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DEL MAR, CA: Dog Beach

Dog Beach is sometimes referred to as "North Beach" by the locals. It is pure delight for your canine companions as they can run free from October to May.  Leash laws are enforced in the City of Del Mar during the summer months.

Most of the folks you see here are throwing frisbees, sticks, or balls for the pooches to retrieve.

Parking is metered and the City of Del Mar gets huge revenues from the parking meters and fines that come from non-compliance.  They are hawkish in its enforcement so bring quarters if you plan to come to Dog Beach.

The crowd is a law respecting dog-owner crowd and unacceptable behavior is punished by the De Mar Lifeguards.  The City of Del Mar offers free poop scoop mitts for you to clean up after Fido.

FROM Interstate 5, take the Via de la Valle exit west to Coast Highway (about one mile), turn South on Coast Highway, Dog Beach will be 250 yards on your right.

If you need a Del Mar, CA mortgage, please contact America's Most Opinionated Mortgage Broker.

I found this video on YouTube that gives you a 20 second glimpse of Dog Beach in Del Mar.

 

 

 

      

 

Mexico Lending: Hard money for Mexico

This hard money lender describes what they do as "situational lending" which is a true representation of what a traditional hard money lender does. 

Unique niches Kennedy Funding states that they will fund are raw land and properties in Mexico.  They are aggressive with large developments and commercial financing.  I have been contacted by them 2-3 times and have not funded a loan with them so I am unable to comment on the efficacy.

I posted this because many mortgage brokers on Active Rain look for vacant land loans.  I hope this helps.  Contact me at 858-699-4590 if you need financing for a Mexico property.

 

 

      

 

Hard Money in California

Here is a hard money lender we might place a loan with.  Brokering to this wholesale hard money lender gives us good opportunities to fund foreclosure bailouts in California:

 

 

  I saw this on Broker Outpost:

Hello,
We currently do loans in Oregon, Washington, California, Arizona, Nevada, Colorado, Idaho and Hawaii!

Our big niche is borrowers whose FICO scores drop below 580, Notice of Default, Notice of Sale, current B/K, no seasoning on title, etc. We can payoff judgments, tax liens or anything that affects title. We have no cash out limits.

We basically disregard every aspect of a borrower’s history and focus strictly on the value of the property. 7 Day close is normal! **Currently 6 Days**!!

Contact me at 858-699-4590 if you need hard money financing

Rainmaker or Dealmaker?

I think Realtors and Loan Originators will become highly specialized individuals in the next 5-10 years.  The business will split off into 2 distinct personalities:  Rainmakers and Dealmakers.   I'm going to share some thoughts about identifying what you are and then some proactive ideas you can take to exploit your strengths in 2007.

Rainmakers are "Connectors". They know how to find people interested in your service offering, build trust, establish relationships and find business.  I love rainmakers because I am one.  I have made the most money in my career when I focused on rainmaking.  This is not to say that I don't know the technical aspects of my business; I do but I've been able to hire people to manage that part of the process. I am a salesperson and I'm extremely proud to say that.   Rainmakers are hunters.  Rainmakers are trailblazers. They are the oddballs that know which rock to look under and which alley to turn down to find a ready and willing prospect. 

Dealmakers are the doers. They specialize in the technical aspects of our professions.  For Realtors, the dealmakers show property to buyers, price property for listings, promote the listings, negotiate contracts, manage escrows, and keep the transaction compliant with the appropriate state real estate law.  For originators, the dealmakers, take a loan application, find the lender, gather the documentation from the borrower, interface with the borrower, processor and underwriter during the loan process, and deliver a happy client to settlement.

Our businesses are changing.  Partnerships and teams are cropping up all over the country.  It is said that real estate is a local business driven by local markets and practiced by local people.  I think that paradigm will morph in the next few years. 

Rainmakers can practice real estate all over the country by using networks where they build credibility and trust.  Rainmakers will be able to start their own "real estate brokerage network" by "marketing" their expertise and trustworthiness to people throughout the world.  Web 2.0, e-mail marketing, the telephone, and the mail allow anybody to become a "trusted advisor".  It is conceivable that I could gain the trust of 1000 people by carefully positioning myself as an expert on real estate through the tools I've mentioned.  If 100 of those people move each year and I get 50 of those transactions to refer, I can generate a six figure income as a rainmaker.

Dealmakers can work extremely hard at knowing the local markets (or loan programs). Rainmakers can find many of the dealmakers right here. Dealmakers should constantly be marketing themselves to avowed rainmakers both locally and nationally.  Dealmakers should have 20-30 active rainmaking relationships and should be talking to them every two weeks.  They should position themselves as an expert in...selling Poinciana, FL homes, helping buyers find the right vacation home in Marco Island, FL, steering investors clear of "traps" in the Vegas market, finding vacation properties in the Carribean, getting a vacation home on Bainbridge Island or selling Coastal San Diego.  Rainmakers should embrace these dealmakers and treat them like they are members of their "Team". 

