By Ray Mathoda

We believe this current down housing market cycle is presenting and will continue to present some of the best real estate investment opportunities we have seen in years, and helping clients make smart real estate investments is and will continue to be a big focus for us at HausAngeles.

Our Investment Focus: Single & Multi-Family Residential Real Estate (Now)…Commercial Real Estate (in a year or two):
We currently help our clients buy and sell investment real estate in the residential single and multi-family sectors (i.e., homes and apartment buildings), and this will continue to be our focus near term. We believe the single family market has been the first to come down in price and represents the best buying opportunities, followed by multi-family where prices are coming down to levels that are once again attractive from an earning-capacity (cap rate) standpoint. It is likely prices in both single and multi-family real estate will come down a little further…although this may change depending on what happens with the credit markets and the government’s foreclosure prevention initiatives during 2009.
 
As has been the case historically we believe commercial real estate prices will “lag” the softening in the real economy by a couple of years so the best buying opportunities in commercial real estate are a couple of years away. Between now and then, expect us to get active in the Commercial sector also.

Thoughts on Timing the Market:
We think timing a market perfectly is impossible and believe history has proven that trying to time the market approximately right is a more realistic and superior investment strategy than trying to time the market perfectly. We believe it is approximately the right time to start looking seriously at real estate investment opportunities.

How We Work:
We have designed our business model to be ‘transaction timing independent’ and focused instead on providing our clients with the best possible information and analysis on both the market as well as specific properties/deals and neighborhoods. Unlike the purchase of real estate for living purposes, buying real estate as an investment is all crunching the numbers and trying to develop a qualitative/strategic perspective on the long term prospects for the neighborhood/geography where the investment is located.

The Team:
The HausAngeles investments team is led by me (Ray) in partnership with the most analytic realtor I have met to date: Bruce Seid. Bruce is an active investor in real estate personally (in and outside Los Angeles), and both he and I think investment real estate is about the numbers, not a sales approach.

By Bruce Seid

With this issue of the HausAngeles newsletter we begin a monthly analysis of Los Angeles County’s Real Estate Supply and Demand figures, as provided by the Multiple Listing Service (MLS). Specifically, we’ll look at the Unsold Inventory (stated in # months based on latest available monthly sales data). This will tell us, in months, how long the currently listed inventory would last at the current sales rate.

Our analysis area is bordered on the North by the Santa Clarita Valley, on the West by PCH, on the South by the 105 Fwy and on the East by the 605 Fwy. Each month we will look at Condos, Single Family and Multi-Family Property trends.

The above data is indicative of the (buyer-driven) nature of and uncertainty in the market right now. Although it looks like unsold inventory levels are going down relative to a year ago, we believe these inventory levels are skewed at this time due to foreclosure moratoriums at various large institutions (over the last 6 months) and because a number of Banks are holding troubled asset inventory on their balance sheet till they assess which of the troubled borrowers qualify for a modified or refinanced loan under the Obama “Making Homes Affordable” Plan.

FYI, the National Association of Realtors (NAR) defines a buyers market as 6 months or more in inventory. We are 2-3 times that number in our current market. Stay tuned for monthly updates on these numbers.

By Bruce Seid

The wealth building power of Investing in Real Estate is a time-proven fact. Simple, right? So, why don’t more people invest in real estate?

The answer lies in the myths and misunderstandings surrounding investing. In his best-selling book, The Millionaire Real Estate Investor, Gary Keller talks about five “mythunderstandings” that can derail investors. These beliefs are often used as justification for failure, and many are repeated widely as cautionary tales. Do these sound familiar?

Investing Myth 1: Investing is Complicated:
Truth: Investing is Only as Complicated as You Make It
Almost anything taken as a whole can appear more complex than it really is. However, you don’t need to know everything in order to do something. Seek the knowledge you need to get in the game. Read. Study. Ask questions. Find knowledgeable experts with proven track records. Avoid the late night infomercial route.

Investing Myth 2: The Best Investments Require Knowledge Most People Don’t Have
Truth: Your Best Investments Will Always Be in Areas You Can or Already Do Understand
Investing in something you don’t understand isn’t investing—it’s speculation. Remember the dot com stock bubble? Real estate provides investors with a tangible asset. Nobody can take your investment property from you on a whim, but stocks can plummet to zero. You also have control over your asset and can take action to improve its value. Seek the specialized knowledge you may lack. Keep it simple and build your knowledge base as you progress.

Investing Myth 3: Investing is Risky—I’ll Lose My Money
Truth: Investing, by Definition, Is Not Risky
Investors don’t ignore risk; we mitigate risk by following sound principles and models. We buy property under terms that immediately create a profit. Our current housing market is providing these opportunities. Even though values are dropping, profit and wealth building opportunities are becoming easier to find. If you know how to do it right, risk can be significantly limited. Investing is about having sound criteria, the patience to find the right opportunity, and a willingness to take action. You can minimize risk while maximizing return. .

Investing Myth 4: Successful Investors Are Able to Time the Market
Truth: In Successful Investing, the Timing Finds You
Timing is one of the most misunderstood concepts in real estate investing. Successful investors make good investments in many different types of markets. You’ll never know where the bottom is until it has come and gone and we are on our way back up! You can’t time the market perfectly. However, if you have a clear sense of your investment objectives and are actively evaluating available opportunities against these criteria, you can make smart and successful real estate investment decisions now.

Investing Myth 5: All the Good Investments Are Taken
Truth: Every Market, in Every Time, Has Its Share of Good Investments
Two market forces create opportunities: economic and personal. They are always present and influencing the market. Economic forces include job growth, interest rates, population shifts and area revitalization. Personal forces include opportunities from positive circumstances, such as relocation, marriage and family growth. Others arise from negative conditions such as divorce, debt and distress. There are opportunities out there to help people with their problems. Investors can offer solutions. Many high-achieving investors have faced fears or doubts about investing that ultimately proved unfounded. These common “mythunderstandings” can stand between you and true financial wealth.