Existing Home Sales and Pre-Construction Sales

Sales of the Existing and Pre-Construction Homes

The sales of the existing and pre-construction homes have seen a noticeable jump in January 2014, mainly thanks to the increased number of cash buyers and the abundance of the rock-bottomed foreclosure and short-sale deals. the Share of combined foreclosure and short sales has hit the highest level in the past 12 months, according to National
Associations of Realtors (NAR). This trend continues all through 2011 to present with fist time and vacation home buyers entering the market in a pattern that by 2015 some markets like Miami were experiencing a shortage of inventory already.

What all this means to you and where the general economy heading all needs a closer look at all factors that should come together in order to help out the construction industry. The bad news for re-igniting of the new home construction in early 2010’s and 2011 was the increased demand for distressed properties as they are competing with the new homes and hence the construction industry. The 9% unemployment and tight credit, on the other hand, have had a negative effect also by reducing the pool of potential buyers and lowering the demands for new homes. Most economists believe that the start of the new home constructions in recent years has been instrumental in lowering the unemployment rate to below 6%.

Now, where is the good news in all this? It simply relies on the news of the increase in the sale of the existing homes, which are mainly bank-owned or short sales. The fact is that the sooner the foreclosed homes are picked up from the market the sooner the demand for construction of new homes will start. At this time, new homes can not compete with lower priced REOs and short sales. In most communities, the prices of the existing homes are a fraction of what a new home will cost and as log as this persists start of the new home construction will not make any economical sense. The fusion of cash by many REITs and foreign buyers to the stressed property market has also triggered the increased competition in grabbing these properties and eventually resulted in a hike in the sales of the existing inventory by 5.3% compared to the year before.

Another indication of a stable market is the number of the months that will take to sell the entire inventory in any given market. According to Lawrence Yun, the chief economist in NAR, the number of the months to sell current inventory in June 2015 was in pace to 5 months from 5.1 months in the prior month. As general to carry a 7 months inventory is a sign of a stable market, which makes the current 5 months rate as a positive indication of a stabilizing market and for that, this is also a good news.

The recent recession along with the increase in the cost of borrowing and unemployment are the break pads slowing down the housing industries. The same industry that triggered the recession will eventually become The Savior and although 2015 is forecasted to be a positive year but we believe it will be a constructive year laying down the foundation for a much better years for the construction industry in 2016 and continue to get even better in coming years ONLY IF we could the limit the number of the foreclosure homes.

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Reasons Invest In Pre Construction Real Estate

by Hamid Hakimi | Pre Construction

Reasons Invest In Pre Construction Real Estate

Top Ten Reasons to Invest In Pre-Construction Real Estate

As we approach the start of a new era in the construction industry, the challenges for the sales of pre-construction homes have become more evident for the developers. The developers are also facing tighter lending policies which combined with cautious investors and home buyers results in more anxiety for the developers planning to start new construction projects. Traditionally most lenders require around 50% pre-construction sales of a project as a contingency for a construction loan. To reach this threshold, the developers have to go through expenses of marketing, creating models and staffing to get ready for sales of the pre-construction homes. Additionally, they have to discount the prices in order to entice the investors and potential home buyers to purchasing preconstruction homes. The amount of the discount offered is to offsets the marketing expenses and cost of the idle capital invested in the acquisition of the land, permits and other operating overheads.

Offering discounts is a win, win situation to the developer as well as the home buyers and investors. The strategy helps the developer to reach the 50% pre-sale plateau faster while rewarding the pre-construction investors and home buyers from the discount. Besides the profit from the discount, there are many other factors that will make the purchase of pre-construction real estate a very attractive proposition for many investors:

1. Lower Prices- Although the discounts are driven from the builder’s bottom line and are an important part of the pre-construction investments, but in reality these margins are a minimal cost for the developers when compared to the cost of idle capital and marketing and sale of the pre-construction units. The home buyers and investors, on the other hand, will appreciate the built-in equity when they purchase preconstruction homes. They recognize that while any appreciation in a typical real estate investment would require a large upfront investment or payment of a mortgage for a long period of time, but in pre-construction investments they could enjoy profits with only a down-payment and in a shorter time period.

