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No Matter the Room or Size of the Project, Make Sure to Come with a Plan

Step 1: Before you even begin have an image of what the final project should look like. A simple search on google images can offer a plethora of ideas and can even be overwhelming at times. This can help you select a layout and functional design as well as the desired finished and overall aesthetic of the room. You may find things you never even thought of during the course of this homework. All rooms will have certain advantages and limitations, know and explore yours before starting any remodel.

Step 2: Interview, shop and research the appropriate professionals to help you accomplish your goal. Referrals, as in my line of business are a great way to meet someone with a proven track record and history. However some degree of additional personal researching on sites like Angieslist or Yelp online can also provide a good source of candidates. In this particular instance I was fortunate enough to have a great referral from a close friend and client that had worked on mutiple properties with this contractor. I helped them purchase and sell these homes so I had initimate knowledge of the contractor and had seen his diligence and final product. Special shout out to Diana & Gideon, thanks guys!!!

Step 3: Do the job right and listen to your professionals. Too often we are blinded by the thought of saving a few bucks here and there only to undermine the lasting integrity of someting over the long haul. Spending a little more at the time of installation can save you massive amounts of money and time down the road. Case in point…valves/plumbing that are hidden behind a wall. Also consider fixtures like faucets that take the abuse of every day use. Your contractor usually knows which is a good product and which isn’t. Listen to them…you’ll be glad you did!!

Step 4: Remain focused and involved. No one likes a customer breathing down their neck at every turn in the project but a well advised and informed one will help keep a contractor updated on what is to be expected of them and the customer aware of any potential issues that they may come across. Further, it helps to ensure that the project comes out right the first time and can aid in dealing with roadbloacks or design challenges. Life tends to get busy and Murphy’s Law can apply, don’t let distractions draw your attention away from your investment. Stay involved until the very end!!!

 

I purchased this condo in Monterey Hills just over 3 years ago and did a massive remodel on almost every aspect of the interior…with the exception of the bathroom!! Well enough was enough, and as you can see from above it went from the ugly duckling to a thing of sharp modern beauty

 

Real Estate Investments Require “Ongoing” Investment

 

The above phrase is something that needs to be understood for anyone looking at the prospect of buying investment real estate or even a primary residence for that matter. As we all know things fall apart, but there are several things that we can do to prepare ourselves for those times. This is a key part of what I bring to the table for my clients, and now with further first hand knowledge I will only add more value to the transaction. There are several systems that any potential buyer should be looking at, that doesn’t always mean they will be fixed before the close of escrow but at least you will know what you are getting into. Some of the obvious but often overlooked are the following:

 

1. HVAC, heating and cooling systems need to be thoroughly looked at to avoid large costs to replace or repair. Sometimes a simple electrical fix or preventive maintenance can extend the life of this system and be a uge cost savings

 

2. Roofing, the roof of a home is what keeps us dry, warm and sealed in. A small breach in flashing or old mastic material in an otherwise solid roof can compromise that system and lead to a wide range of problems. Even someting as innocent as over filled rain gutters can be a culprit. A thorough inspection needs to be done, often by a roofing specialist if your inspector calls out for one take their advice!

 

3. Waste and Sewer Lines, case in point! Unfortuntaley I have seen agents who do not advise their buyers to inspect this all so important system. A couple hundred bucks for a camera inspection can go along way to diagnosing any potential issues. Often times it will reveal some root intrusion or pipe offset. These problems can usually be maintained by routine hydrojetting or snaking. The worse case can be exponentially more expensive and something you want to know while still in the buying process.

 

4. Foundation, the name says it all. This is the supportive system that keeps a home standing and provides the base for it’s overall integrity. Water can errode away the soil, and termites can come from below and slowly eat away at your support piers. This one without question cannot be overlooked, however I have seen buyers using home inspectors that refuse to “get under the house”. Do yourself  favor…hire someone who knows what they are doing and is not afraid to get dirty.

 

There are many more examples but these are 4 of them that tend to be overlooked or under appreciated. Do not fall victim to this…work with the RIGHT AGENT!!!!

 

 

My Story….