Our businesses are changing.  Their will be hunters and farmers in this marketplace.  Identify your natural talents, and run like hell to be the best at your natural talent.  The days of the "do everything" practitioner are ending .  Don't become a buggy whip salesperson or vinyl record manufacturer.

I'm in Love with a Dingbat

I must admit that my heart finds for some strange affections.  I love dingbats!   Now..I better explain myself so that my wife doesn't clobber me.  I'm not referring to an "intellectually disinclined" woman.  I'm talking about the multi-family building so prevalent to Southern California.

FROM WIKIPEDIA:

A dingbat (also called a stucco box or a shoebox), is a type of architecturally undistinguished apartment building that flourished in the Sun Belt region of the United States in the 1950s and 1960s. Dingbats are boxy, two- or three-story apartment houses with overhangs sheltering street-front parking. 

Particularly popular in southern California, but also found in Arizona, Florida, Hawaii and Nevada, they are known for their downmarket status and inexpensive rents. They are currently experiencing a minor sentimental renaissance thanks to the mid-century modern design return to vogue. In spite of their serviceability as functional, affordable housing, and the niche appeal of their trappings and trim, dingbats are widely reviled as socially alienating visual blights; California historian Leonard Pitt said of them, "The dingbat typifies Los Angeles apartment architecture at its worst".

Why do I love dingbats? These apartment buildings offer one of the greatest challenges to a real estate financier.  They don't qualify for residential financing because they are usually greater than 4 units.  They are "small commercial" deals that banks pick apart with a fine tooth comb.  They generallly don't cash flow greater than 60% LTV in Southern California so it is hard for investors to leverage themselves.   They do, however, provide a great opportunity to make money because they have been generally mismanaged and aren't receiving market rents.

Let me give you an example of a property I just financed.  It is less than 500 feet from the sands of the beach in Imperial Beach, CA and was built in 1954.  It is mostly studios and one bedrooms with monthly rents of $6600.  The investor bought the property for $1.1 million.  Banks wanted to finance him at a maximum of $500,000 with no subordinate financing; they were going off of his market rents.  Now come on!  $660/month for a beach apartment in Southern California..unheard of!

This investor plans to sink $100K-$150K into the building to upgrade the facade and interiors.  Updated, an apartment this close to the beach can command upwards of $1,000/month.  It is extremely close to Coronado Naval Base, home to over 5000 sailors.  These sailors receive over $1,200 allowance for off base housing.  He has a natural market less than five miles from his property.  Now, what do you think the effect of future rents will have on the ability to service the loan?  If you're thinking that it is positive, you are correct.  We recognized that and made a hard money loan to purchase this building, allowing for seller-carryback financing of 30%.

One of my favorite things about dingbats is the kitschy names for them.  The complex name is usually emblazoned across the facade in aqua or salmon and has names like "Palm Gardens" or "Beverly Palms".  Dingbats are so retro cool, it makes you want to don a bowling shirt and fedora and have your picture taken in front of the property.

Yep...I love dingbats. I love the fact that they offer affordable rents to the masses and a great return for investors.  Banks hate them, I love them.  If you need financing for a dingbat...call me at 858-699-4590.

Paying Realtors For Performance

I think a good hard look at performance-based compensation agreements in real estate brokerage has merit.  Imagine, if you will, negotiating an agreement when you list a home that is akin to a professional sports player's contract. The modern day professional sports contract is laden with performance bonuses.  A MLB player gets a bonus if he makes the all-star team, hits a certain number of home runs, maintains a certain batting average, or plays in a specified number of games.

In the book, Freakonomics, the authors liken real estate agents to the Ku Klux Klan in their clandestine ability to exploit the information advantage they have over the average consumer. Summarized, they conclude that ANY brokerage or profession (doctor's, lawyers, and yes, Virginia, even mortgage brokers) exploits this advantage in their ability to position themselves as "experts".

The authors illustrate the real estate agent's DISINCENTIVE to hold out for higher prices for their clients. The incremental fee increase on, say, $30,000 really doesn't translate much to a Realtor when you consider the risk that is involved for not encouraging the client to accept a subpar offer.  If $30,000 extra is paid for a $400,000 home, the incremental increase is only about $400 to the listing agent (I am assuming 6% commission, split with a buyer's agent, a 70% split with the broker, and a combined 35% tax bracket).  However, the lower offer of $400,000, accepted, does produce a commission of about $5500 (same assumptions) to the Realtor.