2. Lower to None Maintenance- Purchasing a new unit will require less maintenance for the first ten years of ownership than existing older homes.

3. “OPM” Other People’s Money or “Leverage”- The small amount of initial investment in a pre-construction property affords the purchaser to acquire a property of much higher value. Consider these two simple examples below on purchasing a 100,000 property:

a. Assume that an all cash purchase of a property for $100,000 brings 15% appreciations in 5 years. This will yield a $15,000 Return On Investment (ROI).

b. In the second example, we leverage the same $100,000 investment as down payment to purchase a property requiring 10% down. This will allow us to purchase a property valued at $1000,000. If we expect the same 15% ROI as the previous example, then the ROI will amount to 1000,000 x 15% = $150,000. This simple example demonstrates the power of leveraging that instead of $15,000 we could make $150,000 return o the same amount of investment.

4. Amenities- Today’s developments are designed as resort style and equipped with the state of the art fitness centers, swimming pools, and walk/bike paths in place of the shuffleboards and card tables in the clubhouses.

5. Timely Entry- This is the best time to enter the pre-construction market as we are still in the early stage of an appreciating market. The typical real estate cycles of the past decades have been 7-8 years. During this period, the home values climb up till it hits the top and reverse its course till hits the rock bottom line. Remember to always get into investing in the pre-construction market during the early and midterm stages and never during the late cycle.

6. Safety- The new construction techniques and enforcement of the more stringent local codes have resulted in better construction, which is safer during the hurricanes. This makes the newly constructed homes safer than the older units. Since the1993 Hurricane Andrew; tougher Miami-Dade Building Codes have become a guideline to many other counties and municipalities as well. The result has been a sturdier construction of new homes in Florida.

7. Energy Efficiency- T he efficiency in the construction industry has evolved into more sustainable developments that save you money day in and day out for many years to come. From construction techniques, better insulations to Star Rated Appliances with higher efficiency rates the recently constructed homes are viable when it comes to total efficiency.

8. Technology- Never before has the access to latest technologies been as important as the past two decades with the internet becoming a way of life and work. The modern constructions have adapted to this phenomena by pre-wiring the homes for the internet, alarm systems, and other must-have modern technologies.

9. Builder’s Warranty- Normally builders offer a warranty on all new home purchases, which is a piece of mind for home buyers who have gone through the dreaded purchasing a home and moving expenses.

10. Built-in Equity- From the first day of purchasing a preconstruction home an immediate equity is in place with a minimal investment and before the purchase has been completed.

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Pre Construction Investments

by Hamid Hakimi | Pre Construction

Pre Construction Investments

preconstruction_condos Pre-Construction Investment in Residential Properties

The advance sales of the pre-construction units are the biggest hurdle for most developers planning to obtain construction loans from financial institutions. The typical requirements to start a construction loan process is owning the land, having all permits in place and sell a predetermined number of the pre-construction homes prior to underwriting the loan. With lenders acting more cautious than ever, the developers not only are scrutinized to qualify for a construction based on their creditworthiness but also have to create a sales force, build models and advertise to sell the preconstruction units. To add to their problems is the lack of confidence by the preconstruction investors who are walking scared after the fiasco of the last crash of the real estate market.

As one of the stronger companies that have survived the ups and downs of the real estate market, we are trying to create a sales solution for developers of new residential construction as well as opportunities for pre-construction home buyers and investors. We recognize the challenging times we face in managing the relationships with uncertain investors as well as the anxious developers. We also believe that only hard work along with integrity is the only route for better days ahead. We know that the days of flipping pre-construction contracts are long over. Today’s purchasers are more interested in the quality of the development and the discount margins than a short term gain of crazy margins due to atypical increases in home prices.

