| Recession Proof Your Business | December 26th, 2008 |
|
I just did some internet surfing to see what kind of businesses are ‘recession-proof.’ Here is some anecdotal info I’ve gathered from online research and personal experience: Personal care practitioners: By this I mean massage therapists, estheticians and hair dressers. I can back this up with personal experience. My hair dresser and massage therapist’s appointment books are totally full. I think people want to feel good no matter what and this kind of luxury expense is one they are not prepared to give up. It’s also a kind of pampering that is still cheaper than a shopping spree or big night out on the town. Car repair shops: This is a gimme. No one wants to buy a new car, so they make sure the one they have is running at tip-top shape. Second hand stores: I heard that the Goodwill and Salvation Army stores need to stock more often now. Consignment shops are also thriving. Music teachers: I know a guitar teacher whose business always grows during a recession. He says it’s part of the nesting instinct and that people intuitively understand that playing music is a stress-buster. Surprisingly the porn and gambling industries are NOT doing well. These businesses used to be considered ‘recession-proof.’ |
|
|
|
| Move or Improve? The Choice Just Got Cheaper, Either Way | December 23rd, 2008 |
|
In fact, consumer spending on home improvements is off by 12% since peaking last year, and that works to the advantage of anyone willing and able to remodel now. With contractors hungrier for business, you’ll be able to negotiate better prices, win other concessions and hire better-quality contractors than you could a year or two ago. National experts say you can expect to save at least 10% on the cost of a renovation and possibly a lot more, depending on where you live and the project you choose. And if prices on many remodeling materials continue to decline as projected over the next few months, the cost of home improvements should fall even further. Those who plan on sticking around in their current home for awhile are the best candidates for home remodeling right now. Recouping the cost of your investment, even when it is less expensive, is a dicier proposition than it used to be. these days you can expect to recoup about two-thirds of your costs on a typical home improvement if you sell your home within a year after completing the job, compared with 87% in 2005, when home values were at their peak. To the extent you have a choice, focus on projects with better-than-average returns that may yield additional savings in other ways. For example, installing new windows will cost $10,000 to $20,000 on average but return 75% to 80% of your investment. And those improvements have the added benefit of making your home more energy-efficient, so you’ll also save on your electricity and heating bills. The cost of building materials has also dropped. Lumber, asphalt, and insulation costs have all dropped, so this is also a good time for a roof or driveway replacement, or deck additions. |
|
|
|
It may be a rotten time to sell your house, but it’s a great time to do renovations or repairs. Costs are starting to drop - in some cases, sharply - on everything from building materials to contractors’ fees as the economy weakens.| Weird San Francisco Trivia Even I Didn’t Know. . . | December 23rd, 2008 |
|
|
|
|
|
The San Francisco gay community has its roots in the San Francisco Gold Rush when the emerging city was mostly young males. Newspapers of the day told of the exploits of the “Lavender Cowboys.” Military purges of homosexuals during WWII had a profound effect on making San Francisco a destination of gays. Those serving in the South Pacific were dismissed to the port of San Francisco and many opted to stay.
In 1938, the St. Francis hotel began the tradition of coin washing to prevent ladies’ white gloves from getting soiled. St. The practice of operating world’s only silver coin cleaning operation has continued as a special amenity for its guests. Periodically, the change is collected, washed and polished in a silver-burnishing machine, rinsed off and dried under hot lights, then carried back to the front desk. Today, taxi drivers and cashiers in San Francisco know that if they receive mint-clean money, it’s probably from the St. Francis.
Back in the Barbary Coast days, Maiden Lane, just off Union Square, was a violent, hellish red light district that reported a murder a week. Then the 1906 earthquake and fire burned down all the bordellos and the lane was redeveloped with small, charming shops. until 1906. Today it is lined with elegant boutiques. Best known is 140 Maiden Lane, the only building in San Francisco designed by Frank Lloyd Wright. Like Wright’s Guggenheim Museum in New York, the building has a spiral ramp and skylights.
