Category: Real Estate Investing
Posted: 1/27/2016
The perfect auction for real estate investors
By John Dixon

Longtime business leader A.B. Rose to sell properties at auction

ROCKY MOUNT, North Carolina (Jan. 27, 2016) -- After a lifetime of living and doing business in North Carolina, A.B. Rose and wife Carol are planning to move to Arizona. And that means his lakeside home, an office building, commercial land and other Nash County properties need to be sold.

So Rose has retained John Dixon & Associates to market 18 of his properties in a live auction set for 11 a.m. Saturday, Feb. 20, at the DoubleTree by Hilton in Rocky Mount. “I used an auction to sell business assets, so I was familiar with the process. This will clear the way to move to where we can downsize and be closer to family,” said Rose, whose A.B. Rose Construction Company closed in 2009. 

The five-bedroom home at 905 Old Mill Road sits on almost eight acres overlooking a 10-acre city-owned lake for which the owner of the home will have exclusive use. “The lake was a rock quarry to which we retained the exclusive rights, which will pass on to the buyer. It’s maintained by the City of Rocky Mount,” said Rose.

Another highlight in the auction will include the two-story office building at 430 S Wesleyan Boulevard in Rocky Mount. “This building has room for 10 offices, as well as a reception area, work room, file room, three restrooms and a full bath. It would be a great location for an insurance agency or almost any type of professional office,” said John Dixon, president of the auction company.

Also selling will be a 114-acre farm with a home for rental income, and a commercial property with an equipment shed, shop and shelter buildings. Other properties include several commercial land tracts, five of which are along S Wesleyan Boulevard.

Bidders will also be able to participate online while viewing a live simulcast.

Individuals seeking additional information may visit www.johndixon.com or call 404-625-6410.

John Dixon & Associates, based in Atlanta with offices in Tennessee, Florida and North Carolina, is one of the nation's largest auctioneers of real estate properties, including land, homes, developments, condominiums, farms and other properties owned by individuals, investors, banks and other institutions.

Posted: 7/22/2015
Market Shift: Becoming a Seller's Market
By John Dixon
The real estate market seems to be shifting to more of a seller's market, and that means it's a good time for investors and others to market their property through one of our Multi-Seller Auctions. Carl Carter and I talked about these changes, and about what sellers can expect when they consider selling in a John Dixon Auction.
 
Posted: 1/6/2015
Upcoming auctions in Tallahassee, Atlanta
By John Dixon
Our year is off to a great start, and we're already bearing down on our first two auctions. One noteworthy thing about these two sales is that they feature real estate from a number of different sellers. We'll be putting more emphasis on multi-seller auctions during 2015, because the people who have been buying real estate investments for the past five or six years are now reaching a point where they're ready to sell some of those properties.
 
While we've conducted a lot of auctions for banks and other financial institutions -- and will continue to do so -- we've seen a great deal of real estate move from the hands of banks (who acquired it as a result of foreclosures during the financial crisis) to investors who have been building up their portfolios. By pooling the properties for these investors and individuals, we can enable institutions, investors and individuals of all sizes to sell their properties in a John Dixon Auction!
 
 
 Historic College Park home featured in upcoming real estate auctions in Georgia and Florida

ATLANTA, Ga. (January 6, 2015) -- The Palmour House – a Victorian mansion built in 1892 for the founder of what is now Emory Dental School – will be offered at auction Wednesday, Jan. 28, headlining a group of approximately 70 property offerings. John Dixon & Associates will manage the event.

The restored home is now being used primarily as office space. It was originally commissioned by Dr. William Crenshaw, founder of Atlanta Dental College, now part of Emory.

Other Georgia properties set to sell the same day include a shopping center in Rome, a convenience store in Gwinnett County, and a Macon warehouse, as well as homes, apartment buildings, and residential and commercial land. The auction will begin at 11 a.m. at the John Dixon & Associates headquarters at 200 Cobb Parkway North, Suite 120, Marietta, Ga.

The Atlanta auction is the second of two auctions of properties. The first event will begin at 11 a.m. Tuesday, Jan. 27, at the Holiday Inn at 2725 Graves Road in Tallahassee. The Tallahassee auction will feature a 75-acre industrial property in Hosford, formerly used as a wood chip mill. “This is a great site for someone interested in using it for the lumber or construction industry, because it’s right on the railroad tracks and has building-related businesses on either side,” said Dixon. Other Florida properties include residential and commercial land in Tallahassee, Panama City, Midway and other cities.