In order to resume offering pre-construction opportunities to savvy investors while creating sales solutions to developers, we are looking for sound pre-construction projects to present to our past and present investors. To achieve this, we have completed a highly disciplined due diligence process in choosing our developers in order to ensure the integrity of the project along with the true market value of the units and the discount margins being offered. For further information please contact Hamid at info@portstlucie.city

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Luxury Homes Pre-Construction Opportunities

by Hamid Hakimi | Pre Construction

Luxury Homes Pre-Construction Opportunities

Pre-Construction Opportunities in the Luxury Home Market

The pre-construction opportunities in the luxury home market will require a more sophisticated buyer and a thorough due-diligence process. The preconstruction luxury property market deals with buyers with both financial means, knowledge of the market and discriminating taste. This sector of the real estate market is normally serviced by the developers and real estate companies who are dedicated to the construction and sales of luxury homes. There are many large and small real estate firms specializing in sales of luxury properties in the US and many other countries internationally. As an experienced real estate team with luxury projects and affiliates in US, Europe, and other international destinations we have been trusted by many developers and homeowners alike for over 13 years. As a member of International Consortium of Real Estate Associations (ICREA), we have the advantage of working with international real estate professionals and their buyers to market your luxury homes to a wider range of audiences. The designation of Transnational Referral Certification (TRC) offered only to the ICREA members along with the privilege of access to market your home in their top ranked website www.worldproperties.com.

We showcase preconstruction luxury homes as well as the ready-to-move-in builder’s model and resale opportunities throughout many national and international websites that cater to luxury single-family homes and condominiums. Buying resale luxury homes offers immediate access to the property with many luxury amenities already in place. The pre-construction homes, on the other hand, present the choice of custom-designing prior to the construction of your home or condo along with builder’s incentives.

Regardless of resale or preconstruction purchase of luxury homes, when considering investment in the high-end homes market take the extra steps and do your due diligence as you would in any other investments. The mere fact that there is a big name attached to a project does not necessarily guarantee the success of the project. Just ask hundreds of investors who lost millions of dollars in deposits in the past few years in some projects sanctioned by some of the biggest names in the industry nationwide. Contact the real estate professionals in our team to assist you in buying or selling luxury homes and we’ll walk you through the due diligence, inspection, appraisal and contract to close process.

For developers of luxury homes, we are currently compiling an exciting list of luxury properties and invite developers to join us to market their luxury developments to national and international homebuyers. If you are looking to buy or build your dream home, please contact us for a list of developers specialized in the construction of luxury homes.

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Pre-Construction Risks

by Hamid Hakimi | Pre Construction

How to Buy Pre-Construction Properties

This is a guide on how to buy pre-construction properties in the right time and what to do to eliminate the risks associated with such transactions. In this article, we discuss the differences between the two major contracts; the Builders Contract and the Real Estate Purchase and Sale Contracts and when to use Realtors or real estate attorneys.

Real Estate Sales and Purchase Contracts vs Builders’ Contracts

While the Real Estate Sales and Purchase Contracts used for resale of existing homes, almost all new and pre-construction sales contracts are “Builders’ Contracts”. The typical real estate sales contracts for resale transactions are normally sanctioned by a real estate association. The most significant difference between the two contracts is the fact that the real estate sales contracts are drafted to protect the buyers, however, the builder’s contracts drafted with the developers benefits in mind.

Hiring a real estate professional who is familiar with both types of contracts is beneficial to the homebuyers in many ways. Such professionals could easily identify any pitfalls in the Builders’ Contracts that might work against the buyers’ interests. The scope of a Real Estate Brokers work varies based on the state the property is located. In some states, Realtors cannot become involved in the writing of real estate purchase contracts and their role is limited to finding and showing properties while in others, like Florida, any Realtor is capable of drafting the purchase contract and follow up with the process till the closing. There are other entities to assist the buyers such as real estate attorneys who normally do not get involved in finding and showing properties until the draft of the initial purchase offer becomes necessary.

There are many reasons to use either a Realtor or an attorney or both. Most simple purchase contracts are easily handled by Realtors and title companies. Most of the brokers and real estate professionals are compensated by sellers while attorneys might charge the buyers for their services. Use of attorneys in more complicated real estate transactions such as estates and trusts are beneficial to the sellers. An experienced and educated Realtor could even help you with specialized transactions such as 1031 exchange without any additional costs to you.

