Foreclosures & Investments

Investments

LA Real Estate Group serves as real estate consultancy, providing financial analysis and research on income and commercial properties.  Through its relationship with borkers nd other professionals in Los Angeles, LA Real Estate Group has the  market insight to provide a broad spectrum of services inclding;

• Net Operating Income and Cash Flow Analysis
• Property Valuation
• Comparable Market Analysis

With an independant voice and critical perspective,  LA Real Estate Group can help prospective investors and developers analyze and identify opportunities.  

Foreclosures
California homeowners are defaulting in record numbers andforeclosures in California will get worse before it gets any better. Foreclosure Sale signs are now common in many communities and can be easily found in many MLS searches in California. Some counties are reporting over 250% rise in foreclosures from 2006.

A Real Estate Group can assist buyers, seller and investors with services including;

• Assist home owners that have received Notice Of Default (NOD), Lis Pendes (LIS) or Notice Of Sale (NOS/NFS) avoid damage to their credit by negotiating short sales with the mortgage provider, sell the home before foreclosures or take over the existing loands
• Find investment opportunities for investors that are interested in short sales, foreclosures and bank owned properties
• Assist home buyers, specially first time home buyers who want to take advantage of the current market and foreclosures.
   
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  Useful Links:
  
• Weekly List of Foreclosures in LA County (PDF Document)
• Foreclosures Glossary

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Please contact us if you would like to discuss how we can help you with investing in foreclosures or if you have received a notice of default from your bank. 

We have access to many foreclosures, short sales and bank-owned properties in different areas.  Many of these properties are not listed on the MLS. Please contact us if you are interested in buying or investing in these types of properties. 

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Single Family - Los Olivos Ln. Glendale, CA 91214 $624,900









Very cute Traditional on a great street. This Bank owned home shows very well. Features include three bedrooms, two updated baths, family room (Family room & second bath, although very nice, are not permitted. Remodeled kitchen, wood flooring, cute front porch, nice back yard with covered patio, fireplace, and so much more. This is a great opportunity to buy a nice BANK owned REO!
North on Pennsylvania and right on Los Olivos!

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Single Family - Willowcrest Ave North Hollywood, CA 91606 $478,900








Bank owned foreclosure. Beautiful gated 4bed + 3bath traditional home. Open & spacious floor plan! Step-down LR w/ wood floors. Kitchen w/tile floors & tile counter tops. Spacious rooms. Detached garage. Large backyard, great for entertaining! Don't miss this great opportunity! Buyer to verify all information and rely on their findings. 

S OF VICTORY BLVD/ E OF VINELAND AVE

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DUPLEX - S Columbus Ave Glendale, CA 91204 $450,000




Two bedroom one bath house with additional unit in the back. Legally duplex.Remodeled kitchen and bathroom. The second unit is studio with a small kitchenette and 3/4 bath.
SHORT SALE

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TRIPLEX - North Hollywood Way, Burbank CA 91505    $459,900

HUGE $40,000 REDUCTION! MOTIVATED SELLER - ALREADY PURCHASED REPLACEMENT PROPERTY. NO RENTAL CONTROL!! New rents effective 1-1-08. Nice, clean Burbank triplex with 3 studio units including sprinklers, timers and new grass. Upgraded roof in 2000,windows-2005, water heater-2000,repipe verticals-2004, security doors-2005 & units 2004-2005. Upside to rents. 1423 & 1425 buildings are all for sale. Attention builders, purchase one or both buildings. Zoned BUR4. 2 contiguous buildings.

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DUPLEX - LAKE St Glendale, CA 91201,    $499,900

FORECLOSURE - GREAT INVESTMENT OPPORTUNITY TO OWN THIS REO. EACH UNIT IS A ONE BEDROOM AND ONE BATH. THERE IS A DETACHED PRIVATE GARAGE. BOTH UNITS HAVE BEEN UPDATED.

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TRIPLEX - North Lomita Street Burbank, CA  91506,    $699,900

BEST PRICED 3 UNITS IN BURBANK - A Great Investment opportunity - Top Location near studios & Burbank Media Center. Three 1+1 Garden Style bungalow nits with hardwood floors and new landscaping. Separate gas and Electric meters and 3 garages. No Rent Control.

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Contact LA Real Estate Group for more information.

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Useful Links

• Competitive Rental Analysis of Los Angeles Communities
• Investment & Financial Analysis Terminology & Formulas
• Financing

Foreclosures

Foreclosure is the equitable proceeding in which a bank or other secured creditor sells or repossesses a parcel of real property due to the owner's failure to comply with an agreement between the lender and borrower called a mortgage or deed of trust.  Commonly the violation of the mortgage is a default in payment secured by a lien on the property.  When the process is complete, it is typically said that the lender has foreclosed its mortgage or lien.

