We are Gareia Georgia Real Estate Investors Association Issue11: Year of Opportunity, January/February 2017

PRESIDENT'S CORNER

As 2016 comes to a close and we look forward to a great year in 2017, I would like to take a few minutes to thank GaREIA, its staff, volunteers, and everyone who has helped make the organization what it is today. It would take pages to list everyone as there are more people who have contributed than I can remember. Not only has the organization helped my real estate investing, it has also been the source of new friendships and personal growth. Some of the friendships will continue many years into the future as we continue to work together on deals and strategies.

The 2016 year of my presidency of GaREIA was challenging in different ways as I was working my day job which had been temporarily transferred to Florida. The board stepped up during this time as I was unable to be as involved as much as I’d been in previous years. Ultimately the company made me an offer to permanently transfer to Florida that my wife and I agreed we should take. And as announced at the December Holiday Party we have already made the move there. Using the skills learned through GaREIA we updated our home to the high-end level of the GA neighborhood where we’d been living. Working closely with a realtor we received multiple full-price offers and went under contract shortly after listing on the MLS. We were fortunate and blessed with the result. As some of you already know, good fortune comes to those who are prepared. Again, I would like to thank GaREIA for the education and networking opportunities that enabled us to be prepared.

All the best to you all in 2017. I will look forward to our paths crossing again in the future. Until then, I hope you will enjoy a prosperous adventure in your real estate investing.

By Mike Jacobson, GaREIA President

"Getting Started with Real Estate Investing: Simple Steps for Success"

presented by Curt Smith & Tierra Destiny Reid

Saturday January 28th

Tierra Destiny Reid & Curt Thomas
What You Will Learn at the Event
  • Fundamentals of real estate investing
  • How networking at GaREIA can help you succeed
  • Why a broad education is key to your success
  • The scope and effort it will take to get started
  • What questions to ask when you get advice from experienced investors
  • What questions to ask a potential coach
  • What are immediate tools you need to conduct business?
  • What are the myths and the truths of becoming a successful real estate investor?
  • What area of investing should you start with?
  • Basic steps in a real estate deal
  • Best ways to start your learning
  • Mindset to succeed: the importance of knowing your ''why'' in order to take actions needed to succeed
  • Importance of taking action
  • What to do on Monday
Registration Information
  • $10 Member Early Registration through January 26th
  • $20 Non-Member Early Registration through January 26th
  • $30 Registration after January 26th

GAREIA GENERAL MEETING

Monday, February 13, 2016 - Doors open at 5:30pm

Wyndham, 6345 Powers Ferry Rd, Atlanta 30339

“Homegrown & In The Trenches” Active Real Estate Investors Panel, Arthur Horton, Curt Smith, LaShannon White, Steve Laube

What You Will Learn at the Event:

  • Best ways to avoid mistakes in your real estate investing business
  • Why is buy and hold a good strategy?
  • What is quickest way to financial freedom, i.e., owning 5-10 properties free and clear in 5-10 years, while working a J.O.B.?
  • What other advantages / interesting options does owning 5-10 properties free and clear give you?
  • Where / how do you learn what's entailed in being a good landlord and having good tenants?
  • Can you make money wholesaling?
  • What are common creative financing strategies?
  • How does being a GaREIA member help you in your real estate investing business?
  • How does helping other GaREIA members succeed benefit you?
  • Is having a network and connecting with like-minded people really that important to success?
  • What are most important things lenders are looking for when you are looking for financing?
Bring in Spring with the GaREIA Boot Camp!

GaREIA 2017 Boot Camp

March 3rd - 5th, 2017

Friday / Saturday / Sunday

Declare Your Independence & Register Early!

Benefits of this intense three-day Boot Camp include the following:

  • Finding the deals
  • How to recognize and evaluate a good deal
  • How to make offers that get accepted
  • How to estimate fix up costs
  • How to find the money to make more deals
  • Where to find the contractors
  • Your best exit strategies: keep it or sell it?
  • How to structure deals
  • How to market your properties for quick sale
  • Local instructors show you how it works, step-by-step, and right here in your own hometown.
  • Kick-start your career! Get the boost you need to make more money, smarter and faster.

