These are the glory days of the residential real estate investor. Low prices, rock-bottom interest rates and stable rental markets have created huge buying opportunities.
"It’s awesome right now. I don’t think we’ll ever see another time like this," said Tanya Marchiol of Team Investments, which has operations in about 10 states but focuses mostly on the Phoenix market.
These investors are known to many as vultures because they swoop in and buy "distressed properties" — foreclosures and short sales — cheap. Places like Las Vegas, Phoenix and Miami are popular because home prices there have dropped as much as 70%.
But how they’re investing has changed. In the boom years, they would buy a property and flip it for a quick cash out. Today, they are holding and renting for hefty, steady incomes.
Once they analyzed their decisions based on home-price appreciation, which is very speculative. Now they consider potential rental profits, which is far more stable.
Back then, they flipped often and helped to bid up home prices into a froth. Now, the investors say, they can be a part of stabilizing neighborhoods.
"People are not in it to flip like back in the old economy," said Matt Martinez, an investor and author whose new book, "How to Make Money in Real Estate in the New Economy" comes out next February. "The new economy dictates that you have to have a long time horizon."
Marchiol, for example, does not even factor in home price appreciation for at least a year. After that, she calculates only a 3% annual increase — a return that won’t turn heads of investors who only want to buy low and sell high.
Marchiol just purchased four separate four-plexes in North Phoenix. Three years ago, each four-unit building sold for $310,000; she paid just $70,000 per building. She intends to spend about $64,000 rehabbing the properties, making her total investment $344,000.
In total, she currently owns about 17 rental units. Usually she buys the properties to keep herself, but she also works with a group of investors who are intent on holding them and renting them out. She can spot the deals and then sell to them.
For example, with her North Phoenix buildings, the investors will buy the buildings for $95,000 each. They’ll put 20% down and finance the rest, about $76,000 per building.
At today’s low interest rates, they’ll get a near 5% loan. That yields a payment of about $400 a month. Figure another 10% of the price for property management, 10% for maintenance, an 8% vacancy rate, taxes, insurance and other home ownership expenses, and you’re talking about a monthly nut of roughly $1,300.
Marchiol projects the apartments will rent for $600 a month each, for a total rent roll of $2,400. That gives the owners a profit of $1,100 per month and $13,200 per year — a nearly 70% annual return on investment.
Although conditions are very favorable, investors have to be adaptable because the market is evolving rapidly. In Phoenix it’s changed in just the past six months. Foreclosure auctions are no longer a fertile hunting ground for Marchiol.
"Amateurs have come in and run up the prices," she said. "In 2009 I bought 76 properties at foreclosure auctions, at an average of about 60 cents on the market dollar. This year, I’ve bought four."
Glenn Plantone faces a similar situation in Las Vegas. A veteran real estate broker and investor, he has switched from buying mostly foreclosures and repossessions to short sales almost exclusively. That’s because the inventory of distressed properties available in Vegas is way down, to about a two-week supply.
"The banks make better profits with short sales, so they’re not foreclosing," Plantone said. "They’ve switched staff to processing short sales and they’ve gotten faster at processing them."
He tries to purchase properties for at least 10% less than what he considers to be true market value, then he does some light rehabilitation and sells them to some of the 3,000 buyers he works with.
Since prices have fallen about 70% in some Vegas communities and rents have only declined by about 20%, it’s possible for his investors, who are cash buyers, to make money from the first month the homes are rented.
"We’re getting cash flow (net return on investment) of 12% to 14%," he said.
He doesn’t completely ignore potential profits from home price appreciation because he believes the town is bouncing around the bottom. (Homes already sell for below what it would cost to build new homes.) He does not, however, emphasize that aspect of the investment.
It’s the income from rentals that’s paramount right now.
The beauty of cash flow, of course, is that even if the prices decline another 10% or 20%, the investors should be able to live with that.
