I've made a few comments about the popular press exaggerating the drawbacks of being a landlord .  Managing any business means dealing with customers - owning income producing properties is no exceptions.  Manage your customers (your tenants) well and they'll make your life easy. 

But you can't manage 'em well if you've picked the wrong ones, as this story from the Bay Area Mercury News shows.  A San Jose tenant is charged with killing his landlord and torching the property.  The article says that the tenant was not there when firefires responded to the blaze, but "showed up several hours later and did not appear curious about what had happened" according to police.  Hmmm.....

Well violence and arson are a worst case situation, but the first step to tenant management is screening candidates before they sign on the dotted line .  There were a lot of dodgy signals in this case that should have been heeded - the suspect had a history of scrapes with the law and an established track record of anti-social behavior.  Having a vacancy is bad, but filling a vacancy with a bad tenant is a thousand times worse.  You already knew this, but it's always good to hear again. 

Jerold & Terry Smith do a good job of covering this topic on their REALTOR® blog .  With various new competitors coming onto the market trying to forge their own holy grail of a unified system it will be interesting to see how NAR and the various MLS systems react. 

Real estate investors in some areas will greet this topic with a yawn...by the time a property hits MLS you're looking at a guaranteed negative cashflow investment.  In markets like this you need to find deals at significantly below market value to make the number work (short sales, foreclosure auctions, REO's, etc.)  But in undervalued areas where the rent-to-property value ratio is high you can still pluck some deals out of MLS if you keep your eyes on the ball. 

But competition can still be fierce.  I recently invested in a single family house that I'd bookmarked in the Houston Association of Realtors' excellent site www.HAR.com.  I got an update that the price of the property had been dropped by 10%.  This put the property within my investment threshhold.  I sent in an offer immediately; within the hour. 

Mine was the fifth one they got. 

I did end up getting the deal, though.  The guy who originally one didn't come though with financing and had to back out.  My offer wasn't the next best one, but it must have looked like the bird-in-the-hand to the seller.

Related posts:

• Another non-traditional player jumps into the MLS game
• Zillow.com :: How will the traditional real estate industry respond?

38th President of the United States of America.

My fellow Americans, our long national nightmare is over. Our Constitution works. Our great republic is a government of laws and not of men. Here, the people rule. ... As we bind up the internal wounds of Watergate, more painful and more poisonous than those of foreign wars, let us restore the Golden Rule to our political process and let brotherly love purge our hearts of suspicion and of hate.  August, 1974

Happy holidays from our family to yours.

You'll see the posts slow down for a few days as we enjoy the holiday season.  Looking forward to more good dialogue in 2007.

Regards,

Christopher Smith

EquityScout.com

I got a comment from a real estate agent the other day on the ActiveRain blog.  She said:

• “You can spot the problem investors right away. They have absolutely no criteria for what they are looking for. Their criteria is "anything that is a good deal." Good luck with that. If you don't know what you want to buy you don't know what you are doing.”

Hmm….that sounds like pretty good criteria to me – that's something I say to my agent all the time.  And that’s a fact that many real estate agents take a while to understand.  But that’s okay – we just have to get the point across that as investors we’re looking for something different than the average homebuyer.  An investor isn’t going to say “go find me a nice 3 bed 2 bath with room for my quilt collection on a corner lot.”  An investor is simply looking for a bargain that’s going to generate cashflow. 

And in some areas, bargains are easier to find these days than others.  In Global Insight’s 3rd Quarter Housing Price Study, released this week, New Orleans took over pole position as the most undervalued market in the United Sates, a spot that was held by College Station, TX (home of the Texas A&M Aggies) last quarter. 

Overall, economists take a bad rap, and I understand there are those out there who don't like valuation studies.  But generally I thikn they're useful, and I like Global Insight’s approach.  One thing that does pop out me, though, is that New Orleans is…different.  The Global Insight algorighm seems to do a good job of tracking trends when applied to historical data, but one has to wonder how well it fits the situation in New Orleans post Katrina/Rita.  So I’d look at that particular data point with a bit of suspicion. 