This inspires this question...Is the $5500 bird in the hand worth more than $5900 bird in the bush?

Now, I'm certain that this very question will produce righteous indignation from Realtors.  Many will scream ethical implications and bandy about esoteric phrases like "fiduciary responsibility". I'm going to ask you to rethink your comments before you type.  Maybe read this idea over again, grab a cup of coffee, call your best friend on the phone and run the idea past them before you comment.

Let's say that I have a $400,000 home listed that I agree to sell for $380,000 at the low end.  The absorption rate for my market is say....90 days.  You, as a professional Realtor, agree to list my home and sell it for a 5% fee or $20,000.  I don't want to pay you $20,000 for a...how can I put this?...average performance. You see, I tip really well if the service is good so I want to pay you like I would a rookie quarter back who won the Heisman trophy.

I will establish a base fee of $1,000, paid upfront to defray marketing costs.  For my fee, I expect exposure in the MLS, a listing on your website with a virtual tour, maybe a newspaper ad or two and 1-2 open houses.  Now here's where the compensation gets really good.  If you sell my home in less than 90 days, I'll give you a $10,000 bonus.  Less than 45 days, that bonus is increased to $15,000. That can certainly cover the co-brokerage fee you might offer to a cooperating agent.  If you sell my home for $380,000, we're done; you get the time performance bonus.  I'll add 5% of the price above $380,000 as a bonus.  For an offer accepted above 400,000, I'll pay you 50% of the amount above $400,000, after all, that's pure gravy to me.

So let's see how this plays out if you sell my home for $420,000 in 45 days:

Upfront fee: $1,000  +  Time bonus: $15,000  +  First Bonus (5% of $40,000) = $2,000  +  Second Bonus (50% of $20,000) = $10,000. A Grand Total of $28,000; a 40% higher net fee than the conventional fee model.  Now, if you sell the home for $380,000 in 90 days, you'll make $13,000; a 55% decrease from the conventional net fee model.

I'm sure it will require some creative incentives to pass on to the buyer's agent and someone might point out that  this incentive-based fee pricing model might cause the buyer's agent to not properly represent the buyer. I don't really care.  It's my house, and I want the Michael Jordan of Realtors to show up on my team.

Ten Hints For a Higher Property Appraisal

DO's:

1- Start with a thorough, deep cleaning.  All cobwebs should be removed, all corners hould be scrubbed.  The cleaning should start inside and remove all clutter, then extend to the exterior and be clutter free.  I wonder what the effect of staging would have on an appraisal.

2- Touch up paint throughout the interior.

3- Have maintenence records handy for the appraiser for septic, well, hot water heater, and kiche appliances.

4- Outline major improvements or additions with a detailed report including invoices, and dates of improvements.

5- Stimulate the power of smell and sound.  Soft music playing with cookies in the oven sets a good tone.  Appraisers are people, too!

DONT's:

1- DON'T leave repairs for the appraiser to find; they'll catch them.  Fix first!

2- DON'T blow off the appraiser or reschedule at the last minute.  We all hate when our time is wasted.

3- DON'T follow the appraiser around.  Perhaps you could run to the store.  It should take them about 40 minutes to an hour.

4- DON'T leave a faucet leaking or have a pot in the middle of the floor for a leak in the roof.  Water is your enemy!

5- DON'T even suggest a bribe, even in jest!

High Noon in Long Beach

The California Association of Mortgage Brokers, the same organization that sponsored the trade show that featured completely irresponsible lending practices,  has drawn a line in the sand with this statement that all loan originators need to be licensed. 

"We believe there should be a barrier to entry besides being able to fill out a job application form," said Michael Faust, CAMB's government affairs chairman.

Sounds pretty good, doesn't it?

Not to be outdone, the California Mortgage Bankers Association, fired a shot across the bow of the brokers' association with this statement refuting their demand today.

 

Dustin Hobbs, spokesman for the California Mortgage Bankers Association, said his group objects to the licensing measure, saying that Department of Corporation licenses have better consumer protections."Employees", he said, "must receive training before they can set up loans for homeowners, and their employers undergo regular audits and must meet minimum capital requirements."

The bankers make a pretty good case, also.  They are held to higher regulatory audits than DRE licensed brokers.

What about the federally-chartered banks?  Federally chartered banks are exempt from state licensing and these guys are conspicuously absent in their comments.  The banks will never encourage their employees to get originator's licenses because it makes their originators marketable.  Why should they?  The federal banks don't play by the same rules as the rest of the originators anyway !

