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Jeff Masich's Blog

By Jeff Masich | Agent in Scottsdale, AZ
  • What is really going on in Real Estate Reality TV?

    Posted Under: Home Buying, Home Selling, Investment Properties  |  July 10, 2014 10:14 AM  |  10 views  |  No comments
    What is really going on in real estate reality TV? Is it all for real? Of course not. Why are we hooked?

    Attributes of a real estate flip TV show and what to watch out for: 

    1. Compelling characters (twins battling, husband wife challenges, flipping farmers, design on a dime...you name it)
    2. Artificial deadlines- create tension 
    3. Home disaster (mold, bugs, cracks) create anxiety
    4. Hard work....the contractors do most of the work but viewers love the images of the owner demolishing a wall with a sledge hammer
    5. Profit...how much money will you make....watch out, as some costs are often ignored (closing costs and carrying costs specifically). Shows tend to show the selling price less purchase price plus fix up costs
    6. Oooh Ahhh factor..during open house seeing potential buyer reactions mixed in with before and after pictures
    7. Getting Best Price for Contractor services and supplies....this is one of the most important things for an owner to do, yet it rarely addressed as it is too "boring" for viewers. 
    8. Flips Gone Bad...What did the home actually sell for?.....The selling price, carrying costs and closing costs are often not addressed as the show focuses on the fix up and not if it was successful or not. After all, the show was recorded during the fix up and the sale does not always go at the price hoped for. If the shoppers like the features of the remodel, the show often just ends there. Why scare off the viewers about flips gone bad for a home that sold at a loss?

    To amplify these concepts, the Arizona Republic and Gremlyn Bradley-Waddell reported on July 2, 2014, "Guilty pleasures as they may be, those so-called "reality" TV shows featuring flippers — folks who profit from turning neglected dwellings into comfortable, turnkey homes — drive Marty Boardman, well, flipping crazy.
    The Gilbert-based flipper, who does most of his work these days in Milwaukee due to the narrow profit margins he found in the Valley, has perhaps a better understanding than most people of what goes into these shows.
    "It's difficult for me to sit through any reality show, because I know so much about the formula," said Boardman, a former television-news cameraman, referring to the shows' need for a protagonist, an antagonist and an artificial deadline to stir up plenty of drama.



    Although he doesn't want to ruin anyone's enjoyment of these shows — they have their appeal, he admits — the author of "Fixing and Flipping Real Estate: Strategies for the Post-Boom Era" ($19.99, Apress, 2012) is always happy to point out things he thinks the shows get wrong about the business. His top bugaboos include:

    • Showing just the "____" (glamorus) stuff. Most viewers probably realize there are lots of behind-the-scenes footage that will never air, and Boardman knows all too well that it's the pretty rooms and tension that make viewers tune in each week. But the failure to show any of the more mundane parts of the industry rubs him the wrong way.
    "They show all the "____" (glamorous) parts," he said, "and I'd say 30 to 40 percent of my week is spent in front of a computer screen and, alternately, paying bills."
    Indeed, if a camera crew did show up to film him, they'd probably find Boardman using QuickBooks financial software to track expenses or building Excel spreadsheets to chart schedules on all his properties. After all, there are more than just rehab costs to account for, he added.
    "You have holding costs, which include property taxes, insurance and utilities, and there are also selling costs, which include Realtor commissions and title and escrow fees," he said, noting he has paid as much as 3 percent of a homebuyer's cost to get a deal closed. So a home he sells for $200,000 and cost him $40,000 to rehab can easily end up costing Boardman $60,000 total.