Dixon said both events will feature properties offered primarily by lenders.  “By combining properties from a number of banks, investors and others, we’re able to offer a really good selection that will be of interest to real estate investors as well as individuals. This will be the first big opportunity to buy bank-owned real estate in 2015, and by all indications there will be fewer properties coming to auction this year because bank inventories are dwindling,” he said.

Individuals seeking additional information may visit www.johndixon.com or call 800-479-1763.

John Dixon & Associates, based in Atlanta with offices in Tennessee, Florida and North Carolina, is one of the nation's largest auctioneers of real estate properties, including land, homes, developments, condominiums, farms and other properties owned by individuals, investors, banks and other institutions.

 

Posted: 12/3/2014
What's ahead for real estate auctions in 2015?
By John Dixon
As we move further into the holiday season, we at John Dixon & Associates are busy wrapping up this year's transactions and lining up auctions for 2015. We've had a great year, helping banks and individuals get their properties sold and enabling buyers to build up their real estate investment portfolios. 
 
But what's ahead? After a recent sale, Carl Carter and I found a quiet corner and turned on the recorder to talk about what we expect.
 
Posted: 8/13/2014
Investing by headlines can lead to bad decisions
By John Dixon

I'll confess that I get frustrated at times with the way media cover financial news. I wouldn't mind if it were just a matter of sensationalism, but it's not always that simple. At times, media show such a lack of perspective that stories convey the exact opposite of what is really the case.

Take this headline from a recent Wall Street Journal:

Home-Price Growth Slows Sharply, Case-Shiller says

Index Says Year-Over-Year Growth rate is Lowest Since February 2013

Sounds horrible, doesn't it? And I'll say at the outset that the facts in the story are basically correct. But let's look more closely. Just what does it mean to “slow sharply,” anyway? It sounds almost like home prices are crashing and burning. But right there in the second sentence, it tells us that the S&P/Case-Shiller index of home prices in 20 major cities shows home prices rising 9.3%. That doesn't exactly sound like a “batten-down-the-hatches” storm to me.

If our homes appreciated by 9.3% every year, we'd all be in high cotton. So why the hysteria? Because economists had been expecting prices to rise by 9.9%, which would still be down from 10.8% the previous year.

In truth, even a growth rate of 9.3% is probably unsustainable. After all the pain we've been through in recent years, the last thing we need is an overheated market. Rather, what we need is a good, healthy market for real estate owners – whether homeowners or investors – to prosper. And I'm seeing a lot of signs that we have just such a healthy market. Despite some bumps coinciding with international turmoil and the default of Argentina on its debt, the stock markets have continued their long term bull market.

It's also good to note that people are paying their bills. The S&P/Experian Second Mortgage Default Index shows that the default rate on second mortgages is holding steady at a low 0.57 percent, having remained well under 1 percent for more than two years. When you consider that 4.35 percent were defaulting on their mortgages five years ago, I'd say we're in pretty good shape by comparison.

This, of course, is important because when we're investing in rental properties, we naturally want to make sure people can pay the rent – or qualify for mortgages on properties we're selling.

This translates into a good environment for us, because the current environment is positive for both sellers and buyers. And in a John Dixon & Associates auction, you don't have to worry about whether you're getting a fair price. The competitive nature of the auction takes care of that!

Posted: 12/19/2013
How an auction can help you manage your real estate portfolio
By John Dixon

For several years, when people thought about the sale of institution-owned real estate, they automatically thought in terms of banks selling foreclosed properties.

 
There were a lot of good reasons for that. The credit collapse was still fresh on everybody's mind, and the banks – through foreclosure – had huge inventories of homes, condominiums, stores, shopping centers, subdivision lots and other residential and commercial property that had to be sold.

We at John Dixon and Associates have sold a great deal of that real estate at auction, with such good results that the banks turned to us time and again. We expect to sell a great deal more in 2014.

All this time, other classes of real estate portfolio managers have been watching with interest.

On the surface, their challenge is similar to that of the banks, with a huge difference: They generally don't have to sell. They're in the business of owning real estate. But as with any other type investment, there's a time to reduce some holdings and raise money to redeploy into other areas.