Texas still dominates the bottom five (Dallas, College Station, Houston and Fort Worth, in addition to New Orleans).  No news there.  Other notables: Tulsa, OK; Rochester, NY; Charleston, WV; Wichita, KS; Columbia, MD; Indianapolis, IN.  Investors in these markets should have an easier time of finding investments that produce positive cashflow.  The coasts are still challenged, but as prices have flattened/declined so have the levels of overvaluation.

Global Insight today released it’s analysis of data released by the Office of Federal Housing Enterprise Oversight (OFHEO), which covers both regional and national trends in residential real estate pricing. 

The main conclusion of the study is that the overall level of valuation is starting to ease nationwide.  Last quarter 66 metro areas were deemed “extremely overvalued”, whereas this quarter only 63 are.  This largely is due to price declines in some high value markets – 76 of the 317 metro areas surveyed experienced price declines during the quarter.  Nationwide, the average rate of appreciation for the quarter was 0.86% - significantly below the historical average. 

I thought the chart above was interesting – I took this from OFHEO data on the .gov website.  The cooling trend which accelerated last quarter continues.  National quarterly price appreciation topped 3% quite a few tiems over the past couple of years.  And note, these aren’t annualized numbers.  The peak was in Q3 2004 where the national index went up 4.44% in one quarter – that’s an annualized rate of 17.74%.  These, of course, are national averages – some metro regions were significantly higher. 

Real estate is local, but in a sense we’re all in the same economic boat so a soft landing will be good for the economy as a while.  But regardless of how it plays out, things will be tough for investors in a lot of markets for a while.  Look for shot sale opportunities as overextended homebuyers and speculative investors get squeezed out of homes with negative equity.

Regionally, most markets are within a few points of where they were when Global Insight last came out with their analysis last quarter, but interestingly four important bellweather markets (Las Vegas, San Francisco, Tampa and Washington DC) have inched their way back below the “extremely overvalued” threshold. 

I was meme tagged by Pat Kitano of Transparent RE.com. A meme [mem ] is described by the American Cultural Dictionary as “A unit of cultural information, such as a cultural practice or idea, that is transmitted verbally or by repeated action from one mind to another .”

Huh?  Well consider it sort of a virtual party game.  And this particular meme has instructions: tell five things about yourself that readers might not know, and pass the infection along by tagging five other Bloggers. 

So for your reading enjoyment, five things that you probably didn’t know about me: 

1.  I was a computer nerd early on, starting out with a TRS 80 and a Commodore Vic 20 (with tape drive!) when I was in middle school.  If you look at this photo and get a warm wave of nostalgia then you and I would get along. 

2.  I was an All American boxer in college and made it to the collegiate national championships in Reno Nevada my senior year.  I lost my final bout (my only bout that was televised) - a split decision loss to a hometown boy from UNR.  He was a south paw.  So now I have this thing about lefties...

3.  I lived in Bogotá Colombia for three years working for an oil company.  Best place I've ever lived.

4.  I have a cat that I adopted for $2 at a shelter in Bogotá and it cost me $300 to bring her back to the US when I moved back.  Well actually it cost the company that I was working for because I was able to expense it. 

5.  My favorite vice is Maggie Moo's cotton candy flavored ice cream, which comes in a industrial chemical shade of blue and stains your teeth, lips, and anything else it comes into contact with.  My wife thinks it is disgusting. 

So I’m tagging:  Jeremy Bencken at TenantMarket.com, Derrick Daye at Branding Strategy Insider, and fellow Houstonian Micahel Price of MLPodcast.com.  Those of you who are paying attention will notice that this is just three, not five.  But Pat, who passed this on to me, only tagged three – so I’m doing the same. 

