[Deal of the week] 4-Plex in Modesto, $500k

This week we have an opportunity in Modesto.  I know, the central valley has been devastated by the sub-prime/foreclosure hurricane, but as the storm settles down, investment opportunities are coming to light.  A partner agent of ours has shown me a 4-plex in Modesto that looks like it will cash-flow immediately upon purchase.

Modesto, CA
4 Units, Each 3 Bedrooms, 2 Bathrooms — $900/mo each
3 years old
1200sf per unit

Why is it a good deal:
This is a newer building, which means lower maintenance costs and it is unlikely to need major repairs or remodeling any time in the near future.  Because this is 4 or less units, the Buyer can use residential mortgage rate/terms instead of commercial terms (used on 5 or more units) that are more expensive.  A quick run through the numbers looks like will cash flow even from day 1 with 20% down (but can you get a loan for only 20% down?).  Rents remain stable to high in Modesto due to foreclosure families looking for place to stay.  The location near UC Stanislaus means better chance to keep a low vacancy rate.  The most interesting part is that the current owners bought this building in 2005 for $680k and now the couple is getting divorced so they need to sell this asset — and even at $500k it is NOT a short sale.  It can close immediately!

Rough numbers:
$100k down + $5k for closing and incidentals
$400k loan at 6.5% = $2,528 per month
Add Tax and Management = $772 per month
Paid out each month = $3,300 per month
Income from units = $3,600 per month

Result: put your money in and forget it — watch your renters pay off your building over 30 years.

What is the risk:
If you are looking for equity growth, it may take a while for Modesto to recover — who knows how long.  Out of area investments (well, it’s only an hour and a half away) may make first time investors feel uncomfortable.  It will not be feasible to be your own property manager so you will leak 7% per month to a property management company, but maybe that was your plan anyway even for a local investment.  You may not be able to finance this purchase with just 20% down since Modesto is a “high risk” area for most lenders so due diligence is needed

Sound interesting — call me.


[Deal of the week] Santa Clara 4 Bedroom Townhouse for only $425k

This week we discovered a deal on a sizeable townhouse in Santa Clara that is really irresistible!  This is a 4 bedroom 2 and ½ bathroom townhouse on Pomeroy near Benton.  This unit is listed about $40k under another unit in the same complex that just went pending at $466k.  This is a fantastic opportunity for a first-time single buyer — it is so big that you can have a roommate to help pay your mortgage; or for a young couple who are just getting established in their careers before having children.

1101 Pomeroy Ave, Santa Clara
MLS # 815886 (Sold, $418K)
4 Bedroom, 2½ Bathroom
1564sf living space
2 outdoor patio areas
46 years old

Why is it a good deal:
This is a peaceful neighborhood that promotes the care of owner occupation.  The building is a great modern design (Eichler) with lots of windows and sliding glass doors.  The bedrooms are upstairs and the living area is downstairs with a ½ bath so it is super-convenient for guests and entertaining.  There are 2 outdoor patio areas which give the effect of having a bigger living space, not to mention that the bonus of this unit is that it is just steps away from the pool!  This unit has been completely re-painted, and new carpeting / flooring has been installed throughout. 

What is the risk:
The HOA fees seem to be high at $430 per month so we would need to see what is included, but for that size living space, that price isn’t out of line with other complexes.  This is not an investor play because it cannot be rented, the co-op rules say that this must be owner occupied or close relative (meaning parents buy for child).  If you have need for garage storage then this is not for you because this only has a covered carport at your door.

Sound interesting — call me.


FHA loan is back. . . and very welcome!

The mortgage markets are tightening daily – this is nothing new because it has been front page news since August, 2007.  For homebuyers, this has had the effect of 1) generally higher interest rates, 2) higher FICO credit scores needed to qualify for a loan, and 3) a need for higher down-payments — this has especially impacted first time home buyers.

However, there is a sign of hope known as the FHA (Federal Housing Administration) bringing great news to both buyers and sellers.  The FHA is a government-backed loan program that has not been used much in California in the last 10 years since normal retail banks were offering the best mortgage programs to the public.  But now these same retail banks are stepping away from risk, FHA programs are making their way back as a great option for homebuyers.  Let me show you how.

