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The Monopoly Technique – How To Build Value By Acquiring Adjacent Properties

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The Monopoly Technique - How To Build Value By Acquiring Adjacent PropertiesHave you ever played the classic board game called Monopoly? The object of the game is to collect all the properties until one winner bankrupts all the other players. The other part of the game is that accumulating properties adjacent to each other increases the value of the individual properties. When a player acquires all the properties of the same color (two or three), then the rents go up and property development can begin.

The Monopoly Game In Real Life

The same basic principles sometimes work in real life. Owning a property and then buying the one next door creates a value-added possibility of the combined properties being worth more than the individual pieces.

To start this strategy, tell the neighbors of having an interest in buying their home in the future if they want to sell. This is a way to get the first option to buy a home before it lists on the market.

Control Of The Neighbors Adds Value

In many neighborhoods, there is one home that creates severe negative pressure on property values. These homes may be neglected and badly needing a paint job and landscaping. The home may be a source of neighborhood noise problems or heavy traffic.

When considering buying into this neighborhood, make a plan to buy the derelict house. Then, before bringing it back into a marketable condition, there may be a chance to buy the ones next door for a steep discount from the market value.

If possible, buy all the properties at once and close them around the same time. This helps avoid triggering a profit demand from those who are opportunistic and learn about the interest of a buyer in more than one property.

Cashing Out

If possible, buy three houses, one of each side of the derelict house, then renovate all three properties. Make them into rental units or to sell them as a “flipped” property after the renovation for a big profit.

If there is the possibility of controlling a full block on both sides in a rundown neighborhood, it is possible to start with one block of home improvements at a time. Entire neighborhoods may improve one block at a time.

Redevelopment

In some neighborhoods, there is a chance of re-zoning and redevelopment. For example, it may be possible to build a larger structure by combining two properties. There is profit possible in assembling the land for redevelopment purposes, even for those who do not do the construction for the redevelopment.

Summary

Playing Monopoly in real life can make investing in real estate fun. It is possible to start with a few low-cost rental homes. For rental properties, it makes it much easier to manage them if they are next to each other. Values may increase in the neighborhood by the renovation of a derelict house.

If you are intested in listing your current property or in the market for a new home, be sure to contact your trusted real estate professional!

New York Penthouse Sells For $238 Million – Is This A Real Estate Bubble About To Burst?

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New York Penthouse Sells For $238 Million - Is This A Real Estate Bubble About To BurstThe most expensive home sold in America, so far, was a New York penthouse that sold for $238 million in January 2019. It is on the top of a building that overlooks Central Park. The 26-story luxury condo building designed by Robert A. M Stern is nearly all sold out.

Who Has That Kind Of Money?

The proud buyer of the penthouse is Ken Griffin. His net worth is estimated to be $9.6 billion. He is the founder of the Citadel hedge fund. Griffin is 50 years old. A few days before buying the NYC penthouse, he closed on a home in London that overlooks St. James Park near Buckingham Palace. For that 200-year-old home, he paid just a paltry $122 million.

Griffin’s New York penthouse is 22,000 square feet of ultra-luxury living. It sold for more than twice the amount of the second palace record-holder in America. That is a penthouse on the One57 building, which sold for $100.5 million in 2014.

Boom Or Bust?

One might think that a penthouse sale setting a new almost unfathomable record would indicate a vibrant bullish market in New York residential real estate. Well, not exactly. It did raise the median sales price of a residential sale in New York City to over $1 million from being below this amount at the end of 2018. Prior to this sale, the median price was trending lower.

Forbes reports that the current economic trends are not normal. Usually, the NYC real estate market goes up when the stock market is up. However, the NYC residential real estate is down in spite of the robust economy.

Properties selling for top-dollar at prices that are hard to imagine could be a sign of a real estate market collapse. In general, the NYC residential market has been in a steady decline over the past year. The lowest number of closings in a decade happened during the first quarter of 2019.

Investor Uncertainty

There is a general sense of uncertainty for residential buyers in NYC, where the average one-bedroom condominium sells for over $1 million. Uncertainty makes potential buyers take longer to decide on making a home purchase in the Big Apple.

Add to this uncertainty, there is the new “mansion tax” that was approved by New York City as part of its budget in April 2019. The mansion tax is now 1% on residential sales of $1 million or more that goes up to a maximum of 4.15% on homes sales of $25 million and up.