When I added the above pictured property to my personal portfolio last summer I was ecstatic! Even though I knew that this issue would be ahead of me. For the past 12 months I have been dilligent to keep this line clean by using a plumber to hydrojett it every few months. This way I was at least keeping the root intrusion to a minimum as I vowed to never see that line back up on my tenants. Starting around spring time this year I started shopping plumbers to get this job fixed. Keep in mind that this is not just some average plumbing job that anyone can do. This required me having a to break a large hole on the street which requires a plumber that is specially licensed and bonded with the City of LA. This further narrowed my pool of potential plumbers and I had quotes that were sky high. By accessing my network of collegaues, clients and partners I finally loacted a professional who was well qualified and was able to do the job for much less than that. For a more modest amount of money I will have this issue taken care of and will have made a very valuable upgrade to the property. Something that will appeal to many buyers should I elect to divest from this property in the future. This month I also replaced a water heater in one of these units, and replaced a stove in another. Because I had taken care to secure a home warranty policy I came out of pocket with almost nothing. Another trick I always try to put up my clients sleeve!!

I’m not sure what the feeling is around the rest of the country but here in the greater Los Angeles area things in the foreclosure market have come to a painfully slow pace. Not that I wish for people to lose their homes or end up in the difficult situation of having to relocate their families but at the same time we all know that things are not good and people are being foreclosed on at an alarming clip. We know this from both market data and by personally seeing it right in our backyard on an almost daily basis. In 2009 I had REO listings coming out of my ears, the market was active and entry level homes buyers were jumping over each other to purchase them. Now of course there was some artifical demand created by tax incentives, affordability programs and higher FHA loan limits. However I would argue that there is just as much incentive to buy today as then. Historically low interest rates and even deeper price adjustments would suggest that now is a wonderful time to buy. The problem for these buyers and the difference versus 2009? There is no more inventory!

Which brings me to my central question. Why are the banks not letting the foreclosures out? Is it a question of accounting? Would the books show insolvent banks that are not able to meet their reserve levels? Or is there a more grand plan going on behind the scenes in some cooperative effort by the major lending institutions and the federal government? I do not claim to know and this blog is simpy here to ask other real estate professions the same question. Maybe one of has the answer that so many have been looking for. I additionally do not claim to be an expert but what appears to be happening is that banks are building a huge backlog of distressed properties that at some point have to be unloaded. As anyone with a basic understanding of supply and demand can tell you, this could create a tidal wave of depreciation if not handled properly. I am concerned that the same people who allowed buyers with no assets, little income verification and marginal credit to get home loans during the “boom” years are now also handling this potentially disastrous state of events. I am generally an optomistic person and I do not believe in the “doomsday” theory that the U.S. or world economy will come to a grinding hault in either the real estate, currency or equity markets. With that said though the future is largely unknown and for the past 2 years I have been trying to wrap my head around this issue. Clients ask me this all the time and all that I can honestly tell them is that their guess is as good as mine.

There will be those (usually not a Realtor) that say banks are trying to keep home owners in their homes and that loan modifications and other programs are working to “fix” the problem, hence the lack of inventory. In my opinion this is just simply not true, it’s really not even a matter of opinion but rather of fact. I do not have the stats nor the hard numbers on these programs but we know that these have largely failed to help most homeowners. Furthermore only those that do not honor their obligations can qualify for these programs. Are you kidding me?? Who makes these qualification standards?? They only help those that are almost destined to fail anyways…even after they have had the assistance of the program. Others will say that short sales are addressing the foreclosure problem before the the home goes to the court house steps. That the process has been streamlined and that the banks are processing the disteressed properties. Maybe, but not in my experience. My guess is that a short sale has a 60/40 shot of going through the lengthy approval process, having the buyer “stay in the game” for the entire process and then not have an issue with obtaining their loan or finding a major physical flaw in the property. Then if you’re lucky the lender won’t put a gun to your head at the 11th hour and ask you to kick in some of your commission to close the deal. Oh yeah you can forget about a condo with 18 months of HOA dues in arrears, they ususally want the broke home owner to pay for that. I will finish with this….if short sales are the answer then why does it take so long to process them? If this answers the banks “accounting” issue with a foreclosure why are they not more motivated to get them sold quickly? After all the investors money is tied up in a house with a borrower who does not pay, wouldn’t the loss of income on the money everday alone make youy want to cut your loses?? The whole thing boggles my mind, I look forward to hear what others around the country and here in California have to say on the matter…