The Zen Estate

Post-election "green" investing outlook

2010-11-03T21:56:00.000-04:00

Tuesday saw the end of some market uncertainty with the defeat of California’s Prop 23. Enactment of this proposition would have been a real blow to alternative energy and alternative fuel companies in the U.S. Solar company shares, which gain most of the mainstream media attention, were hard hit during the past 1 ½ weeks but saw an across the board bounce today.

One of the few solar stocks not sharing in today’s gains was First Solar(FSLR), which saw a $13.00 one-day drop last Thursday and further loss on Friday. Most of these stocks will take a few weeks to regain their late October price levels, if not longer. With demand and production continuing to grow, many solar stocks seem destined for new 52-week highs before the end of the year.

Much uncertainty remains among green investors after the election. The Republican party is well known for its support of big oil and coal. They are equally well known for their lack of support for energy efficiency/saving measures and alternative energy sources. Look for federal support programs for everything except ethanol to be slashed, particularly funds coming from the Department of Energy. At least the military branches do not need direct congressional approval to continue spending on alternative energy.

If Republicans were really as patriotic as they like to claim they would be using the U.S. military alternative energy initiatives as an example for the entire country to follow. Our biggest national security issue is more likely energy-dependence on other(often unfriendly) countries than terrorism. And we don’t and never will be able to produce enough oil domestically to meet our current demand.

Obstructing legislation to reduce domestic oil demand, such as higher mpg standards, higher lighting efficiency standards, higher energy efficiency for household appliances, etc…, does nothing but extend and exacerbate an already bad situation. Blocking federal and state incentives for alternative energy installations only lets China and the European nations widen their lead over the U.S. in implementation of these technologies. When the real petroleum crunch does come, those countries with the greatest percentages of solar, wind, geothermal and nuclear energy production will have huge strategic advantages.

America needs to grow food, not fuel

The reason ethanol receives so much support in the U.S. is its reliance upon Big Agriculture. No biomass-based petroleum substitute can be produced in the quantities needed without massive amounts of fertilizer, pesticides, genetically-modified seed stocks and millions of miles put on petroleum-powered tractors, harvesters and trucks. We need an innovative alternative to the internal combustion engine, not a biological substitute for petroleum fuels.

When did the U.S. become afraid of innovation? When did maintaining the existing business status quo become more important than being the world’s technology leader? When did saving a few dollars or a few jobs today start to overshadow the very future of the country? Our political leaders from both parties are bickering about ideological irrelevancies while our credibility with the rest of the world evaporates. When did being a Republican or a Democrat become more important than being an American?

Alternative energies are here to stay. Private industry leaders and the military see the writing on the wall and are taking the initiative to break away from petroleum dependence. But the process would be much faster and more integrated if there were national leadership rather than just national lip-service. For investors, alternative energy and smart-grid companies remain the wave of the future no matter what happens in Washington.

Book review: "Plumbing" by Sunset Books

2010-11-02T14:51:00.000-04:00

Every homeowner and every real estate investor should have at least a rudimentary level of plumbing. Such knowledge is useful during initial inspections(not to replace a professional inspection) prior to purchase and to be able to describe needed repairs to a licensed plumber after purchase. Many dollars can also be saved over the years by doing basic plumbing repairs and upgrades yourself instead of hiring a professional.

“Plumbing”, published by Sunset Books as part of their You Can Build series, is an excellent do-it-yourself book. It is written clearly and concisely by Esther Ferington and the editors of Sunset Books. All major topics are covered in depth along with illustrating color photos. This book is a good starting place for those with no knowledge of plumbing and also a good refresher for anyone that is out of practice.

A lot of money can be saved by doing simple plumbing jobs like installing a new faucet yourself instead of hiring a licensed plumber, especially if a problem occurs during the weekend.

The book starts by surveying the tools and materials used in common plumbing systems. The specific use of each tool and pipe material is covered, as well as the reasons for using them. Basic bathroom and kitchen repairs and upgrades come next, followed by a thorough chapter on sinks, clothes washers and water heaters. The final chapters are about installing new plumbing lines and outdoor plumbing projects.

For any homeowner, real estate investor and/or landlord trying to save money on simple plumbing repairs or upgrades, this is a great book that will get you through fixing a leaking toilet, replacing a faucet set or installing a low-flow shower head. Those more confident of their abilities will find detailed instructions and illustrations for replacing/installing new sinks, toilets, clothes washer connections, etc… At the very least, enough plumbing information can be gleaned from a thorough reading to know if a hired, licensed plumber is on the right track.

Suggested retail price for “Plumbing” is $24.95 in soft-cover. Amazon.com has it available for $18.21 new. Many local libraries will have it in stock as well.

The current state of the "green" stock market

2010-11-01T14:28:00.000-04:00

Solar, wind and wave power are the future of energy

The upcoming elections, recent earnings reports, continued economic unrest and Prop23 in California have not been kind to my “green” stock portfolio. The past two weeks have seen pullbacks in several sectors even though the DOW and NASDAQ continue to see very slight gains on most days. I do not see a Republican majority in congress and/or the Senate doing “green” share prices much good but am not yet convinced that will happen.

Solar shares have taken a big hit across the board. A few seemed to be shaking it off and recovering last week but have since stalled again. I am predicting at least three to four weeks to start approaching the October 15 levels again. A Republican majority and passage of Prop 23 could make that a much longer road.

Mining stocks, and rare earth/lithium miners in particular, are also down and consolidating. These stocks should bounce back quickly as Chinese export concerns remain high along with high demand. If the overall market starts to falter, silver and gold miners should benefit most.

Water treatment and infrastructure shares barely stumbled and are already nearly recovered. The major players, such as Calgon Carbon(CCC), Veolia Environment(VE), Consolidated Water(CWCO) and Watts Water Technologies(WTS) should do well. Consolidated has had a bad year but seems to have turned around. Calgon and Watts are performing strongly.

Battery technology companies remain steady performers and could start to surge at any time. Demand will grow with increasing market penetration by electric vehicles and commercial solar/wind power installations. New research breakthroughs could put a company into leadership position quickly.

Most of the maritime shipping companies, particularly those based in Greece, saw a slight pullback last week. Continuing weakness of orders, rising fuel costs and Greek economic uncertainty remain issues for these stocks. Nevertheless, goods still need to be moved, international trade continues and I remain bullish on maritime shipping as the cheapest way of getting large amounts of product from here to there.

Wind power company shares are mostly flat. Even with increased demand, especially overseas, this is not likely to change anytime soon. Wind is just not glamorous enough for most investors and does not have as much perceived potential for use on individual homes or commercial buildings.

Office equipment review-the Epson Workforce 635

2010-10-31T20:07:00.000-04:00

As an investor in both real estate and the stock market, office machines are part of my life. I regularly need to FAX documents to a bank or customer. I need to be able to receive a FAX. Being able to make copies without going through the computer can save a lot of time. And scanning documents to a hard drive file so that the paper original can be filed(hopefully permanently) saves a lot of desk and file clutter in the office.

This blog came to the attention of Walt & Co.(Epson marketing and promotions) last month and I was offered an Epson Workforce 635 for evaluation. I was clear with the contact person that I have used nothing but Hewlett Packard printers and all-in-ones for more than ten years. A week later the new Epson arrived at my door.

I was quite impressed by the easy set-up on a PC running Windows7. From opening the box to the first test print took less than 30 minutes with no glitches. I used a USB connection because there was already a cable in place. Other connection options for this printer are wired or wireless network.

The Workforce 635 has many features that save time and make business life easier. It will automatically copy and scan double-sided documents. Borderless printing is available. Text is very crisp and sharp and graphics/photos have accurate colors and fine detail without edge artifacts or banding in large, evenly colored areas. Text-only printing is very fast and graphics take only slightly longer.

This machine is obviously designed for heavy daily use. It is solid and very quiet when operating. The automatic document feeder will take up to 30 originals and the paper tray is designed for more than 200 sheets. It takes individual large-capacity ink cartridges for black, yellow, cyan and magenta that are very easy to change. The included software has a great driver interface for printing from a computer and the control panel on the printer makes access to any commands easy. Good optical recognition software is also included for converting scanned documents into editable text documents. Prints can be made directly from all common types of digital camera flash memory cards.

I have used the Workforce 635 for three weeks and am pleased with all aspects of its performance. It has produced high-quality bordered and borderless letter-sized photographs on both glossy and matte photo stock. Post-card sized mail pieces on plain 110# card stock were no problem. Tri-fold brochures on heavy presentation paper and many house flyers and documents on my standard 24#, 30%-recycled bright white paper were quickly printed. After nearly 350 total pages there has not been a single mis-feed or paper-jam and I am still on the first set of ink cartridges. That is pretty impressive performance for any printer. Scanning and Fax operation have also been flawless.

I would not hesitate to recommend the Epson Workforce 635 to anyone looking for an office machine capable of handling scanning, copying, FAX and printing on a daily basis. It has a smaller footprint than some competitors and produces less than average vibration/wobble during printing. Just as important in a busy office is the low noise level during all operations. Pricing should be approximately $250 and this machine should stand up to many years of heavy-duty use.

My new commitment to writing

2010-10-30T12:32:00.000-04:00

I have been writing an on-line real estate and real estate investing column with a focus on the Saint Petersburg area for Examiner.com for nine months. I started The Zen Estate blog to share my interests in both real estate and “green” stock market investing. A more recent addition is the Florida Image Tools blog concentrating on photography tips and personal experiences relating to Florida. I also contribute occasional personal opinion articles to UseKnowledge.com and “green” articles to Greenwalacom.

The writing has been a thoroughly enjoyed pleasure, but inspiration and time have sometimes been lacking. This has led to short contribution gaps at both Examiner and The Zen Estate. I have worked hard on my schedule the past few months and arrived at a better place that seems to be working for me. My original goal was to post three to four articles and/or photos per week at each destination. I have now consistently achieved that goal for three months.

This morning I am rededicating myself to a new writing goal. Having seen a direct relationship between the frequency of new posts and number of readers, particularly at Examiner.com, I am now committing myself to a minimum of six new articles at each outlet every week. I am looking forward to this new challenge and will no longer accept time constraints or lack of topics as excuses.

I have recently expanded my stock market “green company” portfolio and am about to greatly expand that again next week. While taking considerably more time to manage the larger stock portfolio, I am also anticipating a wealth of new article material for this blog as things progress. I am setting aside at least one hour each early morning for quality time with my cameras and will continue to use that material for Florida Image Tools articles.

Please give me relevant feedback on blog post and Examiner.com articles so that I can continue improving the content. I welcome any ideas for new topics of interest. I am currently completing an in-depth on-line course covering options trading techniques, at which I am a complete neophyte. The first book review went live on Florida Image Tools this morning and I anticipate many more book reviews on a range of topics. What do you want to hear about? What do you think about what you have seen so far?

Green investing now

2010-10-29T22:05:00.000-04:00

Solar power, wind power, wave power and advanced battery technology for electric vehicles are all the future of green investing. All of these industries are dependent on rare earth elements.

The past few weeks have seen a lot of consolidation going on in the green investing market. Solar, wind, batteries and rare earths/lithium have all stalled or pulled back. It seems the companies enjoying the fastest share price growth since July have been the hardest hit in the second half of October. This is all expected to be temporary as demand for all products continues to grow, though parts of the wind power industry seem to be faltering.

I do not follow wind as avidly as most green sectors because share performance has been lackluster for years. A-Power Energy Systems(APWR) shares are at early May levels and have not varied more than +/-$1 per share since that time. Vestas Wind Systems(VWDRY), once the darling of green energy companies, has been on a long, multi-year decline and recently hit a new 52-week low with no recovery in sight. China Wind Systems(CWS) has been essentially flat since late January and also shows no signs of imminent improvement. There are plenty of new wind farms being built and on order but that activity is not transferring to share price.

The solar power sector has been a great performer since early June, with a few companies outpacing the pack. JA Solar(JASO), Trina solar(TSL), Renesola(SOL), SolarFun Power Holdings(SOLF) and GT Solar(SOLR) have all set new 52-week highs in the past month. Most of the rest of the sector have seen increasing share prices since mid-summer. The past two weeks saw a significant pull-back that I do not expect to last past the upcoming election next week.

Rare earth element and lithium producers have been steady performers. Trading volume and volatility have increased in lockstep with anxiety over China’s rare earth exporting policy. My favorite companies in this sector are Great Western Minerals Group(GWMGF), Avalon Rare Metals(AVARF), Hudson Resources(HUDRF) and Western Lithium USA(WLCDF). All have been slowly but surely increasing share price except WLCDF, which has been more erratic. These are all very solid and well established companies with a guaranteed and growing market for their product. I remain strongly bullish across the board.

Battery technology is rapidly improving and battery demand is growing even more rapidly. More and more of our “can’t live without” gadgets require batteries and electric vehicles will be taking a prominent place within the transportation industry during the next decade. My top picks in this sector are Advanced Battery Technologies(ABAT), Valence Technology(VNLC), A123 Systems(AONE), Power One(PWER), Ener1(HEV) and Hong King Highpower Technology(HPJ). These companies are all carving out their own piece of the battery market pie and will all be major players for years to come. Expect share prices to follow the integration of electric vehicles. Batteries will also play a large role in the integration of large-scale solar and wind installation with the commercial electric grid.

While most green stocks seem stalled right now, and solar shares have really tumbled, I am not discouraged. These are relatively young growth industries and there are plenty of growing pains left on the way to maturity. Growth is the key word. There is huge world-wide demand for the products produced by all of the companies named above and that demand is going to increase, not go away.

Time is on the side of green. As petroleum prices increase, alternatives will become increasingly cheaper. As infrastructure is upgraded to accommodate the new green technologies, their rate of adoption and integration will increase proportionally. Anyone who still thinks that solar and wind power and electric vehicles are passing fads is just not willing to face reality. It will take time to fully phase out petroleum and coal from transportation and power production but the writing is clearly on the wall and investors getting on the boat early will get the best seats and the most benefits.

Lighting news for investors

2010-10-25T22:55:00.001-04:00

The lighting business is changing rapidly and that is creating opportunities for investors. Traditional companies are adapting rapidly or being left behind and new-tech companies are proving their worth or having short lives. Innovation is rampant and there is no clear technology or industry leader yet.

+Incandescent light bulbs are 130 years old, waste 90% of the energy used as heat rather than light and are on the way out in the U.S. The last plant making the bulbs in North America is closed. Companies in the lighting business are very much on-board with the change and ready to move forward.

+Rep. Joe Barton of Texas has introduced a bill to repeal President Bush’s energy efficiency standards but it is getting no traction. Others will try to get around the new reality in different ways-one German businessman is trying to sell incandescent bulbs as “heat balls”. Expect more creative sales techniques as the phase-out deadlines get closer.

