Coastal Real Estate and Lifestyles

As part of my journey into real estate investment education,  I decided to visit the San Mateo County Courthouse “steps” to watch a trustee sale a few weeks ago.  I have seen a private auction but never this final step in the foreclosure process before the property becomes bank-owned (REO) - the Trustee Sale.  This link shows where the Trustee’s Sale is in the foreclosure process.  More about the link below.

It was surprisingly low key when I got there on a recent early Spring day (sorry Michigan friends!).  Then a few more people showed up for a total of about 10 people.  Most of the people there were seasoned investors.  By seasoned I mean, they are there all the time with their dog-eared list in hand and have mega millions to work with.  I know this because one of the Foreclosure Agents shared some information with me about who buys, how they buy, where the foreclosure market is heading in San Mateo. 

That day 20 properties were up for auction; 5 were postponed and new dates given; and 15 went to the respective banks because nobody bid on them at the minimum auction price.  The sheets were getting updated right then and there.  Sadly, one homeowner was desperately trying to hold onto her home at this eleventh hour; as far as I could tell, her home was not sold to the bank while I was there.  It is my understanding that the lender with the primary lien establishes the minimum auction price.  (My CB training in this starts Monday.)  In other words, none of the investors and bidders there thought the properties were enough of a “deal” to bid at the minimum price.  This is one day’s activity and Trustee’s Sales happen throughout the week depending on the number of properties available.

This experience was totally worth the 90 minutes I decided to allow myself.   There is NOTHING like first-hand education, as reinforced by seasoned investor Jeff Brown, whose blog I follow at BawldGuyTalking.  I also took the time because I wanted to find out what’s really going on in San Mateo County.

Bottom line:  There are foreclosure properties out there, and probably more coming through the remainder of ‘08.  Buying such a property requires research, patience, ready cash…and a bit of a stomach!  Support of your team may be helpful to some and crucial for others (be it contractor, accountant, real estate professional, loan consultant, or parents).

If you’re interested in starting your own online research, I just got this tip from Kevin Boer about foreclosureradar.com.  I’ll be tracking it along with where I currently have an account, Realtytrac, to look for San Mateo County trends.  My Realtytrac research has shown their properties to be pretty out of date so I may try to find another one to use as a comparison to foreclosureradar.  If you know of another good one, make a comment to share with everyone.

Colleague Sam Benson in Contra Costa County updates us on foreclosure property activity there. 

Colleague Pam Buda in Sonoma County told me yesterday that there are over 200 short sale or foreclosure properties just in her office.  Did I hear that right?

5:30 p.m. - Elaine Carlson from the Palos Verdes Peninsula writes an open letter to buyers on this subject if you’re thinking of investing in her area of southern California.

Drain, drain, drain
Drain, drain, drain
Drain, drain, drain
Drain of Funds.

For ten long years,
I stashed cash and got vain
But as I found out, It was funds down the drain.

Drain, drain, drain
Drain, drain, drain
Drain, drain, drain
Drain of Funds.

Oh, I thought I was so clever
But I was financially slow.
Weak stocks and inflation never
Helped my net worth to grow.

Drain, drain, drain
Drain, drain, drain
Drain, drain, drain
Drain of Funds.

Every drain,
has got a bad enabler
But real estate investment
Makes my portfolio stabler.

Drain, drain, drain
Drain, drain, drain
Drain, drain, drain
Drain of Funds.

Mutual funds and money markets,
T-bills and muni bonds,
Can’t beat deeds and equity
And the cash flow I’m so fond
Of…

Drain, drain, drain
Drain, drain, drain
Drain, drain, drain
Drain of Funds.

Now that I’ve grown wiser
The drain has surely ended.
And I’m so much more assured
That my retirement is funded…

Drain, drain, drain
Drain, drain, drain
Drain, drain, drain
Drain of Funds…

Oh!

This is also a special dedication to my dancing and singing buddies who recently played this song and got my brain going in this direction…

My apologies to Ms. Aretha Franklin. 
Photo compliments of Vh1.com.

Frequently I am annoyed with myself for having waited so long to jump into real estate investing.  But, as many of you know, I like to research things before I make my move.  It is so much easier for me to know YOUR next step than MINE.  So I thought I’d share my journey and maybe some of you are in the same boat or can help get me get off the dime.

Tackling this topic in a post is like trying to fit Chris’ basketball in my purse…it just ain’t gonna happen.  (yes, I’m living & breathing basketball right now!)  So, I am going to share snippets of my experiences in these posts.  Once I’ve completed a bit more homework, I’ll create a Page on my site of Investing Resources for you.  For now, here’s a few consistent themes I’m hearing:

Invest for the Long Term.  This may sound obvious, but still people may think long term but act on short term.  Guess what happens…  I realize that the experienced flippers among us may feel differently but obviously I can’t speak for them.  The ROI figures are probably not going to “pencil” unless you go out of the area - and then there’s the management.  This has always been the message but some investors out there took a diversion from common sense in recent past.  Speculation is too risky for my blood!

Create your Team.  Lawyer - Accountant - Financial Planner - Realtor(r) - Lender.  The more this group can communicate with each other on your behalf the better.  I know several professionals in this arena but you each need to create your own team.  Locally, I know John Parsons for accounting/tax/financial planning.  If he handles his clients anything close to how he handles his team of young basketball athletes, they/we will be winners.

Develop a network of investment resources around the country.  I’ve got some good contacts for you - these guys are are doing it now…I’m planning on learning their strategies and formulas for success.  Can you afford the time or money to fly out of state every time you want to check out an area or property?  I certainly can’t.  My Investing Resources information will not be a random ”link” fest.  The links I provide here will be from sources whom I believe will add value for my readers.

Jeff Brown helps investors and also writes a blog called Bawld Guy Talking.  Thanks to my friends and mentors at Domus Consulting, I am going to meet Jeff and hear about his philosophy on February 2, 2008.  According to Domus’ Kevin, he’s helpful to most stages of investor.  “He seems to particularly like to take seasoned investors who’ve made questionable decisions and help them turn around.”  His main theme is “Purposeful Planning” for retirement income.  He’s flying into town and invited guests can hear him speak in Palo Alto.  Contact me if you have questions about this. (note:  I have Jeff’s “Know where you are” List, will post to a page soon.)

Sam Benson is a local Contra Costa County Realtor(r) and writes RealEstate 680.  I’ve gotten to know Sam through our Homescopes network.  Sam says there are opportunities in Contra Costa and West Solano counties.  Also, be careful with investor software… “They can be a little over the top and may make promises that the market does not deliver.”

Trevor Mauch seems like the kind of guy I’d like my daughter to meet.  (She’s too busy to read my blog so I think I’m safe here…)  Trevor doesn’t know me but we’ve become email penpals and he has given me some good tips.  His site, The REI Brain, is full of information and tells you where to start.  If he ever gets down to SF, I will let you know.