Tag Archives: Market

Hard Money Lenders in Los Angeles and the Real Estate Market

Los Angeles remains a very attractive market for those who can afford it. The California Association of Realtors reports that home prices in Los Angeles have increased 6.1 percent this year to date and are projected to show a 6.5 percent gain for all of 2015. Meanwhile, in Los Angeles County, prices are reported to have shot up 5.4 percent so far this year. These figures include detached and attached single family homes and duplexes. Century City Real Estate Report says that some L.A. luxury neighborhoods have already passed the 2007 peak. This situation makes a wonderful market for hard money lenders, since many investors are rearing to buy, but they are leashed by miserable credit ratings and credit histories. Shunned borrowers turn to hard money lenders in their area who hand them the funds based on their collateral.

Here is the Los Angeles real estate data for 2015-2016

The California Association of Realtors projects sales figures of 407,500 single family homes by the end of 2015. This will be an increase of 6.3 percent over the homes sold in 2014. Projections for 2016 are also for a 6.3 percent increase to a predicted 433,000 units next year.

In Los Angeles, some data sources, such as the California Association of Realtors, show that the median sales prices for single family homes and condos shot up 8.1 percent to $950,000 for the 2015 third quarter; a record high for the Greater L.A. area. Regions include Westside, Downtown and coastal cities like Malibu, but omit low-priced areas such as South L.A..

One way to understand real estate price cycles is to look at the building permit numbers. If developers are investing in new properties, as has been happening in the general Los Angeles area, it is a good sign that demand, and prices, are rising or keeping steady. Statistics shows a growth of 2.4 percent in building projects.

Observers are concerned that Los Angeles may be approaching another housing bubble, but William Yu, Economist for the UCLA Anderson School of Business strongly negated this prediction in a recent UCLA Anderson Forecast. Prices have shot (he said) in an already expensive L.A market only because of excessive demand and limited supply. This is no housing bubble but a hugely pricey and unaffordable situation where those with money either do, or would like to, invest. In fact, the market is mostly catering to the very wealthy. Typical reports show that builders and investors are looking to the high-end luxury market where potential profits far exceed the profit that an investor can realize from the average priced home. This kind of high-end residential development needs investors who have the right kinds of funds. Some individuals go to the banks for their loans. Other approach alternate traditional lending institutions.

What about those without money? Or with poor credit who are unable to procure a loan?

This is where hard money lenders come in.

Los Angeles hard money lenders

The Los Angeles money lending directory shows 56 hard money lenders and the listing grows all the time. Experts in the field know that there are many more who are listed in other places or remain unlisted. These (and other) brokers lend their personal funds to residential and commercial borrowers. The hard money lenders ignore the credit history and FICO scores of these borrowers focusing instead on the value of their collateral. If the borrower defaults, the lender sells his property as repayment.

Many investors rush to hard money lenders for their speedy turn-around (typically less than a week) and for the simple and easy procedure (merely a few papers and a handshake). They detest the high interest rates (double to those of the banks) and the low ratio-to-value loans (sometimes as low as 60%-50%). Many borrowers tend to get hard money loans for the immediate short-term future and then repay with bank loans or cover the rest with alternate funding. Hard money loans are expensive so most borrowers try to use them for as short a time as possible.

The Los Angeles hard money brokerage is diverse and vast. You will find lenders dabbling in all sorts of deals and lending to a variety of investors. Lenders also offer varying sums and for varying amounts of time. Since lenders work independently – after all, it is their own funds that we are speaking about – they set their own terms and schedules. If you go that route, make sure your lender is certified by the L.A. regulatory real estate Board and by the National Mortgage Licensing System (NMLS). Also look into his credentials and borrowing history. And best of all: have an attorney review all agreements before signing.

The bottom line is this…

The Los Angeles rising prices and tight inventory have driven more investors to the high-end market. Investors have run out of flips but there is a wider market for the higher-paying population or for wealthy foreigners. This type of inventory drives prices higher and is expected to shoot them higher still over the coming years as there is scanty new construction in the pipeline to meet demand.