Some properties may have been acquired years ago and no longer fit their current direction. Some are underperforming. But selling large numbers of properties one-on-one can be laborious, slow and expensive, so they just manage them, bide their time and make the most of it.

Today, the real estate market is excellent, and inventories of properties for sale are at or near normal levels. This creates the ideal market for investors of all sizes and types to make more use of auctions for trimming their own portfolios.

Here are some ways a John Dixon and Associates auction can help institutions:

  • Portfolio balancing

  • Selling of underperforming, excess or non-core assets

  • Selling properties with excessively high holding cost

  • Improving the institution's cash position

  • Complete the sale within a strategic time frame (e.g., end of quarter)

I invite anyone with portfolio management problems to give me a call at 770-425-1141. Our team of real estate experts can review your portfolio and give you a candid assessment of what a John Dixon and Associates may be able to do for you.



Posted: 4/9/2013
Accumulate assets now for the better times ahead
By John Dixon

 If the sun seems a little brighter lately, there may be a reason for it. For the first time in well over five years, the Dow is finally back above the 14,000 level, where it was in October 2007, just before our economy hit the biggest air pocket since the Great Depression. During the crash, assets of all types seemed to go into a free fall -- stocks, homes and commercial properties. People watched as their retirement accounts fell to a fraction of their former value.

But just in the last few weeks, we've seen the Dow climb back above 14,000. I don't want to overstate the impact of that, because the Dow isn't the best indicator of where the economy is. But it has a major psychological importance, because it's still the indicator the press mentions most. And getting above a barrier like 14,000 can give folks a lift. After well over five years -- at least by that measure -- we're finally clear of the horrendous downturn.

And we're seeing positive signs in the real estate market, too. In January, home prices -- as measured by the Case-Shiller Index -- showed the biggest year-over-year gain since before the crash. The National Association of Realtors reports that sales of vacation homes were up 10.1% in 2012, and the median price of a vacation home rose by 24%. When people get scared, luxuries like vacation homes get hit first. So when beach homes and condos start to recover, it means people are feeling pretty good about things.

As I've noted recently, we've been seeing signs of the upturn in our auctions. Our series of five auctions in late March demonstrated the strengthening economy in a dramatic way, as we had capacity crowds and vigorous bidding all over Georgia. Ultimately, the total reached $17.5 million, as hundreds of bidders purchased homes, commercial properties and land to position themselves for a stronger economy.

The economy is notoriously difficult to predict, so it's hard to tell what's ahead. But all the momentum seems to be positive right now, and there are a lot of opportunities ahead. Our buyers know that those who prepare now by accumulating assets will be miles head in the months and years to come.

 

Posted: 3/20/2013
Commercial property offers incredible opportunity
By John Dixon

When it comes to money managers, you can't find anybody who commands more respect than Howard Marks, chairman of the Oaktree Management Group, which manages $77 billion. How well respected is he? Let's put it this way: Warren Buffett says that when he gets a memo from Marks, it's the first thing he reads.

So I was interested in the recent Barron's cover story saying that "Marks and his Oaktree cohorts are enamored of commercial real estate." In fact, they've made a $5 billion commitment to the commercial real estate sector. Among other things, they're finishing projects and buying distressed properties, especially in small-to-medium size markets.

In other words, they're doing a lot of the same things as the people who show up at a John Dixon auction to bid on restaurants, office buildings, shopping centers, warehouses and other properties.

And we have a lot of commercial properties to sell in the next few weeks. On April 10, we'll sell a 21,000-square-foot office/warehouse in Rome, a couple of strip shopping centers in Stockbridge, two commercial office buildings in Newnan, and a 10,353-square-foot commercial office building in Newnan.

The next day -- April 11, in Pensacola -- we'll be selling about 30 properties, including a restaurant that formerly was the home of the well-known Wintzell's Oyster House. That sale will also feature commercial tracts in Panama City Beach, a car wash in Santa Rosa, and other commercial properties.

The following week, we'll have two more sales that feature some excellent commercial properties. On April 16, in Braselton, we'll sell an office warehouse in Winder and some nice commercial lots in Bogart. On April 18, we'll have two former day care centers and a number of other commercial properties.

 

 

Posted: 12/13/2012
Current real estate prices plus strengthening economy spell opportunity
By John Dixon

When it comes to investing in real estate, the folks in Chicago get it. And those who turned out for our two-day FDIC Chicago auction got some great deals on homes, condominiums, office condominiums and other real estate that should produce excellent returns in the next few years. 