And my inner geek thinks the following is pretty cool: tracking this particular meme back 17 generations:

• Drew of Drew’s Marketing Minute 
• Starbucker 
• Trevor Gay of Simplicity
• Phil of Make it Great 
• Kammie of Passion Meet’s Purpose
• Success from the Nest 
• Dave of Rothacker Reviews 
• Andrea Learned of Learned on Women
• Ann Handley of the Marketing Profs Daily Fix
• Nedra Weinreich, Spare Change 
• Toby Bloomberg, the Diva Marketer 
• Paul Chaney, Strategic Blogging
• Mary McKnight of RSSPieces
• Jim Cronin of Real Estate Tomato
• Joseph Ferrara  of Selsiusblog 
• Teresa Boardman  of St. Paul Real Estate
• Pat Kitano of Transparent Real Estate

Not too long ago I wrote a Five Tips for Realtors® post on What Real Estate Agents Look for in a Realtor.  This is a follow-on to those ideas, and I’ll try to address the question of why should realtors care about what real estate investors look for in a realtor.  Or – more diplomatically put – why real estate investors make good customers…

1)  Real estate investors make up a niche market that needs a specialized set of skills from a real estate agent.  The field is getting more crowded by the day.  The first source of competition is that 1.3 million fellow agents out there; that’s a lot.  Add to that the technology companies that are popping in by the day:  Zillow, Google, Redfin, FSBO players, and who knows who else will declare their new initiative tomorrow.  There are a lot of new agents out there – see the chart.  Not all of them are going to manage to stay in the industry.  But in all fields, when things get tough for the generalists the specialists manage to survive and thrive.  What kind of client are you specializing in?  

2)  Real estate investors are repeat customers.  Most businesses thrive on long-term relationships, and real estate investors are customers who come back.  Again and again.  Investors value trust, whether it be from a lender, a contractor, or an agent.  Trust is comforting – build that relationship and they’ll be back.  This applies to all customers, of course, but you won’t have to wait for the investor to decide to move before he’ll be calling you again.  Your next deal may come the following week.   

3)  Real estate investors are in the market.  Investors are out there following trends, making contacts, and collecting information.  Your client will be looking to you for leads, but this can be a two-way street.  Invariably, investors come up with leads that don’t turn out to be viable investment opportunities, but which may turn into a listing for you. 

4)  Real estate investors can teach you something.  You’re good at what you do, and your investor clients should learn from you.  Likewise, if you’re working with smart investors you should learn from them as well.  A lot of agents are wondering how to get off of the sidelines to start building real estate equity for themselves; if you’re one of them then you might benefit from working with successful investors.

5)  Real estate investors can be easier to work with.  I include this last point with some trepidation.  I know there are some investors who are a royal pain to deal with.  But generally speaking, savvy investors are looking at the bottom line, want good advice, and you won’t have to cut through a layer of emotional attachment to get them to make good decision.  If you’ve ever had to play amateur psychologist to convince a seller that she needed to paint over her beautiful work-of-art wall sized mural to sell her house then you know what I’m talking about. 

It’s a jungle out there, but real estate agents who move now to upgrade to a client base that requires a specialized skill set will prosper and thrive, even as competition drives many of the recent entrants out of the profession.     

We've listened to your comments, and our programmers have made the EquityScout real estate evaluation tool easier to use and more intuitive than ever.

EquityScout's Results Dashboard presents gives you a graphical, easy-to-understand view of your investment's potential financial performance. 

• View Rate of Return to get a quick idea of the viability of the investment.  Does the return justify the risk?
• EquityScout categorizes the assumptions that may be contributing to a high or a low rate of return, and flags assumptions that may be out of line with the market.
• And as always, the user has access to a full suite of graphs, charts and reports to better understand the investment's potential cashflow.   

I'm always interested in your comments and suggestions.  Feel free to go to your contact us page and let us know what's on your mind!

And not just any player.  Google has joined Zillow.com in the real estate fray. 

Lots of news recently on non-traditional players in the Real Estate Industry moving into waters that traditionally has been jealously guarded by the National Association of Realtors.  From the if you can’t beat ‘em, join ‘em file: Google has just announced a partnership with the Houston Association of Realtors (HAR) to upload Multiple Listing Service (MLS) data for the Houston Area. 

HAR runs www.HAR.com, the excellent online database and one that I have some personal experience with as a Houston based real estate investor.  This is a story I’ll follow with interest. 
The various blogs and forums are abuzz with news of the Zillow.com announcement, but this one, potentially, is more interesting.  The question at hand is what kind of strategy the various MLS services can put together.  Seeing that they’re a loosely connected confederation of semi-independent participants it seems to me that a unified approach to keep the dot.coms of the Zillow/Google ilk out of the sandbox isn’t going to work.  Seems that HAR has seen the writing on the wall.  So the reaction over the next few months from the other major metropolitian areas will be an interesting indication of things to come.  Will HAR be viewed as the scabs crossing the picket line?  Or, will they be the first of an exodus?