    • Inflated profit projections. The part of some shows where flippers talk about what they think they're going to sell their rehabbed house for is laughable, Boardman said.
    "Nobody projects a loss, and you really have no idea until that house goes on the MLS (Multiple Listing Service) — and you have people come to look at it — what the true market is," he said.
    The market is notoriously hard to predict, he said, adding there have been times he was sure he wouldn't get the asking price for one of his projects, then offers came in above that price. And then there are other occasions, when "you think you have a slam dunk and there are no offers and no one comes to look at it." He has seen the "wrong" cabinetry turn buyers away, while the "right" location — three doors down from a client's grown daughter, in one case — may prompt another buyer to pay thousands over a home's appraisal price.

    • Artificial drama. On many shows, Boardman said, flippers argue with contractors as a deadline approaches and tension mounts, seemingly putting the project in jeopardy. It makes for riveting entertainment, but Boardman said viewers need to remember much of this is just for show. Deadlines, he said, aren't usually that unyielding.
    "Let's face it, we flippers aren't brain surgeons," he said. "If I go three to four days past the scheduled deadline I've created for myself, no one's going to die. If there's a problem, we want to fix the problem correctly, and everyone yelling and screaming at each other is an incredibly inefficient way to run a business."
    Boardman said he has been approached about doing a reality show, but believes he wouldn't make a good subject because he's a pro who doesn't engage in screaming matches.
    "It's like running any other successful business. You maintain good lines of communication with your maintenance crew and your administrative people and try to stay as even-keel as possible, because there are a lot of highs and lows in this business."

    • Glossing over negotiations. Due probably in large part to the proliferation of these shows, he said today's homebuyers are well educated about the real-estate industry and more demanding than ever during negotiations. They expect everything to be newer, or brand-new, even in a flipped home.

    "If it's not, they'll call us on it," said Boardman, adding that now even the least expensive projects get brand-new materials — travertine, upgraded cabinetry — whether they're needed or not. But expectations can reach even more absurd levels, like when a would-be homebuyer sees a few cracked roof tiles and proceeds to question a home's structural integrity.
    "We're not a custom builder, and we're not in the remodeling business — we're flippers," Boardman said. "The finicky homebuyer can cause any rehabber to lose sleep and get gray hair, and they never show that on the reality shows." "

    Meanwhile enjoy the entertainment value of the shows and some of the remodeling ideas. Don't however, think this is how it is done in the "real world". Preparation, work, and smart ideas win out.

    Jeffrey Masich, Realtor, GRI, MBA
    HomeSmart
    Scottsdale, Arizona
    www.ArizonaHomesLand.com



  • Best "Patio Dining" with a View in Scottsdale

    Posted Under: Entertainment & Nightlife in Scottsdale, Home Buying in Scottsdale, Home Selling in Scottsdale  |  July 8, 2014 5:23 PM  |  28 views  |  No comments
    What are the best patio dining restaurants with a view in Scottsdale, Arizona. Well, see this list from the City of Scottsdale, Best Patio Dining in Scottsdale



    Olive and Ivy restaurant on the canal southwest of Camelback and Scottsdale Road. Wander across the bridge and stroll through the downtown Scottsdale entertainment and arts district before or after dinner. Scottsdale Fashion Square Mall is close by. Don't miss the Soleri Bridge and Plaza public art exhibit nearby in walking distance: http://www.scottsdalepublicart.org/permanent-art/soleri-bridge-and-plaza

    Jeffrey Masich, Realtor, GRI, MBA
    HomeSmart
    Scottsdale, Arizona
    www.ArizonaHomesLand.com
  • Things to do in Arizona for July 2014

    Posted Under: Entertainment & Nightlife, Home Buying, Home Selling  |  July 8, 2014 4:51 PM  |  28 views  |  No comments
    Things to Do in Arizona for July 2014 with live updates for the most current activities in the Grand Canyon State.

    Check in often here as this list is updated daily: Things To Do in Arizona Scottsdale, Phoenix, Tucson and all around Arizona.