Weekly Public Record Foreclosures Document
This link is updated on a weekly basis with all the foreclosures in the LA County.  Its a PDF document format.  Feel free to review the list, and if you are interested in investing or purchasing a foreclosed or bank owned property, please feel free to contact us.

Foreclosures Detailed Report - LA County (Click this link for the PDF Document)

Glossary of Foreclosure Terms

Foreclosure
A process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership (repossession) of the property securing the loan. The foreclosure process begins when a borrower/owner defaults on loan payments (usually mortgage payments) and the lender files the necessary documents to begin the foreclosure proceedings.

Notice of Default (NOD)
A publicly recorded notice that a property owner has missed scheduled loan payments for a loan secured by a property. Some states require lenders to record a notice of default to begin the foreclosure process.

Lis Pendens (LIS)
A publicly recorded notice of a pending lawsuit against a property owner that may affect the ownership of a property. Some states require lenders to file a lis pendens to begin the foreclosure process if a borrower is in default on loan payments.

Notice of Sale (NTS or NFS):
A document announcing the public sale of a property to recover a debt owed by the owner of the property. The notice is mailed to parties affected by the sale of a property, advertised in local publications and recorded in public records. Among other information, it provides the date, time and location of the sale.

Foreclosure Sale
A public sale of a property to recover a debt owed by the owner of the property. The sale can be officiated by a trustee, an attorney or a local government official, depending on state law.

REO: Real Estate Owned by the lender, this status indicates the property is now owned by the lender or bank as a result of a foreclosure.

Lien
A legal claim on a property by a lender or other entity that is owed money by the owner of the property. The entity that files the legal claim is called the lien holder. If the owner does not pay off the loan or debt that is owed, the lien holder can take steps to sell or repossess the property to recover the debt owed (foreclosure).

Junior Liens
Liens that have a lower priority in terms of their legal claim on a property. The priority is usually determined by the date when the lien was filed. The first lien, or senior lien, against a property is usually the first mortgage or deed of trust recorded when the owner bought the property. Junior liens are typically cleared out a public foreclosure sale, but the purchaser at the sale may be responsible to pay off senior or higher priority liens.

Deed of Trust
A legal document that dictates the terms of a loan used to buy a property and transfers the ownership of the property to a third party called a trustee until the loan has been paid in full. The trustee can sell the property to recover the remaining loan balance for the lender if the borrower violates the terms of the loan (i.e. does not make monthly payments).

Mortgage
A document that dictates the terms of a loan used to buy a property and gives the lender some claim to the property (either ownership or a lien) until the loan has been paid in full. The lender can take steps to have the property sold to recover the remaining loan balance if the property purchaser violates the terms of the loan (i.e. does not make monthly payments.)

Postponement
An announcement – usually made at the time and place of the originally scheduled foreclosure sale – that establishes a new date and time for the sale.

Reinstatement
The stoppage of foreclosure proceedings and return to the original terms of a loan that occurs when an borrower pays off the amount in default on the loan to bring the loan payments current. The borrower's chance to reinstate ends before the public foreclosure sale in most states.

Bankruptcy
A legal recourse that allows a person or business to clear any debt obligations by reorganizing the payment amount and payment schedule of those debt obligations. A bankruptcy stalls the foreclosure process, not allowing a foreclosing lender to proceed with the foreclosure until the bankruptcy proceedings are completed or the court in charge of the bankruptcy allows the lender to continue with the foreclosure.

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Investments


Investment & Financial Analysis Terminology & Formulas

Effective Gross Income:
Gross Annual Income-Annual Vacancy Factor=Effective Gross Income

Net Income:
Effective Gross Income (from above) - Operating Expenses = Net Income

Gross Rent Multiplier (GRM) =  Price of property
                                                           Annual Gross Income
(The smaller the number, the better the GRM)

Capitalization Rate Defined:
Purpose: To determine the value of a property.  Is it a good investment compared to other investments?  The Lower the cap rate the Higher the property value.
Beware:  Are the income and expenses realistic?  What has been included and excluded?  Watch out for property Taxes.  No Depreciation of Capital Expenditures.  Financing? (Mortgage not included)

Capitalization Rate =   Net Income (NOI) x 100
                                                       Price

To calculate the price of a property for a given cap rate:

Net Income x 100    =   Price
Capitalization Rate

Features of Capitalization (Cap)  Rates:
Averages:
5-6% Apartment Buildings
8-8.5% Office Buildings
8.5% Industrial Buildings

Characteristics of Low Cap Rates:
Dynamic Cities
High levels of Gentrification
Verh High House Prices
Remember: The Lower the Cap Rate, the Higher the property value.