For those in LA who want to make the most of this luxury market but lack the funds to do so, employing a hard money lending broker may be a feasible solution. This type of broker ignores the credit history and focuses on the asset. Luxury assets seem to have high potential. If the borrower can show the broker his ability of repaying and convince him of the value of his property, the borrower may be able to find an alternate means of landing a spot in LA’s luxury market.

The California Association of Realtors predicts that home prices will likely “grow steadily” in the end of 2015 into 2016. Many investors in Los Angeles are approaching hard money brokers to fund their immediate needs. How does this solutions sound to you? Feasible?

Boston Condo Market In Real Estate Frenzy

The Boston Condo Market has been on a mega rebound over the past few weeks. Downtown inventory rates have dropped significantly and prices are still climbing. Many Boston condos that we have been tracking over the past few weeks have went under agreement at full or over asking price showing the stability & possible frenzy in the 2007 Boston real estate market.

Last week we all read about the real estate frenzy going on in Manhattan right now. Is it the buyers who have been waiting for the bubble to burst over the past 18 months and now are faced to purchase now or rent for another year? Is it the low interest rates that are still active in our marketplace? What is causing this new renewal of the Boston real estate market?

New condo developments in Boston are also on the hot seat. With even more projects coming up this shows the lack of luxury condo properties or full service condos. We are glad to see more of this type of condo property being built as it is the wave of the future. The Back Bay, Beacon Hill, Brighton Allston, Charlestown, Chinatown, Fenway, Leather District, Midtown, North End, Seaport, South Boston, South End, Waterfront and the West End in Boston are all hot and downtown Boston will continue to boom.

Not surprising, some immediate suburbs like Brookline, Newton, Medford & Quincy are also picking up on this trend. Traditionally these markets don’t cater to the full service young professional, however, we are seeing all new types of luxury condominium properties popping up around the skirts of Boston also.

7 Things You Should Know About the NYC Luxury Real Estate Market

1. You DON’T have to spend a ton of money. (Relatively speaking.)

Plenty of strategies exist for those who want to purchase NYC luxury real estate but don’t want to spend an exorbitant amount of money. One way is to purchase a unit in a lower floor of a luxury building. A second floor unit can cost as much as 19% more than a comparable unit on the first floor. Another option is to seek units with higher maintenance or common charges per month, as those often have lower asking prices. Alternatively, some lines in a building can carry a higher price tag than others… for instance, a unit line with windowed bathrooms will fetch much more on the open market than a line whose bathrooms are lit only by fixtures.

2. Get Bank-Approved.

If you need a mortgage to purchase a NYC luxury real estate property, you will want to get a mortgage approval letter from your bank stating the amount of mortgage loan for which you are approved. Savvy sellers can legally tell their brokers to only show properties to buyers who are “bank-approved.” A bank qualification letter is not the same as an approval letter, and will not qualify you to see a property under bank-approval requirements.

3. Know Your Terms.

In the real estate industry, “terms” refers to the stipulations under which money is given. For cash-closers, this relates to among other things, how many days needed to close. For mortgage holders, it refers to your percentages for interest as well as time needed to obtain the funds from the bank and transfer them into the appropriate ESCROW account. In a real estate transaction, terms are equally as important as cash, because they dictate to sellers under what conditions they will get to recoup their original purchase price. If you know your terms inside and out, it will make it easier for your broker or agent to negotiate with sellers for you.

