Facebook Application Helps Buyers Decide Where To Buy Property

I just discovered a new Facebook application which could help change the way people buy property. The name of the application is Facebook Neighborhoods and the basic gist of it is that users are able to meet and interact with their neighbors. The tool is pretty far-reaching; it covers many countries and neighborhoods already and is growing rapidly. I believe the tool is originally intended for neighbors to communicate with one another and stay updated, but I think it could also be used as a great tool for potential homebuyers and investors alike.

Once you are in the Facebook Neighborhood tool you are able to browse through neighborhoods, see what is going on in the particular neighborhoods and also see the names of other people living in the neighborhood. Typically, unless you are friends with these people, you won’t be able to view their full profiles--in case you were wondering what type of people are in the neighborhood--but you can send them messages.

For real estate investors, talking to neighbors can be one of the more beneficial due diligence tasks they can undertake. Neighbors are going to know whether there is a drug house in the area, or a neighborhood thief or numerous other helpful things. They might even know things about the particular house in question. Many times I’ve found that the neighbors know about damage the house has suffered (which homeowners are supposed to disclose, but sometimes things magically slip their minds), or specifics about the sellers such as why they are selling and so on, which can be helpful in negotiation. You might be surprised at what types of things can come up when you talk to neighbors.

Obviously not all the neighbors are going to be part of the Facebook Neighborhood, so prospective homebuyers are probably still better off at least attempting to knock on the neighbor's door (especially for the property-specific information), but for those who are too shy for face to face confrontation--or maybe just don’t have the time--this could be another way to conduct due diligence.

I would use this tool to accomplish a wider neighborhood survey of sorts. I would craft a message that asks a few questions about the neighborhood, send it out and then see what type of responses I get. I wouldn’t ask anything specific about the house, but would start the message by saying I’m thinking about buying a certain property in the neighborhood and just wanted to get a little more info about the area. By throwing out the address--even though I don’t ask directly for property information--if they have some juicy information they just might share it. Mainly I’m looking for information regarding the neighborhood. What do they think of the schools? How is the homeowners association (depending on how wide the neighborhood is; there may be different HOAs)? Any problems with crime? How do they like living there? Things like that. People like to share this type of information, and it will be useful whether you plan on living in the home or renting it out. This initial communication could also serve as a spring board for further relationships with the neighbors so that you can ask them for help in the future for things such as checking on how your tenant is maintaining the property (helpful for out of area investors) and so on.

Questions are your friend when conducting property due diligence and this tool just provides homebuyers an easy way to connect with people who might have the answers they are looking for.

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PolicyMap Offers Tons Of Info For Investors And Developers

PolicyMap is a new online service that was created by The Reinvestment Fund, a non-profit organization that funds neighborhood redevelopment. I read about PolicyMap on Future of Real Estate Marketing blog and thought it sounded like an interesting service. When I went to check it out, I was astonished by the amount of information and customization they offered.

Real estate investors or developers who need to do extensive demographic research should definitely check this site out. They offer more than 4,000 different demographic variables for which you can customize maps and reports. They cover the standard ones such as crime, income and so on, but they also have powerful ones you can’t find anywhere else, such as an estimation of a neighborhood's population in the year 2012 and many others I just don’t have space to mention.

All of this information does not come cheap, however.

They offer limited data and customization for free upon registration, but for the real goodies you have to be prepared to ante up. Their standard subscription starts at $200 a month, and they don’t even publish their premium subscription price. If you are a developer or real estate investor who does a significant amount of deals, though, I think their service is well worth the price. This is especially true if you have to put together presentations for money partners or others as part of your investments. PolicyMap offers data that would make your presentation much better, in addition to tools that should make gathering the data and putting into presentable format much easier.

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NAR Releases New Commercial Real Estate Listing Service

The National Association of REALTORS (NAR) launched a new commercial real estate listing service called Commercial Source yesterday. The new site can be found at www.commercialsource.com and should offer the commercial real estate leader LoopNet.com a run for their money. With the strong backing of NAR, Commercial Source already has a leg up on the competition.

Browsing the site I found it to be laid out well, with an attractive design. As an investor, though, one problem I came across was with the property searches. It doesn’t appear that they have any sort of advanced search, and their available options are a bit limited. If I’m trying to narrow down my search to a specific type of property, I'm going to have a more difficult time on this site than LoopNet, for example.

