AUTUMN 2006 – THRIVING IN A CHANGING
REAL ESTATE MARKET
NEW REAL ESTATE GROWTH AREAS
SELLING OPTIONS IN A CHANGING REAL ESTATE ENVIRONMENT
This just in – 13 real estate market areas have more than a 50 percent chance of falling house prices within two years. The most recent quarterly report by PMI Mortgage Insurance Co. sites that eight of those areas are in California, three are in Massachusetts, one is in New York and one is in New Jersey. The major real estate markets at the greatest risk of a price decline are San Diego-Carlsbad-San Marcos, Calif.; Nassau-Suffolk, N.Y.; Boston-Quincy, Mass.; Santa Ana-Anaheim-Irvine, Calif.; and Sacramento-Arden-Arcade-Roseville, Calif.

Fortunately there are many markets – in California and elsewhere that defy the national downtrend. Locally, CNN/Money likes Victorville, CA. They report, “As Los Angeles grows, development is creeping north of the San Bernardino Mountains. Home construction is on fire in once-sleepy Victorville. Four Wal-Mart Supercenters are coming to the area.”

Locally, it is predicted that trade with China through the country's largest port will fuel a boom in logistics, warehousing and distribution centers. With freight volume projected to triple by 2030, warehouse builders will become the fastest-growing commercial developers in the region.

Up north, the action is moving east from the Bay Area:
Did you know that 40% of homes that sold during the recent real estate boom were bought as investments? Now that the market is shifting, you are seeing a lot of residential and some commercial (particularly retail and development property), sitting on the market. With market trends changing, a Lease Option or a Lease Purchase may be a fine way to dispose of excess properties….

The difference between the two is legal. With a Lease Option, you have the legal right to purchase the property
ROOM TO GROW IN MAR VISTA
4066 TIVOLI, LOS ANGELES, CA 90066
$779,000
CALCULATING CASH FLOW
“I’ve been wanting to buy a shopping center, but every time I start analyzing the numbers, I get a headache,” an investment buyer recently noted. “Each property has a different set of numbers, and they are not always accurate. How do I know what to buy?”

Whenever you review an income and expense analysis for a property or six, you realize how difficult it is for the average investor to digest the information and make an educated purchase decision. Much like the stock market, what makes a great real estate investment is keyed into timing and interest rates as much as it is to the true operating costs of a property.

In the current market, if you’re looking for portfolio properties that have a return on investment, you either need a big down payment or to buy outside of town – Texas, Arizona, Idaho and New Mexico are current favorites. Certainly SoCal has offered a lot in property leverage and appreciation over the years, but at the end of the day the cash flow is what is really sexy to a property investor, and why so many have been buying out of state.

Again comes the almighty questions, “How do I know what to buy?”

Real Estate analysts offer these suggestions for using a cash flow analysis in making investment property purchase decisions….

1. Examine many similar properties at the same time.

You can ascertain how accurate an income and expense statement maybe when you compare it with income and
other featured properties:
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We need a 15,000-30,000 sq.ft. warehouse – L.A. County., Orange County.
Got one to sell?

Contact Jodi Summers if you have anyone who is interested.

Jodi Summers
Sotheby's International Realty
tel: 310.260.8269
fax: 310.392.1001
jodis@verizon.net
www.SoCalIndustrialRealEstateBlog.com
www.santamonicalandmarks.com

** LIFE ESTATE ISSUES Question: My father died in 1992. He left his house to me, his only child, subject to a life estate for his second wife. My stepmother is now 93 and still living in the house, but she has done nothing to keep it up and it has fallen into a terrible state of disrepair. Somewhere I read that you can terminate a life estate for "waste." I brought a lawsuit against her because she let the house deteriorate, but a judge ruled there was not sufficient waste to terminate her life estate. The house (worth around $1,500,000) is now a deteriorating fixer, but it is in a decent neighborhood. I feel like she is wiping out my inheritance. Is there anything I can do? --Brian P.

Answer: You probably read about the option of terminating a life estate for waste from noted real estate columnist Bob Bruss, who also offers these options:
Del Mar afternoon - September 2006
TIDBITS
WHAT REAL ESTATE BILLIONAIRES HAVE IN COMMON

Didja know that 46 out of the world’s 691 billionaires made their fortunes in the real estate industry. According to Forbes magazine’s annual list of “The World’s Richest People,” this elite group have quite a bit in common between their habits, lifestyles, and business styles. Here are some unifying qualities shared by America’s richest real estate moguls.

1. Go commercial. Billionaires who make their fortunes in real estate don’t do it in residential. They are moguls