    Hiking in the White Mountains of Arizona is cool and a wonderful adventure. Higher elevations bring tree lined forest trails and streams and lakes to explore. Take a deep breath and than God for his creation. For a list of some of the great White Mountain hikes: 
    http://arizonahiking.org/index.php/jreviews-directory/jreviews-listings-module-10

    Jeffrey Masich, Realtor, GRI, MBA
    HomeSmart 
    Scottsdale, Arizona
    http://ArizonaHomesLand.com 
  • Yikes! Opie's house is for sale for $27 million. What would Aunt Bee say?

    Posted Under: Home Buying in Arizona, Home Selling in Arizona, Celebrity Homes in Arizona  |  May 13, 2014 11:18 AM  |  284 views  |  No comments
    Yikes! Opie's house in on sale for $27 million. What would Aunt Bee say? Remember when little Opie was walking with his father, Sherrif Andy Griffith to the fishing hole? He did well.

    Les Christie of CNN Money reported on May 2, 2014, "This Ain't Mayberry...


    ron howard house outside
      Mr. Christie, further reports, "Ron Howard made his Hollywood acting bones playing small town, All-American boys. But Westchester County, N.Y., is a long way from Mayberry, and his home there is a lot bigger and grander than anything Opie would have lived in. 
      There's six bedrooms, five full and four partial baths, and a two-bedroom guest house. The Howards lived in the house built for them for 20 years, but no longer need such a large house.

      "Our children are grown, so it's time to move on, but the memories of this very special place will never leave us," said Howard."

      Mayberry and America, do the right thing and good things can happen.


      Jeffrey Masich, Realtor, GRI, MBA
      HomeSmart
      Scottsdale, Arizona
      http://ArizonaHomesLand.com


    • Things to do in Arizona for May 2014 with live updates

      Posted Under: Entertainment & Nightlife in Arizona, Shopping & Local Amenities in Arizona, Home Buying in Arizona  |  May 13, 2014 10:50 AM  |  279 views  |  No comments
      Things to Do in Arizona for May 2014 with live updates for the most current activities in the Grand Canyon State.

      Check in often here as this list is updated daily: Things To Do in Arizona Scottsdale, Phoenix, Tucson and all around Arizona.



      Tubing on the Salt River and for even more excitement Salt River Whitewater Rafting Season - White Mountain Apache Reservation , (not the tubing section of river), half-day, full-day, and overnight wilderness trips of up to 5 days, http://www.azroa.org

      Jeffrey Masich, Realtor, GRI, MBA
      HomeSmart 
      Scottsdale, Arizona
      http://ArizonaHomesLand.com 
    • Selling your home? How to get buyers to say "We should see this one!"

      Posted Under: Home Buying in Arizona, Home Selling in Arizona, Design & Decor in Arizona  |  May 5, 2014 6:22 PM  |  329 views  |  No comments

      Many homes look exactly the same from the outside. The buyer when viewing the home from the street or on the real estate search engines may not even stop when driving or browsing to look at all of your inside improvements. The first main picture of the home on the internet or the appearance when diriving by needs to scream, "Honey...Stop the Car"!  

      How to do this you ask? Make the home look happy and inviting. Make it smile! Nobody wants to look at a grouchy person, same with your home.



      Think about a distintive feature that will set your home apart from all of the others.

      1. A Fountain
      2. An inviting curving path
      3. A porch with a rocker
      4. A Magnificent plant
      5. A Picket fence
      6. An Archway
      7. A Stunning door
      8. New spectacular shutters or awnings
      9. Planters under the windows and potted plants on the porch
      10. An American Flag

      After, they get to the front door? According to the HomeGain survey, the top five home improvements that Realtors recommend to home sellers based on cost and return on investment (from highest to lowest ROI) are:

      1. Cleaning and de-cluttering ($200 cost / $1,700 price increase / 872% ROI)
      2. Home staging ($300 cost / $1,780 price increase / 586% ROI)
      3. Lightening and brightening ($230 cost / $1,300 price increase / 572% ROI)
      4. Landscaping ($320 cost / $1,500 price increase / 473% ROI)
      5. Repairing plumbing ($385 cost / $1,250 price increase / 327% ROI)

      If you don't feel like you know where to start call your Realtor, they know what improvements will get the "I think we could live here" response from buyers.