Are there close to 1 million people originating loans in California as the mortgage brokers suggest?  I think not.  That would be one originator for every 38 people in the state or one originator for every ten familes.  I think this is just another protectionist ploy by an organization with declining membership.  The press release also calls for new disclosures for "exotic mortgages". Remember this is the same organization who encouraged lenders who offer  100%, stated-income, negative amortization loans, to exhibit at their San Diego trade show.

I think this is CAMB's last straw to show its declining membership that it has value.

Why do Realtors Offer Loans, Too?

Why does your Realtor have an "in-house" mortgage company?

Your Realtor has an in-house mortgage company because they just can't make any money on real estate brokerage.  Commission splits have been rising exponentially for the past 15 years.  The introduction of the 100% model combined with discounting pressures has had real estate broker scrambling for ways to increase the bottom line by offering a "one stop shop" for customers.

How much can the broker really make off of an ABA with a  loan company?

Well, that depends.  If it's the Coldwell Banker/Century 21 model, not a lot.  tThe originating broker makes about $300/transaction.  Now if your office is a 30 agent office with 8-10 loan a month, that may pay the salary of a receptionist (which helpsl)

I had an arrangement with 3 Keller Williams' offices in Phoenix.  I paid "rent" to the office, had a separate entrance, and operated as my own business.  I still had to hustle and my rent was "all-inclusive" (phones, fax, copies, internet at $2,000/month per office).  When I operated by myself, it was a great deal.  When I hired loan officers, I didn't make any money.

I was proposed a "partnership" with the real estate brokerage because they were convinced that they were missing out on thousands of dollars in profit.  This was the greatest thing that ever happened to me.  We split "profits' after the loan originators, rent, and all of the incidentals were paid.  I made more and the brokerage made about what I was paying in rent.  The broker had more of an incentive to encourage the agents to utilize our services.

How about title or escrow services?

In California, many brokerages have in-house "escrow" companies.  In fact, the term "virtual escrow" has popped from title companies to capture the title policies.  This platform transfers some basic escrow functions to the real estate broker and allows them to be compensated for it.

Does this violate RESPA?

Absolutely not if it is done correctly.  Section 8 (c)(4) of RESPA provides for these arrangements if they meet a safe harbor test.  It is required to use the HUD disclosure for each customer disclosing compensation or ownership.

Summary:

Real estate brokerage is a low margin business today.  Experienced agents are demanding (and getting) splits of 80-90% as well as increased services.  Big shops that have over 100 agents can afford to operate on brokerage alone.  Small shops where the real estate broker produces are able to operate on brokerage alone.  It's the 10-60 agent shop that needs to find alternative revenue streams to make a profit. 

Great Hotel in Imperial Beach

I walked along Seacoast Avenue in Imperial Beach, CA today and visited some businesses near a property we financed.  We are an active Imperial Beach, CA mortgage company and like to see the communities in which we lend.

The Seacoast Inn on the Beach is a charming property right on the beach in Imperial Beach, CA.  I had an opportunity to meet Doug Butler, The General Manager of the hotel, today during my walking tour. Doug was kind enough to give me a tour of the property.   

A description of the Seacoast Inn on the Beach from their website:

The Seacoast Inn, Imperial Beach is home to the famous Sand Castle Days, an attraction that draws artists from all over the country to compete in sand castle making. Imperial Beach, with its wide beaches and soothing surf is an ideal place for jogging, roller-skating or taking a casual stroll with the waves at your feet. The weather is almost always sunny, and all our guests enjoy our outdoor heated pool and spa, a spacious sundeck and complimentary use of our barbeque grills. The Seacoast Inn has 38 newly renovated beachfront rooms, which are warmly decorated, spacious and provide guests with either a view of the ocean or the pool area. It's the perfect retreat for a family vacation and children 18 year and under stay free in their parents' room. Other hotel amenities include an outdoor heated pool and spa, guest laundry facilities and complimentary parking

 

 

 

This hotel has one of the best locations in the South Bay.  Views of Coronado Island and Mexico and it's a short walk to the Imperial Beach Pier.

 

 

 

 

 

This picture shows the splendid view they have from their lobby.   

 

 

A view from the back patio.  You can walk right to the beach and enjoy Sand Castle Days.

 

 

 

 

 

 

The rooms are "family" or "group" friendly with an efficiency unit and double beds.

 

 

 

 

The property boasts a heated pool and hot tub for your "after beach" relaxation.   

 

 

 

 

There are many things to do in Imperial beach, including our favorite Southern California past time; surfing.

 

The Seacoast Inn on the Beach is an excellent choice to stay while you look for homes in Imperial Beach.  Ne sure to check with your Imperial Beach Lender to get pre-approved before you go home shopping.  Ask for Doug and tell him that America's Most Opinionated Mortgage Broker sent you.