Using FHA may help get around many of the problems buyers are having with typical retail loans today.  FHA does not have a high credit requirement so low credit scores may be accepted.  FHA loans can go up to 97% loan to value ratio, so buyers can get into a home with a low down payment.  FHA loans also go up to $729,750 on a single loan and the interest rates are very competitive, around 6.25% today.

These new FHA loans do have some restrictions, but nothing that should scare anyone from using them to buy the home you want.  You need to have 2 years continuous employment, any late payments on your credit report will need to be explained in a written letter, and you need to wait 3 years after a foreclosure to try to use an FHA loan for a new purchase.  On the down side, FHA loans do require a 0.5% per year mortgage insurance payment and 1.5% origination cost at the time of purchase.  You also need to consider that since this is a government-backed program, allow for a 60 day close instead of 30 days because there is more “process” involved.

Out of what we are seeing in the housing market today, the FHA program is a very important piece and we believe this will begin to repair the market.  If you believe you are out of the housing market because you only have 5% or 10% saved as a down payment, you now have other options.  If you are a seller of a home that is not moving after being on the market for a long time, it may be wise to consider concessions that will let buyers qualify for a loan on your home instead of reducing the price.


Real Estate Photography for Realtors

In a tough real estate market which we are all facing right now, better photos makes your listing stand out – good photos gets more buyers’ attention and makes them want to go see the house in person, and you as a listing agent have a higher chance to get multiple offers for your seller.  Spending a little time to learn how to take better photos is a small investment you can’t afford to miss.

I am offering to do a free one-hour presentation on “Real Estate Photography for Realtors” in different Brokerage offices around Santa Clara County.  If you are interested to have me to present this class in your office, please contact me (Sabrina 408-859-5864 or sabrina@themeshnetwork.com) so we can discuss in more detail.  Or you can read through this article on my blog to get some ideas.

Let me tell you a little bit more about the class that I am offering.  Basically, I am going to show you how you can take better photos with your point-n-shoot camera (not cell phones) just by knowing:
1. How to choose a good compact camera for shooting your listings,
2. When is a good time to shoot,
3. Which angle is better for interior or exterior shots,
4. What your camera can do for you,
5. What should be avoided when taking photos

The most important part is you don’t need to use photo editing software or lighting equipment.  After just a one-hour class, your photos straight from your camera will looks ten times better.

Do good pictures matter?

Of course, especially when gas is soon to be $5.00 per gallon.  The Realtors’ association survey found that when it comes to Web
features that buyers considered “very useful,” 83% cited pictures, 81%
cited detailed property information and 60% cited virtual tours.  If most of buyers and Realtors search homes online, no matter which websites they are using, photos will be the key for them to determine whether or not they want to see it in person.

Santa Clara County’s MLS allows each home to have 9 photos and a link to the virtual tour, so out of curiosity I did a quick scan on current listings.  I searched listings located from Palo Alto to Los Gatos (excluding San Jose), in the price range from $600K to $800K, single family house that are listed more than 60 days on the market, and it came out to 82 listings.  By comparison, there are 39 houses listed between 3/1 to 4/30 that are now sold or pending.

                               Sold or Pending     Still on market
                               within 60 Days       after 60 Days

Only Map, no photo             13%                   10%
Only 1 photo                        9%                    5%
2-5 photos                         16%                    3%
More than 6 photos              62%                  82%
With virtual tour                  10%                  13%
Good photos                         5%                  21%

Basically, we have 22% of the listings that are not selling which have only 1 or no picture at all, that is almost 1/4 of all listing — no wonder they are on the market more than 60 days.  Moreover, only 5% of all photos are really good, which is sad.  When I say “really good” I am not talking about professional grade, I am talking about the rooms look bright; I can tell the color of the sofa in the living room; and I can see how the house looks like from the front.

I understand this is just an experiment and doesn’t have any scientific value but I also believe the relationship between a quick sale and long time on market has something to do with the photos.  If you don’t think so, you can stop right here and no need to waste your time; otherwise, keep reading and let me show you how to make some changes.  You need to do three things right in order to improve your photography skills — Right Tools, Right Time, and Right Ways.

Right Tools

You need a compact camera with 24mm wide-angle, because camera phone is not good enough.  If your hand shakes or you want to take night shots, you might want to use a tripod so your pictures will not blur.