San Francisco has a love/hate relationship with Vaillancort Fountain in the Justin Herman Plaza opposite the Ferry Building. When it was built beneath the raised Embarcadero freeway, it’s blocky framework and splashing water sounds complimented the concrete piers and traffic noise. Then the freeway was torn down and the jumble of 100 concrete tubes and boxes has been called “Stonehenge Unhinged” and likened to a deposit left by a dog with square bowels.| Consumer Confusion Around Locking Interest Rates | December 22nd, 2008 |
|
Some borrowers/buyers are unwilling to move forward without a guaranteed rate of at least 4.5%. They don’t want to gamble on locking a rate at 5.5% then seeing rates drop down. One option is to ask your mortgage broker to lock you at the current rate, but guarantee a lower rate in the event it becomes available. Most rate locks are 60 days. Some brokers will allow allow a free re-lock before the 60 days is up. Others charge a fee. For names of two or three great mortgage brokers I trust and have been doing business with for years, please call or email me. |
|
|
|
If you’re considering a purchase or refi because rates have dropped, it’s hard to know whether you should wait or act now. Mortgage professionals tell you to do something right away. But then the head of Fannie Mae/Freddie Mac says he sees rates going “well below 4%.” He was unwilling, however, to indicate when that might happen.| Cheap Holiday Treats in Union Square | December 18th, 2008 |
|
Eating your way around our shopping district is much less expensive and more enjoyable than lugging around those darn Bloomies and Macy’s bags. You can start with Venetian hot chocolate at Emporio Rulli inside the square, then buy a handful of fresh roasted chestnuts outside Macy’s Geary Street entrance. The phenomenal subterranean food court at the Westfield Center is also a ‘must-see’ attraction for anyone who hasn’t been there before. I never knew about the cheese fondue at Grand Cafe’s cozy little Petite Cafe. And nobody ever told me about the complimentary filet mignon sandwiches during Morton’s happy hour. I also totally forgot about the Hyatt’s festive Grandview Lounge, 36 floors above the City. My husband and I may head there after our tour of the Christmas lights, for a hot buttered rum, eggnog or apple pie martini. . . . |
|
|
|
SFWeekly recommends that you don’t ’shop til you drop’ in San Francisco this year – Instead approach Union Square with an eye (and stomach!) for its munchable sweets and savories.| When/Where/How Will Loans Be Made? And What are the Rates Today? | December 16th, 2008 |
|
The following information comes courtesy of Julian Hebron of RPM mortgage. I like Julian’s style. He has a ‘no bones approach that matches mine: For borrowers with great credit and at least 20% down, 30-year fixed rates (with zero points) are close to slipping below 5% for loans up to $417k. Between $417k and $626k rates are dropping towards 5.25%. Loans from $625k to $1m are in the mid-6% range. Today the Fed reiterated their strategy to buy mortgage bonds to drive rates down—when mortgage bond prices rise on buying rallies, mortgage rates drop. The Fed also cut the overnight bank-to-bank Fed Funds Rate to near-zero, saying they’d keep Fed Funds in a 0-.25% range, and cut the Fed-to-bank Discount Rate to 0.5%. Following this Fed announcement, prepare for the latest barrage of misinformation: 0% Rates! 4.5% Mortgages! The reality is that, for loans up to $626k, borrowers need to pick a rate-lock range because these rates trade wildly all day every day. For those that don’t know, a ‘rate lock’ secures your rate with a lender for a certain length of time– usually 30 days. A wise target for borrowers awaiting the bottom is 5% or less on loans to $417k and 5.25% or less on loans to $625k. Loans above $625k are unpredictable since they’re priced on lender risk factors rather than mortgage bond trading. HOW TO GET THE BEST RATE The rest should get their loan documentation fully approved before they start worrying about when to lock the rate. If you wait and lock the rate first, THEN try to get your application in line for approval, you may have to pay money to extend your lock as lenders get overwhelmed by demand. So get approved and ready to close now. Then lock when the time is right. MORTGAGE RATES NOT TIED TO FED RATES: Here are RPM Mortgage’s rates TODAY– (December 17, 2008)Conforming ($200,000 – $417,000) – NO POINTS Jumbo ($625,500 – $1,000,000) – NO POINTS A Quick Primer for First-Time Home Buyers: Not all ARMS are sub-prime loans. And many are tied to indexes that have dropped quite a bit. So some owners who just got their first adjustment after five years of fixed payments are seeing their floating rate stay lower than what they had before. |
|
|
|
| The Buzz Drags Out An Old Chestnut To Calm The Waters Of Our (Supposed) Economic Armageddon, | December 11th, 2008 |
|