An article in the Houston Business Journal makes an interesting point of the fact that Google’s first major foray w/ an MLS system is occurring in Texas, as opposed to their home turf of San Jose.   This might have something to do with the vision of Bob Hale, HAR’s president and CEO who has a reputation for his interest in emerging technology.  It might also be a reflection that perhaps the real estate industry in California has a stronger view of it’s ability to resist future changes than we do here in Texas.  Interestingly, James Harrison the President and CEO of the Silicon Valley MLS comments “They (Google negotiators) are friendly and young, but they are not willing to work out a deal unless it completely benefits Google.”

This post is directed at the real estate agents out there.  There sometimes can be an uneasy relationship between agents and investors; investors have a unique perspective which often is different from other homebuyers.

Real estate investors represent a special group of clients for agents.  As the field gets crowed both with agents (10,000 new Realtors® every year!) and technological innovations, finding a niche will be important for agents who want to thrive as the market evolves. 

I don't always use an agent, but I do sometimes - I have an agent that I trust and she helps me out a lot. 

Following are five things that I, as an investor, tend to value in an agent.  This is just my opinion, but it's informed by feedback from lots of other investors.

1)  Understand the risks of investing:  Some clients will need some help here.  Generally speaking, investors take two kinds of risks:  speculative risks and operational risks.  Speculative risk is high when an investment relies primarily on future property appreciation in order to be profitable.  Operational risks deal with all of the issues involved in maintaining a cashflow-positive property - vacancies, tenants, repairs, etc.  There are players who think they are investors, but actually they're speculators.  They might not know the difference - but you should. 

2)  Be the investor's eyes and ears:  My real estate agent is valuable to me because she has ways of finding things out.  She's plugged into the community and she's constantly talking to other brokers and agents.  She does this full time, I don't.  Once a property gets to MLS it's old news - I have to compete against all the other investors in my area.  But if I can get to something early - that's a tip that's valuable to me. 

3)  Understand the numbers:  If you're pitching an investment, or helping the investor to understand one that he's found himself, you should be able to answer the questions:  Should I expect this to be a positive cashflow investment?  How much will I be able to charge for rent?  Will that cover my expenses?  What sort of property appreciation will I need in order for this to yield a decent rate of return?  An investor who can't answer these questions (many cant!) is driving blind.  You can help. 

4)  Screen opportunities:  Know what your investor is looking for.  Bring her opportunities where the numbers work out.  Shelve the rest. 

5)  Know the neighborhoods.  This is an area where my agent helps me a lot.  Which areas are generating a lot of interest?  Which ones aren't?  Where are a lot of for-sale signs popping up?  You and your investor will come up with a strategy to decode this information; sometimes a preponderance of for-sale signs means opportunity, other times they signal trouble. 

The playing field is shifting out there; agents who evolve will stay ahead of the curve. 

So now that Zillow is officially in the listing business it’s the topic of the hour .  Some have compared Zillow.com with WebMD, a once promising startup with a now discredited business model.  In my opinion this isn't a good comparison - a doctor spends somewhere between 10 and 15 years in college, medical school, and residency before she can operate on you.  And the internet, no matter how good it gets, will never be able to remove your appendix. 

A much better comparison is with a stockbroker - a skilled profession that offers a more similar service.  The stockbroker profession hasn't been eliminated, but it has changed radically, and margins have plummeted.  I use a realtor, but I don't use a stockbroker.  I go online, log onto vanguard.com or etrade.com, check my stocks, read the research, buy, sell, and manage my own portfolio.  Ten years ago they told us this would be financial suicide - but now it's commonplace.

Remember E.F Hutton - the stock brokerage firm?  "My broker is E.F. Hutton...and E.F. Hutton says"...then everyone turns around and listens w/ rapt attention.  Hutton and their ilk sneered at the internet startups.  Financial suicide for foolish investors, they said.  Cheapskate clients...we don't want 'em.