**Early Registration through February 15!**

  • $595 for one GaREIA members
  • $995 for two GaREIA members

Are you not yet a member of GaREIA? Your registration fee includes an annual membership at Georgia REIA! Just $695 for one person; $1,195 for two - with early registration - through February 15!

REGISTER TODAY - Class Size is Limited and Registration Will End When Capacity is Reached!
Market Forecast

Local Market Monitor’s 2017 Economic Outlook

By Brad Beckett

Local Market Monitor (a National REIA preferred vendor) recently released their National Economic Outlook for 2017 where they predict;

“the economy will grow at a slower rate, home prices will continue to rise, but more people will want to rent. This isn’t much different from 2016 but the risk of investing will be higher in some local markets.”

National Economic Outlook – January 2017

January 3, 2017

By: Ingo Winzer

Three things to keep in mind for 2017: the economy will grow at a slower rate, home prices will continue to rise, but more people will want to rent. This isn’t much different from 2016 but the risk of investing will be higher in some local markets.

The Economy

The Federal Reserve believes the economy is “strong” and will do even better next year. Local Market Monitor thinks this is pie-in-the-sky optimistic.

The US economy moves in tidal waves that ebb and flow for years at a time. This is especially true for jobs. After the 2008 recession, job creation built back to a peak of 2.3 percent in early 2015 and since then it’s receded to a 1.6 percent annual rate. Maybe another wave of growth will follow in 2017, but I doubt it. Some important stats say further slowing is more likely.

Two special indicators – new jobs in trucking and in new jobs in temporary services – which both soared after the recession, have now dropped to their lowest level since then. Trucking jobs move goods to stores, and temps are the last ones hired before businesses stop hiring altogether. Lows in these areas are tough to square with a “strong” economy.

Job statistics tell us what the economy is likely to do, but they don’t tell us why. To better understand what will happen with jobs – and therefore with real estate – we need to look at the longer-term situation of American consumers, who drive the economy but can only spend money when they make money. Or when they borrow it.

Before the last recession, consumers had borrowed – and spent – vast amounts of money against the value of their homes. When they could borrow no more, spending stopped and the recession started.

The next slowdown will probably happen when consumers are up their eyeballs in the vast amount of debt they have taken on to pay for college.

Over the last ten years, student debt increased by a trillion (yes, trillion) dollars. When a business borrows, it may invest in something that will grow the economy; but when a student borrows to pay for something that has no more value than a high school diploma once did, it’s not an investment that will grow the economy – it’s just a transfer payment to their college, and a debt that keeps them from spending money on other things.

The unfortunate situation we seem to be in is that our economy can only grow modestly unless consumers borrow to spend – first it was homeowners, now it’s young adults. What will happen when all consumers have borrowed all they can?

Home Prices

Nationally, home prices bottomed out in 2012 and are up about 5 percent a year since then. But the local differences are stark. In the last three years, prices rose 30 percent in Southern California, yet just 5 percent in Alabama and Connecticut. Many local markets are still under-priced 25 percent or more. Not surprisingly, job and population growth account for much of the difference.

It’s easy to list growing markets where prices will continue to rise, but are the under-priced markets an investment opportunity? For that matter, what’s the best way to invest in markets that are already over-priced? The answer may lie in the rental question.

Buying Versus Renting

Buying, fixing up and then renting out single-family homes remains an attractive proposition. Right after the recession, bargain home prices were a big draw for such an investment, promising quick returns. But even with higher prices, the fundamental economics of renting will be favorable for years.

In 2005, 37 million American households were in rentals. In 2016 it was 44 million. Builders, however, have not kept pace – in the last five years just 2 million new rentals built although 4 million were needed. And there are good reasons to think this imbalance will continue.

The income of the average worker increased just 10 percent in the last five years – no better than inflation. More importantly, the income of the lower half of workers increased only 8 percent. Fewer people have the income to buy a home and more of them are already saddled with debt.