You might ask why a wide angle?  If you want to make a small room look bigger, or you want to show a living style within a space, you need wide angle to do that; otherwise, your photo will looks like you are selling a piece of furniture or accessory. 

Compare these two photos.  If you use a non-wide angle camera, you would not be able to show off the whole kitchen (pic 1) and only show part of the kitchen.  The wide-angle camera gives you the ability to capture everything in the kitchen, showing the space and the life style (pic 2).  If your listing is a great home and nicely staged, wouldn’t you want to show it all to the buyers and other Realtors?

Don’t have a wide-angle camera? Don’t you worry!  I did all the homework for you already.  You just need to buy one from three I picked.

Wide Angle Compact Cameras for Realtors

Many Realtors use Camera phones to take photos for their listings; however, camera phones don’t have many control functions so the picture quality is not as good as compact cameras.  Therefore, we still need to invest in a good compact camera if we want to have better photos.  For Real Estate photos, wide angle is a must but there are not many compact cameras that come with 24mm wide angle capability.  Luckily there are four pretty good ones, and three of them are new on the market to choose from.

Update (8/13/08): The newest camera with 24mm wide angle lens is the Panasonic Lumix DMC-LX3.  It has F2.0 24mm ultra-wide-angle Leica lens, Large 3.0 LCD, Raw, HD Video Recording and slideshows, ISO 3200, approx. 2.5 shots per second, Face Detection (up to 15 faces).  Optional items such as Wide Conversion Lens brings the maximum wide
angle to 18mm; ND Filter and PL Filter, aluminum External Optical Viewfinder (DMW-VF1),  and the GN22 Compact
Flash. If you were consider Canon G9, you might want to take a look this camera because it can do about everything G9 can do and a 24mm lens without converter and under $500.

Canon_g9_back HD6600
The second one is the Canon PowerShot G9 with Raynox HD-6600 Pro 58mm Wide Angle Converter), 24-210mm, $620. This is a alternative version of a DSLR because it has features like Raw, AP and TV modes, special scene modes such as aquarium, underwater, kids and pets, color accent and swap.  It has 3.0 inch LCD, hot shoe for external flash, record movies, ISO 3200, f/2.8 and 12.1-megapixel. A new Face Select and Track function enables the user to manually select and track an individual face from up to 35 faces detected in frame. It has an in-built ND (Neutral Density) filter, AEB (auto exposure bracketing), focus bracketing and a live histogram display. The only drawback is a littler bigger (4.2 x 2.8 x 1.7 in) and heavier (13.1 oz).

The third one is the Ricoh Caplio GX100, 24-72mm $440.  It has Raw, AE and AP modes, 1 cm macro mode, Exposure bracketing, f/2.5 to f/4.4, and hot shoe for external flash.  If you want wider than 24mm, you can purchase 19mm DW-6 Wide Conversion Lens and HA-2 Adapter.  The only drawback is that it’s 10-megapixel images sensor is pretty noisy above ISO 400 but I don’t see it is a problem for Realtors. (4.4 x 2.8 x 1.7 inch, 9.2 oz) (Update 08/13/08: New GX200 is 12-megapixel, $599)

The last one is the Samsung NV24HD, 24-86mm $350.  Other than wide angle, its Face Detection technology can detects up to nine faces and automatically adjust focus and exposure to ensure better composition and image quality that makes taking pictures of family and friends a snap.  By utilizing Face Detection technology, it automatically detects the user's face, adjusts focus and exposure, and will only allow a photo to be taken if the subject is centered in the frame.  Additionally it includes the ability to shoot at ISO 3200 and 14 scene modes to choose from. (Update 03/21/09:
Samsung has three new 24mm wide-angle compact cameras in 2009 – HZ10W,
HZ15W, TL320, and they all come with Live View function).

You can buy these cameras on bhphotovideo.com or Amazon.

Right Time

Timing is very important for taking good picture because lighting is everything in photography.  A sunny mid-day is usually not a good time but that is the time most Realtors take photos, so if you have choice on when to take your photos, do take advantage of it.  The best time to take photos is Early Morning, Late Afternoon, or a Cloudy Day, and this also applies for landscape, flower and portrait.  Why?  Because these three times of the day give you enough light but much softer lighting so the subject you are shooting will be clear and prettier.

