2011 August :: The Construction Management Pro

A Kiss from Irene

August 29, 2011

While Irene wasn’t as devastating as predicted, it still caused several fatalities. My prayers go out to all those who lost someone or had severe property damage.

My last blog post gave you three simple steps to Be Prepared for Irene. Now I have to take some of my own advise.

Aftermath of Irene, Tree falls on house

Tree roots after Irene



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Three Steps to Prepare for Irene

August 26, 2011

Someone once said, “Proper preparation prevents potential problems” or something like that. The point is that now is the time to take some basic steps to prepare for what Irene may bring and protect your real estate investment. As a real estate investor and construction manager here are a couple of things I suggest that you do right now.

1. Take pictures of all your properties inside and out. Don’t forget the roof, basement, windows and your neighbor’s property as well. This will make it easier for you to file a claim for damage as a result of the storm. The pictures of your neighbor’s property may allow you to demonstrate the location of windblown debris which causes most of the storm related property damage.

2. Locate and review your insurance policy(s). Make sure you know what is covered and what isn’t. If you have more than one policy, be sure you know which one covers what.

3. Secure your property. This may seem obvious, but again, windblown debris causes most of the damage. Be sure your landscaping and trees are trimmed and cleared of dead branches; windows are secured and protected.

Taking these three simple steps will put you in a better position to deal with the aftermath of what could be a disaster. While no one wants to see it, take a page out of the Boy Scout’s motto, “Be Prepared!”

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Freddie Mac Warns of Short Sale Fraud

August 26, 2011

I have often heard investor Gurus say that as an investor we have to “influence the Broker Price Opinion” (BPO). Lately, that language has changed to “providing the broker with our estimate of value.” This article warns investors of the dangers in flipping short sales. “The GSE is seeing trends in which agents manipulate the short sale price and obtain a low broker price opinion (BPO) by inflating repair estimates or making the house look more distressed than it really is, something called reverse staging.”

To be forewarned is to be forearmed!


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Homeownership Rate Hits 13 Year Low

August 5, 2011

The Bush Great Recession has forced unprecedented numbers of homeowners out of their homes, made for a difficult homebuying environment, and tainted many Americans’ ideal of owning a home. The increase in the homeownership rate seen during the housing boom has been more than completely wiped out by the bust.

The Census Bureau says homeownership in the United States has fallen to its lowest level in more than 13 years. The nation’s homeownership rate dropped to 65.9 percent in the second quarter. That’s a full percentage point lower than the second quarter of 2010 and a half a percentage point below the rate recorded in the first quarter of 2011. With nearly 3 million foreclosures in the pipeline, no sign of a major improvement in credit requirements or the labor market, demand for owner-occupied housing is likely to remain weak.

The flipside will be a further increase in the demand for rental housing. This will boost rental rates and bodes well for the multi-family sector, and real estate investors with a buy and hold strategy. In line with the steep declines seen in homeownership, the share of all households renting has naturally increased to a new 13-year high of 34.1 percent in the second quarter. That’s up from 33.6 percent in the first quarter. The rental vacancy rates have fallen to 9.7 percent from a peak of 11.1 percent in 2009, which has driven a recovery in rent prices. Landlords could see rental yields of more than 5 percent over the next few years.

Paul Dales, senior U.S. economist with the research firm Capital Economics says there are 1.9 million homes up for sale that are still sitting empty. He says another 3.9 million homes are empty but, for one reason or another, are being held off the market. The excess supply of housing remains high, and Dales stressed that the combination of weak demand and high supply almost certainly will not translate into higher house prices any time soon.

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Foreclosure Rental Bill Introduced in House

August 2, 2011

The House of Representatives is considering a bill that would authorize FDIC-member banks, Fannie Mae, and Freddie Mac to enter into five-year lease agreements to rent REO properties back to the foreclosed homeowner or another individual.

The Neighborhood Preservation Act (H.R. 2636) was introduced by Rep. Gary Miller (R-California) and reportedly has bipartisan support. The legislation would address two key issues; it would give families a chance to remain in their homes while stabilizing home values by reducing the number of distressed properties on the market. According to the National Association of Realtors, distressed home sales accounted for 30 percent of single-family home sales in June. However in Los Angeles County they accounted for nearly half of all sales. “Something must be done to reduce the inventory of available homes and stop the further decline in home prices,” Rep. Miller said.

News surfaced last month that the administration was considering such a policy for Fannie and Freddie. Now, Rep. Miller wants to enact it with legislation. It’s not the first time Miller has pushed for a foreclosure rental policy. He championed a similar bill in the 111th Congress (H.R. 2529), which passed the House by a bipartisan voice vote, but was never acted on by the Senate. The Neighborhood Preservation Act is cosponsored by House Financial Services Committee Chairman Spencer Bachus (R-Alabama), Ranking Member Barney Frank (D-Massachusetts), and Rep. Carolyn McCarthy (D-New York).

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