Over two days, we had about 240 attendees, including 122 who came to bid in person. Another 36 participated online.  We sold 79 out of the 81 properties offered. Most of those -- 74, in fact -- were residences and commercial properties. As I'd noted when we first announced the auction, this sale consisted heavily of improved residential and commercial properties.

Across the board, the properties sold for prices that afforded the bidders with some excellent values. While many real estate prices have been firming up for several months, they're still at levels that enable investors to earn excellent returns, and we had a number of properties that were ideally suited to the needs of smaller investors, who figured prominently in the auctions.

Let's face it: When it comes to any investment, half the battle is buying at the right price. For a smaller investor, that means finding a property within your means. But whether you're investing $50,000 or $5 million, it also means investing at a level where the rental income provides a suitable rate of return, or at which you'll be able to make a profit down the road. 

Our auctions of bank-owned properties during 2012 have presented just those types of opportunities. Bidders have been acquiring properties at prices that won't last forever. At the same time, crowds at our auctions have been growing, resulting in solid results for the financial institutions and others for whom we're helping reduce inventories.  

We've had great year, and it's given me a lot of satisfaction to help our sellers reduce their holdings while providing avenues for investors to build portfolios that will make them a lot of money. I have every confidence that 2013 will bring more of the same.

Posted: 11/21/2012
Chicago FDIC auction will have many investment opportunities
By John Dixon

I'm excited about our upcoming auction of 100 properties for the FDIC in Chicago. There are a lot of great investment homes in this group for those who might be seeking an income property.  Here's the release about the FDIC sale in Chicago.

As we move into the holiday season, I know a lot of folks will be taking vacations and spending time with family. But we're already hard at work lining up auctions for the new year. January and February can be an excellent time for an auction as people are returning from the holidays, charged up about the new year and looking for opportunities.

 

FDIC to auction Chicago-area residential and commercial properties

CHICAGO, Ill. (Nov. 14, 2012) -- Bank-owned homes, duplexes, multi-unit residences and commercial properties in the Chicago area will be among approximately 100 properties set to be auctioned by the FDIC on Dec. 8-9.

"This will be an excellent time for individuals seeking homes for themselves or their family members, or for real estate investors who are seeking to add to their portfolios of investment properties," said John Dixon, president of John Dixon & Associates, which will conduct the auctions.

"Most of these properties are unoccupied and present excellent opportunities for creating an income stream, or in some cases for renovation and resale," said Dixon.

One of the highest profile properties is a single family residence on Bosworth Avenue, in the Lake View Oscar subdivision. "This is a very upscale home that is only nine years old, located in a high-demand area. We also have some attractive commercial properties, including a property with a car wash and two restaurants, a couple of bank branches, and some office condominiums," said Dixon.

The first event, at which the FDIC will auction approximately 60 properties, will begin at 11 a.m. Saturday, Dec. 8. The second event, at which approximately 40 properties will be auctioned, will begin at 2 p.m. Sunday, Dec. 9. Both will be conducted at the Marriott Chicago Midway, 6520 South Cicero Ave.

Chinese and Spanish translators will be available both days.

Dixon said investors who had shied away from real estate since the credit crisis are now returning. "By virtually any yardstick, real estate is gaining strength, with home sales, construction and prices beginning to establish a clear uptrend. That means, of course, that those who delay too long will probably find themselves paying more," he said.

John Dixon & Associates, based in Marietta, Ga., is a leading auctioneer of bank-owned properties throughout the United States. Individuals seeking additional information may contact the firm at 770-425-1141 or visit www.johndixon.com.

 

Posted: 10/22/2012
North Georgia auction demonstrates growing strength in real estate
By John Dixon

 I've been involved in lots of successful auctions in my time, but the three-day auction we conducted last week (described in the press release below) was special by any standard. The turnout was outstanding, and the seller was pleased with the results.

It also reinforced my view that the real estate market is bouncing back, perhaps more quickly and strongly than people realize. We had a lot of perceptive bidders who understood that the best time to buy is at a low point in the cycle. But they could also sense that the bargains they've seen for the last couple of years won't continue indefinitely, and they wanted to build their portfolios while they can.

Smart bidders!