"I tell them to plan on holding for five years," he said. "With cash flow, there’s no need to worry about price drops."
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Yahoo Japan Corp. said on Tuesday that it will begin to switch over to Google Inc.'s search and advertising technology in the future.
The move is expected to give Google and the Japanese company that is 35 percent owned by Yahoo Inc. (NASDAQ:YHOO) a near monopoly on search in Japan. Microsoft Corp. (NASDAQ:MSFT) has only about 3 percent of the search market in the world's second largest economy, with Yahoo Japan ( 57 percent) and Google (38 percent) making up the rest.
The Japanese telecom company Softbank Corp. owns 40 percent of Yahoo Japan.
Company officials said they began to contemplate a switch to Google (NASDAQ:GOOG) last year after Yahoo announced a partnership with Microsoft in which it is switching to the software giant's Bing search technology Low fee payday loans.
"We looked at this from many angles, but in the end we determined that Google was the better choice," Yahoo Japan CWO Masahiro Inoue said at a briefing in Tokyo.
Yahoo Japan also announced earnings, saying its net income rose 12.6 percent to $248 million in the three months ended June 30.
The free credit score industry has been booming since the recession as a lot of people hit hard times and want to keep an eye on how the recession has affected their credit standing.
Shareholders of Quad/Graphics Inc. and World Color Press Inc. have approved Quad's proposed acquisition of World Color Press and put the deal on track for a July 2 closing.
Shareholders of privately held Quad/Graphics of Sussex approved the transaction Thursday, while shareholders of Montreal printer World Color Press gave the deal the go-ahead Friday morning. The deal still requires the approval of the Quebec Superior Court, Commercial Division, and a deal on a final order is scheduled for June 28.
Quad/Graphics has been cleared to apply to list its class A common stock on the New York Stock Exchange under the stock symbol QUAD. Quad/Graphics anticipates the shares will begin trading July 6 or July 7, at which time the company will usher in a new era as a publicly traded company. It is expected that Joel Quadracci, Quad/Graphics chairman, president and CEO, will ring the opening bell July 7.
World Color shareholders will receive consideration of 40 percent of Quad/Graphics stock and a cash payment of up to $93.3 million. Existing Quad/Graphics shareholders will hold 60 percent of the company.
The merger, valued in media reports at $1.3 billion to $1.4 billion, not including any assumed debt, will create the second largest commercial printing operation in North America, trailing only industry leader R.R. Donnelley & Sons Co.
Matrix Packaging of Missouri Inc., a subsidiary of Sonoco Products Co., will receive $572,267 in state tax credits, the Missouri Department of Economic Development said Friday.
The Hazelwood business was approved for the credits under the Enhanced Enterprise Zone (EEZ) program to assist in the creation of new jobs and investment.
Matrix was approved for the tax credits, over a five-year period, for the creation of 90 jobs and investing $16.6 million for the expansion facility at 5801 N. Lindbergh Blvd. in Hazelwood.
The Hazelwood plant currently operates nine blow molding lines, producing plastic bottles for household, food, and health and beauty products.
The Enhanced Enterprise Zones are geographic areas designated by local governments and certified by the DED. Designation is based on certain demographic criteria, potential to create sustainable jobs in a targeted industry and demonstrated impact on local cluster development. The EEZ program began in 2004.
Hartsville, S.C.-based Sonoco Products Co. (NYSE: SON) is a $3.6 billion global manufacturer of consumer and industrial products, and provides packaging services. It has more than 300 operations in 35 countries.
Combined Austin Energy and Austin Water bonds totaling about $200 million garnered "AA-" ratings and are scheduled to sell next month, Fitch Ratings reported Friday.
The utility revenue refunding bonds were rated in two series of $98.8 million tax-exempt and $100.9 million in direct subsidy-build America bonds. The release said the bonds are expected to sell via negotiation early next month. They are secured through the utility company's net revenue.