Well, E.F. Hutton is gone.  Bankrupt.  People stopped listening, and they stopped paying those fat commissions.  Meanwhile, E*Trade, Ameritrade, Fidelity, Schwab, and the rest of the online guys survived the dot.com collapse and are churning and burning.  The point being that all competitive landscapes change...and market participants who don't go with the flow - those that stick to their guns with a religious fervor - are doomed to the dustbins of history. 

Has real estate gone that far?  No.  Not yet.  But it will if the response from the National Association of Realtors is simply to point out Zillow's flaws, insist that the public will always pay 6% commission to sell their house, and that technology isn't a threat. 

Six percent has been a rule of thumb that the National Association of Realtors has done everything in its power to protect (just as any industry - auto, energy, consumer products, whatever - will always try to protect its margins).   

Problem is: in the long run this strategy simply won’t work.  The New York Times  ran a great article on this. A quote from the article:  Traditional agents still firmly control the M.L.S., which allows all participating brokers, including Redfin, to view almost every home for sale in a particular area, even those being offered through competitors' agencies. But the typical 6 percent commission, paid out of the seller's proceeds and split between the seller's and buyer's agents, is under attack because, as economists note, it does not serve consumers well.

Disruptive technologies are notoriously hard to predict.  Zillow may be a flash in the pan.  But eventually – soon – something will come along that isn’t.  There are some stockbrokers and travel agents who survived the onslaught of e*trade, Ameritrade, Orbit and Travelocety, et al – but many didn’t.  The ones that made it adapted found a niche where they added a special kind of value.  But the bread-and-butter business will soon go away. 

The new 300 pound gorilla, Zillow.com, has taken the logical next step.  Now you can go and post your home for free and get exposure to Zillow.com's massive customer base.  Interesting tag line:  It's FREE and anyone can do it.  Translation: you don't have to be a licensed real estate agent. 

Clearly, Zillow still has its problems, and the accuracy of its valuation algorithm has attracted lots of critics.  But one thing can't be denied: these guys have a lot of momentum and they know how to keep the public's ear. 

I saw a New Yorker cartoon the other day.  It showed a couple of dinosaurs chatting.  One was emphatically stating the time to develop the technology to destroy an earth-bound asteroid is now!  but the other dinosaur clearly wasn't interested.  And in that vein I'm looking forward to seeing the reaction from the National Association of Realtors.  To date their stock response has been to point out Zillow's flaws and insist that technology isn't a threat.  If they continue with this approach than this will herald the beginning of the end of the standard 6% commission. 

Stay tuned...

Seems that we’re always reading a story about some performer or athlete that has made millions of dollars over the course of his career only to squander it all.  Mike Tyson springs to mind. 

Now consider Hakeem Olajuwon. 

Olajuwon, a Nigerian émigré, played a long career with the NBA, leading his team to two championships in the process. 

And in the 10 years since hanging up his basketball shoes he’s managed to earn as much money in real estate as he did during his 17 years with the NBA. 
Olajuwon’s strategy has been described as “unorthodox yet disciplined.”  But no one can doubt his effectiveness.  Based on estimates his earnings in the real estate market easily exceed $100 million. 

Check out the excellent article in the New York Times. 

The New York Times ran an interesting piece today on the subprime mortgage rollercoaster.  Over the past five or six years the number of subprime loans have skyrocketed as a percentage of loans issued, especially in minority communities.  This has put home ownership in reach of countless families who otherwise wouldn’t have qualified for a mortgage, but now as rates creep up and property values flatten more and more families are starting to see the downside.

The industry is now looking at its practices and standards.  I can only hope, however, that the pendulum doesn’t swing too far in the opposite direction.  As the article points out, making the rules for qualifying for a mortgage overly restrictive will have the unintended effect of making a bad situation worse for squeezed homeowners looking to refinance out of their high-rate ARMs.

A website that appears to be on a pretty rapid growth curve is ActiveRain.  The company is based in Bellvue, WA and is focused on collaborating with real estate professionals – primarily agents.  Their stated goal is to Empower the real estate professional.

They offer a few tools designed to support agents and Realtors® such as lead management – but the main thing they offer is networking. 