Did you just do the math? Griffin would have paid $9.87 million for the new mansion tax if he waited until April 2019 to buy his penthouse. So maybe he feels like he got a bargain by saving nearly $10 million on the purchase?

Summary

In spite of the record price for the penthouse sale in NYC, the residential market continues to soften. The new mansion tax is not going to help sales either. Unless you have money to burn, as Griffin does, it may not be the best time to invest in residential properties in NYC if you hope to make a return on your investment when selling them.

Your trusted real estate agent is well-informed about the market trends in your area. Be sure to set up an appointment if you are in the market for a new property.

3D Printing Used For Home Renovations And Construction

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3D Printing Used For Home Renovations And Construction3D printing technology is a game-changer in the home construction business. Not only is the technology capable of printing a home, but it can also be used to print one at a much lower cost when compared to traditional home construction.

All3DP reports on homes printed using 3D technology that costs as little as $4,000 to $10,000. Some are ready for occupancy within 24 hours.

The $4,000 Home

A company in Texas, called ICON, is working with NewStoryCharity.org to create 3D-printed homes at an extremely low cost. New Story Charity builds simple homes in other countries, like Haiti and El Salvador. They give these homes to very poor people who live in shacks built out of plastic and cardboard.

These homes are small (around 500 square feet) and yet fully self-contained with a kitchen area, a bathroom, a bedroom, and a living space area.

Weather-Resistant Homes

A Russian company, called Apis Cor, used 3D printing to build a ready-to-use home for just over US$10,000 that can withstand the severe climate during winters in Russia. The 410-square-foot home is completely finished, painted inside and out, and wired for electricity. It was printed and built completely on site. It is small, yet quite attractive.

Ten Homes In One Day

A company in Shanghai, China, called Winsun, achieved the break-through of 3D printing ten homes out of a foamy, lightweight concrete material in a single day. The prospects of factory-produced extremely low-cost homes are extremely appealing in China where many millions are looking to have a new home.

Architectural Firsts

Many of the applications of 3D-printing technology in home construction focus on small homes built quickly for a really cheap price. That was what Winsun first started doing. However, 3D-printing technology is not limited to these cheap homes.

In fact, using 3D-printing technology, Winsun produced a beautiful, architecturally-stunning, office building that went up in Dubai for the price of $140,000. The project only took 17 days to complete. The cost was about one-half of regular construction costs for a building of the same type.

The office building has beautifully-curved walls and a style that would be very difficult to replicate by using other construction methods.

Summary

Expect that 3-D printing technology will increase in use for the construction of homes. Using 3D-printing technology also means that the homes can be very stylish. They can have nicely curved walls and are not limited to simple, rectangular-angled styles.

This means that, right now, they are perfect for a cottage home, an in-law apartment, or home office built in the back yards of larger homes in America. If you are thinking about a backyard cottage you can already get one 3D printed for a great price.

If you’re in the market for a new home or interested in listing your current property, be sure to contact your trusted real estate agent.

Case-Shiller: Annual Home Price Growth Slows for 13th Consecutive Month

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Case-Shiller Annual Home Price Growth Slows for 13th Consecutive MonthCase-Shiller’s 20-City Home Price Index for April showed further declines in home price growth with 2.50 percent year-over-year home price growth as compared to March home price growth of 2.60 percent. New York City home prices held steady month-to-month and Seattle, Washington’s home prices were unchanged year-over-year after posting 13 percent home price growth in 2018.

The top three cities with the highest rates of year-over-year home price growth were Las Vegas, Nevada with 7.10 percent growth; Phoenix, Arizona followed with 6.0 percent growth and Tampa, Florida reported 5.60 percent home price growth. All three cities were hard-hit during the recession. While U.S. home prices are rising, they aren’t rising as fast as in prior years. The fastest home price growth rates remained in single digits as compared to double digit home price growth rates posted in recent years.

Changing geography played a role in this year’s home price growth as San Francisco, California, Portland, Oregon and Seattle, Washington fell to sun-belt cities east of the west coast. Astronomical home prices and pronounced shortages of homes in many west coast cities caused home buyers to seek affordable homes elsewhere.

The Case-Shiller 10-City Home Price Index posted a year-over-year gain of 2.30 percent in April as compared to its March reading of 2.20 percent. Analysts said that slower gains for home prices indicated more normalized price conditions, but noted that home price growth remains about 1.50 percent ahead of inflation.