+There is no single leader in the battle to replace the incandescent bulb. Compact fluorescents(CFL’s) are an established technology with a low price-point but contain mercury and other toxic components. LED’s are growing in popularity but are still quite expensive even though their long working life makes them cheap over the long-term. High intensity discharge(HID) metal halide bulbs have some advantage of their own for certain application. Combinations of the above are beginning to appear(halogen-CFL by General Electric). Organic light emitting diode(OLED) technology is just beginning to enter the lighting field and should have advantages in some areas.

+Research and innovation will continue. General Electric now has an LED bulb that uses jet engine technology to cool the LED’s instead of aluminum heat sinks. New technologies and new applications of existing technologies will allow new lighting products to come to market. There might never be just one “standard” type of light such as the incandescent bulb was for so many years. And that is not necessarily a bad thing.

Adapting firms that will retain a strong presence in the lighting industry are General Electric(GE) and Philips(PHG). The strongest player so far in the LED lighting field is Cree Inc.(CREE). Others in the industry are all jostling for position. A very large and unanswered part of the equation is consumer sentiment and how the public will spend its dollar/voting power. There will be more than a few winners and early investors, as always, will reap the greatest rewards.

Rare earth elements are good investments now

2010-10-23T17:39:00.000-04:00

Rare earth elements and lithium, usually pretty far under most investors’ radar, are making headlines lately. Because of China’s huge and growing domestic electronics and solar industries, they have needed to cut exports the keep Chinese businesses supplied. As China currently supplies more than 95% of the world’s rare earth elements, the diminishing exports are a cause for serious concern. The rest of the world is scrambling to find alternative supplies of these very important additives. Electric vehicles and the ever growing list of other battery-dependent products is driving the value of lithium.

Add to China’s reduced export quotas a growing tension about trade in general over allegations of currency manipulation and the stage is set for a lot of anxiety. That anxiety may be warranted is borne out by China’s total cut-off of exports to Japan for several weeks. There have also been rumors, denied by China, that the U.S. could be similarly cut off from rare earth supplies if they force the currency issue.

All of these recent happenings have been very good for the share prices of North America’s rare earth and lithium exploration, mining and production companies. Since rumblings of export reductions first emerged from China in the early summer, many of these U.S. and Canadian companies have watched their market values steadily climb. That climb should continue and possibly increase during the coming years as China further reduces exports and supplies of rare earth elements become even scarcer in the west.

There are many very small exploration companies, fewer mining companies and fewer still refiners for rare earth elements. Most I think of as background clutter because they are not traded on any major U.S. exchanges or as Pink Sheets. I track only a handful that are easily tradable in the U.S. with on-line software but always keep my eyes and ears open for new possibilities.

My personal favorite is Great Western Minerals Group(GWMGF). This is a very well positioned company that will probably end up being the only company outside of China to mine, grind and refine rare earths-real one stop shopping. Great Western shares have gone from $0.13 in mid-May to a new 52-week high of $0.47 this week. I expect this company to be a real player as China continues to choke off the world-wide rare earths supply.

The real rock star of the rare earth companies is Avalon Rare Metals. Shares of Avalon have risen from $1.09 in April to a new 52-week high of $4.87 this week. This is a solid, well managed company with a great track record and an established position. Its shares price should have many more new highs in the coming years.

Rare Element Resources has really seen its share price explode. REE has gone from $2.79 in August to an all-time new high of $13.71 this week. This is incredible considering what a struggle so much of the wider economy is going through.

Other companies on my personal radar are First Liberty Power(FLPC), Western Lithium USA Corp(WLCDF), American Lithium Minerals(AMLM) and Taseko Mines Ltd(TGB). Any of the much smaller and more difficult to trade exploration and mining companies could also hit a big strike at any time. Don’t be surprised if some of these rare earth and lithium specialists become buy-out target for the large multi-national mining companies looking to cash in on the coming rare earth shortage. I am watching this sector very closely.

Manipulated markets can cause ruin

2010-10-21T18:05:00.000-04:00

Today we have another guest post by Ron Robins, founder and analyst of Investing for the Soul. Ron’s post warns of some of the dangers of governments trying to manipulate currency markets. This subject is the current cause of much tension between the U.S. and China and is also driving uncertainty on Wall Street and the precious metals markets.

Market manipulations eventually led to Soviet economic collapse. Though not as overt as the Soviets, it is the manipulation of currencies and interest rates by major economic powers that has mostly led to massive misalignments is investment and consumption that pose extraordinary dangers to global economic health.

Ask anyone if they believe that the Chinese currency, the renminbi, is manipulated. Almost everyone agrees that it is. Are US interest rates manipulated? Again, everyone knows they are. (Not too long ago it was only the short term rates that were controlled. Now the US Federal Reserve [the Fed] is buying longer dated US treasury bonds to bring their rates down too.) Countries all over the world are manipulating their currencies lower to gain export advantages and maintaining near zero interest rates to spur domestic demand and cheap government borrowing.

It is basic economics that where markets are manipulated, supply and demand are distorted. And one distortion creates the need for a further distortion, and so on. The longer the distortions continue the greater the possibility of total market failure. We are near that point today with currencies and interest rates.

The Chinese have scored a major mercantile advantage by pegging their currency, the renminbi, at a relatively set and undervalued rate to the U.S. dollar. Not only have US exports suffered, but the exports of many other countries have suffered as well. Under US law, the Chinese should probably have been labeled a “currency manipulator.” However, by bowing to Chinese demands that they not be labeled a currency manipulator, President Obama’s administration is losing credibility everywhere.

So, Americans are waking up to find that not only does China dictate U.S. foreign exchange policy, but China indirectly influences its domestic economic agenda as well. Everything from employment policies (export expansion) to government funding needs (requiring Chinese funding) are all partly defined by the present exchange rate policies.

Increasingly, Americans realize that on the foreign exchange front they have been “checkmated”-as in the game of chess-by China. Should difficult economic times continue, or worsen, increasing American anger is likely at this arrangement. It could pass the breaking point and encourage America to act unilaterally against China. Currency turmoil might then embrace the globe.

However, one never discussed but possible reason why the US government has been afraid to label China (and Japan previously) as currency manipulators may be because the US itself may be acting covertly to manage the dollar exchange rate.

According to the US government’s own legislation, it can act secretly in currency exchange markets to affect the dollar’s exchange rate using the Treasury’s Exchange Stabilization Fund (ESF). The US Treasury say that the ESF, “with the approval of the President, may deal in gold, foreign exchange, and other instruments of credit and securities.” The ESF was established by the Gold Reserve Act of 1934 and then amended in the late 1970’s.

Also, the Fed engages in opaque currency “swaps” with other nations, and there is significant evidence of U.S. Treasury and Fed engagement in gold price suppression. Gold is the “anti-dollar” and barometer of confidence in the dollar. (See my August 24 column, “The Ethics of Gold,” at http://english.alrroya.com/node/54671 and gata.org)

Another manipulation of the Fed is its control of short term rates-and now possibly long term ones as well-to smooth out the booms and busts of the economy. However, we see the falsity of this argument. After almost two years at a near zero per cent federal funds rate the US economic quagmire continues-or worsens.

Induced low rates over the past ten years or so created a massive real estate boom and bust, discouraged savings, led to inordinate financial risk taking and moral hazard, unsustainable consumer debt, and now excessive, possibly uncontrollable government deficits and debt.

In their seminal work, “Growth in a Time of Debt,” published January 2010, Professors Carmen M. Reinhart and Kenneth S. Rogoff found that when government debt/GDP ratios exceed 90 per cent, economic growth rates fall considerably. According to the BIS, U.S. government debt/GDP will be 92 per cent by the end of 2010 and 100 per cent in 2011.

Furthermore, on September 1, the International Monetary Fund said, “general government debt in the G-20 advanced economies surged from 78 per cent of GDP in 2007 to 97 per cent of GDP in 2009 and is projected to rise to 115 per cent of GDP in 2015.”

Unfortunately, the present and future private deleveraging of debt in the U.S. and some other developed countries means potentially continued high-or higher-government deficits as economic growth is retarded or declines further. The Fed has said that to counter any renewed softness in US economic activity it will significantly expand its purchase of US government bonds and possibly other assets. This has the potential for fueling a huge expansion of the money supply and creating high or even hyperinflation.

The U.S. and some other countries are following a path whereby every manipulation begets further manipulation, and which then begets even further manipulation. With China, perhaps Japan again soon, and other countries controlling their currency values, the U.S. may be forced overtly or covertly to counter their currency manipulations. And with continuing economic difficulties, with interest rate policy having created a debt nightmare and becoming increasingly ineffective, the Fed may institute money proliferation policies that have the possibility of leading to high or ever hyperinflation.

If a vicious circle of manipulations by US authorities and other countries occurs, given time, it might rival some aspects of the soviet command economy-and with a possibly similar tragic outcome. Hopefully, Americans and others wake up before it is too late and realize that manipulated markets can eventually cause ruin.

E-mail the writer: r.robins@alrroya.com

©alrroya.com
See the original post of this article at: http://english.alrroya.com/node/58753

Is MERS nothing but a scam?

2010-10-19T20:03:00.000-04:00

MERS stands for Mortgage Electronic Registry System. This system was set up by banks and other financial institutions specifically to save themselves time and fees when selling mortgages to each other. It was intended from the very beginning to make an end-run around the requirement in every local jurisdiction in the country to transfer and record the original mortgage loan paperwork with each and every transaction. The headline on their web site home page says “Process loans, not paperwork.” They seem proud of being “created by the real estate finance industry.” MERS “eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans.”

The problem is all those local and state laws still on the books everywhere across the entire country that do require the preparation and recording of assignments when trading any mortgage loans. It seems like everyone just decided to look the other way while the financial companies made things much easier and cheaper for themselves. To make things even worse, by no longer properly recording the mortgage loan assignments state and county registrars are shielded from knowing who the true owner is. Mortgage loans transferred through MERS list MERS as the mortgagee even though they don’t hold title to the land.

Which brings up another problem with MERS. Many of MERS member companies have MERS carry out foreclosures in MERS’s name. This despite the fact that MERS does not own legal title to the mortgages. MERS therefore lacks legal standing to foreclose. Foreclosure courts have a very difficult time disputing this because the mortgage loan assignments are not recorded so the actual owner cannot be found.

All of the above is further complicated by the fact that MERS has no employees. This means all actions taken by the company are out-sourced to third parties. The third parties are usually document processing companies such as LPS or DOCX or large attorneys’ offices specializing in document processing. Yes, the same ones under so much scrutiny in Florida and around the country for questionable signature, verification practices and notary stamps.

Given the way the real estate crisis has played out during the past few years, it is hard not to wonder if MERS wasn’t a planned scam from the first. If the financial companies wanted to be able to sell and trade and securitize mortgages as quickly as possible without scrutiny, what better way than to remove those sales and trades from public view. The true legal owners of any given mortgage loan could no longer be tracked down through any public records. No government regulators could track how or when or how often mortgage loans were assigned. It was as if a huge segment of the mortgage industry got sucked into a black hole never to be seen again. Until people started to default on those “hidden”, “off-the-books” mortgages, of course.

Real Estate Investors start to feel the effects of foreclosure fraud

2010-10-16T14:42:00.000-04:00

There is a wide, deep, blue sea of foreclosure problems just starting to be explored. Investigations into foreclosure fraud by the federal government, state governments and the lending banks have had major effects on the real estate world. Until very recently there had been little to no change at the local level. That has changed during the past week.

Real estate investors and others purchasing property at courthouse auctions are seeing large portions of the daily docket cancelled. On some days the entire docket is cancelled and there are no foreclosure sales. This is a big change from dozens to hundreds of properties each day.

It can now be a last minute scramble to find a title company willing to issue insurance on foreclosure sales. Most investors have a deep network of title companies, but some foreclosed properties are just no longer insurable because of questionable titles. This situation is bound to get much worse in the near future.

As more news of foreclosure fraud and the questions it is raising reach the main-stream public, people will become more skeptical of buying foreclosed properties, with or without title insurance. And who can blame them. How many title insurance companies would be able to survive if they had to pay off on even one quarter of the policies written on foreclosure sales during the past two years?

There might actually be a kernel of good news hidden in this mess. Non-foreclosure real estate sales will look more desirable compared to foreclosures, even at a higher price, and closings will be possible. Prices will probably stabilize or even rise slightly as a huge amount of foreclosed inventory is removed from the market as (at least temporarily) unsalable.

This situation should give real estate investors, lenders and title insurance companies a chance to take a long, hard look at their business models and make the changes needed to move forward. Investors by nature tend to be very adaptable and take such changes in the business landscape in stride. Lenders and title companies will have to return to older, tried-and-true ways of financing and transferring property.

New battery research yielding results

2010-10-14T08:47:00.000-04:00

This is the time for battery companies to take the lead. Many of the emerging “green” industries are dependent on electrical power storage for success. Electric vehicles and intermittent renewable energy sources such as wind and solar need batteries or other types of power storage. Current battery technology has problems for which new research is developing solutions.

Lithium ion is the present battery technology of choice for its dense energy storage but heat produced during both charging and discharging cycles is a serious problem. Just remember stories of laptop computers and cell phones catching fire and notice how warm your digital camera battery is immediately after recharging. A few solutions aimed at this problem are beginning to appear.

Quallion, based in California, has developed a partial cure for heat build-up in Li-ion batteries for use in heavy-duty trucks to reduce time spent with the engine idling. Their design uses arrays of interconnected, smaller batteries that produce less heat individually and are easier to keep cool en-masse. The arrays are connected to allow continued performance even if individual cells fail. The Li-ion battery arrays weigh much less than a similar amount of storage using conventional lead-acid batteries. Using battery power for interior lights and cooling/heating while parked would significantly reduce the amounts of greenhouse gasses produced by the idling diesel engines of these over-the-road trucks.
Another coming change applies new research to the anode(negative side) of Li-ion batteries. Graphite is the present material of choice but has a limited capacity to hold lithium. The amount of lithium determines the amount of energy that can be stored in a given battery. Silicon can hold nearly ten times as much lithium as graphite but develops cracks after several charge/discharge cycles because of the expansion/contraction caused by the heat produced. Putting micron-sized pores in the silicon surface give enough room for expansion/contraction without cracking. This breakthrough will allow batteries of the same size and weight to hold many times the amount of power now possible. Much smaller batteries for large-scale uses, such as electric vehicles and buffers between solar/wind installations and the commercial power grid should soon be on the way.

Cathode(positive side) research is also bearing fruit. BASF is experimenting with a Nickel-Cobalt-Manganese(NCM) cathode material that could have wide applications. They claim up to 60% more energy storage capacity for same-sized batteries. This amount of increased storage could mean up to 50% more distance per charge for an electric vehicle. For consumer electronics it would mean greatly extended use time for laptop computers, cell phones, etc…

One of the older and better-established battery technologies might also make a comeback thanks to new research. Sodium-Nickel-Chloride(Na-beta) batteries have been around for a long time but like other types of rechargeables produce heat when recharged. It seems changing the shape of the battery from the traditional long cylinder to a flat pancake produces much less heat. An added bonus is the ability to deliver up to 30% more power. The materials that go into Na-beta batteries are cheaper and more easily available than those required for Li-ion batteries.