No matter which state or what type of service applies to you, just make sure to use the assistance of a real estate professional and don’t walk unarmed to the developer’s office and start checking out the models. This makes even more sense when, as a buyer, the help you’re getting from the real estate broker is not costing you a dime. Just think, if the builders have their attorneys on their side to protect their benefits, who will look after yours?

We hope these series of articles serve as a useful guide to buying preconstruction properties and aid the home buyers and investors in reducing the risks associated with purchasing of pre-construction properties. This is a follow-up to our other articles in advising buyers in how to buy pre-construction properties and what to look into when it comes to choosing a developer including the purchase contract and other terms and conditions set by developers. The recently published articles on the importance of due diligence and other facts about preconstruction acquisitions were intended to assist and educate potential home buyers and investors in the market for the purchase of pre-construction properties.

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Pre-Construction Risks

Real Estate Investment Trust REIT

by Hamid Hakimi | Pre Construction

Real Estate Investment Trust REIT

REIT Real Estate Investment Trust

Contrary to what Many investors think the REITs or Real Estate Investment Trusts are not the phenomena surfaced during the recent real estate booms and the REIT platform is over a century old. Although many REITs and other investment clubs popped up during 1990’s and recently 2005-2007 period but the history takes REITs dates all the way back to 1880’s when it was used as a tax shelter against double-taxation on corporate and individuals. The international Real Estate Investments Trusts, on the other hand, are fairly new and are different in qualification standards by each country. Modern countries like Canada or England have adopted the regulation for Real Estate Investment Trusts (REIT) as recent as 2007 in England.

The tax benefits, power buying and expert management of these Trusts has attracted investors since 1990. Lee A. Chilcote from Arter & Hadden estimates the market expansion from $5.5 Billion in 1990 to over $140 Billion in 1998. According to REIT.Com, all REITs index in was up by 28% in 2010, which easily surpassed the broader market index when S&P 500 saw an increase of 15.1 and NASDAQ Composite was up 16.1%.

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Hamid Hakimi Speaker at Florida Real Estate Convention

by Hamid Hakimi | In The News

Hamid Hakimi Speaker at Florida Real Estate Convention

Hamid Speacker at Real Estate Converntion

Hamid Hakimi – Real Estate Broker

Hamid Hakimi Guest Speaker 2014 Florida Association of Realtors Convention

As one of the only four Realtors in the State of Florida Hamid Hakimi was invited to be a guest speaker in 2014 Florida Association of Realtors Convention and share his experience with other Realtors. The topic of the speech was “My Best and Worst Deal” as a Realtor.

My Best and Worst Real Estate Deals

One of the educational events in the Realtors conventions is inviting the experienced Realtors to share their knowledge with their colleagues. Last year’s Florida Association of Realtors’ annual convention followed this tradition by inviting four Brokers and Realtors from across the state to share their vast experience with the audience of fellow real estate professionals. In 2014 convention the subject of the discussion was “My Best and Worst Deals”.

While the audiences were expecting boasting about the financial rewards of a transaction, they found Hamid’s Idea of the best deal nothing short of a surprise. Hamid told them of a day that a young couple with three children went to his office looking to buy a home in Broward County. Hamid was in charge of the armed forces relocation division for his office in Coldwell Banker and the husband was in the armed forces, being transferred from Texas.

With their Prequalification Letter for $300,000 mortgage on hand it took near a month during the real estate boom to finally find a house. While writing the offer in his office, Hamid found out that the couple was a victim of predatory lending. The mortgage broker had offered them a very low monthly payment without disclosing the loan was a Negative Amortization, Adjustable Rate Mortgage (ARM) and their payments will almost triple in a year or so. While this was workable, Hamid could have easily tried to sell them the house, to the couple’s surprise, he refused to write an offer and be a part of the predatory lending.