John

Hundreds of bidders turn out for $8 million auction of bank-owned properties

GAINESVILLE, Ga. (Oct. 22, 2012) -- Bidders showed up in Gainesville by the hundreds last week for a three-day auction of approximately 175 properties, including office buildings, land, restaurants, homes and home building sites, among others.

The result was a combined total exceeding $8 million, according to John Dixon, president of John Dixon & Associates, which partnered with the Metro Brokers Bank Asset Team for the auction for Community Bank & Trust.

"We expected a strong turnout because of the variety and quality of the properties we were selling, but this was frankly a stronger turnout than even our optimistic estimates. It was three days of pure excitement," said Dixon.

Ronald Gailey, assistant vice president-special assets for the bank, said he was pleased with the outcome. "We achieved our goals and then some. The folks at John Dixon and Metro Brokers Bank Asset Team did an excellent job. Crowds were great, and bidding was vigorous across the board," he said.

Over the three days, the auction drew approximately 550 bidders -- 250 who jammed into the room for live bidding and another 300 who joined the auction via Internet simulcast and cast their bids remotely. And those numbers do not include those who attended on more than one day, Dixon said. "Many came all three days, but are only counted as one bidder. We had standing room only crowds all three days."

 On Tuesday, a group of properties in the northeastern corner of the state sold for approximately $3 million. On Wednesday, properties spread out over north Georgia sold for approximately $2 million, and on Thursday, properties stretching from Rome to Augusta sold for another $3 million.

John Dixon & Associates, based in Marietta, Ga., is a leading auctioneer of bank-owned properties throughout the United States. Individuals seeking additional information may contact the firm at 770-425-1141 or visit www.johndixon.com.

 

Posted: 8/20/2012
Major Buying Opportunity!
By John Dixon

The local Chamber of Commerce may not have been thrilled when the S&P/Case-Shiller Index pointed out that Atlanta was the only city in its 20-city composite with a double-digit negative annual return on home prices, but real estate investors should welcome the news.

 That’s because, as I’ve pointed out an number of times in this blog, the real fortunes are made by buying when properties are undervalued. And right now, home prices in Atlanta are lagging those in other cities covered by the respected index. The latest numbers show that Atlanta posted a negative return of -14.5% versus May 2011. And that came in a month in which 17 of the 20 cities posted increases in annual returns.

The ideal environment for any investment is one in which assets are underpriced relative to their true value. Sooner or later, other buyers will identify the values and start buying, resulting in significant profits for the investors who got in early. Investors especially like it when they identify a pocket of value once the overall market has begun to turn.

Atlanta is in precisely that position right now. Take a look at the chart, which shows the rate of change vs. 12 months earlier for Atlanta and the composite. Note that both Atlanta and the 20 cities are already in a well established upward trend, beginning around January. Prices in both are clearly improving, but Atlanta just started "deeper in the hole."

As an investor, that to me screams "value!"

 
Posted: 8/15/2012
Farmland!!
By John Dixon
The single hottest category of real estate is farmland, and I'm excited to have a major auction coming up in the heart of Georgia -- Dooly and Macon counties. During the last two or three years, farmland prices in the Midwest have been rising at an annual clip of 20 percent or more, providing excellent returns to farmers and investors alike.
 
And while the Midwest gets all the press attention when it comes to farming, agriculture is a major industry as well, and investors are beginning to look beyond the Corn Belt for good land values. 
 
I expect they'll like what they see with the 1,874 acres we're selling in Dooly and Macon counties. You can learn more about it here and by reading the press release below.

Major Georgia farmland auction set for Aug. 30

MARIETTA, Ga. (Aug. 14, 2012) -- Approximately 1,874 acres of farmland in Georgia's Macon and Dooly counties will sell at auction Thursday, Aug. 30, with John Dixon & Associates managing the sale.
"Farmland has been the hottest category real estate nationwide for the last two or three years, and it's very rare to see this much Georgia farmland selling in an auction, so this is a rare opportunity for farmers or investors," said John Dixon, president of the auction company.

The land will sell in 19 tracts, ranging in size from 8.5 to 831 acres. The Dooly County land includes 1,098 acres, of which the Farm Service Agency (FSA) designates 833 acres as cropland with 988 base acres. The Macon County land includes a total of 776 acres, with 443 designated by FSA as cropland with 500 base acres.  Most of the land has been used previously to grow peanuts and cotton.