Another older battery technology is also being revived. GP Batteries received this year’s Battery Manufacturer of the Year-Alternative Chemistries award. They developed a new Nickel-Metal Hydride battery for use in electric vehicles.

Continued research and creative thinking is all of the above areas are needed. Battery storage plays an important role in the continued integration of greener/renewable energy sources into everyday life. Grid interface is a major problem for more widespread use of intermittent power generation like wind and solar. Better battery storage solutions are one way to move forward.

While battery company stocks have been lagging behind other “green” sectors, this situation will not last forever. Batteries have too large a role to play in the success of alternative energy production. The companies that best take advantage of new research will come out ahead in market share and stock share price. I watch several of the largest and most innovative battery companies closely and think they may soon follow the solar PV industry along the path of increasing share prices.

Where does foreclosure fraud go from here?

2010-10-07T21:22:00.000-04:00

The pile of federal, state and local officials landing on the country’s mortgage lenders is starting to get pretty deep. State Attorneys General, the U.S. Attorney General, governors, state legislators, U.S. Representatives and Senators, all are calling for lenders to halt foreclosure proceedings until the issue of fraudulent paperwork can be sorted out. Many of the same officials are also calling for criminal charges against guilty companies and individuals. Things, as they say, are complicated.

One of the stickiest issues is proving who actually owns the original mortgage loan note because the owner of the note has sole legal right to foreclose on the mortgaged property. After Wall Street decided to make more money by bundling mortgages together, getting them credit-rated and selling them as securities, they were subsequently often sold several more times. For many of those mortgages, no one knows where the original loan note is. Often enough no one is even sure who is supposed to own the note. The lenders are still processing the loans(taking the payments, or not), but do not have and cannot get the original notes. They are under tremendous pressure because of the sheer numbers of loan defaults – they have to foreclose so they can recoup something from the sale of the property.

The lenders turn to “paper-mills” that can’t find the original notes, either. But they guarantee delivery of requested documents within a deadline. So they manufacture a replacement document because they know the lender and the judge in the courtroom will be too busy to notice little discrepancies like forged signatures of attorneys and bank officers, inconsistent dates and improper notary stamps. It just won’t be a problem because the homeowners being foreclosed won’t be able to afford defense lawyers and won’t know enough to be able to defend themselves. And so things went for two years.

There were occasional but persistent stories right from the start about homeowners coming home from work to find the locks changed and the house empty, without receiving any notice from the lender. There were stories about homeowners finding problems with document dates and document facts but being ignored by lenders and judges. Most put these stories down to disgruntled, down-on-their-luck homeowners. After all, how could you possibly not know the bank was about to evict you?

It turns out that most of those stories were probably true. If the lender fails to tell you about imminent eviction(by officially serving the correct paperwork), how would you know? When the banks are so confused they are evicting people from homes that do not even have mortgages on them, it causes questions about what else the banks might be wrong about? When two banks both try to foreclose on the same property, what other mistakes are they making? The lenders are admitting in sworn testimony that they don’t read or verify the truth of the contents of foreclosure affidavits. They are proving with their actions they do not know who owns given properties.

So it seems foreclosures do need to stop for a while. There are legal requirements for foreclosure and the past few years has made a farce of those legalities. Everyone involved has played their part in undermining justice for the homeowners – the lenders, lawyers, judges, notaries and document-processing companies. Not a single person is trying to justify non-payments of mortgage loans, but legal requirements for foreclosure must be met.

If twenty people witnessed a murder and the guilty party was not informed of his Miranda rights and was questioned without a lawyer present, he would be set free. Those are legal requirements, not just niceties to attend to whenever there is time or nothing better to do. Homeowners deserve the same protection of the law. If a lender cannot prove ownership of the original mortgage loan note, does not properly serve the required notice, does not file the required documents with the court containing the required signatures, proper dates and notary seals, foreclosure should not be allowed to proceed. These legal requirements are not mere “technical issues” as some lenders have facetiously tried to claim.

Criminal charges should be filed against guilty companies and individuals. It will greatly slow down the country’s economic recovery. It will prolong the pain of a reeling housing market. It will cause many more financial institutions to go bankrupt(and rightly so). But it is a necessary thing. To do anything less would be to hold other values higher and more important than justice and the law.

REIT's for real estate investing

2010-10-05T20:59:00.000-04:00

Almost every conventional financial adviser will recommend diversifying invested assets to safeguard against loss if one sector of the economy underperforms. The common advice is to split the sum to be invested into some combination of stocks, bonds, cash or CD’s, precious metals and real estate. The amount invested in each sector will vary with age, total amount invested, desired annual growth/income, and the beliefs of each financial adviser.

I am not a strong personal fan of that style of diversification. I do still believe in keeping at least a portion of funds invested in real estate. Real estate, in my opinion, should be looked at as a hedge against economic downturns and inflation, similar to the way most investors look to gold. Real estate should not be looked at as a way to get rich quick, but owning a few houses occupied by renters or owner-financed buyers can provide a steady monthly cash-flow with little work and possible tax advantages.

Most average investors either don’t have the funds or the willingness to own and manage their own real estate investments. There is an alternative available giving investors almost all of the advantages of owning real estate without having any management responsibilities. Real Estate Investment Trusts(REIT’s) were started in the U.S. in 1960 to provide a sort of mutual fund for real estate.

REIT’s must follow some basic rules. They must hold at least 75% of total investment assets as real estate and derive at least 75% of gross income from rents or mortgage/interest payments. A REIT must be jointly owned by 100 people or more and be managed by a board of directors or trustees. At least 90% of income must be distributed to investors as dividends.

Owning shares of a well managed REIT therefore has advantages even over most stocks. Not only does an investor get the benefit of rising share price but also of unusually hefty dividend payments. So far in 2010, REIT’s have been vastly outperforming all of the main market indexes. There are many to choose from and most specialize in one type of property: hospitals, assisted living communities, single-family homes, large apartment buildings, commercial retail, manufacturing, etc… This fact makes it possible to stay diversified within the real estate sector.

I ran a very basic stock screen to see what would turn up. I chose real estate, $10 to $500 per share, $10-million to $10-billion market capitalization, outperforming the 50-day moving average and outperforming the DJIA by 5% or more. This simple search gave me 15 REIT’s to choose from on October 4th, 2010. Five of these have increased share price by more than 20% since the beginning of the year.

The top performer is Saul Centers Inc.(BFS), up 30.8% YTD and closely followed by Avalon Bay Communities Inc.(AVB) with a 30% YTD gain. Developers Diversified Realty(DDR) is up 29% so far this year and Digital Realty Trust Inc.(DDR) is up 23%. Worst performing of the top five is Kimco Realty Crop.(KIM), which is up a mere 19.9% since January 1. The most expensive shares are Avalon Bay at $106, the cheapest are Digital Realty at only $11.91 per share. Remember, there is still a nice dividend to collect as well as the increase in share price. This is pretty impressive performance in the current economy!

If you want to diversify your investments into real estate but don’t want to be a landlord or have to deal with mortgage payments, or even the actual rehabbing and reselling of properties, consider adding shares of a few REIT’s to your portfolio. Do the homework, just like if you were buying a house. Look for proven past performance and high, steady dividends. Buy sectors you believe in: healthcare, commercial retail, etc… And like any other stock, don’t be an ostrich and just it ignore. Pay attention, check on it regularly and don’t be afraid to sell and invest elsewhere if performance starts to lag.

Foreclosure fraud fallout for real estate investors

2010-10-02T18:39:00.000-04:00

This post is for everyone involved in any form of real estate investing. Direct investors are those who buy properties and then either rent them for monthly income or re-sell them for a one-time profit. Indirect real estate investors(some of whom do not even think of themselves as real estate investors) buy shares of stock in companies that make mortgage loans, write mortgage or title insurance policies or REIT’s that manage large property portfolios. Be aware the developing situation concerning mortgage and foreclosure fraud is going to cause problems for nearly everyone involved in even the slightest way.

The seven largest mortgage lenders in the country are now part of a federal investigation into foreclosure fraud. More federal investigations will follow this first one. Attorneys General for Florida, California and Connecticut have now started their own foreclosure fraud investigations. These state fraud investigations will also proliferate, at least in the states with the highest numbers of foreclosures. At least one U.S. Senator and one U.S. Representative are now publicly calling for the responsible federal agencies to bring criminal charges against companies and individuals found responsible for foreclosure fraud. Foreclosure proceedings in many states are already grinding to a halt. Homeowners are not being evicted and sales are not being allowed.

Some of the repercussions are already being seen. Some lenders have halted foreclosure evictions and sales in some states. Some states have halted foreclosure proceedings by certain lenders. Law firms specializing in processing foreclosure paperwork are being investigated. Mortgage loan insurance companies are starting to sue mortgage lenders for improper procedures and for not following their own in-house risk-avoidance rules. Title insurance companies are starting to refuse policies on property sales by some lenders. When these types of companies start getting nervous and turning on their own, things tend to escalate quickly.

*Investors who buy property in order to produce rental income
Hopefully you have title insurance on all the properties in your portfolio. Even if you do have title insurance, be prepared for possible problems with properties bought as foreclosures from the lenders under investigation. If there are problems, be prepared for multiple stalling tactics from the title insurance company while they try to pass the buck back up the line. If you own properties without title insurance you are in a very tough spot right now.

*Investors who buy properties for re-sale
This would be a good time to minimize inventory on hand. The big seven lenders are in the hot seat now but that spotlight is going to get wider. Be sure to get title insurance on every property purchased and try to re-sell while title insurance is still available for your buyers.

*Real estate stock investors
This would be a good time to consider moving funds into other investment sectors. The developing foreclosure fraud investigations are without doubt going to impact the share price of mortgage lenders, title insurance companies, mortgage loan insurance companies and mortgage/foreclosure paper processing companies at a minimum. Some effect of this already seems to be showing up in the markets. Without meaning to sound like a “chicken little”, this is going to get really ugly.

The current state of the mortgage mess

2010-09-29T10:30:00.000-04:00

Since the very beginning of the mortgage foreclosure crisis two years ago there were rumblings of fraud by the lending institutions. A very few isolated cases of proven fraud made local newspaper headlines. More information has been available on-line at web sites and blogs specializing in consumer issues, mortgage/financial issues and real estate. Until the past few weeks this news stayed very much under the radar and out of the national network television/national newspaper headlines. That is beginning to change.

Mortgage fraud is a much more important to real estate investors. Many investors were holding rental and/or lease-option/owner financed properties which were financed by major lending institutions/banks. The investors were also hit hard by the bursting housing bubble and facing foreclosure on financed properties. This is a business for investors and they were much more inclined to fight back, researching the lenders’ legal requirements for foreclosure and hiring attorneys to protect their vested interests in financed properties. Most homeowners facing foreclosure, however, were broke(could not afford their mortgage payments), ignorant of the law, unaware of the rights as borrowers and not inclined to try to fight a big bank(no money for attorneys’ fees).

It makes a lot of sense to have rampant mortgage fraud in the current situation. The lenders were not any more prepared for the massive way of mortgage defaults that swept over the country than were the homeowners. The necessary procedures, personnel and knowledge were just not there. Many of the lenders relied on outside companies to handle the paperwork for foreclosures and those companies were not any more prepared than the banks themselves for the sudden tidal wave of defaults.

This situation resulted in many corners being cut and legal requirements being ignored in order to be able to keep up with the increased flow of foreclosure paperwork. County court systems were also not prepared and did not pay enough attention to the paperwork presented them during foreclosure proceedings. Now, even though there have been complaints from the very beginning, these issues are coming to light in the mainstream media because of federal investigations into the practices of the mortgage industry.

The big lenders want to shrug off these illegal practices(mortgage fraud) as merely “technical issues”. Court decisions on issues of legal procedure, however, tend to place a great deal of importance on “technical issues”. It will be very interesting to see if any of the lending companies, processing companies or individuals involved ever face criminal prosecution or if any of the affected former homeowners ever receive any recompense.

One widespread “technical issue” that has come to light is bank officers signing affidavits without personal knowledge of the truth of the information contained in the affidavits as required by law. Unauthorized bank and processing company personal forging the signatures of bank officers on foreclosure paperwork also appears to be common and accepted practice and is also illegal. Large volumes of foreclosure papers seem to have been signed without a notary present to witness the signatures as required by law. These are very serious issues. The presence of any of these issues in any given foreclosure procedure would be legal grounds for the dismissal of that foreclosure. Tens of thousands of foreclosures seem to have been pushed through the court system in this way. It is fraud on a massive scale and it happened because the lenders either were not aware of the proper procedures or did not feel they had the time to follow the proper procedures. Ignorance of the law and time issues are not normally well-received excuses for fraud in other areas of business and should not be considered adequate excuses for mortgage lenders.

Now we wait to see where things go from here. If the federal government does the right thing and decides to prosecute lenders and processing companies and individuals for fraud, it will get very messy and drawn out and clog the court systems for years. And what can possibly be done for the former homeowners, who have already been evicted from their homes and the houses sold at foreclosure auction or privately by the banks? Or will it all just get swept under the carpet as an unavoidable consequence of the housing bubble fall-out and the feeling that banks are already under too much pressure?

Geothermal energy is "green" and out of the spotlight

2010-09-26T11:35:00.001-04:00

“Green” renewable energy is a popular topic in the news and with environmentally-minded stock market investors. Solar and wind production get almost all of the headlines, though, especially from the mainstream media outlets of large-city newspapers and network television. Bio-fuels, liquid fuels that can replace diesel and gasoline, consistently run in third place. Another contender that is even more earth-friendly gets very little media attention and is also very much “under the radar” with investors is geothermal energy.

What media coverage has received concentrated on a selected few areas of the world with obvious surface geysers(have to have those spectacular photos!) such as Iceland and California. This is high-temperature geothermal, using water and/or steam directly out of the ground and operating above 300F. The average person or investor does not even know geothermal is a proven energy source even at much lower temperatures, shallower depths and areas with no near-surface activity at all.

Low-temperature geothermal energy production can provide heating, cooling and hot water for buildings as well as electricity production with no emissions and very little above-ground infrastructure. It is also practical with already existing and proven technology almost anywhere on the planet. Installing a system is more expensive than most solar equivalents but bring the same energy savings, require fewer toxic chemicals and carbon emissions to manufacture the components and less potential future maintenance.

The U.S. military and Department of Energy(DOE) are putting considerable resources into geothermal right now(though still less than solar or wind). The DOE recently announced $20-million of new funding for a variety of geothermal projects ranging from large-scale commercial electricity generation to reclaiming the energy absorbed by oil & gas drilling brines discharged as waste-water to small systems supplying heating and cooling to a few buildings combined with aquaculture operations(one of which is currently operating in New York City). The new funding covers seven geothermal technologies suitable for cities, small towns and remote areas. The National Renewable Energy Laboratory(NREL) is teaming with IKEA stores to bring geothermal energy to new big-box stores. The Environmental Protection Agency(EPA) is investing in geothermal to reclaim some heavily polluted areas and the military is also investing heavily to reduce petroleum dependence at its bases.