Although Hamid explained the pitfalls of these type of mortgages and the increased risk of not being able to pay the much higher monthly payments, the young couple who had finally found their dream home insisted in proceeding with the offer. To their dismay Hamid would not budge, and insisted on helping the couple to either buy a small condo for a much lower price or rent. After a few sessions of going and back and forth with the couple insisting on buying the home, they ended up finally leaving Hamid’s office very upset.

Over a month after the Broker in his office shared a very heartwarming letter that she had received from some clients. To Hamid’s surprise it was a letter of gratitude from the young couple who wrote to the broker about their experience with a Realtor who put their benefit before his. For Hamid this was another day at the office as this is how he works every day, understanding that he is working with people that trusted him with the largest investment of their life.

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Real Estate and Economic Recovery

by Hamid Hakimi | Housing Market

Real Estate and Economic Recovery

Approaching Economic Recovery

Although the signs of the economic recovery are appearing in almost every sector of the economy, but the good news is that instead of talking about gloomy days of recession and depression, we are finally talking real estate economic recovery.

1) The number of notices sent out to homeowners in default in their mortgage payments in May 2015, was the lowest since 2006.

2) The sales of existing new homes have increased for 9 straight months in June 2015, for a total of 9.6% increase in when compared to the same time last year.

Although there are other positive signs in different sectors of the economy and we are following a cautious path toward recovery, but some factors still dampen the optimism of a recovery. While the decrease in both default notices and foreclosure filings by are welcoming news but these numbers do not portray the reality of the real estate market. The fiasco of hew year ago, with Robo-signing and other mishaps by the lenders, has forced a major overhaul in the foreclosure process, which in turn has delayed some of the new filings. There is no actual data of how many foreclosures have been delayed because of the Robo-signing but the following data by Realtor Magazine might shed some light as to where the real estate and construction industry are heading:

States with the Most Foreclosures

Florida
New Jersey
Tennessee
Maryland
Nevada
New Mexico
Ohio
Illinois
Indiana
South Carolina

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Under Contract Homes Increase in May

by Hamid Hakimi | Housing Market

Under Contract Homes Increase in May

More Homes Under Contract in May

The number of Pending Home Sales, or homes under contract, rose by 0.9% in May 2015 compared to the month of April and 10.4% compared to the May of 2014. Pending Homes Sales (PHS) is considered as an important guide in analysing the current market activities and strength. Since Pending Home Sales is an indication of future completed sales, in next 1 to 2 months, it is also used to forecast the home sales status in near future.

According to July 22, 2015, article by National Association of Realtors, NAR, the sales of the existing homes witnessed the highest paste in June 2015 over the previous 8 years. The report indicates the highest pace in sale of existing homes in 2007 of 53.9 million homes while 5.1 million homes were sold in June 2015.

Following our series of previously published articles on market conditions, we will examine the recent “Pending Sale” statistics in this segment. The pending sales represent the number of homes that are under contract and have not closed yet. The higher number of Pending-Sale is an indication of a good sign of positive momentum that the real estate market is enjoying these days. As previously discussed, one of the biggest hurdle on the way to a healthy real estate market has been the number of foreclosed properties. These properties need to be taken out of the market in order to reach any normalcy in the future real estate and construction sectors.

The upward trend in pending sales started in June of 2010, which perhaps coins that date as when the market hit the rock bottom and the start of a steady increase in home prices. The increase in sales contracts and home sales are great signs that we could finally see the lights at the end of the foreclosure era tunnel. To witness further improvement the under-priced foreclosed properties needs to be out of the inventory before we could see any sign of new construction.

With the recent increase in the number of the permits for new home construction, only hurdle standing in the way of recovery is the lenders who are still sitting on thousands of delinquent and foreclosed files. The fiasco of last year’s mishandling of these files has caused delays in the submission of delinquency notices to homeowners and subsequent foreclosure process. The banks and other lending institutions should move to get the remaining foreclosure properties into the market as soon as possible. Furthermore, they need to ease up the lending process for the new home buyers that they could pick these properties up from the real estate market.

Perhaps it is the time for these banks to help to rebuild the real estate market that they have so mercilessly destroyed.