"Dooly and Macon have some of the best farmland in Georgia, and the vast majority of this land is tillable and suitable for cotton, peanuts, soybeans, wheat, vegetables and other crops," said Dixon.   "There's really been a shortage of farmland on the market nationwide, so I expect this land will attract considerable attention from neighboring farmers and investors."

Dixon said he expects the land to appeal to investors seeking to accumulate and lease farmland without paying the high prices currently seen in the Midwest. "Southern farmland is far less expensive and is an excellent value. Investors who are hesitant to pay $10,000-plus per acre will find that there are excellent returns and appreciation potential to be had here in Georgia," he said.

The auction will also include farm equipment, including a tractor, combines and other farming machinery, with Midway Machinery & Auction LLC managing the equipment sale.

The auction will be held on the Dooly County property, beginning at 10 a.m. Individuals seeking additional information or directions to the property may visit www.johndixon.com or call 770-425-1141.



Posted: 7/25/2012
Wall Street demand for homes good news for investors, banks
By John Dixon
Bidders at John Dixon auctions frequently hear the bid caller say something like, “Buy yourself rich.”

Now, that message is starting to catch on -- not only among small investors, but among some on Wall Street as well. And the bigger investors especially seem to be focused on single family residences.

Fortune this week noted that one major private equity firm now owns 2,000 homes, reportedly one of the biggest portfolios of homes ever accumulated (excluding Fannie and Freddie).

And some are reaching even higher. Also quoted was a UC Berkeley professor and consultant who advises real estate investors. He said he knows of two dozen investment funds currently buying up single family homes, and some hope to own as many as 10,000 homes around the country.
If this trend continues to build the way it appears it might, it’s good news for banks who are still sitting on large inventories of real estate -- and for the individual investors who’ve been quietly building up their own portfolios of homes for rental or resale.

While it’s true that institutions have lots of buying power and armies of analysts, they’re not especially nimble. Investors who are ahead of the curve may see nice increases in values because of this new and significant source of demand. My guess is that there’s still time for smaller investors to accumulate properties before the institutions begin to bid up values.

For banks, it makes auctions smarter than ever. When prices are starting to rise, an auction is the surest way to make sure investors pay the current market value.

Meanwhile, our advice continues to be the same as always: Buy yourself rich!
Posted: 5/15/2012
You can sell your home -- if you're willing to accept the market price
By John Dixon
Here’s good news for people with a home to sell: Homes are selling again. Indeed, even Bloomberg is writing about markets such as Silicon Valley, where real estate agents are now wrestling with a problem from a bygone era: Too many buyers chasing too few homes.

But there’s a caveat: Home prices still aren’t rising. New numbers from the DataQuick service show that home sales are down 3.6 percent from a year ago and down 8.9 percent from three years ago. But the prices people are paying? Up a mere 1.1 percent compared to three years ago.

That probably means a lot of homeowners who are under water on their mortgages may still have to get the bank to agree to a short sale.

The reality is that whether you sell in a rip roaring market like the one we had in 2005 or a soggy one like we have now, you’re going to have to accept the market’s judgment for what your home is worth.

It’s hard to be realistic and objective about the value of your home. For decades, homeowners watched the values of their homes go up and calculated the effect of a growing equity on their retirement. Some still hang on to an appraisal they got several years ago, before the mortgage crisis hit and homeowners fell into default. On the flip side, we tend to discount the impact of foreclosed homes that are sitting empty. Or buyers who can’t get a mortgage.

The reality that a home sells at the market price may be easier for me to accept because I sell real estate at auction. I love the auction method, because it strips away any uncertainty and establishes a firm market value. And that’s the only number that really matters.

Time to start building soon?

In its article, Bloomberg noted that the inventory of new homes in March was the lowest of any year since 1963. (After all, builders haven’t been building a lot of spec homes.) But as the inventory of new homes (144,000 in March) shrinks, smart builders are starting to look ahead to a time when they can once again make a profit with spec homes. That’s why we’ve seen an increased demand in the hundreds of home sites and lots we’re selling these days.
Posted: 4/17/2012
Mixed signals aren't necessarily a bad thing
By John Dixon
Sometimes I think we'd all get a clearer picture of what's happening in the economy -- and the real estate market -- if we refused to read the financial news more than once a week.

Actually, once a month would be better still, but I doubt any of us could handle that. 