One type or another of geothermal energy production is practical nearly anywhere in North America. Norwegian researchers think current oil & gas drilling technology could make geothermal much more easily accessible and the supply is inexhaustible. The United States Geological Survey(USGS) says over 120,000 MW of low-temperature geothermal energy is easily available and Rocky Mountain Power utility company has found about 800 MW of geothermal potential within 100 miles of its transmission lines in California, Utah, Oregon and Idaho. Nevada is becoming a geothermal hot-spot and U.S. Geothermal is now building a 11.5 MW plant in the northwest corner of the state to replace an existing power plant.

Stock share prices for companies in the field of geothermal energy production have been mostly flat for the past year, ignored by investors the same way geothermal has been ignored by the press. My current watch list has only four companies: U.S. Geothermal(HTM), Ormat Technologies(ORA), Nevada Geothermal Power(NGLPF) and Sierra Geothermal Power(SRAGF). ORA and HTM are by far the largest of the geothermal companies in North America. ORA’s shares currently trade around $29.50. The others are all under $1.00 per share, making them quite cheap investments. They are all low volatility stocks. With the spate of recently interest and money from DOE and the military ORA and HTM are both showing some signs of life and increasing share prices. With increased interest in geothermal within Nevada, NGLPF and SRAGF should follow the same path. Larger companies, such as Siemens and General Electric, are also showing signs of more interest in geothermal as a power source.

Is geothermal energy production on the verge of a major move into the mainstream of renewable energy? Are share prices of companies involved with geothermal about to start a long, steep climb to the stratosphere? It is still too early to make that call with any accuracy. The current interest and money in geothermal from federal government agencies bodes well. Private-sector interest and money from the likes of IKEA is also a very promising signal. Watch these stocks closely as things seem about to get quite interesting and may move quickly.

Photo courtesy of FreePhoto.com

Higher US Savings Is Economic Game Changer

2010-09-24T21:34:00.000-04:00

I am happy to present The Zen Estate's first guest post. Mr. Ron Robbins volunteered this very interesting article about U.S. savings rates and their effects on the American and world economies. I firmly believe that Americans need to save more and consume less. That has been a core issue of the "green" movement since the very beginning and seems like simple common sense(not so simple and not that common as it should be).
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Thursday, 23 September 2010 at 12:07, By Ron Robbins, Founder & Analyst-Investing for the Soul

There is one prayer of governments and businesses around the world: that Americans forgo higher savings, banish their job and retirement income worries, and go on a spending spree. However, this is not to be. Were the prayer to be fulfilled the global trade and other economic imbalances of the past and present would be unresolved, even magnified. But fortunately, the early stages of their resolution are at hand.

To help resolve these global imbalances, US savings rates must go up while its consumption of goods and services relative to GDP goes down. And this will be a generational game-changer for the US and for the world, causing economic difficulties everywhere for the years ahead.

Depending on how fast its savings rates rise, the US economy will be mired in recessionary or depressionary conditions for some years. But America has faced many daunting economic challenges before and each time it rebirths to greater prosperity. This is likely to be true again.

America once had high savings rates with much lower levels of personal consumption than now. Between, 1950 and 1975, its savings rates were generally in the 8 to 12 per cent range of disposable income, and personal consumption relative to GDP averaged around 64 per cent. In the years between 1975 and 2000 savings rates declined significantly to under 5 per cent and then to 1 per cent by 2005 when personal consumption rose to a high of about 72 per cent of GDP.

Since 2006, America’s savings rates have been moving up-and most especially after the 2008 financial crisis. Today, they average about 6 per cent.

Furthermore, it is probable that US savings rates will move even together to the 10 to 15 per cent range in the next few years as Americans worry about job security, home values, and retirement income. As this happens, US consumption rates will fall back to the 60 per cents region. This will have initially deleterious effects for the global economy and countries reliant on exports for income and jobs. Thus this is another game-changing situation.

No country or countries can presently replace the American consumer. For instance, the combined annual personal consumption of China and India is about $2 trillion, compared to America’s nearly $9 tln.

The big Asian exporters, as well as Germany, will have to find other markets for their products-or stimulate internal consumption to grow. Intra-regional Asian trade is growing rapidly but “is still mainly driven by supply-chain links involving intermediate goods rather than newly surging end-market demad in Asia,” says Stephen Roach, non-executive chairman for Asia at Morgan Stanley, in a Financial Times report.

So where will increased US savings go? As of now they are going mostly into bonds, especially US government bonds. Annual funding needs for the US government over the next few years will probably be close to $2 tln if economic growth stalls or declines. That sum is equal to about 13 per cent of US GDP. It will be increasingly financed from within the US by savers, banks and especially the Federal Reserve(the Fed).

The Fed will create new money to purchase US Treasury debt and probably other assets. This “money-printing” will generate huge amounts of “excess” dollars. The consequences of this action will produce a litany of global economic difficulties. These will include a slumping dollar, domestic inflation-and even possibly hyperinflation.

Upset at the dollar’s fall, other countries and regions from China to Japan to Europe, will attempt to devalue their currencies, leading to probable currency and trade wars. (I have written more on these subjects in previous columns.)

Of course a lower dollar and likely new US import restriction will mean higher US import prices, or even unavailability of some products. This will give some American manufacturers the opportunity to recoup previously lost domestic markets and the servicing of new ones as well. US industrial production could be re-ignited and even induce foreign companies and manufacturers to buy or invest in US domestic manufacturers as well.

With US imports from oil and computers to foodstuffs, as well as domestically manufactured goods costing more, Americans will find their standard of living declining.

“The need to overcome the effects of reduced[American] individual buying power will lead to the invention of a new class of product which will be a major trend of 2010 and into the future: Technology for The Poor…,” says Gerald Celente, the renowned American trends forecaster and president of the Trends Institute. Continuing, he says that, “growing with the same speed as the Internet Revolution, the trend will be recognized, explored and exploited by legions of skilled but jobless geeks, innovators and inventors who will design and launch a new class of products and services affordable by millions of newly downscaled Western consumers…”

Mr. Celente further forecasts, “a ‘not made in China’ consumer crusade that will spread among developed nations, leading to trade wars and protectionism.”

Americans have little choice but to increase personal savings rates. The Fed will “hyperventilate” to derail prolonged economic malaise and promulgate vast quantities of new dollars, causing the dollar to fall-or crash! A dollar fall will produce inflation; a crash could ignite hyperinflation in the US and elsewhere. Also unleashed could be ‘buy America’ strategies and policies within the US thus further inciting the risk of global currency and trade wars.

This sounds like dire news. However, a new, free America could be born as it rids itself of the shackles of debt. Americans, renowned for their outstanding drive, creativity and innovation, may create a new generation of ingenious products and services geared to the new economic reality. ‘Made in America’ products could again fill retail shelves. And Asia’s export-reliant countries will finally focus on enhancing domestic consumer demand to purchase their wares, thereby bringing much improved living standards to their populations.

Higher US savings will be an economic game-changer for the US and the world.

E-mail the writer: r.robins@alrroya.com

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See the original post of this article at: http://english.alrroya.com/node/58753

Where does housing go from here?

2010-09-21T14:13:00.004-04:00

The “housing crisis” in the U.S. has been a major blow to almost every homeowner, every real estate investor, every bank and financial institution writing mortgages and the financial system as a whole. Things are slightly more stable than six months ago. “Slightly” is the key word and the stabilization might well be only an illusion.

The federal government has done a lot to “help” through actions of the Federal Reserve, HUD, FHA, Fannie Mae and Freddie Mac, and direct bailouts to most of the mortgage lenders. Most of the changes seem to have allowed the pain to be less over a much longer time period. The bailouts let the financial institutions get back to profitability quickly without going bankrupt. All of the iterations of HAMP and other programs to help borrowers have instead also mostly helped the financial institutions. Changes to the way banks can report foreclosed and repossessed properties also benefitted the banks and not the homeowners.

Now homeowners trying to sell are still slashing the asking price to find buyers so prices are still falling in most parts of the country. Borrowers that were in trouble are still in trouble whether they were some of the lucky few granted rewritten mortgages or refinancing or not. Homes are still being foreclosed upon in record numbers. The inventory of REO residential properties for sale is growing and the “shadow inventory” of REO properties held by banks but not on the market is growing even faster. Buyers are going away to wait for better times or sitting on the sidelines waiting for even better prices. Private real estate investors are caught in the middle of the mess along with everyone else, getting “great” deals on foreclosure auction properties and seeing profit margins shrivel up before they can get the house back on the market.

There are a few bright spots though many would not see anything very good about them. Lenders, finally pushed into a corner by ballooning foreclosure inventories, are starting to seriously consider more mortgage rewrites and refinance packages to make existing deals realistically affordable for homeowners and avoid further foreclosures. Real estate investors are finding a large pool of takers for houses they are unable to sell for a profit by offering to rent, rent-to-own or lease-option instead.

Real stabilization and reduction of the REO inventory will only come when buyers agree that asking prices are fair and are not likely get any lower. This is classic free-market economics. When that point is reached it will still take several years for inventories of homes to reach reasonable levels again as many people who want to sell now are waiting for that time before listing their home. There is still some market for new-construction homes but it is small and remain that way until the existing-home situation is solved.

So, to the question asked in the title: “Where does housing go from here?” The sensible answer would seem to be: “Not very far and not very quickly.” This problem is just going to have to work itself out, almost certainly over the course of the next several years. It just is not going to matter very much what else the federal government does or the banks do or real estate investors do or anyone else does. The “housing crisis” was created by nearly everyone involved trying to get rich quick and the fallout and pain is going to last for a long time. Those who were prudent and kept the risks in mind have not been hurt nearly as badly as those who let greed drive the risks right out of their minds. Hopefully the one thing we can all count on after going through this is that lenders and borrowers will both learn important lessons from it. Don’t try to take that to the bank!

"Green" mining investments?

2010-09-17T17:44:00.003-04:00

Mining is one segment of my “green” investing strategy with which some might not agree. I would argue that mining is absolutely essential to most “green” technologies, including wind power, solar power, super-conductivity, advanced battery designs, highly efficient LED lighting and smart-grid just for a start. Without the metals and other diverse elements supplied by the mining companies of the world, modern electronics and “green” technologies would not exist. Silver and gold, copper and iron have always been important to the electronics industry. Just as important to modern semiconductors are the “rare earth” elements.

The rare earth elements are not really rare but are quite common and well distributed in the earth’s crust. They are, however, fairly difficult to purify into usable form. The rare earth group consists of 17 elements mostly in the lanthanide series of the periodic table. They most commonly occur in nature as oxides and are often intermixed at the same location. Highly-concentrated deposits suitable for mining operations are well distributed around the planet.

The problem today is China’s domination of rare earth mining and production. China now produces over 97% of commercially used rare earth elements. This situation came about because Chinese production was cheap and rare earth elements were an excellent export commodity. The rise of the native Chinese electronics industry increased domestic demand for rare earths. China is in the process of stopping export of these essential elements.

The need for more locally produced rare earth elements is putting a spotlight on mining and refining companies capable of replacing Chinese supply. There is no shortage of these companies and most of them are quite “cheap”. When the major electronics producers start feeling the pinch of reduced Chinese rare earth export policy these mining companies are in a position to see rapid, long term growth and share-price increases. A few of the companies I watch most closely are Great Western Minerals Group(GWMGF), Avalon Rare Metals(AVARF) and Sociedad Quimica Y Minera(SQM).

Let me reinforce the importance of the rare earth elements to “green” technology. These elements are used in almost all semiconductors including photovoltaic and PETE(photon enhanced thermal emission) cells. Rare earths are absolutely necessary for the strong magnets needed for efficient wind power and hydroelectric generation. Low-temperature superconductors require rare earth elements. LED lighting depends on rare earths. Many lasers, high-refractive-index glass formulations, colors for phosphors and LED’s and glass, fluorescent lamp bulbs, ceramic capacitors and portable x-ray machines all depend on rare earth elements.

My view is rare earth mining and production companies outside of China are a great short- and long-term investment. They should do nothing but continue to increase in value and share price(unless bought by a larger or wealthier competitor). Our part as “green” investors is to push them as hard as we can to make their mining and production operations as “green” as possible. It is also our responsibility to push the EPA and all other responsible government bodies with oversight authority to do their duty and ensure all rules and regulations are followed.

Tampa Bay area real estate update

2010-09-15T22:15:00.004-04:00

Homes in the Tampa Bay area are now selling for the same prices as ten years ago. August continued the slow downward price slide to $89 per square foot. That is 7% lower than last August and 4% lower than July. An average home lost $13,000 of its sale price. The number of homes sold increased by 2% but the total number of listings decreased by 1.5%.

The price decline in the greater Tampa area has been relentless. July home prices were down 3.6% from a year ago. June saw a 2.52% decline. Prices for May were 4.74% lower. The statistics remain very similar whether distressed property sales are included or excluded. Nearly 50% of all existing home sales in the area are now distressed properties. The Tampa area has seen slightly smaller price declines than Florida as a whole and prices have leveled off when averaged nationally.

Pinellas County was hardest hit in the Tampa Bay area for August. Sales of single family homes decreased by 8.1% for the month. Sales price lost almost 5% compared to the previous year. Average home price for Pinellas dropped to $135,000. While condominium sales in Pinellas were up 8.1% for August the median sale price of a condo lost 17.2% compared to a year ago.

Budget and staffing cuts within the Pinellas County, Florida government are affecting real estate and real estate investors. Starting October 4, the Pinellas County foreclosure auction will go on-line, replacing the current live daily auctions at the Clearwater and Saint Petersburg courthouses. The monthly tax deed sales will follow on October 20. Moving these auctions on-line will ease pressure on staff in the Clerk of the Court’s office. Pressure has not let up this year as foreclosures in Pinellas County continue to roll in at the rate of 1,000 per month, only very slightly below the rate for 2009.

In Clearwater, the City Council members have voted to purchase an entire city block in the East Gateway neighborhood. The decision was unanimous. The $1.675-million purchase will be funded by a $1.9-million loan from Clearwater’s Central Insurance Fund. Immediate plans are to put the purchase in a land bank. The city will decide what to do with the property at a later time. Involved is 2.2 acres of land with buildings including two motels, a restaurant, two duplexes and a single family home. This is a high crime area bordered by Cleveland Street, Grove Street, Betty Lane and Lincoln Avenue.

Why invest in "green" companies?

2010-09-13T20:38:00.002-04:00

I feel quite strongly that we all need to be conscious of how we treat the planet we call home. Pollution is making breathing the air and drinking the water dangerous to our health. Modern “big agriculture”, using antibiotics and hormones as staple ingredients of animal feed, has made eating a pork chop or a chicken breast the equivalent of taking a prescription drug(no prescription needed). The systematic use of chemical fertilizers and pesticides in the fields has done the same for commercial vegetable and grain crops. All of these chemicals, along with all of the OTC and prescription drugs and vitamins that pass through everyone’s toilets, go on to become part of our drinking water supply.