Look at these two photos.  The first one is taken with a regular camera in the early afternoon.  The sun is behind the house so you can’t really see the texture in the front side of the house because the shadow.  By comparison, the second is taken with wide-angle camera in the early morning.  I stood right in the front of the lawn to take this shot.  You can clearly see the color of the exterior wall, the landscape, the green grass, the garage doors and the driveway.

The third one is taken about a half hour before sunset that gives you soft and warm light and brings out the color in the trees, flowers and grass.

Right Ways

Before you take the shot, make sure you turn OFF on-camera flash and turn ON all indoor lights including lamps because on-camera flash is not powerful enough to light a room and the flash light is a “cold” color anyway.  Turn On all indoor lights and shooting in the right time would provide you enough lighting.

Most of the time you want to avoid to shoot into a window because it will make your room look darker (if you don’t know how to compensate your exposure on camera).  Normally you want to shoot with the light, meaning, you stand on the window side and shoot inward so the room will be lit by the window light.

If you know how to use exposure compensation on your camera, you can make the room look bright but blow out the window.  But sometime you want to under expose to show the outside window view when there is a garden or a deck.

Read your user Manual

The compact cameras today are very smart and powerful and the problem usually is the person behind the camera.  So the first thing for you is to read your camera user manual to find out the settings for Manual mode, ISO set on 200-400, file size set on Large and Fine, and most important thing is the Exposure Compensation.

If you have to shoot in a mid-sunny-day, you will need to use the exposure compensation to help you; otherwise, your photo are more than likely to be too dark without other lighting source.

Kitchen_3Look at this kitchen.  I shot in a mid-sunny-day because I have no other choice.  By using exposure compensation, I can dial up +1 to make the room look brighter without using a on-camera flash (it won’t help anyway).  The normal setting looks ok too, but I like it brighter.

Watch what is in the frame

When you look thought your viewfinder, take a look what is in the frame.  Try not to cut into a subject such as a table, a chair, an art piece, a window, etc.  You want them either in your frame or out, not partial usually.   Also, you want to make sure the wall or a window or a door is straight with your frame.  You don’t want to tilt the camera but you can lower your position.  If you tilt the camera, the photo you took won’t be pleasing in the eye.

Try Different Angles

Don’t just shoot from a doorway and run.   You want to try to take from different angles too.  It’s digital, you can pick and choose later but you definitely don’t want to regret you didn’t take enough the first time.  The first photo is from the doorway, the second photo is from the other side of the room, the third photos is from diagonal of the room.  So now I have three photos of this master Bedroom from three different angles to choose from.

Image Editing

I understand Realtors don’t have the time to edit the photos you just took, but in case you do want to do some light editing, you can try Picasa (a free and easy software from Google). Picasa's Basic Fixes are buttons that make it fast and easy to crop, remove red eye, fix the contrast and color, and enhance your digital pictures.

Online Resources

If you are interested in Real Estate Photography, you can check out the Photography for Real Estate (PFRE) – the blog owner Larry is based in Seattle and he helps his Realtor wife shoot all of her listing.  His original target readers were other Realtors but recent surveys have shown that the majority were Photographers, which surprised him.   He also started a PFRE Flickr group, where people from all over the world could share their experiences and opinions.


By now, you should have the confident to take better photos.  I would love to see you share some of your photos with us.  Although taking professional grade photos involve a lot more skills, knowledge and understanding on photography, by knowing some basics it should help you improve your photos noticeably.  If not, you can hire me. 🙂

Related Articles:

Making Every Pixel Count from New York Times
Taking Home Photos That Will Draw Buyers from WSJ

– Sabrina

It’s a Buyer’s market, not a Tryer’s market

I like to describe this housing market as a tale of 2 markets.  There are properties that are IN the market, and then there are properties that are ON the market — and these are the ones that are not competitive.  There are too many other buyers out there looking for good properties that when a “deal of the week” comes on, it goes away quickly.  We are seeing homes all over the area having multiple offers at all price ranges.  In fact, we just made an offer on a downtown SJ condo listed at $450k that had 4 offers and there was another condo in the same complex that also had multiple offers.