4. You CAN do your own research, and you probably should.

According to the National Association of Realtors, 88% of individuals start their real estate search online. In New York City, home of the savvy shopper, over 90% of buyers and renters start their search online. The importance of doing your own research is to be ahead of your competition – other ready, willing and able buyers. Each NYC luxury building has its own rules for purchase and its own amenities to offer. Each area of Manhattan has its own disadvantages, quirks and advantages. And not every real estate agent or broker is equal. You will want to some conduct some preliminary research in order to stay ahead of YOUR competition – other ready, willing and able buyers. Which brings us to our next point…

5. Competition IS fierce.

You’ve probably heard this adage before in regards to the NYC Rental market: bring a bank-certified check with you and be ready to close on a rental unit you like as soon as you see it, because the next person to see it might just snag it from under your nose. Similar fervor applies to the NYC buyers’ market, especially for luxury NYC real estate. International all-cash buyers are most likely your strongest competition in the NYC luxury market. They can walk right in and say “I’ll take it,” and cash buyers can close in as little as two weeks. Know your own financial situation, and know just how quickly you are ready to move on a property you like. The ability to quickly move into ESCROW will give you a significant advantage against other buyers.

6. You NEED a competent broker.

Just because a property falls under the luxury umbrella, does not necessarily mean that it is problem-free. Structural problems such as improper weight baring pillars and roofing issues, evidence of water damage and mold, or piping and HVAC problems are just some of the problems one can find in any property. That is why it is integral that one conducts a home inspection before signing on the dotted line. Most importantly, make sure your contract for purchase includes a home inspection contingency, i.e. a statement that permits you to freely walk away from the property if the inspector finds a problem with it. A competent broker also won’t waste your time or their own by showing you properties that aren’t satisfactory.

7. The NYC Luxury Real Estate Market never really dipped.

The New York City real estate market is a market unto itself, comparable to none other in the United States. It plays by its own level of supply and demand rules. International demand for NYC luxury real estate continues to be one significant reason why Manhattan prices are so high compared to other areas. REBNY reported that 2012 was the most successful year (over $30 billion in property sales) for NYC real estate since 2008. REBNY also reported that broker confidence in the market has been higher in January 2013 than in any month of 2012. Sales numbers across most brokerages point to the fact that we are continuing to trend towards a sellers’ market, as sellers and co-op boards continue to be able to pick and choose among a pool of possible buyers. Know that the NYC luxury real estate market is not depressed by any means and factor this knowledge into your approach to purchase.

How To Market Luxury Homes Online

This article is for a realtor or for a home owner preparing to sell a luxury home.

If you are a real estate agent a significant and lucrative way to operate your business is to work to get listings. If you have the nicer listings in the area then all the better. If you have the inventory then other area agents have to work with you to sell your inventory. You, effectively have them working as your agents selling your inventory to their buyers. It is a great situation.

So how do you get more and better listings? This is the big question. What I recommend is to do something that is different and exciting for the home owner. After all it is the home owner that selects the listing agent. Therefore, if you properly impress the home owner with how you will market their home then you are well on your way to gaining more listings than your competition.

Now ask yourself this question. Is the home owner more concerned about the listing price or the time on the market? Most home owners want to get the highest price possible and are willing to keep the house on the market a bit longer than the agent may want to achieve a higher selling price. It is your job to define a price that is reasonable given the comparable sales and time on market. If the priority of the home owner needs the equity in the house fast then you and the home owner need to agree on an asking price that is at a point that encourages showings and offers. Let say that you and the home owner(s) are in roughly the same place relative to the asking price then what do you do now to get the listing?

You impress them with the marketing tools and approach that you can apply to the selling to their property.

Here are some ideas that you can use to impress the home owner with and increase significantly your chance of getting the listing.

A Dedicated Website

There is a service offered by Luxury Home Marketing has a nice website platform that can be used to quickly set up a website dedicated to showcasing a specific home. Another advantage of this platform is that it is very affordable. For the right home you can set up a website that explains the home and its special features, the area as it relates specifically to the property and all relevant information can be included in a neat and tidy online package.

Also, with a dedicated website the search engine terms can be specific and customized just for the specific property and specific area. This is a big advantage over your main site as it would not be easy (in fact it would be very difficult) to maximize the search terms for a specific property while still maintaining a proper cross section of significant search terms for your business and the other properties on your site.

With a dedicated website a realtor can specifically set up on-page content that helps to get specific targeted traffic to the website. Also, if you want to run a Pay-Per-Click (PPC) program then, again, you can be specific with the search terms. The PPC can be specific and targeted. This is a big advantage that you can create over your main site.