Investors aren’t likely to find a lot of leads or tips, but it is well worth a look for agents and realtors or any other real estate professional who is building a business. 

Almost all buyers in the real estate market conduct some of their shopping online, whether they’re FSBO’s, bank owned foreclosures on MLS, or garden variety properties listed by realtors. 

When buyers check out a potential investment they’re basically looking for something not to like – a reason not to make the investment.  Your average buyer isn’t going to see the diamond in the rough – they’re not going to be able to look past an ugly photo.  If you’re wholesaling to an investor (selling fast and cheap) this might not make much difference, but photos matter when you’re selling to John Q. Public. 

Some buyers will arbitrarily narrow their search by the number of photos included in the listing, and they’ll focus on those photos that are effective in showing the property in a flattering light.  And here’s the rub: taking a good looking photo really doesn’t take much more effort than taking an ugly one. 

So in the interest of banishing ugly photos, here’s a few tips.  Photos are courtesy of the local MLS – all are for small starter single family homes…

1)  Think about perspective.  I think this is the single most important thing – and it’s completely in the photographer’s control.  A good angle is your friend.  The kitchen on the left is from a tiny starter home – under 900 square feet.  But it feels big and bright because the photographer chose a flattering angle.  The second photo is from a larger house, but the photographer has opted to take a weird angle of the kitchen floor looking into the laundry room – giving it a claustrophobic feel. 
 

Again, the photo on the left is from the smaller, cheaper house.  The photo on the right is from the larger, more expensive house - in the same neighborhood.  Which photo is more likely to get the seller a showing? 

2)  Get the lighting right:  There’s no reason to make the room look like a dungeon.  Open all the windows, turn off the flash, put the camera on a tripod and set it on auto exposure.  The second photo does a much better job.    

3)  Keep your horizons level:  Pay attention to the lines of the photo.  Make sure they’re straight.  There’s no reason to publish a photo that looks like these two.  

4)  Keep it simple:  Get rid of the clutter.  This seller seems to be enamored with her display of Christmas wonderland trinkets.  But the buyer probably won’t be.  It would have just taken a couple of minutes to stash this stuff in the closet before snapping the photo. 

5)  Focus:  When you’re reviewing your photos on that little screen on the back of your camera sometimes it’s hard to tell when a photo is out of focus.  But it will be obvious once you upload it. 

It's also possible that the blur was caused by camera shake - meaning that the photographer was not able to hold the camera steady enough.  This often happens in low light situations w/ shutter speeds slower than 1/30th of a second.  And if you don't know what this means don't worry - I won't get into it - just go out and get a cheap $20 tripod and that will fix the problem. 

6)  Don’t stretch/squash the photo:  A distorted photo doesn’t look right.  And in this case it makes the ceilings look lower than they are. 
 

There’s more.  But this is a start.  And as my might have guessed, photography is a hobby of mine – so it’s possible that I care about this stuff more than most – but I think that getting the photos right is a relatively effortless way to make sure that your property puts its best foot forward online. 

I’m seeing rough waters on the horizon for some of the higher priced markets, but there are quite a few pundits out there predicting a full-on housing price Armageddon.  Sell your house now.  Stock up on spam, bottled water, and ammunition. 

Check out a few of these blogs that take a national perspective in the impending collapse…

The Housing Bubble Published by Ben Jones from Arizona.  Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.

Bubble Meter:  A blog dedicated to the premise that there is a Housing Bubble in many locales in the USA. With a particular focus on the: When will it pop?  I don't know much about the author, who identifies himself simply as "David from Maryland". 

David Lereah Watch :  This blog watches the comings and goings of David Lereah, the Chief Economist of the National Association of Realtors (NAR).  Written by the Bubble Meter guy, above. 

Probably the most mean-spirited of the blogs in this post; this blog takes NAR bashing to a new level.  The author refers to Lereah as a "shill" (one of the milder descriptions of Lereah on the site).  Strikes me as a bit unfair, however.  Lereah works for the NAR - of course he's going to be talking up the market.  He gets paid to support realtors, not to be objective.  What do you expect the guy to do?