The Take-Away

Slower job creation in 2017 – incomes for many people don’t match inflation – the debt of consumers goes even higher – more people need to rent – but builders aren’t building enough rentals.

About the Author: Ingo Winzer is President of Local Market Monitor, and has analyzed real estate markets for more than 20 years. His views on real estate markets are often quoted in the national press and in 2005, he warned that many housing markets were dangerously over-priced. Previously, Ingo was a founder and Executive Vice President of First Research, an industry research company that was acquired by Dun and Bradstreet in March 2007. He is a graduate of MIT and holds an MBA in Finance from Boston University. He resides in Cambridge, Massachusetts.

www.LocalMarketMonitor.com
info@localmarketmonitor.com
800.881.8653

Replacing Your Job Income with Five Rental Properties

By Brad Beckett with RPOA Real Estate Investor Podcast

The RPOA Real Estate Investor Podcast recently discussed “Replacing Your Job Income with Five Rental Properties, Infinite Returns and Profiting by Solving Other People’s Problems with Nick Watkins.” This is a great conversation with an investor who started off with a duplex and now owns several rentals and has real-life experiences to share.

“Two-Thirds of the way through my conversation today, Nick Watkins drops a huge bombshell: He’s managed to generate as much money in rental profits as he makes in his full-time job – and he’s done it with only two duplexes and three single-family properties! Nick takes me step-by-step through his process, how his desire to help others solve their problems led him to purchase rental property, how he’s used creative financing to help him achieve ‘infinite returns’, and how he’s learned to manage his properties and his tenants.”

Full podcast can be heard on rpoaonline.org/podcasts.

Industry News

Housing Starts Up 11.3%

By Brad Beckett

The U.S. government is reporting that privately-owned housing starts in December were at a seasonally adjusted annual rate of 1,226,000. This figure is 11.3% above November’s rate and is 5.7% higher than one year ago. Single-family housing starts in December were at a rate of 795k. The December rate for units in buildings with five units or more was 417k. An estimated 1,166,400 housing units were started in 2016. This is 4.9% higher than one year ago.

Privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 1,210,000. This is 0.7 % higher than the December 2015. Single-family authorizations in December were at a rate of 817,000 which was 4.7% higher than November. Authorizations of units in buildings with five units or more were at a rate of 355k in December. An estimated 1,186,900 housing units were authorized by building permits in 2016. This is 0.4% than one year ago.

Full report on www.census.gov/construction/nrc/pdf/newresconst.pdf.

US Home Sales Have Been Failing at an Increasing Rate

By Brad Beckett

A recent analysis from Trulia has found that nationwide home sales have been failing at an increasing rate – with starter homes being at most risk. In the 4th quarter of 2016 alone failures were 4.3%. Furthermore, they report that on an annual basis the failure rate has nearly doubled to 3.9% in 2016, up from 2.1% in 2015. To determine this, Trulia took the daily status of all listings for the first two months of each quarter from Q4 2014 through Q4 2016 and then tagged any properties that went from “Pending,”or “Active Contingent” back to “For Sale,” or “For Sale by Owner.”

The reasons vary but here are a couple key findings:

New homes and very old homes are least likely to see deals fail. As of Q4 2016, homes built in 2016 have among the lowest proportion of failed sales at 2.6%. That proportion increases steadily as age increases to an average of 5.2% in homes built from 1959 through 1969, then falls steadily to an average of 3.5% for homes built from 1900 through 1920.

Of all listings in the largest 100 metros, 7.1% of starter home listings failed in the most recent quarter, compared with 6.7% of trade-up homes and 3.8% of premium homes. For all of 2016, the failure rate was 6.3% for both starter and trade-up homes and 3.6% for premium homes.

Full report on Tulia.com.

Happy New Year!

Remember to seize the opportunities this year will bring and share your success stories with your GaREIA family.

Always remember, GaREIA is here to provide educational material, not legal advice! Do not apply this information to your specific situation without the advice of an attorney and any other appropriate professionals.
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