When home prices were moving up, urgency on the buyer side came from “oh, I need to buy something because these prices just keep going up.” But now as prices have softened, buyers are afraid of paying too much so there are many buyers sitting on the sidelines. What I can tell you is that if you are that kind of buyer (willing to buy high but afraid of not buying low enough), you will always have the worst selection of houses to pick from.  Because the buyers who are really IN the market will always be moving quickly on the properties that are also IN the market.  They are getting the best deals and leaving the rest to everyone else.

I like to think of it as — “It’s a Buyer’s market, not a Tryer’s market.”  What I mean by that is that you need to be following the market and be prepared to make a move in order to take advantage of the best properties out there; otherwise, you are just a “tryer” and some of the best opportunities might pass you by. 

You can wait, wait, wait, and what you end up waiting for is what is left.


Seller Beware

It’s a tough time for sellers right now, at least for most of cities in the Bay Area.  So if you don’t have to sell right now, it might not be a bad idea to wait.  If you need to sell for whatever reason, make sure you hire a professional and responsible agent to list your house.  They may not get the price you want (because the market determines the price, not agents nor sellers) but they may get your house sold before the one around the corner from yours.

As a seller, you should at least ask the listing agent to give you a copy of MLS listing and the flyer they make to market your home.  Agents are only human, they make mistakes and no one knows better about your house than you do as the homeowner.  So double check the work your agent does for you, make sure the listing price is right, the schools are right, the square footage is right, and especially make sure the pictures look the best they can.

In today’s market, a house will sit on the market for more than 60 days for two big reasons – either it is overpriced or it didn’t get enough attention from buyers. 

Buyers are in the market to buy but they have a lot of houses to choose from and they have time to compare, so they are a lot more calm than in 2005.  If your home is overpriced, buyers have the time to figure that out and they are going to buy the best house in their price range.  Houses are still selling, and price can overcome any objections buyers might have such as ok schools, busy streets, outdated interior, etc.  Price is the key factor if you want to get it sold fast. 

On the other hand, 85% of buyers today start their home search online.  Even Realtors start their home search for their clients online.  Some people drive around to pick up flyers for homes they may find interesting.  So after they type in all the criteria for searching, the first thing they see on the MLS to decide if they want to make the effort to see the house are THE PHOTOS!!!  I don’t know how many times I hear buyers talk about how bad the photos are that they see on MLS – it makes them feel like they don’t event want to bother to see the house.

Although an overpriced house with great photos doesn’t guarantee the sale, you are not going to get the house sold if you can’t get buyers in the door to see the house.  As a seller, you should care who took the photos and how the photos turn out.  This is a basic concept of merchandising your home.  So when the listing agent wants to talk with you about a “price reduction”, you want to know if your house didn’t get sold because the price is unreasonable or because no one has come to see it.

Santa Clara County’s MLS allows each home to have 9 photos and a link to the virtual tour, so out of my curiosity I did a quick scan on current listings.  I searched listings located from Palo Alto to Los Gatos (excluding San Jose), in the price range from $600K to $800K, single family house that are listed more than 60 days on the market, and it came out to 82 listings.

Out of 82 listings, 13% have only a map (no picture at all), 9% have one picture of the front of the house, 16% have 2-5 photos, and luckily 62% have more than 6 pictures.  On top of that, 10% have a virtual tour, but only 5% the photos are really good.  Basically, we have 22% of listings that are not selling have only 1 or no picture at all, that is almost 1/4 of all listing — no wonder they are on the market more than 60 days.  However, only 5% of all photos are really good which is sad.  When I say “really good” I am not talking about professional grade, I am talking about the rooms look bright; I can tell the color of the sofa in the living room; and I can see how the house looks like from the front.

By comparison, there are 39 houses listed between 3/1 to 4/30 that are now sold or pending, 10% have only a map, 5% have one picture of the front of the house, 3% have 2-5 photos, and luckily 82% have more than 6 pictures.  On top of that, 13% have a virtual tour, and 21% the photos are really good.

Don’t believe me??  Let me show you a few photos from MLS that are currently listed and you will understand what I mean.

Example_7Those just some of the photos and I am sure you have seen some of them too.  Can you believe the third photo from the top is a agent sitting inside of his/her car (did you see the side mirror), not even roll down the window (see the window sticker) and maybe taking the photo from a cell phone.  If you are a buyer or even a agent that are searching houses online, would you go see these houses or just skip it when the gas is $4+ per gallon?

– Sabrina