Return on Investment (ROI) : The averageannual percentage returen, based upon the intial investment (down payment).

Calcualte Profits (yr 1)

Cash flow+ Equity Growth (Loan Reduction)+ Equity Growth (Appreciation)+ Tax Benefits (Depreciation, Rebate, Amortization = Total Profits

Step 2: Calculate ROI =  Total Profits from above
                                           Initial Investment

ROE: Return of Equity or cash on cash return:  The average annual percentage return, based upon the sum total of equity help in the property.

Calculate ROE =   ___Total Profits (yr 2)___
                                 Equity Position (Yr 2)

Cash on Cash Return = _(NOI-Debt Service) x 100
                                          (Price- Mortgage)

Depreciation :
Value of Property - Value of Land = Value of Improvements (Building)

Establishing Depreciation Rate: 
Minimum rate for residential property is 27 ½ years.
Minimum rate for commercial property is 31 ½ years.

Formula:    Annual Depreciation = _Value of Building __
                                                    (Depreciation Rate)

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Competitive Rental Analysis of Los Angeles Communities

Beverly Hills Rental Property Statistics

Beverly Hills as the most expensive housing market (second year in a row) in the United States, with a median home price of $2.21 million dollars

Hancock Park Rental Property Statistics:

Hollywood Rental Property Statistics

Koreatown Rental Property Statistics

Los Feliz Rental Property Statistics

North Hollywood Rental Property Statistics

Santa Monica Rental Property Statistics

Silver Lake Rental Property Statistics

Valley Village Rental Property Statistics

Venice Rental Property Statistics

West Los Angeles Rental Property Statistics

City	1 Bedroom	2 Bedroom	3 Bedroom	4 Bedroom
Beverly Hills	$1800.55	$2677.63	$4351.94	$7338.22
Hancock Park	$1514.48	$2716.67	$3885.52	$5045.00
Hollywood	$1487.60	$1996.86	$2623.59	$3134.80
Koreatown	$1102.21	$1588.96	$1700.00
Los Feliz	$1661.87	$2195.98	$3712.74	$3885.00
N. Hollywood	$1061.44	$1508.44	$2367.90	$2833.75
Santa Monica	$1495.00	$2333.33
Silverlake	$1603.55	$2094.07	$3351.14	$5200.00
Valley Village	$1266.09	$1698.66	$2883.62	$4444.44
Venice	$2074.02	$2839.76	$4590.29	$6224.50
West LA	$1562.83	$2306.02	$3757.75	$5461.43

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Financing

Congress Raises the Conforming Loan Limit to $729,750

The Coming Boomlet?

As part of the Economic Stimulus package, Congress has enacted legislation that will raise the conforming loan limit to $729,750 in high cost states (from current $417,000) for loans originated through December 31, 2008.

Conforming loan rates are currently at multi-year lows -- approximately 5.5% -- as opposed to jumbo loans (above the current conforming loan limit of $417,000), which hover in the 6.5% range.

Buyers or those refinancing in the $450,000 - $850,000 price range in Los Angeles can expect to see a decrease in their projected monthly costs.

For a $600,000 loan, the current monthly payment (prinicipal and interest) is $3,792 -- $385/month more than the projected monthly payment of $3,407 under the new guidelines.

The current monthly cost of a $750,000 home (with 20% downpayment, principal, interest, property tax and insurance) is $4,581, equivalent to the monthly cost of an $820,000 home financed at 5.5%. Under proposed terms, buyers will have a 9.3% increase in purchasing power.

In the local market, where sales volume has been down 25 - 60%, expect activity for homes under $1 million to pick up as buyers capitalize on their increased spending power.

It's unclear when the new funding guidelines will come into effect. Given that the expiration date on the incentive is December 31, 2008, one can anticipate changes in the near term.

What's also unclear is what the new conforming loan limits will be for 2-,3- and 4-unit properties. Currently the limits are set at $533,850, $645,3000 and $801,950, respectively.

The single family home loan limit increase is $312,750 -- or 75%. This would translate into new conforming loan limits of $934,237, $1,129,275 and $1,429,162, respectively, for 2-,3- and 4-unit properties.

With Los Angeles' strong rental demand, these new loan limits could create an excellent buying environment for duplexes, triplexes and four-plexes.

Consult a lender to evaluate affordability under these new guidelines. Buyers should take advantage of reduced interest rates and the slow market to purchase properties under the best terms since 2005.

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Mortgage 101 by LA Real Estate Group With over 175 informative documents and interactive tools, Mortgage 101 can help you find the answers to your mortgage questions. View current interest rates, sign up for a monthly newsletter, use interactive calculators and more.

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