This is why I think it is important for everyone who invests in the stock market to take a long, hard look at “green” investing. Companies that are trying to minimize the damage done to the earth deserve to be supported. It is not a hardship: there are thousands of publicly trades companies on the U.S. stock exchanges involved in the “green” movement. Plenty of diversity can found and more companies are turning up every day.

I take a fairly wide-angle view of what is “green”. My current watch list of companies that I will invest in numbers slightly over 200 and grows daily as I discover new opportunities. Industries on my list include: batteries, solar energy, wind energy, geothermal energy, water power, wave power, electric vehicles, fuel cells, kinetic energy storage(flywheels), smart grid, LED lighting, rare earth mineral mining(necessary for semiconductors), wireless network & storage(necessary to smart grid), water treatment/recovery/efficiency, ocean transport(more efficient than flying), organic/sustainable agriculture, green packaging and a few more. There are also many tech companies that supply needed components to solar, wind, water and other industries. I also list cleaner, more efficient current technologies such as internal combustion engines designed to run on natural gas or natural gas turbine engines designed for vehicle use.

Many of these “green” technologies have been lagging the general stock market. This is not because the companies involved have bad management, or lack sales revenues or solid profits, or do not have ample opportunity for future expansion. The reason their stock prices are lagging is because people do not yet believe in them enough to put their money into company stock. This needs to change. If we believe in the products we need to believe in the companies making the products.

The situation seems to just be reaching a tipping point. As word of China’s stranglehold on rare-earth mineral production reaches a greater audience, previously little-known companies like Avalon Rare Metal Inc. and Great Western Minerals Group are seeing more interest and slow, steady share price increases. A123 Systems Inc., a maker of lithium-ion rechargeable batteries, announced the opening of a new production plant in Livonia, Michigan dedicated to batteries for electric vehicles and the $7.36/share stock shot up $0.65/share in one day. When Westport Innovations, designers of natural gas conversions for commercial diesel engines, signed a partnership agreement with Cummins to build heavy truck and equipment engines their shares saw a substantial and maintained price increase.

“Green” companies are the wave of the future. The writing is on the wall and there is really no choice. Companies like Walmart are using hydrogen and fuel cell fork lifts and more-efficient semi’s and Frito Lay is using an electric truck delivery fleet in New York City and the U.S. military is installing solar and wind power on its bases. The only real question is: how long will you wait before investing in these companies? Why not get in now while there is maximum upside and the support will make a real difference to the company? I invest every dollar with the intention of that dollar making me more money and it is certainly possible to do that within the “green” sphere of companies.

Solar power innovations

2010-09-06T09:24:00.004-04:00

New developments are really starting to pop in the solar power arena. Most businesses and individuals will readily admit that solar power is one of the waves of the future. They have been slightly hesitant to jump on the bandwagon themselves, however. The numbers of businesses installing solar power or heating and its adoption by government agencies in the U.S. has been disappointing. So has the performance of publicly traded solar stocks.

I think we have reached a collective turning point. Whether or not global warming is real has been mostly decided in most minds, regardless if because of natural or man-made causes. European and Chinese adoption of the technology is leading the world and making the U.S. seem like a dimwitted laggard. Large global companies and the military have seen the writing on the wall concerning petroleum-based power production and are making the move to renewable sources of energy. New solar research is revealing many ways to make this energy source both cheaper and much more efficient.

Global Solar of Tucson, Arizona specializes in thin, flexible solar panels that do not need mounting racks like traditional rigid polycrystalline panels. This allows them to be glued to roof surfaces with no penetration. They perform well in areas receiving no direct sunlight. The panels are currently produced in 19-foot-long by 1 ½-foot wide strips. They are now seeking certification for the panels.

A few companies are experimenting with selling small solar panels having built-in micro-inverters. This allows plug&play installation of as many or as few as wanted at the time. More panels for greater power output can be added later. This should be a growing trend allowing companies and individuals to “get their toes wet” before diving in to a full(and still expensive) solar array installation. Green Ray Solar in Westford, MA has received UL certifications for its solar panels containing inverters.

Research at University of California will lead to much more energy-efficient smart-phones and other hand-held devices. This extra efficiency would allow these devices to run on solar power rather than high-powered batteries alone. Think about the extra freedom having solar powered phones, mp3 players, portable GPS units and laptops allows the user. No more worrying about running out of battery power or down-time while recharging the battery.

The National Renewable Energy Lab has discovered a new technique to greatly improve the efficiency of existing solar-panel technology by allowing the absorption and conversion of all wavelengths of light. Acid etching the silicon photovoltaic wafer producing millions of tiny holes in its surface and turns it black. The process is fast and easy to produce. The new process could reduce production costs of solar panels as well as increase their efficiency.

Solar power will continue to evolve rapidly during the coming years. New discoveries in the field will make this energy source continually cheaper and easier to access. This is the reason I actively invest in a number of solar energy stocks and will continue to do so. This industry has not yet lived up to its potential concerning share prices but that day is coming soon and smart investors will be ready when it arrives.

photo courtesy of: freephoto.com

More efficient lighting with LEDs

2010-09-04T21:48:00.003-04:00

The future of lighting, all kinds of lighting, is LED’s. Only a major and totally unanticipated discovery would prevent LED’s taking the place of incandescent and fluorescent lighting during the next five years. LED’s will soon dominate the lighting industry because they are much more energy-efficient, they stay cool, they are small and light-weight, and they are more earth-friendly to manufacture and dispose.

Energy-efficiency and operating temperature are closely linked. Incandescent light bulbs waste approximately 90% of the electricity used producing heat instead of light. Fluorescent bulbs waste nearly half of their power as heat. LED’s produce light with more than 90% of their electrical draw. This enormously reduces the amount of energy needed to light an area while also reducing the energy needed the keep that same area cool. The lights themselves are now quite expensive but the energy savings will make up for the price difference. Prices will rapidly decline as demand and production increase(remember how “expensive” compact fluorescent bulbs were when first introduced?).

Longevity is the LED’s forte. Most currently being sold will last at least five years if never turned off. For most businesses, changing dead light bulbs is a daily or weekly(at least monthly) necessity. Switching to LED lights could allow a maintenance department to forget how to change a light bulb. How many saved labor hours, reduced storage space and inventory could this be worth to the average business? How much aggravation and space could be saved in the average home?

These are the reasons for the “LED Section” of my investing watch-list. I now monitor: Cree, Inc.(CREE) of Durham, NC; Veeco Instruments, Inc.(VECO) of New York, NY; Carmanah Tech Corp.(CMHXF) of Victoria, BC, Canada; XODTEC LED, Inc.(XODG) of Taiwan; Obelux of Helsinki, Finland and Bridgelux of Sunnyvale, CA. My not-so-secret wish is that Obelux and Bridgelux go public in the near future. These companies should all have a very bright future in the lighting industry.

Veeco Instruments makes the equipment other companies need to produce LED lights. Cree is one of the oldest and best established LED lighting manufacturers. Carmanah specializes in self-contained solar-powered outdoor LED lighting units. Obelux specializes in aviation and architectural lighting and has just announced a 200,000 candela white LED aviation marker light that is Federal Aviation Administration approved and uses just 350 Watts. Bridgelux is lead by ex-Seagate Technology CEO Bill Watkins and has already applied for over 250 patents covering various aspects of LED light production.

Stock market performance of these companies has been less than stellar so far. This is expected in with just-emerging technologies. As a greater variety of products becomes available, product prices drop and the importance of energy-efficiency increases, share prices of these companies should soar. I continue to wait and watch and monitor new developments within the industry.

Large private-sector companies and governments, led by the military, will undoubtedly be the early-adopters of large-scale LED lighting, followed by smaller companies and then individuals. Starbucks has already committed to making the switch in all of its stores. The U.S. Navy has committed to LED lighting on its combat ships. Many more forward-thinking organizations will soon figure out the many advantages of LED lights even at present prices. By the time they have to change the first dead light, replacement prices will probably have dropped by 60% or more and the initial investment will have been repaid several times over in energy savings.

These are exciting times in the world of batteries

2010-09-01T19:59:00.005-04:00

Batteries play a major and very under-rated role in our everyday lives. With many “green” technologies dependent on battery power storage(think electric cars and reliable, on-demand supply to the grid from wind and solar power installations) the importance of batteries will only grow. These are the reasons I am bullish on battery stocks even though the general market seems to be taking a much more wait-and-see approach.

Some of the companies that I invest in on my current watch list involved in battery production include Advanced Battery Technology(ABAT), Braskem SA(BAK), Valence Technology(VLNC), Ener1(HEV) and A123 Systems(AONE). I usually own shares in at least one of these companies. These companies cover a range from traditional lead-acid batteries to ever-more-common lithium-ion batteries to cutting-edge research on totally new power storage solutions. All of these technologies will play a big role in the coming years.

One exciting recent discovery took place at MIT. A common virus was used as a bio-template for preparing lithium ion battery anodes and cathodes in plain water at room temperature. Batteries produced this way could be made into any shape, including woven into fabrics. Imagine wearing a rechargeable vest that could power a laptop and smart-phone. This technology would also allow the outer casing of a camera or phone to double as the battery. The process eliminates the need for high temperatures and noxious chemicals during the battery manufacturing contest and the batteries stay much cooler during use, reducing the chances of fires(remember those laptops bursting into flames?).

Philadelphia is about to start a project with a novel use of batteries – subway stops will be equipped with high-capacity batteries(1-1.5MW) to capture electrical power produced by the brakes of the trains approaching the stations. The power stored in the batteries will then be reused to accelerate the trains as they leave. The new system is expected to save the city a considerable amount on its power bill and might even be able to feed some power back into the grid. The Pennsylvania Energy Development Authority has awarded a $900,000 grant to Viridity Energy to construct the system. It is expected to be in use by next spring.

Xcel Energy is already using a bank of sulfur/sodium batteries from NGK Insulators of Japan to smooth out the supply of electricity from an 11MW Minnesota wind farm. The batteries can store 7.2MW-hours of power. They are the size of two semi trailers and weigh 80 tons. Price of the batteries was $4-million. Xcel is planning to test a similar battery bank with a large solar array near the Denver airport.

The military takes the lead in renewable energy

2010-08-31T08:46:00.002-04:00

The federal government, via the Department of Defense, is finally taking the lead in renewable energy. This will speed the “mainstreaming” of renewable energy technology. Action is taking the place of words and minor financial incentives at long last. More private-sector jobs are an important added bonus. The military obviously sees the immediate need to break its long dependence on oil(mostly imported from not-always-friendly countries). Hopefully this will help Congress and the Senate see the light and speed the country as a whole in this direction.

Sunpower Corp.(SPWRA) has signed contracts with the General Services Administration, the National Renewable Energy Laboratory, the U.S. Air Force and the U.S. Navy. New solar power installations for these government agencies will comprise a minimum of 20MW. Sunpower estimates creation of 1,000 new local construction jobs. Locations are in the west and mid-west, in Colorado, Indiana and Arizona and are expected to start producing power next summer. The U.S. Marines are also getting into solar power with suitcase-sized installations for field use.

Wind power is also in the picture. The U.S. Coast Guard installed a 2.4MW wind turbine at its Southwest Harbor Base in Maine. The Coast Guard is shooting for a zero-carbon footprint for housing at this base and also installed solar panels and solar hot water heaters. This closely follows the U.S. Army’s first wind project at the Toole Army Depot in Utah.

The Army has so far been focusing on geothermal energy production. The Air Force is moving forward on renewable biofuels for its aircraft.

Tampa Bay Real Estate Update

2010-08-30T20:51:00.002-04:00

New foreclosure filings slowed slightly in July in the Tampa Bay area. There were 6,031 new filings. It is definitely a buyer’s market. Prices continue to slowly erode and have not yet reached a bottom. Florida existing home sales dropped 14% compared to July 2009, but condo sales were up 11% on a median price barely above $87,000.

In Tampa, The Towers of Channelside have received Fannie Mae approval. Almost three quarters of the 257 luxury residential condominiums have been sold along with four of the five retail units at street level. Marketing and sales are handled by JMC Realty Inc. The development consists of two 28-story towers in the downtown Channel district. Fannie Mae approval should make for quicker qualifications and closings on the remaining units.

An informal drive-around survey of Clearwater, Largo and northern St. Petersburg shows no slackening of real estate investor activity as revealed by bandit signs. Prices continue to decrease on these properties as well.

A new way to harvest solar energy

2010-08-29T12:42:00.012-04:00

A new and much more efficient way to convert solar energy into electricity has been discovered. The process is called Photon Enhanced Thermionic Emission(PETE). PETE could double or even triple the current efficiency of photovoltaic conversion by also taking advantage of the heat that usually goes to waste. Another plus is that PETE becomes more efficient at high temperatures while current photovoltaic technology becomes less efficient at increasing temperatures.

PETE is achieved by coating the photovoltaic semiconductor material with a thin layer of cesium. Research continues on which semiconductor materials work best for this process. PETE seems to work well at temperatures as high as 800C. The added efficiency over current photovoltaic materials could finally make solar price-competitive with oil. The new process uses already-existing and easily available materials and has been tested in southern California's Mojave Desert.

The research is being done by a joint venture of Stanford and SLAC National Accelerator Laboratory. The work is funded by the Defense Advanced Research Projects Agency and the Department of Energy. The original paper was published in Nature Materials after a success
ful demonstration of PETE.

photo courtesy of: freephoto.com

Creativity

2010-08-29T09:49:00.004-04:00

My creativity takes a variety of paths and requires a variety of actions. I write about what I do and find interesting(this blog is just one example): real estate, investing, photography, food. I photograph(examples also on this blog): mostly nature and wildlife but also architecture, still life, portraits, weddings and to illustrate my articles. I cook: a range of cuisines and fusions centering on fresh, healthy ingredients. I invest: in local single-family homes and in world-wide stocks concentrated on earth-friendly technology.

Maintaining creativity in these areas means spending some time each day doing each of them. This keeps me in active practice and keeps the basics mostly out of the thought process. The constant practice means I don’t have to stop to think about basic punctuation or grammar or spelling while writing; I don’t have to stop to think about which lens focal length or f/stop to use to get the perspective and depth-of-field wanted in a photograph; I don’t have to stop to think about whether to sauté or roast ingredients for an experimental dish; I don’t have to stop to think about how to enter a “buy” or “sell” order for stocks. Constant practice by constant doing takes the very basics of an activity out of the thought process and allows focusing on the creative aspects of the activity: to tell a story or just report the facts, everything in the frame in sharp focus or only the main subject, a medley of complementary flavors or the predominance of lemon/dill.