The rating agency also reaffirmed grades for three city of Austin outstanding bonds: $498 million in outstanding combined utility system revenue bonds at "AA-"; $1 billion in outstanding city of Austin electric utility system revenue bonds at "AA-"; and $1.5 billion in outstanding water and wastewater system revenue bonds at "AA-."
Overall outlook was listed as stable cash advance companies. Fitch cited Austin Energy's stable service territory, diverse supply mix and competitive rates. The agency said rate increase delays could cause some concern to creditors and though Austin Energy has low debt, that could change as the company pursues 35 percent renewable energy by 2020.
"While rates are competitive and fuel adjustment charges are adjusted regularly, the utility's base rates have not been changed since 1994," Fitch said in the release. "Raising some concern about city council's willingness to raise rates in the face of declining financial performance"
Austin Energy powers more than 407,926 customers and Austin Water provides treated water and wastewater to about 209,994 and 196,842 customers, respectively.
German business software maker SAP AG has agreed to buy Sybase Inc. in a $5.8 billion deal that ratchets up SAP’s rivalry with database leader Oracle Corp.
The deal intensifies the battle between SAP and Oracle to run more of the programs that corporations use to manage their data.
Oracle is the world’s leading database maker a market where Sybase is a small player and has been on a buying binge in an attempt to take business in other areas from SAP.
Faisal Shahzad lived on the downslope side of affluence in the small Connecticut hamlet of Shelton. On Monday, while Shahzad sits in a jail cell in downtown New York City, a judge is scheduled to foreclose on his home, clipping Shahzad’s last attachment to the American dream.
Like many other homeowners across the U.S., he used his house as a piggy bank. Shahzad, who is accused of trying to detonate a Nissan Pathfinder in the center of Times Square last week, took out a second mortgage on the home just months before he left the country for what prosecutors say was a stretch of bomb-making training in Waziristan, Pakistan.
That second mortgage gave him access to a $65,000 credit line, secured by the tidy three-bedroom suburban house he bought in July 2004 for $273,000. Though the frothy real estate market was flinging around cheap money, Shahzad put down the traditional 20%, financing a mortgage balance of $218,400 at a 4% interest rate.
The 30-year-old had a steady job as a financial analyst at Affinion in Norwalk, Conn. He was trading up from a condo he had recently sold. He seemed like a good risk.
And for years, he was. Sure, he repeatedly tried to sell the house, listing it for the boom-time price of $399,000 just one year after buying it — but who didn’t try to hit the real-estate jackpot? And while others were draining their homes of equity, Shahzad stayed away from extra mortgages and loans for the first few years he owned the house. He married Huma Mian, added her name to the deed in December 2007, and kept mailing off his mortgage checks each month.
So when he approached Wachovia Bank in January 2009 for a $65,000 loan secured by his home, no red flags were raised. They approved the money, and he suddenly had a line of credit. Wachovia, now Wells Fargo, did not return calls requesting comment.
Three months later, Shahzad would become a U.S. citizen. Four months later he would leave his job. Five months later he would stop paying his mortgage and leave for Dubai and, eventually, Pakistan.
The house sat empty after he left. In September 2009, Chase (JPM, Fortune 500) initiated foreclosure proceedings, saying Shahzad owed them $200,673.49. Chase, and its local attorney, declined to comment on the case instant payday loan no telecheck.
Connecticut state marshal Mark Pesiri served the papers on the abandoned home, in accordance with Connecticut procedures.
"I don’t get too many up there," Pesiri said.
It’s true. There’s hardly a For Sale sign or foreclosure notice to be seen along the three-mile stretch of Long Hill Avenue that Shahzad lived on. His 7-year-old, grey-sided house is the noticeable exception. There’s a lockbox on the front door at #119, where the lawn is erratically mowed and trash has accumulated in front of the garage door.