An abbreviated version of this tale was sent out in a recent Buzz email (you should sign up for them– they’re really good, and much of what I send out is never posted here). This posting offers the whole scoop, from the day I bought my first property right up to the present circumstances we find ourselves in today. Am I Stupid Or Am I Smart? On December 28, 1988, I closed escrow on my first property, a two-flat building with a studio on Grove Street in San Francisco. It cost $375,000. I paid for it by putting down $75,000 and getting a new loan on the property for $300,000 at a rate of around 9 percent. I moved into the top unit. Much of an investor’s success in the real estate market can be attributed to dumb luck. You can either look very stupid or very smart, depending on where the market is going at the moment you buy. Within a year’s time I was looking pretty stupid. The market had peaked and was now on a downward slide along with my income since I was a full-time, inexperienced Realtor whose earnings depended on a robust real estate market. In 1989, I saw my income drop to just half of what it had been the year before. The year after that, it dropped by another 50 percent. It?s likely that a manager at McDonald?s was making more money than I was then. I scraped by and hung on while the market made a slow turnaround. By 1993, the adjustable rate on my mortgage had dropped to about 8.25 percent and my rent-controlled tenants had moved out so I could rent out the other two units at market. The building was still worth less than what I’d paid but I’d turned around my business in real estate sales and was making good money again. I also initiated the tedious process of converting the building into three condominiums, so I could hedge my bets against a further drop in the market. While a real estate investor can look stupid or smart in the short term, I believe if they hang on long enough they always wind up looking very, very smart. By 1998, I was looking brilliant. Rates had dropped again to 7 percent and the units were renting for more than ever before. Even better, the building was now worth around $500,000 as an income property and even more as three separate condominiums. In 1998 I sold the top unit, where I lived, for $335,000 and used the proceeds to buy and renovate the property where I am now, a Victorian home in Alameda with two small apartments in back. I paid $288,000. My timing for this purchase couldn’t have been better — the market was just taking off and as it rose it took the value of my little income property with it. In the summer of 2000, when I was specializing in selling lofts and condominiums in San Francisco, I took a client to see some brand new condos at The Brannan– a luxury development near the ballpark. A small one-bedroom there took my breath away. It was the windows I fell for first — they were unusually tall, with dead-on views of the City skyline. I knew that at night it would be like living inside a Christmas tree. Then I swooned when I saw the view from the apartment?s tiny deck, which offered my favorite San Francisco postcard shot of the Bay Bridge. It’s a rare day when I see an exceptional piece of real estate that I want to buy and can afford to buy at the same time. In short order I made arrangements to sell my studio on Grove Street and put the luxury unit under contract for myself. At $465,000 in a hot market it seemed like a good investment, especially when I found my first tenant right after I closed escrow, who happily forked over $2800 a month for the place. Then the dot bomb hit. After the dust settled, I found myself with a condominium that was worth just a hair more than what I paid for it and a new tenant who pays significantly less than what I was getting before. The rent I get couldn’t cover my carrying costs so I had to come out of pocket each month just to hang onto the place. I hung in there until the little condo went back up in value. In early 2005 I sold the Brannan unit for $625,000 and traded it into 4 snappy looking units with parking near UC Berkeley. I paid $825,000 for the new building. It was breaking even until October of this year when I made the decision to rent a one-bedroom below market to my god daughter and her two-year old. One of the beauties of owning property is that you can sometimes fill a critical need for a loved one. Today it is probably not worth what I paid for it, but has not dropped significantly in value. Some of my other investments have not panned out so well. Not included in my email is the sale of the middle unit on Grove Street in 2002. I sold it for $500,000 and did another 1031 exchange into a 50% interest in 28 townhomes near Sacramento. Today the property sometimes breaks even, and sometimes runs a negative. It is also presently worth significantly less than what I paid for it. Since ignorance is bliss and I have no plans to sell, I choose to not learn what its present value is. I also bought a new principle residence in Alameda a year-and-a-half ago for $817,000. It’s now worth 30% less, but I can comfortably stomach this decline in value. It is our ‘dream house’ and we plan to stick around for a good while. Besides, we couldn’t buy it at any price today—because no one would give us a loan right now. When we bought our home I moved out of the little house with the units in back. At the market’s peakthis property could have sold for $900,000. Today it’s worth $600,000 but spins off about $400.00 a month after carrying costs. We are using this cash flow to slowly fund improvements on our new home. I made one more real estate investment in 2007. My sister and I had inherited a small house on a land lease. We sold it and I took my share of the proceeds and flipped it into two one-percent TIC interests in a couple of giant apartment developments out of state. The Tacoma investment pays out at 6%. The Salt Lake city investment paid out at 7%, but plans are to suspend payments for one year so a loan for capital improvements can be paid back. At the moment there’s a shrinking buyer’s market for these kinds of properties, but only a few months ago (when the market was already soft) we were entertaining offers on the Salt Lake property at 20% above what we paid for it. So today I’m half stupid and half smart. And in my opinion this market is going to bounce back sooner rather than later. I think the current state of the market is more a credit problem than a market problem. Once banks start lending more freely, values will rise and (I think) outperform the stock market as investors seek a safe harbor from paper investments. So stay tuned. I’m certain this tale will have an all around happy end. |