Buyers Benefit from Slower Home Price Growth, More Available Homes

First-time and moderate income home buyers were sidelined by competing investors and cash buyers as home prices rose quickly, but may find it easier to compete as market conditions achieve a balance of advantages to home buyers and sellers.

The flip side of easing home price growth may be that prospective buyers who are leery of buying at peak market prices will put off buying homes. Low mortgage rates continued to boost affordability and decreasing shortages of homes provided buyers with more options. Homebuyer sentiment is likely to vary according to economic trends, regional and personal circumstances.

If you are in the market for a new home or interested in listing your current property, be sure to contact your trusted real estate professional.

 

Fed Holds Key Rate Steady As It Watches Economic Trends

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Fed Holds Key Rate Steady As It Watches Economic TrendsFederal Reserve policymakers held the federal funds rate at its current range of 2.25 to 2.50 percent. Analysts speculated that the Fed may lower its key rate based on signs of slowing economic growth and the President’s encouragement to lower the Fed rate.

Federal Open Market Committee members cited “uncertainties” in support of their decision not to change the Fed’s key lending rate. A stiff month-to-month drop in jobs growth and worries over trade problems associated with recent tariffs assessed against China contributed to the Committee’s decision to hold rates steady and closely watch domestic and global economic trends.

Signs of slowing economic growth caused the Fed to adjust its forecast for achieving the benchmark inflation rate of 2.00 percent to 2021 and lowered expectations for inflationary growth from 1.80 percent to 1.50 percent.

Fed Chair: Fed “Closely Monitoring“ Economic Developments

After the FOMC statement, Federal Reserve Chairman Jerome Powell gave a press conference in which he further addressed the Fed’s response to slowing economic growth and current developments in global affairs. Chairman Powell said that it is important for policymakers to respond based on emerging economic trends rather than reacting to quickly shifting data.

Chairman Powell identified trade concerns and slowing global economic growth as factors impacting slowing domestic economic growth. Due to recent economic changes, Chairman Powell said that a “somewhat accommodative” policy stance was indicated. Uncertainty over supply chains due to tariffs was an example of factors causing concern over economic growth. Positive indicators centered around labor as job growth continued and employers reported a shortage of workers for available jobs.

Manufacturing declined globally and domestically as service-related-jobs expanded. When asked about Fed oversight over banks’ risk exposure due to lending policies, Chairman Powell said that large institutional holdings presented the greatest risk for banks, but did not say such risk was currently problematic. The chairman re-emphasized that FOMC members constantly assess economic data and global events to determine the Fed’s economic policies.

 

NAHB: Builder Confidence Slips in June

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NAHB Builder Confidence Slips in JuneHomebuilder confidence dropped two points in June according to the National Association of Home Builders Housing Market Index. June’s index reading was 64, which indicates strong sentiment among home builders for current housing market conditions.

NAHB component readings also dropped in June with builder confidence in current home sales one point lower at an index reading of 71. Home builder confidence in home sales conditions over the next six months dropped two points to 70 and builder confidence in buyer traffic was one point lower at 48. Buyer traffic readings seldom exceed the NAHB benchmark reading of 50. Index readings over 50 indicate that most builders have positive sentiment toward conditions surveyed.

Home Builders Cite Ongoing Concerns and Growing Worry Over Tariffs

Home builders surveyed for June’s Housing Market Index cited continued concerns over shortages of labor and buildable lots, but also worried over increased materials costs resulting from recent tariffs. Analysts said that high demand for homes is driven by a current shortage of several million available homes; demand should be driving builder sentiment and housing starts much higher than current levels. Builder sentiment reported in the Housing Market Index typically drove housing starts, but this hasn’t been the case in the aftermath of the housing crisis. Severe shortages of homes for sale drive home prices up; this creates competition between buyers and sidelines first-time and moderate income home buyers.

While buyer traffic is robust, headwinds including high home prices and concerns about general economic conditions could be keeping would-be buyers on the fence. Low mortgage rates, which may drop further if the Federal Reserve lowers its key lending rate, could prompt more buyers to enter the market, but rapidly rising home prices in recent years have caused would-be buyers to hold off on buying homes. Faced with few options and high home prices, buyers may be waiting until more homes come on the market. Industry leaders have long said that building more homes is the only way to resolve the shortage of homes and high demand from home buyers.

Faced with rising materials costs and strict zoning rules, builders are tasked to find affordable housing solutions when fewer buildable lots and zoning rules discourage higher density affordable housing developments.