Los Angeles Times – Investors say they’re providing nice homes for families by buying up bargains, holding them, and renting them out. Critics say they’re taking advantage of a situation they caused.

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Los Angeles Daily News – California home sales and prices both posted gains in December, with the median price posting strong double-digit gains for six straight months, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported.

Making sense of the story

• Sales in December were up 0.8 percent from a revised 518,460 in November and up 0.9 percent from a revised 517,730 in December 2011.  The statewide sales figure represents what would be the total number of homes sold during 2012 if sales maintained the December pace throughout the year.

• The statewide median price of an existing, single-family detached home climbed 5 percent from November’s $349,300 median price to $366,930 in December.

• December’s price was up 27 percent from a revised $288,950 recorded in December 2011, marking the tenth consecutive month of annual price increases and the sixth consecutive month of double-digit annual gains.

• The substantial increase in price was due in large part to a significant increase of higher-priced properties, while inventory constraints continued to constrict sales of lower-priced homes.  Price increases are not expected to continue at a high pace into 2013.

• California’s housing inventory was further constrained in December, with the Unsold Inventory Index for existing, single-family detached homes dropping to 2.6 months, down from 3.1 months in November and a revised 4.3 months in December 2011.  The index indicates the number of months needed to sell the supply of homes on the market at the current sales rate.  A six- to seven-month supply is considered normal.

• The median number of days it took to sell a single-family home edged up to 38.1 days in December 2012 from 37.5 days in November but was down from 58.7 days for the same period a year ago.

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In investing a real estate property, location is one of the many factors you have to consider. However, that does not stand alone; in fact, you need to know the type of real estate you have to invest on. When you consider a purchase of a certain real estate, you must look at whether it is a residential, commercial, office, or retail property. Each one of them is usually influenced by certain drivers that would dictate their own respective performances in the investment scheme. One type of property is different from the other, and it can also be said on how they perform and how good they are as an investment.

There are two types of investments in real estate and these are:

• Income-producing; and
• Non-income producing.

Income-producing real estate is often classified into four, and these are offices, retail, industrial, and residential areas that are leased for renters. In other words, such real estate is usually rented for other people’s usage, and that the income is usually generated by them. On the other hand, non-income-producing ones are the usual properties, such as houses, vacation properties, and commercial buildings for vacancy.

One of the most recognized forms of investment in the income-producing realm of real estate is office property. With the high level of office properties in urban areas such as cities and suburbs in terms of amount and necessity, there’s no way investors can profit from these. Indeed, office space is a growing need, especially for start-ups and those transferring from one office space to the next.=

The same goes with properties for those selling retail products, such as shopping malls and buildings that tenants can rent beside pedestrian zones. Investors often take into account not only location, but also its visibility and the population density of the supposed retail establishment.

Of course, regardless of the type of real property investment, there are those that cater to vacationers and families alike. As it is, residential properties often provide the most stable returns. For income-producing residential areas, investors can get profit out of it because there are tenancy rates that they can impose on potential tenants.

Likewise, for non-income-producing residential areas, investors can still obtain stable returns through capital appreciation. Also, investing on debt secured by such type of real estate should be based on the borrower’s ability to cover the mortgage payments because there is no income that can be obtained from tenancy.

This guest blog was provided by Scott Gordon Realty, the finest Palm Beach luxury real estate services, luxury rentals and condos for sale.

DS News – A joint survey by BiggerPockets.com and Memphis Invest found that 65 percent of active real estate investors plan to buy as many or more residential properties in the next 12 months as they did in the past.  The percentage translates to 4.5 million investors.

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New York Times – As college students prepare for fall classes, some of their parents or grandparents will be studying up on the real estate markets near campus.  Investing in student housing may not only help to reduce the room-and-board portion of the tuition bill, but also provide a revenue source, and in some cases, a tax deduction.

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Union Tribune – Investors have the cash and the manpower working in their favor.  They’re buying up parts of neighborhoods in hopes of turning quick profits, and in their own words, moving a once-stagnant market forward.  For first-time home buyers, they’re seen as potential hurdles.

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The Dow is barely positive for the year. Gold is at a 12 month mid range. Bonds yields are ho-hum. As for real estate, prices are down, rents are up and interest is the lowest since the 50’s. Wouldn’t it be prudent to ride out this slow, but steady, economic recovery in a home of your own that is likely to appreciate over the long term?

PreviewSFhomes.com offers you the luxury of perusing the MLS, foreclosures and short sales free and unlimited from your desk at your leisure. Define your parameters, i.e. location, price, # of bedrooms/baths and we will email you daily a list of San Francisco real estate with those criteria only.

Call Thea or Janis to view properties.  They will provide comps, negotiate offers and even navigate escrow, if you find a home…all at no cost. The seller pays the commission.

Before you begin your search, call Michael for loan preapproval. That prepares you to move quickly on a bargain, should you find one. Ask about no down VA and 3.5% down FHA loans. Michael is a licensed mortgage broker with over 40 financial affiliations from which to select the best loan for your needs.

As always, we wish you prosperous San Francisco real estate hunting.

Thea Miller, Real Estate Representation (415) 229-1218
Theamiller@PreviewSFHomes.com

Janis Stone, Real Estate Representation (866) 224-8024
Janis@SFResidence.com
DRE# 00517072

Michael DiVita, Mortgage Finance Support (800) 239-1103
Michael@DiVitaHome.com

Smart Money – Most boomers want to wait until the housing market improves before downsizing, but the savings of a smaller home may make long-term sense.

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(Note: This is a real estate investing tip by REIBulletin.com and is presented as information only. It is not meant to be a strategy that SFResidence supports or recommends.)

Buying discounted notes can generate residual income just like methods used by financial markets on Wall Street, only on a smaller scale.

Have you ever heard of Mortgage Securities?

They follow the strategy I am about to show you but on a billion dollar a year scale. If it can work for them, surely it can work for you! 

Certain pieces of information become public knowledge when a home is sold. These items include:

1. Price
2. Taxes
3. Liens
4. Buyer’s Name
5. Seller’s Name
6. Amount of Mortgage
7. Names of Lenders

 All of this information can be found at your County Courthouse or the Clerk’s Office.

Let’s say you find a property valued at $80,000. The seller is retiring, owns the place free and clear (no mortgages) and wants to buy a condo in Florida for $30,000.

You suggest that he invest the balance of his equity into seasoned mortgages worth $50,000 and paying 10% interest, with monthly payments of about $500 per month to supplement his Social Security. This income will NOT affect his  Social Security. He agrees.

Now, locate a mortgage with a $50,000 face value, at 10% interest with monthly payments of at least $500.  

Offer the mortgage holder $35,000 cash, to be paid at closing. The note is to be placed into escrow along with signed a copy of the agreement (preferably notarized).

 At closing, your bank (if YOU are buying the property) or your buyer’s bank (if you are selling to a third party – see “Double Escrows”) puts up the money for a first mortgage of 90% of the price, or $72,000. From this amount:

•  You pay $35,000 for the note. The note seller goes home, happy. 
• You pay the seller of the property $30,000 cash and give him the $50,000 in mortgage(s). He goes home, happy.
• There is $7,000 left “on the table”. This belongs to you, along with $8,000 in equity in the property (the
  difference between the $72,000 mortgage and the $80,000 value). If you bought and sold simultaneously at a double escrow, you would walk away with $15,000 cash.
• in other words, the $7,000 left on the table and the $8,000 equity you sold to your buyer (his down payment).