How To Blow Up Your Deal

This will be an short post. I was involved in two back to back incidents last week of near deal-killing credit missteps by borrowers that prompted me to write this.

It's amazing how often otherwise intelligent people make stupid decisions that threaten to kill their property purchases. When a loan officer implores a borrower not to make big purchases, take on new loans or apply for new credit before closing, that borrower is well-advised to listen. The loan guy knows that any of those things can reverse a mortgage approval and it can happen just days before closing. I have seen buyers purchase furniture for a new house prior to closing and have that new debt kill their mortgage approval. One of the two deals from last week that I mentioned almost blew up because the buyer applied for a new credit card the week before closing. Leasing or purchasing a new car before closing is an almost certain deal killer for the average mortgage. If you plan on using a mortgage for a property purchase, keep your credit usage as close to zero as possible between the time you apply and closing. Once closed, have at it.

The brown tide algae bloom in the Banana River that began earlier this year has intensified and produced a massive fish kill this past week. Yesterday afternoon I watched the west wind pushing hundreds of dead fish up along the eastern shore of the river south of the Thousand Islands. The water looks like rusty chocolate milk and the stench of dead fish is gagging this morning. The City of Cocoa Beach has been making recent expensive and progressive moves to address water quality in the river and limit runoff, erosion and sewage leakage. I hope those actions aren't too late and that our neighboring communities along the river will do their parts and we can see the river return to its former beauty and health. Thankfully just across the street yesterday the Atlantic Ocean water was Caribbean blue, water temp in the mid 70s and head high sets were peeling in both directions to the delight of locals and visitors.

"All water has a perfect memory and is forever trying to get back to where it was." __Toni Morrison

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11 Years and Counting

The 11th birthday of this blog slipped by me earlier this month unnoticed, not that I planned to bake a cake or have a party, but it's fun to look back. A lot has changed since that first post on March 4, 2005. The market in Cocoa Beach and Cape Canaveral in March 2005 was, to put it mildly, insane. There were new condo complexes going up everywhere a developer could purchase a piece of dirt. Investors were putting their names on waiting lists hoping to be selected for the opportunity to plunk down 10% to reserve a unit. Almost all were planning to flip the contract for a profit before actually closing on the unit. It had been working splendidly for a few years until, sometime that year, it didn't. Scores of "investors" were left holding the bag. The lucky ones walked away from their 10% deposits, poorer but smarter.

When I wrote that first post the national average rate for a 30 year fixed rate mortgages was 5.77%. In Cocoa Beach and Cape Canaveral there were 154 units in oceanfront complexes active in the MLS with prices ranging from $179,900 for a 1 bedroom at the Saturn in Cocoa Beach to a pre-construction 5th floor penthouse at the Ocean Club in Cape Canaveral for $1,279,900. That project turned out to be a disaster with only one of the 11 units closing. The bank eventually sold off the remaining 10 units in 2010 at far less breathtaking prices.

In the miracle mile of south Cocoa Beach between the fork in A1A and Patrick Air Force Base there were over 200 new condo units under construction or awaiting groundbreaking representing over $150,000,000 of inventory. The cheapest among these were a few 2nd floor pre-construction Magnolia Bay units offered for $549,000. Every single project turned out to be a short-term failure, victims of unfortunate timing. Eleven years later all the complexes have recovered and the millions of evaporated dollars are but a memory. One thing not forgotten by owners in several of those buildings is the broken promise of a clubhouse over the river in the old Fisherman's Wharf building. A couple of days ago I was sitting on the deck of the newly opened Squid Lips looking over at that building wondering if I will ever see it finished. If ever finished it will be the coolest clubhouse of any condo in the county. Picture below.

2005 would turn out to be the peak year for condo sales with 805 units closing that year. By the end of the year inventory was approaching 1000 and would peak just under 1200 units the following year. This morning there are less than 300 total units in the MLS in the two cities with 128 of those in oceanfront complexes. The nationwide average 30 year fixed rate mortgage is at 3.68%. Prices, while rising steadily, are not even close to 2005 levels with units in many complexes still selling at numbers 40% and more off the peak.

For those who may have missed the news, the iconic Pumpkin Center on the ocean between South 3rd and 4th street was completely destroyed by fire night before last. Plans for an eleven story Red Roof Inn are already in the works.