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Drop in Foreclosure Filings

by Hamid Hakimi | Housing Market

Drop in Foreclosure Filings

Foreclosure Filings Drops

The foreclosure rate dropped to approximately 18% in 2014 compared to the total number of the foreclosure homes in 2013 and also down 61% from the peak of foreclosure filings in 2010. The foreclosure rates have been on a steady decline for the past few years. The slowdown in the foreclosure filings along with the increase in the number of sold homes is great news for the construction industry. During the past four years, this sector has not been able to compete with the massive umber of lower-priced foreclosed homes that made the construction of new homes economically unfeasible.

Reducing the number of foreclosure properties from the inventory will help to kickstart the construction of new homes. This in turn, will have a great effect in the creation of more jobs and stimulating the US economy. As predicted in our recent articles the new home construction should end the slump by the end of 2011 and begin the new era for the construction industry in 2012.

For all these reasons, we have jump-started our efforts in resuming our services of pre-construction investment to offer unparalleled opportunities to the developers and pre-construction investors and home buyers.

The month of July 2010 was the 10th straight month that the foreclosure filings dropped to the lowest level since November 2007. According to CNN Money, July filings fell by 35% compared to the same month in 2009. The slowdown in the foreclosure filings along with the increase in the number of sold homes is great news for the construction industry. During the past four years, this sector has not been able to compete with the massive umber of lower-priced foreclosed homes that made the construction of new homes economically unfeasible.

Reducing the number of foreclosure properties from the inventory will help to kickstart the construction of new homes. This in turn, will have a great effect in the creation of more jobs and stimulating the US economy. As predicted in our recent articles the new home construction should end the slump by the end of 2011 and begin the new era for the construction industry in 2012.

For all these reasons, we have jump-started our efforts in resuming our services of pre-construction investment to offer unparalleled opportunities to the developers and pre-construction home purchasers.

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Vegetable Gardening in Port St Lucie

by Hamid Hakimi | Curb Appeal

Vegetable Gardening in Port St Lucie

Gardening in Port Saint Lucie

After moving from a townhouse in East Port Saint Lucie to a house in St Lucie West our large backyard encouraged us to start our long awaited gardening plantings. We started with plants and fruit trees that take the longest to mature and ended up planting an avocado tree, a mango tree and a Ponderosa lemon tree that bears lemons as large as a grapefruit!

The next and most recent venture was creating a vegetable garden that so far has tomatoes, green beans and different herbs including basil and tarragon. Our newest discovery was the easiest way to plant green onions that would literally last forever and with a little patience, we might not have to buy green onions again. The method is very simple, just cut the top of the onions where there are some roots visible, put them in the water and wait for the roots to get stronger and the green part starts sprouting. When the green onions reach couple inches in height just plant them in good soil and soon you have plenty of green onions. If they grow real big the beautiful flowers will add charm to any vegetable garden. Happy Florida gardening!

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Coleus Plants Add Color To The Garden

by Hamid Hakimi | Curb Appeal

Coleus Plants Add Color To The Garden

Newest Additions to the Florida Garden

With busy work schedules and taking care of family this often leaves little time for the garden. Consider coleus plants to add color without all the care. They are easy to grow and forgiving if you do not water every day. If you are on a budget and cannot spend a lot on landscaping you can make cuttings for other parts of the garden. For families on the go planting flowering bushes and plants such as the coleus will add curb appeal to your home without all the high maintenance. Remember to remove all grass and weeds from your flower beds and lay down newspaper before you mulch.

King’s Mantle also known as Thunbergia Erecta

Kings Mantle is a perennial type climber and vine reaching heights of 4-6 feet. Plant 6-8 feet apart from other plants. The plant likes the sun or partial shade. Plant using a mixture of peat moss and cow manure in well-drained soil. Trimming should be done in the late spring. Fertilize three times a year with a granular fertilizer in the Spring, Summer, and Fall. You may want to add a bloom booster such as a liquid fertilizer with bone meal.You can propagate from cuttings or from seed. You can let the flowers dry on the plants and collect seeds.