|
|
|
With nervous buyers sitting on the sidelines and nervous owners worrying about losing equity in their property, it seems time for The Buzz to offer up an old chestnut for the Christmas Holidays. My personal story, “Am I Stupid or Am I Smart” offers the long view on real estate investment and many have found the story reassuring. | San Francisco Sublet Available for January 2009 | December 11th, 2008 |
|
One of our associates has a great sublet for someone seeking the ‘San Francisco life’ for the month of January. The location at Vallejo and Octavia is classic Pacific Heights. While parking isn’t part of the deal, public transit is super easy from this location: Date: Jan 10-Feb 10 - a month Interested? Call me at 415-577-0809 and I’ll hook you up. |
|
|
|
| Bayview Developments | December 11th, 2008 |
|
Nota Bene: I cribbed much of the following from an SF Business time article that appeared last year. It has been updated to reflect current market events. While it is true that the residential part of the Bayview has suffered badly from very many common social ills, there is an ongoing determined effort to change the residential sector for the better. Also, it should be noted that the ethnic demographic is becoming more mixed with many blacks moving out and being replaced by Asians. But there is a distinct other side to the Bayview that is always overlooked because of the media emphasis on the troubles of the residential part. It is the home of almost all of San Francisco’s non-retail small businesses. These plumbers, electricians, machine shops, printers, mailing houses, event planners, roofers, termite inspectors, importers, distributors, truckers, craftsmen, sign makers, contractors of all sorts are the vital backbone that keep the economic infrastructure of the city functioning. It is by no means a down-and-out area. Yes, it tends to be scruffy as any hardworking blue-collar working area always is, but there are many parts that would not be out of place in the Marina or in Jackson Square. In fact, the Bayview boasts on Yosemite Avenue the first commercial condominium built in San Francisco — a 61-unit building covering an entire city block housing small businesses of all sorts. Everyone who visits it exclaims what an oasis it is. Supermarket powerhouse Tesco has signed a deal to open a Fresh & Easy Neighborhood Store on Third Street in the Bayview– the first Bay Area deal in the British company’s $2 billion investment into the United States. In spite of the economic downturn Fresh and Easy store is still committed to occupy the space at 5800 Third. The project is slated for 340 condos upstairs. The project stalled out for over a year (Goldman Sachs did the financing– need we say more?), but developer Rick Holliday stepped in to finish the project. Holliday is known for delivering a great product that can transorm neighborhoods. He was instrumental in beginning the renaissance South of Market over 15 years ago and also delivered one of Emeryville’s first loft projects. The site is a former Coca-Cola plant at 5800 Third St. The project will be directly across from the Carroll Street Muni station on the new Third Street Light Rail. Tesco will purchase the store as a commercial condominium. The deal is a major boost for the southeast corner of the city, which has struggled to attract and retain grocery stores selling fresh produce and healthy food. In a recent survey by the Southeast Sector Food Access Working Group, over half of those surveyed said they left the neighborhood to shop for groceries. “Obviously this is a big deal because of the neighborhood,” said Brendan Wonnacott, a spokesman for Fresh & Easy. British-based Tesco is the third largest retailer in the world, but it just entered the U.S. market in October, with six Los Angeles-area Fresh & Easy stores. Since then it has expanded to 100 stores in Southern California and the Central Valley. On the flip side, Niner fans will be disappointed to hear Candlestick Cove has stalled out after completing Phase I and II. At issue is United Bank’s refusal to continue financing. The Cove is a gated community where residents can almost spit right into the stadium. Some have dubbed it the ‘Monster Project’– phase III was slated for 465 units. But stay tuned. Ultimately the credit markets will loosen and someday the Cove will be back on track. |
|
|
|
| Partner Needed for Yummy 2U TIC Building Ready to Condo-Convert | December 8th, 2008 |
|
Totally remodeled TIC flat in this slick 2-unit Victorian in prime Noe Valley… Absolutely spectacular flat features 2 bedrooms, large study/2nd bed, fab living room off new kitchen with SS appliances/Viking range and granite countertops, an office, new bath with sleek glass tile and fixtures from Restoration Hardware, new high-end lighting throughout, beautifully refinished hardwood flooring, wonderful BIG backyard w/level lawn + patio, new washer/dryer, storage and 2-car parking. Price is $850,000 with room to negotiate. Please call 415-577-0809 if this is what you’ve been waiting for. |
|
|
|