A dedicated home showcasing website is sure to impress a home owner and it can be a deciding factor in getting a high-end listing.

Home Showcasing Voice Narrated Presentations

The next tool to use is an online video or online slide show. The feature to stress here with the home owner is the voice narration. As the listing agent you know the story of the high-end property better than anyone else. Your job is to tell that story to as many potential buyers as possible. To use the Internet to do this is a big advantage.

An online voice narrated slide show will work for the home owner 24/7 -even on weekends! This is a sure way to impress a home owner.

To get more listings it is important for you to develop tools that can showcase a home and then to present the home to the best possible audience. If you have a listing for a high-end home is likely to attract a sophisticated buyer. This type of buyer will be familiar with the Internet and this sophisticated buyer will expect a high-end property to be well presented.

Not only will you get more listings but you have move in the direction of selling the property faster and at a higher price as the home will be presented to more buyers and in a way that emphasizes the true value of the property.

Online Printable Brochures

It is important to offer the visitor to the dedicated website to an opportunity to print out a well designed brochure on the property. In our experience the most requested aspect of a realtor website are the printable brochures. Visitors like to print our the details of the key property they are interested in. They like to show these printouts to people for their opinion. A printable brochure should be a significant part of your marketing plan and can be easily integrated into your main site and the dedicated site.

Another related feature to showcase the high-end property is in online printable brochure on the area. This should compliment the entire marketing program for your luxury listings. A high-end buyer is buying the home and grounds, the area and even the life style. Your printable brochure on the area should integrate seamlessly with the marketing plan for all your high-end real estate listings.

The format for both the home brochure and the area brochure should be Portable Document Format (PDF). This has become the standard for online printing.

  • This also creates the following advantages:
  • The buyer only prints out the brochure if and when they want to.
  • There is no need to mail or fax or send it by e-mail. The potential buyer can download and print it out right from the website.
  • The buyer is immediately satisfied. The Internet is all about instant gratification. Give the visitor what they want and immediately when they want it.
  • The cost to print is the visitors cost. You have no mailing cost, no printing costs and no labor (after you have created it – which you should be doing anyway) to get the brochure into the potential buyer’s hands.
  • All branding information and contact information is in the brochure. If the potential buyer needs or wants to contact you then the information is right in front of them when they are looking at the brochure for the property.

In summary, a dedicated website with a multimedia slide show and printable brochures on the property and about the area are a powerful combination that will ensure a home owner of a high-end-luxury property will give you their full attention with you are being interviewed for the listing. Master the use of these tools and present them to the home owner and watch your ability to gain the high-commission listings increase significantly over the agents that do not.

Visit the website of Luxury Home Marketing at http://www.luxury-home-marketing.com/ to learn more and to see some examples of these high-end real estate showcasing tools.

Property Investment Loans and the Luxury Home Market Still Suffering

Both the luxury homes and the investment property market are still feeling the pinch of the credit crisis, with loans hard to come by and substantial excess inventory. The process of arranging loans to buy property has been drastically affected since the Lehman Brothers crash, and most lenders have increased their lending criteria by a substantial margin.

It is unlikely that a borrower will be able to arrange financing without at least a 25% deposit available. When one takes into consideration the increases in charges and fees to arrange a loan, realistically this needs to be closer to 30%. Until such times as the commercial property losses accrued and coming due over the next 18 months have been declared, lending is going to remain restricted and the markets will continue to devalue.

Some markets may recover sooner than others, but the problem of overbuilding – particularly in the “luxury” segment is likely to continue to cause a problem for some time. With the end of the 125% “jumbo loans,” and a return to rational lending, one has to wonder how much of the current inventory is going to be unsalable.

It is hard to accurately predict where the turn around point will be – and there will be one, but many are calling that point and have been calling it almost since the downturn began. But – I feel this problem is still unresolved and this one is too big to “hype,” our way out of. The underlying fundamentals: lack of credit, upcoming banking losses in the commercial property sector, and rising unemployment have not changed.