As this is a new site, though, I’m sure changes such as this will come with time. For a first release, I think NAR did a good job on this site and I will definitely be keeping my eye on Commercial Source. Other than LoopNet, I really haven’t been impressed with any of the other commercial real estate listing sites out there, so this new competition is welcome in my eyes. Hopefully this pushes both sites to make improvements and become even better.

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HomeGain Launches Agent Blog Platform

Last month, HomeGain, an online real estate marketing company, announced the launch of their new blogging platform for customers of real estate agents.

HomeGain’s Source4Sellers marketing system allows agents to sign up as bloggers on the network and to post their contact information and profiles for consumers seeking real estate.

Users searching for homes in a particular neighborhood will see a display of blogs related to that neighborhood or area from agents working there. Consumers then have the option to contact agents directly from the website through their blog.

Since HomeGain is known in the industry as a lead-generation and sales tool, the blog provides an identifiable way out of that niche by allowing agents to receive some of the web traffic that would otherwise be reserved for HomeGain’s site.

Many other service provider blog programs allow agents to communicate only with other agents, but this tool, designed for the consumers use, is intended to allow direct interaction between agent and consumer, giving agents another way to market themselves and gain exposure to the right buyers.

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Clean Edge Can Help Investors Profit From Clean Tech

The world needs to be saved. The global climate crisis threatens our planet. But for every mayor like Greg Nickels of Seattle, who encourages people to drink tap water rather than bottled, or for every consumer who chooses reusable tote bags when shopping, there are thousands of cars and factories cropping up in developing countries such as China and India that cancel those actions out.

Small steps by individuals certainly can help, but major progress is not going to be made in solving the worldwide crisis without major action.

Major action will happen when people realize they can profit from making environmentally conscious choices.

To that end, Clean Edge is here to help.

The company, founded in 2000 by Ron Pernick and Joel Makower, is a research and publishing firm that strives to help investors, companies and governments learn about and profit from using clean technology.

Clean Edge "tracks and analyzes clean-tech markets, trends, and opportunities through its network of partners and affiliates," according to the company's website. "Clean Edge, with offices in the San Francisco Bay Area and Portland Oregon, offers unparalleled insight and intelligence on the emerging clean-tech economy."

Clean Edge's products and services include market research reports, the Clean-Tech Investor Summit, strategic consulting services, a daily newsfeed and a monthly newsletter. But perhaps the most useful and unique tool they offer investors are the NASDAQ Clean Edge U.S. Indexes. These are "benchmark indexes which track U.S.-listed clean-energy companies," according to the website.

"The NASDAQ Clean Edge U.S. Index (CLEN) and the NASDAQ Clean Edge U.S. Liquid Series Index (CELS) are modified market capitalization-weighted indices designed to track the performance of companies that are primarily manufacturers, developers, distributors, or installers of clean-energy technologies. An exchange traded fund (ETF) is based on the NASDAQ Clean Edge U.S. Liquid Series Index and is sponsored by First Trust Advisors L.P.," according to the website.

If enough people invest in clean technology, and make clean technologies viable on a large scale, the world can be changed.

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Neverland Ranch Avoids Foreclosure: Peter Pan Still Truant But Optimistic

Michael Jackson, the original Lost Boy, has negotiated a way out of foreclosure just days before his Neverland Ranch was to be auctioned. Colony Capital purchased the $23.5 million loan from Fortress Investment Group and will begin negotiations with Jackson to save his beloved sanctuary/ruin/amusement park from hell.

For the ruined pop icon—who hasn’t darkened the doors of the decaying Indian village or fed exotic animals in his private zoo, now home to domestic algae, for almost three years—it is a sad testimony to his inability to accept the end of his inane and insanely decadent lifestyle. He may simply be hoping to preserve what little equity he has. Half of his 50 percent stake in the ATV music catalog is in place as collateral for a $200 million loan he negotiated three years ago to restructure his debt.

As for his benefactors at Colony Capital who purchased the loan, I cannot say whether they expect to ever be repaid by Jacko or if they expect to eventually take the dilapidated Nymphenberg off his hands as an investment property. The 2,800-acre estate has been valued as high as $120 million, but it is in desperate need of repair: the cost of which will no doubt figure into any deal to purchase it, lowering the sale by a sizable margin if Capital chooses to sell it as a single property.