Patrick.net: Website proclaims itself as the “top ranked Google result for “housing crash” and “housing bubble” for 3 years running. 

There’s a lot more out there – some of which take a more local approach (which, in my opinion, is more useful). 

We feel like we’re pretty unique here at EquityScout.com in a number of respects, but I know we’re not the only fish in the sea of real estate evaluation software.  There are a few other services out there – I took a look at a few of them over the past couple of days…

• Advantage Software LLC :  Based out of Pardeeville, WI.  Advantage offers a downloadable windows based software package for $97.95 that produces reports, graphs, ratios, etc.  They offer some specialized products as well, including a program called Flip-it assistant for the same price. Their website includes screenshots of report graphs, etc. 
• RealData :  Based in Southport CT.  RealData sells a suite of Microsoft Excel ® spreadsheets, ranging in price from $99.00 (for their “ultra-light” model) to a high of $495 (for their standard spreadsheet).  To see how their offerings compare they’ve included a comparison chart .
• REI Wise   : Offers desktop products ranging in price from $59 to $499.  They have a demo of their commercial product that you can view on their site.  Like EquityScout.com, REI Wise offers some online products:  commercial for $24.95 and residential for $14.95.
• Doug Rutherford CPA.  Doug sells Microsoft Excel® spreadsheets from two different websites: RentalSoftware.com  and Landlord Software.  Doug offers two products, Landlord’s Cash Flow Analyzer Pro and Flipper’s Cash Flow Analyzer, both for $79.95.  He also offers coaching for $75/hr and a variety of courses. 
• Real Estate Informatics:  Based in Fairfax VA.    Sells Microsoft Excel ® spreadsheets ranging from the ROI Forecaster Spreadsheet download ($99.95)  to the Professional Edition w/ software mailed ($179).

Note:  no recommendations or critique in this post.  I'm interested in hearing from anyone out there who has any experience with any of these products/services.  More to come...

You'll be familiar w/ Carleton Sheets if you've watched any late-night television.  In promoting his new online venture, www.HomeForum.com, Carelton Sheets today released a press release in which he comments on the “real estate bubble”, or lack thereof.

“There has never been a national real estate bubble."  Sheets comments.  "Even in the markets that are correcting, there are sub-markets that present incredible investment opportunities for the investor. With interest rates at historical lows and an ample inventory of properties, there has never been a better time to invest."

Ok this sounds a bit shrill, and the purpose of his comments obviously is to sooth jittery nerves of the aspiring millionaires who buy his late-night courses; presumably all this gloomy news about overpriced markets makes his product a bit tougher to sell.  And it doesn’t help that he goes on to quote David Lereah, the Chief Economist for the National Association of Realtors ®, another guy who has a lot to benefit from promoting a sunny view of the real estate markets. 

But – motives aside – Sheets is right.  Certainly there have been real estate bubbles, but his statement that there has never been a national real estate bubble is defendable.  The last round of market collapses which occurred in the ‘80’s were fueled by oil and occurred in now stodgy markets like Austin TX, Houston TX, Casper WY and Lafayette LA.   Unambiguously there were bubbles, but in the period that Austin dropped by 27% some markets in California – San Francisco and Los Angeles – soared by 80%. 

So regional markets don’t always move in tandem, and there are some attractive markets out there. 

But – we’d caution against taking the argument too far.  First, a casual reading of Sheets’ statements might lead a reader (especially an optimistic one that’s spent some money sitting through a weekend motivational seminar) to conclude that no national bubble means no bubble at all.  Wrong conclusion in our book – there are some overheated markets out there.  Best to run the numbers and check your assumptions. 

Second: this run-up is different from that of the eighties.  It’s been longer, stronger and broader.  From ’86 to ’96 the national median home price went up by 40%, an average annual increase of 3.4% - a rate generally comparable to inflation.  From ’96 to ’06, by comparison, the median home price increased by 99%, an average annual increase of 7.1%.  So when (not if) the super heated markets go through a period of correction there’s the potential for a broader national impact. 

The key for investors now:  understand your risks, understand your cashflow, run your numbers.  Investors who get into positive cashflow investments are posed to capture the upside and their also poised to weather a downturn.