Continuous research is also a creativity booster. I read pretty much everything from science fiction to action/spy novels to stock/real estate investing techniques/theories to photography magazines and manufacturer’s equipment updates/new releases. It is important to think about these new(or old) ideas and how they tie in with personal philosophies/practices. I do not have the budget for a new lens but Canon has just released a 8-16mm fisheye zoom lens, stimulating me to think about new ways to use my current lenses. An organic gardening blog or Twitter post causes me to try a new spice or vegetable, a short story contest entry gives me style ideas to incorporate into my real estate column posts. I try to maintain a Zen attitude about life and always be open to new ideas and ways of doing.

Operating this way most effectively keeps me out of ruts. Concentrating too hard or too long on one activity or one technique puts me into a rut, which is then difficult to get out of. If I find myself not getting excited about photographing wildlife or landscapes I will park downtown and spend some time wandering around looking for interesting street scenes or architectural details or man/nature juxtapositions. If I feel uninspired for my next real estate column I might research the latest battery technology breakthroughs as a mental refresher. When feeling burned out on a house rehab a long swim in the Gulf of Mexico can get my thoughts back on track.

Recent random real estate thoughts

2010-08-28T17:23:00.002-04:00

Florida licensed real estate sellers should be getting a settlement from BP. After negotiations between the Gulf Coast Realtors Association and BP(via government rep.), it was agreed that all states bordering the Gulf of Mexico would get a payout based on the amount of home sales commissions lost because of the oil spill. The amounts have not yet been decided.

As expected, both new and existing home sales plunged to new depths after the expiration of government tax credits. This has happened despite a near-record low 30-year fixed rate mortgage interest of 4.21% in Florida. 15-year rates are now well below 4%. But people still are not buying. Many are no doubt waiting for both home prices and mortgage interest rates to go even lower, which it looks like they probably will.

The rate of new foreclosures in the Tampa Bay area does seem to be leveling off. This fact has done nothing for the backlog of homes already in foreclosure. Hillsborough County started running two-per-day foreclosure auctions at the courthouse this month and will continue through the end of the year. The intent is to deal with the 36,000 to 38,000 foreclosures already in the system. Any guesses what this is going to do to the housing inventory and pricing in the area?

All of the federal government’s programs designed to help ease the housing mess continue to be unmitigated failures. The feds just can’t seem to figure out that as long as these programs remain voluntary and continue to help the banks more than the homeowners that the banks are not going to cooperate. There is just no financial incentive in any of these programs for the banks to help the homeowners. As long as banks continue to make the most money(or lose the least) by following through on foreclosures, that is what they will do. They bankers are not going to renegotiate lower interest rates or reduced principal amounts just because they are such swell people and it is about time the government figured this out.

Another part of the wave of the future is here

2010-08-28T10:21:00.003-04:00

One of the oldest public swimming pools in the country has been transformed into one of the greenest and healthiest places to swim indoors on the planet. “The Plunge”, also known as the Richmond Municipal Natatorium, has been brought back from the dead after being closed for nearly a decade because of lack of public funds for maintenance and necessary upgrades. The historic 1925 pool reopened on August 14, 2010 in Point Richmond, California.

The refurbished 324,000 gallon pool now features chlorine-free saline water sanitized with ultraviolet light, solar heating, solar electric power, highly efficient pumps and 300 operable windows for natural ventilation. The $7.5-million makeover was paid for with a combination of voter-approved funds and private donations. A portion of the grounds are now dedicated to a community food garden.

This type of project is the wave of the future. Governments and other public-service entities need to take the lead on the issues of energy efficiency, alternative energy use and public health. If government sets the example, these types of projects will seep into the mainstream and become the norm much more quickly.

Up to this point, most projects of this sort have been undertaken by private-sector companies. The companies are not spending this money just as a public service or for good PR. They are doing it because they can see the writing on the wall and know it makes good long-term financial sense. Government on all levels needs to adopt such a long-term outlook and jump on the bandwagon sooner rather than later.

For photos and more information, click these links: http://solar.calfinder.com/blog/news/richmond-plunge-green-pool/ and http://www.metaefficient.com/architecture-and-building/efficient-public-swimming-pool.html.

My Personal Investing Strategy Ingredients

2010-08-27T22:20:00.007-04:00

I have overhauled my stock investing strategy and portfolio to better reflect my environmental and political beliefs and the realities of the current investing market. Investing in what you know and are comfortable with, I still strongly believe, is the way to success. I know the technology and energy sectors and environmental science issues. Intense self education let me shift from my former “buy & hold good undervalued companies” to my current “buy when it’s down and take reasonable profits before it goes farther down”.

Converting the portfolio is an interesting and ongoing process. I developed a list of several hundred companies that fit my criteria. These companies are directly or peripherally involved with: solar power, wind power, geothermal power, “next-generation” nuclear power, fuel cells, batteries, flywheel energy storage, electric vehicles, hydrogen/natural gas vehicles, smart grid, organic agriculture, sustainable aquaculture, water treatment and supply, waste management, and a variety of other earth-friendly fields. There are plenty of companies to choose from in all of the above listed areas. These companies are diversified enough to not leave me vulnerable to a crash of one market sector. These are definitely growth industries on a global scale and are also geographically diversified.

Converting the investing strategy is more difficult, but it is obvious to me that the days of buying shares of a good company at a bargain price and knowing that they would be worth much more in five or ten years is a thing of the past. This is very much a mental adjustment for me. In today’s stock market investors must be light on their feet. Investors must keep well informed about business/investing and larger global issues. Investors, to be successful, cannot become emotionally attached to the companies in which they are investing.

I am benefiting from these changes. I feel good investing in companies that improve the situation for everyone. I am more confident and more successful for specializing in the “green” niche: I can know the companies in greater depth, have a better “feel” of the business issues involved and better see things in context. I was formerly a generalist but now understand the advantages of being more specialized as an investor.

Removing texture from a ceiling 1

2010-04-21T07:14:00.002-04:00

The current rehab project has one “bedroom” that was originally a screened sun-room. There is an original exterior-wall window still in place between it and the living room. The interior walls were ¼” exterior-grade plywood shot with heavy plasticized popcorn texture, but the joints were all cracking anyway because of wall movement from inadequate framing. The ceiling had a heavy coating of conventional popcorn texture and also had some quality issues. There were only three receptacles all on the same wall. The room had no door and there was no closet.

The latest step of this rehab was the removal of the ceiling texture to allow refinishing to a smooth surface. I had never done this particular job before and received a very helpful hint from a fellow investor and TBREIA member that most textures could be lightly dampened with water to soften them and then either flattened or removed with a dull-edged trowel. I was a little skeptical but decided to give it a try for lack of any better options. I did not want to remove the ceiling unless absolutely necessary.

I used an old window-wash spray bottle filled with plain water to mist the ceiling in 2’x4’ sections and gave it five minutes to soak in. It worked like a charm. Instead of a difficult, dusty, all-day job the ceiling was ready for refinishing in 2 ½ hours.

Rehab update

2010-04-19T21:29:00.002-04:00

I continue to make progress on the rehab on Ewing Avenue in Clearwater. This morning I finished the electrical(six new boxes and receptacles on two different circuits) in the rear bedroom. The new framing is also complete and ready for sheet-rock to go up. Tomorrow the new closet doors will be installed and I will start removing popcorn texture from the ceiling.

It looks like I will be able to start putting up the new sheet-rock by Wednesday, maybe not until afternoon. I want to be able to do the bedroom and the new kitchen ceiling at the same time so that I can tape all of the joints at the same time. Then those two rooms plus the front bedroom can all be painted together as well.

After that will come the bathroom. The plan now is to tile the entire room from floor to ceiling. A new vanity will be installed along with new plumbing fixtures. The ceiling still needs a thorough check but will probably come down and be replaced with fresh sheet-rock and light fixtures.

I will continue to shoot short videos as this project goes along.

Federal mortgage help not working

2010-04-18T21:11:00.002-04:00

In its latest report, the Congressional Oversight Panel notes that the programs initiated by the Treasury Department to help homeowners facing foreclosure have not been effective. Fewer than 200,000 people have been permanently helped by the programs so far. I do not think this should be a surprise to anyone.

What incentive do the banks have to help homeowners facing foreclosure? The government bailed them out and continues to offer help as more foreclosures pile up. Participation in all of Treasury’s programs so far has been voluntary for the banks. A new requirement that loan servicers explain to homeowners why their loan modification has been declined is not going to increase the number of modifications. New efforts to get banks to write down principal loan amounts to bring loans in line with actual house values has gained no traction, even with one out of four mortgages currently being upside down.

What incentive does a homeowner have to apply for help through these Treasury Department programs? With second mortgages, credit cards, car loans and other debt, most homeowners would still pay nearly 60% of their income towards debt service even with reduced first mortgage payments. If they do attain a “best case” 5-year payment reduction, the homeowner will probably still be upside down and looking at higher payments once again.

Lenders and borrowers both seem slightly confused by the trickle of modifications to existing programs and new programs that keeps coming from Treasury. No-one seems to know whether to try to modify a mortgage now or wait a few months to see if something better comes along. Homeowners have seemingly been stuck in a non-stop cycle of applying to lenders for help, being denied after multiple delays and then being encouraged to apply for help again under a new or changed program, only to be denied yet again.

Meanwhile, more and more homes are foreclosed upon. Housing prices seem to be stabilizing in parts of the country but are still plummeting in some major cities. And the banks are once again profitable thanks to the federal government bail-outs.

The rehab progresses

2010-04-17T21:33:00.004-04:00

I have been spending at least a few hours almost every day working on 1585 Ewing Avenue. The framing for a new drywall kitchen ceiling is done. Framing for new bedroom drywall is almost complete and I finished the electrical upgrades in that room today. Drywall repair in the first bedroom is almost finished but I still need to enclose the main breaker box.

This morning the kitchen cabinets were removed from the wall to give access for electrical upgrades in that part of the house. Receptacles will be changed to GFI,s and moved to accessable ares, wiring will be concealed and cabinets remounted correctly. A previously repaired area behind the kitchen door will get a built-in shelf unit to hide that area - the wall material is no longer available and cannot be blended in. Additional lighting has already been added to the kitchen. The wall area behind the range/sink also needs repair.

See the first video of what it looks like now. I will update the videos regularly as the project progresses.

Enjoying getting back into practice

2010-04-12T20:20:00.002-04:00

For the past week I have been doing my own rehab work on a real estate investment property. It just had too many cosmetic and minor electrical issues for most buyers. The obvious electrical issues were switch and receptacle boxes recessed behind newer drywall so that it was impossible to attach cover plates and a few lights that were slow to come on when the switch was thrown. Cosmetic issues were ugly drywall taping, no or poorly installed trim, poorly installed carpeting and a really ugly drop ceiling in the kitchen.

It has been almost ten years since I have done any real construction work but I wanted to tackle as much of this project as possible myself to keep expenses down and try to salvage a small profit. I started with the best bedroom which needed mostly drywall touch-up: replacing/repairing poorly taped seems, filling nail holes, fixing receptacle/switch boxes and building a proper cover for the main breaker box. That room is nearly ready for paint.

Every remodel I have ever done has revealed many more problems as the job progressed. I had planned to simply frame and drywall a new kitchen ceiling below what was there and drop the existing fixtures down. The wiring was a mess and the ceiling was not level, so the drop ceiling had to be removed and new wiring and fixtures installed. A problem was found in the wall of one corner and the paneling cannot be matched so a built-in cabinet is now going to cover that area. The wall behind the range and sink were not finished, with exposed wiring and plumbing. Those need to be pulled out, the area finished properly and the fixtures reinstalled.

One of the bedrooms was going to need drywall seams re-taped. Then it was discovered that the joints were cracked because the walls were water-damaged plywood over an aluminum screen-room frame. Those walls are currently being removed and will be properly re-framed, insulated and drywalled. A closet will also be added, which will hide an original exterior window in the wall between the bedroom and the living room.

Yes this was an odd house. A lot of so-so work was done by the original owners over the course of nearly 30 years. But it will soon be a nice, freshly painted home for less than $3,000 of materials and a few weeks of work. And I have really been enjoying getting back into practice with a hammer, screwdriver, multi-meter and drywall knife. It is hot and dusty but also very satisfying work where you can see your progress at the end of every day.

Belleview Biltmore clears all legal hurdles

2010-04-07T21:46:00.001-04:00

Things seem to be looking up for the owners of the Belleview Biltmore Resort and Spa. The appeals period for the latest court challenge of development plans has expired. Last month saw another court challenge to development of the Cabana Club site on Sand Key defeated. Both properties are owned by Latitude Management Real Estate Investors, who plan to spend over $100-million on renovations and updating. This is good news after 2 ½ years of non-stop legal battles with various groups trying to prevent the proposed development work.

The historic 113-year old resort, located at 25 Belleview Blvd. in Clearwater, was built by Henry Bradley Plant and is on the National Historic Register. The Biltmore is probably the largest occupied wood-frame structure in the world at 820,000 square feet. Since opening in 1897 the hotel saw a steady stream of prominent guests including numerous presidents, queens, kings and captains of industry from around the world. It is one of very few historic hotels in the state of Florida.

With the removal of all legal obstacles to the development, project architect Richard J. Heisenbottle said the search for funds can begin in earnest for the first time. Finding financing for the complete project as planned could be a challenge. Knowing that the project can really be built should make the financial search a little easier.

The hotel has been shuttered and more than 300 employees laid off for more than a year. At one point the hotel was paying daily code violation fines for roofing problems. The originally filed development plan called for opening the renovated resort in January 2012. The new timetable for work and re-opening is not known.

Why “green” is important to real estate investors

2010-04-05T21:47:00.002-04:00

There are a lot of reason why green is in the news so much. Many of those reasons are going to become very important to everyone involved in real estate or real estate investing. Green is not just about trees and polar bears but about making homes more affordable and salable. Home buyers are interested in green and investors should remember this when doing rehabs.

Homeowners in all areas of the country benefit from living in energy-efficient houses. Well insulated walls and ceilings, thermal-barrier windows and no air leaks reduce heating and cooling bills for everyone. Installation of modern, efficient furnaces, air conditioners and electrical appliances also leads to reduced emissions, reduced raw materials extraction, reduced transportation costs and less waste in general. There are many programs at all levels of government to help homeowners pay for these types of improvements on older homes. More incentives also need to be made available for purchasing energy-efficient new homes.

Water contributes to the monthly cost of home ownership. Making a home more water-efficient can both lower operating costs and benefit the environment. Reduced water use can even delay or prevent sinkhole formation in areas prone to sinkhole activity. Low-volume toilets, shower heads and faucets all help reduce water usage. Native-plant landscaping watered with captured roof run-off can greatly reduce irrigation needs. Where available, recycled water can be used for irrigation. Tankless, or on-demand, hot water heaters save both energy and water.

Solar water heaters are an ancient and proven technology that is easily and cheaply installed and can also be adapted to heating the house. Passive solar home designs can reduce demand for air conditioning by limiting indoor direct-sun exposure during summer days and allowing cool night air into the home. Solar electric has become much more efficient and affordable than ever before and can supply much of a home’s needs during the day but storage is still a problem. Wind electric generation is just starting to trickle down to the individual home level and should become much more affordable and available during the next few years.

