
Fortunately, a good realtor, using the tools provided by MLS, can advise clients accordingly. In my case, being a CPA/attorney is a good start when it comes to assessing the financial strength of any given building or development (though I'm careful to advise clients who get that far to consult someone who's licensed and has practiced within the last decade!).
Stuck Rates
High Mortgage Rates Defy Drops Elsewhere
T-bill's are yielding zero, the Fed Funds overnight rate is 1%, the 10 year bond is at 3% . . . and mortgage rates are still at 6%? What gives?
Traditionally, 30 year mortgages are 160 basis points above the 10 year bond. If that relationship held now, mortgages would be at 4.6%. Think 4.6% mortgages would stimulate home sales? You 'betcha.
Unfortunately, like so many facets of today's dysfunctional credit and equity markets, traditional relationships no longer apply, and gravity has been suspended, at least temporarily.
T-bill's are yielding zero, the Fed Funds overnight rate is 1%, the 10 year bond is at 3% . . . and mortgage rates are still at 6%? What gives?
Traditionally, 30 year mortgages are 160 basis points above the 10 year bond. If that relationship held now, mortgages would be at 4.6%. Think 4.6% mortgages would stimulate home sales? You 'betcha.
Unfortunately, like so many facets of today's dysfunctional credit and equity markets, traditional relationships no longer apply, and gravity has been suspended, at least temporarily.
Thursday, November 20, 2008
How about ExxonMobil instead??
Portfolio of Dogs
"I wouldn't want to belong to any club that would have me as a member."
--Woody Allen
That's how I feel about the U.S. government buying, ostensibly on my behalf, an equity slice (or several) in household names like Fannie Mae, Freddie Mac, AIG, Wells Fargo, Bank of America, Citigroup, and countless others.
Just me talking out loud, but if my tax dollars now give me a .0000000000000000001% stake in a portfolio of American corporations, why do they all have to be dogs? Why can't they be profit-gushers like ExxonMobil or Chevron Texaco? Or at least Wal-Mart, Johnson & Johnson, Microsoft or any of dozens of other venerable companies that are still making a profit and have positive net worth?
When it comes to the first group of companies, U.S. taxpayers would appear to be not so much "stakeholders" as "bag-holders" (as in, "left, holding").
"I wouldn't want to belong to any club that would have me as a member."
--Woody Allen
That's how I feel about the U.S. government buying, ostensibly on my behalf, an equity slice (or several) in household names like Fannie Mae, Freddie Mac, AIG, Wells Fargo, Bank of America, Citigroup, and countless others.
Just me talking out loud, but if my tax dollars now give me a .0000000000000000001% stake in a portfolio of American corporations, why do they all have to be dogs? Why can't they be profit-gushers like ExxonMobil or Chevron Texaco? Or at least Wal-Mart, Johnson & Johnson, Microsoft or any of dozens of other venerable companies that are still making a profit and have positive net worth?
When it comes to the first group of companies, U.S. taxpayers would appear to be not so much "stakeholders" as "bag-holders" (as in, "left, holding").
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