      Feel free to contact me with any questions or comments. I would be pleased to help sellers in Scottsdale, Paradise Valley, Fountain Hills and the Phoenix metro area. A Realtor from my office can help you anywhere in Arizona.

      Jeffrey Masich, Realtor, GRI, MBA 
      web: http://ArizonaHomesLand.com
      HomeSmart 
      Scottsdale, Arizona

    • Getting started with a Real Estate IRA

      Posted Under: Home Buying in Scottsdale, Home Selling in Scottsdale, Financing in Scottsdale  |  April 22, 2014 1:24 PM  |  461 views  |  No comments

       Have you heard about self direct real estate IRAs and wondered how they work and how to get started?

      A real estate IRA provides and alternative to investing in traditional stocks and bonds and allows the account holder to invest in income producing real estate.

      Here is a short video from Vantage about the real estate IRA: http://youtu.be/7jMAVKUDb7w

      Real estate IRAs are often invested in with cash from the IRA without carrying a mortgage from the IRA or IRA account holder to comply with IRS rules. Per, Business Week and Lewis Braham, "Nor can investors employ a traditional mortgage to finance IRA properties. An IRA account doesn't allow its owner to be held personally liable for any unpaid debt. The only permissible loans are so-called non-recourse loans that use the property itself as collateral. These have higher interest rates than conventional mortgages, and any income earned with the portion of the property owned with this leverage is considered outside the IRA and fully taxable....As a result, most self-directed IRA real estate deals tend to be all-cash. For most people, the lack of easily available leverage creates concentrated portfolios of a handful of properties. That's why experts recommend multi-family rental properties with two to four apartments, instead of single-family rental homes; if you lose one tenant, you still have a second apartment rented."

      What is an self directed IRA? According to Wikepedia, "A self-directed Individual Retirement Arrangement is an IRA that allows the account owner to direct the account trustee to make a broader range of investments than other types of IRAs."

      There are limitations on the rules for investing in real estate IRAs that may result in penalties. Business Week reports, "Self-directed IRAs are complex legal structures that, if managed incorrectly, can lead to stiff penalties from the Internal Revenue Service. The primary mistake is any appearance of self-dealing, where you benefit financially or otherwise from the property in the account before the minimum distribution age of 59 1/2. That means if your IRA owns real estate, you or any immediate family members can’t live in it or get any rental income from it directly. Otherwise, you could invalidate the status of your IRA account and be subject to a 10 percent tax penalty for the account’s value.

      Moreover, all repairs, management and property tax costs must be paid with the IRA’s funds. So you must either have a buffer in the account to pay for unforeseen expenses, or hope that the annual maximum allowable IRA contribution, currently $5,000, will cover costs. You can’t even make repairs by yourself without your own “sweat equity” being considered a contribution to the account." 


      Some investors keep 5 percent to 10 percent of their property’s value in liquid securities such as cash or bonds to cover future repairs.


      An investor, will need to choose a custodian to invest their self directed IRA assets into before purchasing a property. The custodian does not determine the value of the real estate purchase. The IRA investor makes these decisions. As Business Week reports, "Perhaps the biggest risk of self-directed IRAs isn't tenants bolting or tax twists but what you choose to put into it." Choose a Realtor that can help you determine a good property for purchase, do your homework and look at costs to bring the property to maket and manage the rental income. If you choose correctly there is a good return in a real estate IRA as opposted to the traditional stock and bond portfolios and the risk associated with those traditional investments.

      For more information, check with your accountant and financial advisors.

      Jeffrey Masich, Realtor, GRI, MBA
      HomeSmart
      Scottsdale, Arizona
      http://ArizonaHomesLand.com



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