All of these “green” upgrades will lower monthly bills and increase salability of a home. These are not “fringe” ideas limited to the granola & chai crowd at the co-op. Mainstream home buyers are now looking for “green” features because they benefit everyone.

Investment property change of plan

2010-04-04T21:35:00.001-04:00

I am now working on rehabbing an investment property purchased a few months ago. The original plan was to wholesale it to another investor as a rental. It was a conventional sale and the normal realtor 30 days until closing even though I was paying cash. Between contract and closing values in the neighborhood went down and sales in the area slowed to a near stop.

There still seemed to be some hope of scraping out a few dollars for a quick resale but interest was low. Soon other properties in better condition were selling for the same amount as my asking price. There was a lot of realtor interest but the slightly run-down property condition and odd floor plan put conventional buyers off. It was time to adjust the investment strategy.

The major problems with the house were old and ugly switches and receptacles, an improperly installed hung ceiling and ugly dishwasher in the kitchen and older, different-colored paint in every room. Taking care of these problems and painting the exterior trim should cost a few thousand dollars and a few weeks if I do the work myself and should make the house acceptable to a conventional buyer at a price that will leave me with a small profit. This seems like a wiser course of action than insisting on a straight resale and losing money on the deal.

In most if not all of life it pays to be adaptable and open to new ideas. I am certainly using a different strategy for the stock market than just a few years ago. Real estate investing is no different. The market is constantly changing and successful investors pay attention and make the effort to change with it.

Real estate investors are still doing well

2010-03-31T21:20:00.003-04:00

I have spoken with a couple of other real estate investors working in the Tampa Bay area the past few days. Needing advice on a rehab, I was able to ask someone that has specialized in that area of investing for a long time. A meeting with another investor and friend to catch up on a few shared deals led to looking at several houses in Tampa and dinner.

The rehab specialist works mostly in Pinellas county. He has not had any problems finding distressed houses for good prices. Buyers for the updated houses have not been a problem, either. This investor likes to do “complete” rehabs, replacing all kitchen appliances and cabinets, bathroom fixtures and tile and all floor coverings as well as any windows, doors, etc… that are not in good repair. He likes to sell “the nicest house on the block”, no matter what it looked like when he bought it. Most of the work is done by the investor himself.

The other investor works mostly in Hillsborough county and used to mostly wholesale properties. He has transitioned into rehabbing most properties during the past six months, seeing it as a way to make the same amount of profit while buying and selling half as many houses. He also sees no shortage of good deals on rough houses or buyers for the repaired homes. The plan for these properties, though, is to do the least possible work to make the house presentable to a buyer and keep the selling price in line with short-sales in the area. All of the repair work is hired out.

Both of these investors noted that good labor is available at bargain prices now. The virtual halt of new home construction has left a large and idle pool of skilled workers looking for a job. This will not last forever but is helping real estate investors now.

The two investors also noted fewer properties on the market. Buyer demand has increased and they thought the flood of new foreclosures into the market had slowed slightly. Realtors I spoke with have noted this smaller inventory, too.

How sinkholes form

2010-03-29T17:50:00.002-04:00

Everyone knows, or at least should know, that Florida is prone to sinkholes and that sinkholes can have a very negative impact of property value. There are reasons why there is so much sinkhole activity in the state. This post will explain those reasons.

Most sinkholes occur in areas underlain by limestone, gypsum or salt. These three minerals are all easily dissolved by water, which in wet areas leads to underground cavity formation. When the roof of the cavity can no longer support the weight of the surface material above it the surface collapses into the cavity as a sinkhole. Since the hydraulic pressure of underground water also helps support whatever is above it, removal of large amounts of ground water can also lead to settling of the surface and sinkholes.

Salt and gypsum are dissolved in normal water and quite porous, so any wet climate will lead to sinkholes where these two materials are the base. Limestone is quite hard and made up of 80% to 90% calcium carbonate, usually formed by the compaction of marine life such as coral and shells. It is also prone to fissures which allow the easy passage of water. Organic material in water can form carbonic acid which dissolves the limestone.

Development activity can often lead to the collapse of otherwise stable underground cavities, thus forming sinkholes. Placing more weight on the surface above a cavity, such as settling ponds and large buildings, can cause collapse. The vibration caused by heavy highway or railroad traffic can weaken the roof of hidden cavities and lead to sinkhole formation. Removal of high volumes of ground water by farming irrigation or other commercial activities can also lead to cavity collapse or just general ground subsidence.

Any form of surface subsidence can cause major damage to any structure, roads or rails in the area. This damage can often be repaired, but repairs are usually quite expensive. The repairs generally involve mechanically jacking the structure back to its original position and then pumping the sinkhole full of concrete or other solid fill material to once again support the surface. Unless very well built, any affected structures are often either not salvageable or require extensive and expensive repairs.

Effective government Mortgage help for homeowners?

2010-03-28T13:21:00.002-04:00

Can the federal government really have much impact on the number of consumer mortgages that go into default? So far the answer would appear to be no, but the programs offered have been quite limited and not many homeowners have even qualified. The answer for the next round remains to be seen.

First there was the Making Homes Affordable program launched in 2008. Though the intentions were good the program showed the governments lack of grasp of the reasons home mortgages were going into default. The program targeted people with equity in their homes and who were current in their monthly payments. It encouraged lenders to refinance at lower interest rates and/or lesser principal amounts to lower payments to a more affordable level. With the drastic drops of property values and the rapid rise of the unemployed, most folks in mortgage trouble were left out in the cold. There was also very little incentive for the banks to take part in this program.

New provisions have now been added that try to make up for some of the original shortfalls. Eligibility now extends to properties valued at least 15% less than the amount of the mortgage. The unemployed are also targeted. Lenders are encouraged to refinance with FHA guarantees at a new principal of 97.75% of the actual property value, getting people above water on their mortgages again. Another goal is have maximum monthly payments of 31% or less of the borrowers income. Banks are also encouraged to offer up to six months on reduced or furloughed payments to help those who are out of work. Participation by lenders is still voluntary but some of the larger banks are showing signs of they think keeping people in their homes is better than foreclosing and trying to sell in today’s real estate market.

The problem of second mortgages, a large part of many lenders’ portfolios, remains unaddressed. Also not tackled is the problem of unaffordable mortgages on properties that have not drastically dropped in value. All of these loans will still go into default if the borrowers not find a job quickly or lose the job they currently have. The impact of the many commercial real estate loans about to come due is also ignored and could have a major impact on the whole economy. There are still interesting times ahead for all of us.

Real estate and the federal government

2010-03-26T09:37:00.001-04:00

Timothy Geithner, the current Secretary of the Treasury, pledged at a recent congressional hearing to reform the way Fannie Mae and Freddie Mac operate. Geithner thought Fannie and Freddie had been more prudent than the private market mortgage lenders but acknowledged mistakes. He said the failure of Fannie and Freddie in 2008 was part of a broader crisis and revealed structural flaws in the entire housing finance system. The main flaws were seen to be insufficient regulation and enforcement of existing rules and regulations.

The Vice President and Liaison to Government Affairs of the National Association of Realtors, Vince Malta, mostly agreed with Geithner. Malta thought the basic structure of Fannie Mae and Freddie Mac were flawed. He saw them having a private profit structure but a public loss structure, putting money in the pockets of those in charge but taxpayers on the hook for losses. Instead, the entities should be self-sufficient and price risk effectively to cover potential losses. Any profit should be used first to establish capital reserves.

Fannie and Freddie were allowed to earn private gains for many years while at the same time being subsidized by taxpayers. Federally regulated banks are required to hold 4% capital against mortgages on the balance sheets. Fannie Mae and Freddie Mac were only required to hold 2.5 percent capital against held mortgages and only 0.45% against guaranteed mortgage derivatives. They made unwise risk decisions during the boom years by investing heavily in mortgage derivatives.

The Federal Home Loan Bank system also made unwise decisions. Heavy investment in sub-prime mortgage securities was part of their game plan as well. These risk decisions and lack of capital reserves to cover loans and securities gone bad are a large part of the present problem.

Everyone involved thinks the government needs to stay involved in the home lending industry. Federal government loan guarantees are seen as the only way out of the housing mess. Without some sort of government guarantees the private mortgage industry would shrink to the point of uselessness. The question is: how will things be restructured and will that really solve the problems that were exposed during the past few years?

Fun writing tomorrow’s Examiner.com mural article

2010-03-24T21:49:00.000-04:00

Tonight I have been having a good time researching and planning an article for Examiner.com. I wanted to write about Clearwater,s new economic stimulus grant to paint several outdoor murals in the East Gateway neighborhood. The problem was tying the murals into the real estate topic my Examiner column. What came to me was that murals enhance the value of the real estate. Now I had a good local topic with a real estate spin and could take a photo in the morning of the empty wall where the first mural will be painted this coming weekend.

Because the new murals were not really enough material for a complete article I started researching other murals in Clearwater. As with many things about Pinellas county that turned up many interesting twists and turns. There is a tackle shop on Ft. Harrison with game fish painted on the outside walls that I have driven past many times. I did not know that the fish are still there because the ACLU helped the shop’s owner sue Clearwater for violation of first amendment rights when the city called the fish an “advertising sign” and fined him for code violations. There were a few other murals that I did not know about. So now I will have a slide show to go with the article instead of just a single photo.

A good time to buy

2010-03-23T10:33:00.001-04:00

This is a great time for anyone that would like to buy a home. Whether shopping for a first home, wanting to trade to accommodate a growing family or downsizing to something more efficient the current prices are about as low as we will ever see. The true bottom of the real estate market might not be here yet but there are plenty of bargains available that will still be seen as bargains in the years ahead.

Some of the best values are on fixer-uppers. Many of these homes are foreclosures that former owners could not afford to maintain properly or just older homes that need a little TLC. The FHA has a little-publicized 203k program that helps people get into this type of home. This program allows prospective home buyers to borrow the purchase price plus a considerable amount more to be used for renovation. Work to be done needs must be documented and renovation must be completed within six months of the purchase date. Other FHA rule such as down payment amount, interest rate and term of the loan remain the same as on standard loans.

Anyone thinking of purchasing now should move quickly. The federal tax incentives for home buyers are set to expire on April 30. These now consist of an $8,000 credit for first-time buyers and up to $6,500 for many others purchasing a home.

Also, the FHA is set to tighten other lending regulations soon. Down payments will increase because the cap on seller kick-backs will go down from the present 6% to 3%. The up-front mortgage insurance fee is increasing by ½%. FICO credit score requirements will also be tightened with a 580 necessary to receive the lowest 3.5% down payment. Those scoring below 580 will need 10% down after these rules take effect.

This situation might be behind some of the increased sales activity seen in the Tampa Bay area in March. A secondary effect of the increased sales has been a reduction of inventory of for-sale houses. The result is being felt by potential buyers as reduced time on the market and sale prices close to or at the asking price.

On-line foreclosure auctions

2010-03-22T22:37:00.001-04:00

Florida was the first state to allow on-line foreclosure auctions in 2008. This came about because of a lobbying effort by Lloyd McClendon, the man behind Realauction.com. This company was started to auction tax certificates and now also runs foreclosure auctions for ten counties in Florida. I expect this trend to grow rapidly as budgets shrink and staff is cut. Realauction.com averages $35 per sale and takes its cut from the buyer.

Pinellas and Hillsborough counties still have their foreclosure auctions the old fashioned way, at the courthouse. There are only a handful of regular sale attendees, minimum bids are disclosed just before the start of the sale and bidders know who is bidding how much because they are standing next to each other. With on-line auctions the minimum bids are announced well ahead of time, maximum bids can be placed in advance and bids are anonymous. Rather than just showing up at the courthouse, bidders must register in advance for on-line sales as well as place adequate deposits ahead of time. With courthouse sales the balance of a winning bid is due the following day but the Pasco County on-line auction requires the balance by 4:00 PM the day of the sale.

As the on-line foreclosure auctions spread to more counties it will radically alter the way real estate investors approach this process. The on-line system draws bidders from a much wider pool in the counties where it has been implemented. Miami-Dade county now has nearly 4,500 Floridians registered to bid and almost 750 more out of state or international bidders. It is time for investors that bid at courthouse foreclosure auctions to start making plans for the shift to on-line bidding.

Recent Happenings

2010-03-21T22:05:00.002-04:00

There is a lot happening on the real estate scene in the Tampa Bay area. The residential and commercial markets continue to evolve and there is an undercurrent of life just going on. I am going to touch briefly on a list of items that have caught my eye over the past few days.

Commercial real estate shows signs both good and bad. Two large new projects are moving ahead in Clearwater that will replace years-old eyesores with new senior housing, upscale apartments and retail and restaurant space. The Tampa East Industrial Park had one tenant renew their lease for 100,000 square feet of space. But Tampa area hotels saw average daily rates and revenue per room rates drop much more sharply than the state or national rate. I am seeing more empty retail space in Pinelllas county strip malls every time I go out.

Residential single family home sale numbers are strong, mostly on foreclosed properties priced at $125,000 and less being snatched up by first-time home buyers taking advantage of the $8,000 tax credit and the bargain prices. On the down side, Tampa Bay’s average home price continues to drop more quickly than state or national rates and foreclosure rates remain the highest in the nation. More bad news recently came from FEMA, which refused Florida’s request for federal emergency money to deal with high rates of toxic Chinese drywall in all 67 counties.

For investors the low prices and foreclosures make finding good properties easier than it has ever been before. The low prices and foreclosures also mean that profit margins are very thin. But even with depressed rental rates it is not difficult to find properties with good positive cash-flow. The near stand-still in new construction starts means a lot of unemployed construction workers which translates to a discount labor pool for rehab investors. The still dropping prices mean that properties must be turned around quickly or bought at huge discounts, though.

For anyone involved in real estate, adaptability is absolutely necessary. Many of the old game plans no longer work very well and there are opportunities that did not even exist a few years ago.

Commercial real estate developments in Clearwater, Florida

2010-03-20T20:22:00.002-04:00

Two substantial commercial real estate developments have been approved during March by the City of Clearwater, Florida. Both involve additional housing. One project also brings more retail and restaurant space. Both developments will transform sites that have been unused for several years and are considered eyesores.

Pine Berry Senior Limited Partnership plans to build 85 units of affordable senior housing on the site of the former Rainbow Lanes bowling alley at 1225 S. Highland Ave. This will be a four-story building with laundry room, community room, library, computer resources room, picnic area and emergency call service. Total project cost is estimated at $15,859,959. Clearwater is putting up $545,000 for 30 years at 3% and 5 years of deferred payments. Other funding comes from a variety of sources. Expected completion is the summer of 2011. Estimates of tax revenues from the project ranged from $13,000 to $70,000 per year. Pine Berry is experienced at building senior housing.