Two days after the foreclosure papers were delivered, Chase hired appraiser Scott Iadarola to inspect the property. He valued it at $245,000, putting Shahzad $20,673.49 under water — meaning Shahzad owed the banks that much more than his property was worth.
Shahzad — listed as Faisal "Zhahzad" in the legal filings — never responded to any of these notices and or court actions. He was in Pakistan, where he has told investigators he was studying bomb making. When he returned in February 2010, without his wife or children, he didn’t make up his missing mortgage payments, or try to execute a short sale, or even return the keys. Instead, he rented an apartment 13 miles away in Bridgeport, Conn.
Two months later, he would allegedly drive a Nissan Pathfinder loaded down with fertilizer, propane tanks, gas cans, fireworks, clocks and wiring, and leave it smoking on a street in Times Square.
Meanwhile, the interest meter on his Shelton home kept ticking. And, as many American homeowners now understand far too well, home prices kept falling. When Shahzad house was reappraised on March 15, 2010, Iadarola declared the property to be worth just $240,000 — 12% less than Shahzad paid for it six years ago.
And so on Monday, when Shahzad’s case is scheduled to appear before a judge in Connecticut Superior Court, he will be just one more of the millions of American homeowners who hasn’t paid his mortgage in more than a year and is sitting on a debt — in this case, $37,870.38 — that outstrips the value of the home buried beneath it.
The non-partisan Congressional Budget Office estimates that the Democrats’ revised health care bill will cost $940 billion over the next 10 years, a House Democratic source told CNN Thursday.
CNN has not seen the numbers directly yet nor has the CBO released them publicly. But, according to the source, the bill would cut the deficit by $130 billion during the first decade. And it would reduce the deficit by another $1.2 trillion in the following decade, the source said.
The measure extends health insurance coverage to 32 million Americans, helping to guarantee that 95% of Americans will be covered, the source said. It also reduces Medicare expenditures by 1.4% annually while extending Medicare’s solvency by at least 9 years, the source added.
The source also told CNN the $940 billion price tag is fully paid for. But what’s not clear yet — and what may be revealed later Thursday — is just how Democrats plan to pay for the bill instant payday loan.
One of the reasons House Democrats objected to the Senate-passed version of health reform is the nature of some of the revenue raisers in that bill, in particular an excise tax on insurers that would apply to high-cost insurance plans.
Supporters of the excise tax say it offers a good shot at reducing health care spending over time, since insurers and employers would seek to avoid the tax by opting for lower cost coverage.
Opponents, including unions, say the tax would be passed on to workers, and lower cost coverage would be less comprehensive.
– CNN’s Dana Bash and Brianna Keilar and CNNMoney’s Jeanne Sahadi contributed to this report.
Americans may still be frustrated with the nation’s top banks, but the technology that large lenders are dangling in front of consumers may keep some from leaving.
Bank of America (BAC, Fortune 500) customers, for example, can now deposit checks at an ATM without having to fill out a deposit slip, as a result of the company’s recent conversion of nearly 14,000 cash machines into "envelope-free" ATMs.
Meanwhile, JPMorgan Chase (JPM, Fortune 500) has made waves with a nearly identical service that lets people deposit cash directly into an ATM.
Wells Fargo (WFC, Fortune 500) unleashed its own flurry of tech-driven initiatives over the last year, including a new mobile service that allows customers to transfer as much as $1,000 to another Wells Fargo account holder from their BlackBerry or iPhone.
"Our promise is to be available anywhere and everywhere our customers expect us to be," said Arah Erickson, head of Wells Fargo’s retail mobile banking division.
Big banks have long relied upon cutting-edge technology as a way to retain existing customers or win over new ones. These days however, "gee-whiz" banking products like an iPhone application or smart-ATM have taken on even greater significance.
Offering greater convenience may help soothe consumers who have become outraged over bailouts and big bonuses. But embracing new technology also makes good business sense for banks looking to cut expenses.