If the property were subdivided, it could be sold piecemeal for a better profit overall (I call dibs on the Bumper Car tent). It is safe to assume that Neverland will never be restored to its former, nightmarish glory. It took an...extraordinary individual to dream up the theme and layout of the Ranch, and it would take an extra-extraordinary individual to buy it as a residence. If Neverland ever reopens its doors intact, it will as almost certainly be as a tourist attraction, but given its history and the fact that its former occupant is still breathing (in an oxygen tent, through one nostril), it won’t be a viable one until Jacko is fairy dust.

I think the surest investment with the abdicated King of Pop would be a life settlement. To quote the crocodile: Tick tock, tick tock. As a one-time human being, Jackson still inspires some sympathy in me, but the bottom line is he is finished, and he won’t turn a real profit again until he’s halfway to the first star on the right, straight on ‘til mo(u)rning. For now, I only wish him and the goodly pirates at Colony Capital the best of luck.

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The REX Agreement: Capitalizing On America’s Real Estate Pessimism

Unsure about whether your home may see much appreciation over the next five years, and looking for some liquidity on your home equity? Then a REX agreement might be the solution for you.

What is a REX agreement? What it boils down to is an exchange of cash today for a share in the future appreciation (or depreciation) of your home. Let’s look at an example:

Say your home is worth $1 million today. You decide to take a payout from REX of $100k in exchange for a 40% stake in the future change in value of the home. Without getting into the more complicated parts about how REX structures their agreement to share in the appreciation or depreciation and get their original funds back, let’s consider three different options for sales price of the home after five years.
Sales PriceGain/LossHomeowner ShareREX ShareHomeowner GrossREX payoutHomeowner Net

If the homeowner sells for a larger amount, REX will keep a portion of the upside. If the homeowner sells for a break-even price, then the homeowner has been able to use the original $100k payout without any costs other than origination fees for the REX agreement. If the homeowner sells for less than the original appraised value, then REX will actually lose a portion of the original $100k payout it gave to the homeowner. In other words, REX only gets paid (other than a return of their payout) if the homeowner makes money.
While these scenarios may sound enticing as an alternative to using a loan, there are some other key factors to know about the REX agreement:
  • Appraisal value – REX’s appraisals will likely come in lower than the bloated appraisals we’ve come to expect in the past. REX requires 6 comps, twice the number of most residential appraisals, and is much more particular about ensuring those comps are actually good comparables for the property.

  • Owner occupation – Thinking of using a REX agreement to take some cash out of your home to go buy a new house? That’s a no go. Part of the agreement states that you will continue to occupy it as your primary residence.

  • Closing costs – Although REX started with few closing costs, typically paid by REX, they will begin charging a 3% origination fee within the next few weeks.

  • Home values – For the deal to work for REX, your home probably needs to be worth $350,000 or more. The average home price that REX has been funding is about $750,000, which is one of the reasons it has only ventured into 6 of the higher-priced states (California, Washington, Oregon, Illinois, Florida and Massachusetts). There are other states that REX anticipates coming online before the end of the summer, including Colorado, Connecticut, Rhode Island, Maryland, Virginia and New Jersey.

  • Five year timeframe – The REX agreement includes penalties for selling your home before five years have passed. The penalties are steep during the first year (25%), declining by 5% each year after that. After five years there is no penalty, but REX still shares in any gains in the home’s original appraised value.

  • Amount of equity – You’ll need to have at least 25% equity in your property, based on the REX appraisal, in order to qualify. REX will provide a cash payout of up to 13% of the value of the property, which would put the total value of liens on your property at a maximum of 88% (75% in loans and 13% in REX’s payout).

  • Inflation – With a timeframe of a minimum five years without penalties, inflation could likely add value to the home (even if the true inflation adjusted value of the home doesn’t change). In that scenario REX would be entitled to share in their portion of that gain.

On another interesting note, the big money behind REX & Co. is AIG. They are not only a major shareholder, but also the institution providing the bulk of the financing for the actual REX agreements. That ought to say something about what the “smart money” thinks about where the market is headed.

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