Nickel Plate Properties, Inc. plans to develop the former Lakeside Mobile Home Park. This 30-acre site fills the area between Gulf-to-Bay and Druid on the west side of Belcher. The plans, backed unanimously by city officials, call for 240 apartments and 83,000 square feet of retail and restaurant space. Because of its size this project also needs the approval of the Pinellas County Commission and the Florida Department of Community Affairs. The proposal is significantly smaller than the maximum allowed under current zoning for the property. The retail space would get one new entrance on Gulf-to-Bay and one new entrance on Belcher. The apartments would get three gated entrances along Druid. Shoppers would not be able to exit onto Druid. Cost of this project has not been made public.

Eco-friendly straw bale house construction

2010-03-18T20:38:00.004-04:00

A lot is heard lately about “green” home construction and houses that are “eco-friendly”. Most of the homes in question use conventional frame construction with more insulation, more efficient electrical appliances and low-flow water fixtures. Truly earth friendly house construction goes well beyond these measures.

A popular “green” construction method in the western US is the straw bale house. This technique is starting to gain popularity across the country and worldwide because of its ease of construction and use of an agricultural waste material. More states and cities are adding straw bale construction codes every year.

Straw bales used for home construction must have less than 20% moisture content and be tightly compacted(they should not bend if lifted by one string). This also makes the bales quite fire resistant, as they contain little oxygen, especially after being encased in plaster and/or stucco. A bale home has approximately three times the thermal insulation of a conventional frame home. Sound insulation is also much better that with typical frame construction. Another advantage of straw being a natural material is no off-gassing, which can be a problem with many insulating materials for sensitive people.

People often wonder about the durability of straw bale structures. Because they are encased in waterproof stucco on the outside and “breathable” plaster on the interior, the bales are fully protected from water and do not rot. The highly compacted bales have low oxygen content and are much more fire resistant than conventional construction. Bale homes survive well in high-wind and earthquake zones. Many straw bale homes from the 1800’s are still standing in Nebraska and Europe.

Many resources are available to learn about straw bale home construction on-line. Many books have been published on the subject as well. Straw is an agricultural waste product in many parts of the world and is often burned, adding to the greenhouse gas problem. More bale-friendly building codes could help both the earth and home owners.

Florida mimics the feds in useless foreclosure help

2010-03-16T20:56:00.004-04:00

In December of 2009, Florida’s Supreme Court required the 20 state judicial circuits to sponsor mediation between lenders and homeowners. This was supposed to ease the mortgage crisis. But it was a totally new program and each circuit had to design it from scratch. Pasco and Pinellas will start offering the foreclosure mediation in June and Hillsborough does not know yet when it will be able to start. There are now more than 50,000 mortgage default cases clogging the judicial system in those three counties alone.

First the borrower is contacted. The borrower then meets with a foreclosure counselor. Then mediation is scheduled. The best case scenario is that it would take at least a month after a program begins before the first case would get to mediation. Those with other mediation experience in Florida estimate only half of the eligible homeowners would sign up. Real estate investors without homestead exemptions would not even be eligible for the program.

The entire program of foreclosure counseling for the borrower and then mediation costs $750. This fee is paid by the lender. Sessions are set for no more than three hours.

This just does not sound like a useful or practical program. Three hours to work out an alternate solution to foreclosure with a bank? Really? Has any of these Supreme Court justices tried to convince a bank to do a short sale recently? Have they timed the process?

Another requirement: mediation sessions must be scheduled between 60 and 120 days after the foreclosure filing. How is this going to help any of the cases currently in the system? Does the Supreme Court think there are that many more foreclosures yet to come? Why not find a way to help some of the people that are being foreclosed on right now? Many of the foreclosures now in the system have been dragging on for much longer than 120 days.

A further requirement of the court: bank representatives at the mediation sessions must have full authority to modify the mortgage. The problem is that many of the banks filing the foreclosures are only servicing the loans. The mortgages are often owned by investing companies across the state or across the country. How is that ever going to work? The justices are again showing a severe lack of knowledge of how the modern mortgage system works.

So here is the way I see it. In the face of a poor economy and strangled budgets, the state Supreme Court has forced every judicial circuit in Florida to start a large new program from scratch that is not going to help any homeowners. There is no incentive for the banks to cooperate and it is another colossal waste of taxpayer money.

Eagle Lake Park opens at last

2010-03-14T18:34:00.003-04:00

Eagle Lake Park is set to officially open at 10:00 a.m. on March 30. I have been looking forward to the opening of this park for years. Residents of Pinellas County have been driving past the property at the intersection of Belleair and Keene since 1998 knowing the county owned the parcel but unable to access it. Total cost to date for the purchase of the 163 acres in tow parcels and construction of the park amenities is slightly less than $24-million.

The land was the Taylor family homestead and John Taylor III was the last family member to live on the property in 2006. The Taylors came to Pinellas in 1868 to grow citrus and raise cattle. The original John Stansel Taylor was Pinellas County’s first state senator and the county park on 8th Avenue SW in Largo is named after him. There are still 18 acres of orange groves in the park that will be maintained along with the 1929 tow-story family house. Amenities at the new park include a dog park, ball fields, playgrounds, wetlands with boardwalks, nature trails and parking for almost 300 cars.

I live near the intersection of Belleair and Highland and am really excited to have a new alternative to the Largo Central Park Nature Preserve for the wildlife photography that I love. Pinellas County took a step by going ahead with this park in the face of difficult economic times, severe budget problems and often extreme criticism from some residents. This is valuable real estate but another park is much more important to the county than more houses or stores.

Florida Property Insurance

2010-03-13T12:50:00.003-05:00

For average home owners, and real estate investors in particular, Florida’s property insurance is not a pretty picture to look at. Years of reform promises, rate reduction promises and guaranteed coverage promises have amounted to nothing. A very powerful insurance lobby has been able to consistently bulldoze an ineffectual legislature and governors. Even when some meaningful rules changes have slipped through, the insurance industry has been able to get them overturned within a short time.

2010 is looking very much like more of the same all over again. Florida citizens are hurting badly from years of stiff premium increases caused by hurricane damage, some of the highest unemployment in the nation and astronomical numbers of foreclosures because of the inability to refinance Adjustable Rate Mortgages(ARM”s). What better time for Big Insurance to go on the offensive? The insurance industry is backing Bill 1447 this legislative session. This bill would limit the insurance payout for sinkhole damage claims to 25% of the total available coverage. A more expensive “catastrophic” policy would be needed to provide adequate coverage in sinkhole-prone areas(which covers a large part of Florida). Lack of catastrophic coverage could mean many more families and/or investors losing properties because they cannot needed afford repairs.

SB 2044 is also backed by the insurance companies. This bill would allow payment of “Actual Cost Value” for any damage claims rather than the currently required “Replacement Cost Value”. Instead of collecting repair funds from their insurance based on estimates of material and labor and then proceeding with the work, the proposed bill requires home owners to pay for the repairs out-of-pocket and then be reimbursed by their insurance only for the amount they can prove with receipts. So the insurance companies would not only get to keep the money longer but would also get to pocket any difference between ACV and RCV if the property owner found a bargain on material or labor.

Yet another proposed rules change would allow insurers to impose limited rate increases without review by state regulators. An attempt by some legislators to give the Consumer Insurance Advocate’s office greater power over insurance rate increases has already been shot down.

Let’s all hope the legislature finds some backbone and a little sympathy for the citizens they were elected to represent. Usually it seems our elected officials pay a lot more attention to the money the lobbyists can contribute to their re-election funds than to their obligations of office. It will be an interesting, and possibly expensive, year for home owners in Florida.

TBREIA Meeting-Internet Marketing

2010-03-12T12:35:00.001-05:00

Thursday night is Tampa Bay Real Estate Investors Association meeting night at Perkin’s Restaurant. Last night’s meeting featured speaker Jenna Waites on the topic of internet marketing for business. I just started pursuing this avenue to build business a few weeks ago based on the number of people I talked to that saw huge increases in revenues after giving it a try. It was a very interesting and informative evening.

Jenna covered all the basics: the huge numbers of people now on the internet, why they were using the internet, why it was important for any business to have a presence on-line, the avenues available for businesses to capture more customers and how to develop a strategy to make best use of internet resources. The why’s and how’s of using traditional web sites, blogs, social media such as FaceBook and Twitter, networking sites like LinkedIn and other resources like Google Local Search were all touched upon. Local groups with regular meetings for this purpose were also brought to our attention.

I just started this blog with a business slant two weeks ago, opened a Twitter account 1 1/5 weeks ago and put up a FaceBook page for my business last night immediately after the meeting. The blog and Twitter have already driven significantly more traffic to my business web sites and my on-line real estate column for Examiner.com. For 1-2 hours per day of effort, and less time in the future as I figure out how to better streamline and integrate the different pieces, I think this will be a very profitable addition to my business marketing strategy. It was all very quick and easy to get started and all 100% free except for the time involved and I would highly recommend exploring this approach to everyone.

Big Banks Acting Badly

2010-03-11T14:46:00.003-05:00

There has been a spate of big banks acting badly recently and the leader of the pack has been Bank of America. Seems they just made so many bad mortgage loans that it’s impossible to keep track of all of the addresses. Last summer a Massachusetts couple had B of A take over the Spring Hill, Florida home they paid cash for four years earlier. It took more than six months to straighten out and the couple is now suing the bank. They lost a good tenant and the house suffered water damage after pipes froze because of B of A’s actions. A Pittsburg, Pennsylvania woman also had her home seized by Bank of America. Personal property was damaged and the woman’s pet parrot was impounded. This action resulted in another lawsuit against B of A alleging the bank has no policy in place to prove the validity of foreclosures or to prevent improper property seizures from occurring. As Bank of America too big to learn from its mistakes as well as too big to fail?

To even things out a bit, Bank of America is not the only big bank to make these mistakes. Citi and a few others have done the same thing on a few occasions as well. Let’s hope they can keep better track of our money than they do of our addresses.

Government rehabs and rentals?

2010-03-10T19:04:00.003-05:00

Climate Progress posted an interesting piece on March 3 proposing a more active government approach to the current housing crisis/foreclosure situation. Andrew Jakabovics suggested the FHA directly take over more homes, do energy-efficient “green” rehabs, fill them with renters and then market them to real estate investors as “portfolios” of grouped properties.

This approach is backwards and wasteful for several reasons. The intended market is investors that are highly skeptical of the government. They are currently buying at foreclosure auctions for pennies on the dollar and getting good rents after fast and cheap rehabs. The work gets done quickly and at a discount because so many skilled construction workers are available, no longer employed on new construction. Most investors would not pay a premium retail price for a “green” rehab, especially if the work was done by the government. Investors usually also have a ready pool of renters on tap and often don’t like to buy properties with tenants already in place. And most investors are small and would not be interested in multiple properties at one time.

The idea is sound in a modified form. Government “green” credits to investors that upgraded properties to “green” standards would have much more appeal to the investors. They could buy their own materials, use their own contractors and supply their own renters without government interference as long as everything met agreed upon standards. The properties would return to the market more quickly and more cheaply than the FHA could manage. Investors would have more valuable and marketable properties than without the government “green” credits.

How the bank bail-out could have worked

2010-03-09T19:16:00.005-05:00

We are now well over a year into the bank/financial institution bail-out. Trillions of dollars of taxpayer money have gone to huge companies that knowingly took very foolish risks with other people's money in order to enrich themselves. The people whose money was lost have gotten nothing and by government decree have been forced to give even more. Meanwhile the foreclosures roll on and more and more lives are ruined.

The entire mess started with home owners unable to afford the increased monthly payments on the adjustable rate mortgages(ARM's) their broker or bank talked them into(probably many could barely afford the low introductory payments). Facing the possibility of that many mortgage defaults the banks got nervous. Then the mortgage insurers(AIG, etc...) got nervous. Then the companies backing and depending on the insurers(Lehman, Goldman Sachs, etc...) got nervous and the whole house of cards started to come down.

Since the problem started with individual home owner's inability to meet an increased monthly mortgage payment, shouldn't the solution start there also? How many people would have remained in their homes and current on their mortgages if the government had offered them a few hundred dollars per month until a refinance solution could be worked out by congress and the banks? Would everyone have been so panicked if all those mortgages were getting paid by the government? Would simply keeping peoples' mortgages current have been any more expensive than the actual bail-out? How differently would our government be seen if all those trillions of dollars had been used to keep people in their homes instead of keeping huge, greedy companies afloat?

It is too late this time but this or a similar problem will happen again in the future. Next time I hope our government has the backbone and the common sense to look for solutions that address the real cause of the problem. The current financial crisis was not caused by huge banking and investment companies facing bankruptcy. The current crisis was caused by home owner’s inability to pay escalating monthly mortgage payments and this cause was never adequately addressed by any part of the bail-out.

New article on Examiner.com

2010-03-08T21:33:00.004-05:00

My latest Examiner.com article outlines how short sales might be a viable alternative to foreclosure for some home owners in financial distress. I will also work on another article for tomorrow continuing the theme of "green" housing with a local Florida slant. Will have an article on the Belleview Biltmore later in the week and possibly a real estate investing book review for the weekend.

I also want to write a few photography articles tomorrow to update the Florida Image Tools web site, which has not gotten enough attention lately. One subject will be my recent switch from Minolta/Sony DSLR cameras and lenses to Canon equipment. A second article will be on the subject of photography contests.

Speaking of contests - I just received the new issue of the National Resource Defense Council(NRDC) magazine OnEarth in this afternoon's mail. They are running a nature photography contest using only photos posted on Flickr.com. Since I have quite a few images on Flickr already it was a simple matter to add the required tag and enter a half dozen shots. Prize is simply publication on their web site and in the magazine(with photo credit, of course) but it sure beats a poke with a sharp stick. Last weekend I was notified of a full-page photo on the 2011 USDA/APHIS "Biodiversity for Birds" calendar.

The real estate writer

2010-03-08T13:55:00.000-05:00

Let me introduce the writer inside myself. I am currently the Saint Petersburg, Florida Real Estate Examiner for Examiner.com. This means producing three to seven articles per week, with photographs, about real estate or real estate investing and a local slant to the Tampa Bay area of Florida. Having the post for slightly less than one month now it is still a joy to me to research and write the articles each day. Visit my page at Examiner.com to see for yourself, and please subscribe if you like what you see.

So far I have written all of my own web site content. This includes both a real estate site and a photography site. If something off-topic gets my attention I have been known to write pieces for UselessKnowledge.com as well.

While real estate is a fairly new endeavor for me and the kitchen has been my main career, writing and photography have been lifelong best friends that I still enjoy spending a lot of time with.

First time blogging

2010-03-08T13:07:00.000-05:00

This is my first blog and I am excited. My approach is to use this spot to share my thoughts about work(real estate investing, writing about real estate and real estate investing, photography and cooking) and life. Missing out on another minute of this great opportunity to share on the web was not an option.

For now, I am going to take some time to learn about the options available for this blog so I can take advantage of them and make a better experience for readers(hopefully there will be some).