A customer that uses a teller to make a deposit, for example, costs the bank $1.34 on average, according to research firm TowerGroup. That same deposit made at an envelope-free ATM costs just 59 cents.
"That saves a lot of money," Bank of America CEO Brian Moynihan said during a conference in New York last month, discussing the bank’s recent success in getting more customers to conduct transactions at its recently-updated network of ATMs.
Many of the nation’s top banks have been scouring for ways to cut costs as well as find new revenue streams as a result of the crisis and as the federal government has steadily unveiled a variety of new restrictions, including limits on their credit card operations.
Interestingly though, most banks have been reluctant to expand the ATM much beyond its role as a cash-dispensing and deposit-accepting machine, resisting such available technologies as using the ATM to sell concert tickets or help a customer pay a parking ticket.
"We want it to be as fast as possible for the customer," said JPMorgan Chase spokesman Tom Kelly guaranteed fast personal loans.
Many experts instead suggest that perhaps the biggest push will come in mobile banking. Nearly half of all iPhone users, for example, already do much of their day-to-day banking by phone, according to a study published last fall by Javelin Strategy & Research.
That number however, is expected to balloon in the coming years with 99 million U.S. adults conducting some sort of bank transaction from their mobile phone by 2014.
Top lenders like Wells Fargo and Citigroup (C, Fortune 500) already offer cell phone users a means by which to pay their bills by phone, check their balance or locate the nearest ATM.
It is widely believed that these and other banks will soon allow customers to make a deposit by taking a picture of a check with their smartphone, a burgeoning industry practice called "remote deposit capture."
Financial firm USAA was among the first to offer such a service when it launched its mobile check deposit product "Deposit@Mobile" to its predominantly military customer base last summer.
Some consumers have been reluctant to embrace such new technologies partly over concerns of having their account information compromised. But whether you have an account with a big lender or not, mobile banking and smart ATMs will at some point become the industry standard.
In fact, some ambitious community banks and credit unions, which have historically not had the economies of scale to implement such cutting-edge technologies, are now capable of offering products to rival the big guys.
San Antonio, Texas-based Randolph-Brooks Federal Credit Union, for example, which is a little more than one one-thousandth the size of Bank of America, has already announced plans to offer a mobile deposit product to its customers, noted Red Gillen, senior analyst at the consultancy Celent.
Customers at Mercantile Bank of Michigan, which operates just seven branches, can just as easily transfer funds as Wells Fargo customers with its MercMobile service.
Gillen said many of the latest technologies, particularly online services like an iPhone or BlackBerry application, don’t require a budget-busting investment by smaller banks.
"It really serves to level the playing field," he said.
Maureen Dwyer, one of the city’s leading land use and zoning attorneys, and four other attorneys from Pillsbury have joined Goulston & Storrs, the firm announced late Friday.
Making the move with Dwyer are John Epting, Phil Feola, Allison Prince and Paul Tummonds Jr.
Dwyer, the co-chair of the land use group at Pillsbury, said in a news release that Goulston’s size, scope of services and experiences better matched her clients, particularly universities. Dwyer’s clients include Georgetown, George Washington, American, Catholic, Trinity universities and the Consortium of Universities of the Washington Metropolitan Area.
“We are delighted to be joining a firm with such a stellar reputation and a deep historic commitment to real estate,” Dwyer said in the release.
Goulston, a Boston-based firm, opened its D.C. office in 2001 to support its national affordable housing practice and has since broadened its real estate practice. Not including Dwyer’s team, its D.C. office currently has 14 attorneys, accordimg to the firm’s Web site.
"We wish our colleagues good fortune at Goulston,” said Jim Rishwain, chair of Pillsbury, in the release from Goulston. “I am confident that we will continue to work with Maureen, Allison, John, Phil and Paul on joint projects and opportunities as we continue to serve our clients at the highest level.”
Before joining Pillsbury, Dwyer, a 1978 graduate of Catholic University’s law school, worked at Wilkes Artis.
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