The problem with staying "on top of things" is that we see all the ripples and lose track of the waves that really matter. 

Today's headline, for example, is that housing starts are down in March -- 5.8 percent below February, as if that means anything. (Compared to March of 2011, housing starts were up 10.3 percent.) 

The numbers -- reported by the Census Bureau -- serve a very important purpose, of course: They give financial reporters something to write about. That keeps the news sites humming, but it doesn't necessarily give us much perspective. Other bits tell us that mortgage rates are back down to record lows. That sounds good, until you remember that a low rate is useless if nobody has the money to lend, and money continues to be tight.
 
Another ripple: Rents are going up while home prices remain stuck in the mud. This passes for bad news, and it is for people who can't get a mortgage. But it's a plus for the real estate investor, because it indicates he can add homes to his portfolio at a lower price but rent out at higher rates for more income.
 
As always, the devil is in the details, but the clarity is often in the lack of them. 
 
 
Posted: 4/10/2012
If 4% returns are too much to ask of stocks, what does that say about real estate?
By John Dixon
Folks who don't like real estate investing argue that it entails more risk than alternative investments. And there's no question that a lot of money has been lost since 2006. But then, that's been true of most investments, including stocks and bonds.
 
When I look at the returns to be had on various assets, real estate looks better all the time. Robert Shiller -- the Yale economist who helped develop the S&P/Case-Shiller Index that tracks home prices --  is also widely known for his insights into stock returns. And right now, he says the current stock market valuations predict something like a 4 percent return after inflation.
 
That's not much of a return on an investment with the risk of the stock market, in my opinion.  He cites data showing a 7 percent stock return over a 200-year period, but in a recent interview with CNN Money, he said the future may do worse than that. 
 
That doesn't mean he's necessarily bullish on real estate, but I am. We're seeing more investors at our auctions, and they're bidding more aggressively on all kinds of properties, including homes, lots and commercial properties. Let's say you can buy an investment home or commercial property at a substantial discount to its former price. You can lease it for a very attractive rate and still earn a return that beats 4 percent by a long shot  -- even if the price doesn't go up right away. 
 
Even better, with the amount of cash looking for a home,  a lot of investors now are able to pay cash for their properties or at least own them with relatively little debt. That translates into low risk. Let's not forget that when the self-made experts were talking about building a real estate portfolio for "little or no money down," that translated into a highly leveraged investment in an overextended real estate market with little or no room for anything to go wrong.
 
And in the real world, things go wrong. Our best protection is to own the best portfolio we can, at the lowest possible price, with the least possible debt. That calls for a marketplace exactly like the one we're seeing now. 
Posted: 4/2/2012
Loss sharing explained by the FDIC in four minutes
By John Dixon
OK, technically it’s four minutes a 14 seconds, but what’s a few seconds among friends? This FDIC video does the best job I’ve seen of explaining how the agency’s loss sharing agreements work.
Posted: 4/2/2012
Why buying investment properties is a great idea now
By John Dixon
It’s an unfortunate fact of life -- and a reality of human psychology -- that we read and hear the most about an investment class in the late stages of a cycle when all the easy profits have been made and the risk is at its highest.

That certainly has been the case with virtually all types of real estate. In the mid-2000s, you couldn’t escape the flood of books, videos and seminars telling you how to make your fortune in real estate. Invariably, these materials featured a photo of a smiling, newly minted real estate guru promising to reveal the secrets of how he made his fortune.

Even worse, a lot of them promised to show the secrets of getting real estate with little or no money down. I suspect that in our business of selling bank-owned properties, we’ve probably sold some properties these guys used to own.

The real tragedy is that now’s the time people really can make money by investing in real estate. Many properties are selling for a fraction of their former prices, and those who are in a position to build up a good portfolio now will be in the catbird seat when the economy comes back to life.

During the boom, thousands of developers created subdivisions all over the country to accommodate what seemed to be an insatiable thirst for new suburban homes. Commercial developers built shopping centers and office buildings that relied on growth that was about to come to a screeching halt. Individuals borrowed too much money -- much of it from lenders and brokers who were less than scrupulous.

Investment fashions may come and go, but here’s one truth that never changes: Your rate of return depends what you have invested. The less you pay for your investment, the higher your return on it will be, whether you’re buying it for rental income, resale or future construction.
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