Relax. Just kidding about the RRI. Hopefully we'll see something worthy of the location built on that 200 feet of oceanfront..

Your leavin' left me goin' crazy
I'm countin' on a needle to save me
I drop it in the groove
And we go 'round and 'round
And down in a spiral
I guess I really oughta call and thank you
I rediscovered Red Headed Stranger
Got down with old James Brown
And found New Grass Revival
If you find your way back, I owe you a beer
For my record year

______________Eric Church from Record Year

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Slowdown

After breaking sales records every year for the last ten in Cocoa Beach and Cape Canaveral the recent sales numbers are hinting that the skinny inventory may be starting to overwhelm the strong demand. With February's lackluster numbers we now have three consecutive months of lower year over year condo sales. December lagged the previous year by 13 units, January - two less and February came in 22 units less than February 2015, slightly more than half the activity of a year ago. Single-family home sales were similarly slow with only eight homes closed in our two cities in February. Inventory has recovered somewhat (up about 40% since Jan. 1) so I suspect this slowdown will be short-lived. There are 98 condos and 28 homes currently under contract awaiting closing.

Home sales of note included a nine year old 6475 square foot, 7 bedroom Cocoa Beach canal home that closed for $550,000 ($85/sf) and a brand new waterfront 2414 square foot Key West style two blocks from downtown that closed for $655,000 ($271/sf).

In a departure from recent months, activity in the higher priced condo market was absent. Only one unit sold for more than $400,000, a 2140 square foot three bedroom direct ocean unit in a small three unit building in south Cocoa Beach that closed for $425,000. Only four of the 28 closed condos were oceanfront. Four of the sold units were bank-owned, all less than $206,000. Nineteen or 68% of the condo sales were cash.

The forecast for the next week and a half is looking good. Cocoa Beach is packed with snowbirds, day riders escaping Bike week and early spring  breakers. Drive carefully and look out for the other guy.

"The truth is, everyone is going to hurt you. You just got to find the ones worth suffering for." _______________Bob Marley

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New Construction in Cocoa Beach

Woke up this morning to an announcement of a new Cocoa Beach oceanfront building by the Dorough Brothers. Most will remember Howie Dorough as a member of the Backstreet Boys. The brothers' company has been a prolific developer and investor in our area for over a decade with multiple oceanfront buildings under their belt. The new building, Flores de la Costa, is going up just north of Wilson Ave. in the north end of Cocoa Beach. Units are two, three and four bedrooms and sizes range from 1133 to 2460 square feet. Pre-construction prices for the units currently offered in the five story building range from $258 to $380 per square foot with prices for the 2/2 units at $325,000. With a two week rental minimum these look very attractive from an investment standpoint. These prices should be a wake-up call for some sellers of oceanfront units in other, older buildings.

Buyers looking for an oceanfront unit with at least three bedrooms currently have 43 other units to consider if  the Mystic Vistas A and B buildings are included as oceanfront. [Readers know that I don't consider Mystic as oceanfront] Sellers of sixteen of those units in the older buildings asking over $340 per foot may want to reconsider their asking prices.

Also on this morning's hotsheet are two brand new townhouses two blocks from downtown Cocoa Beach. Construction has already begun and these two, 3 BR, 2.5 BA units will share a dock and both have a two car garage. Asking prices are $379,000 and $389,000.

Now for recent shenanigans. I showed a house the other day that is listed on the MLS as being concrete block construction with four bedrooms. The listing agent is known for being difficult and I've shared stories in the past of a few crazy encounters with him. This particular concrete four bedroom house turned out to be a wood frame two bedroom house with an extra "bedroom" in a separate structure in the back yard. The homeowner was shocked to find out that it was listed as a four bedroom and said she'd call the agent immediately to correct it. Two days later it is still unchanged.

After an intense downpour during the night in Cocoa Beach, the sky has cleared and it's already 74 degrees and forecast to hit 79 by early afternoon. We will hit the 70s every day for the next week according to Weather Underground.

"We should be MOST skeptical of ideas we like because we are sufficiently skeptical of ideas that we don't like."  ____Penn Gillette

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How We Doing?

We be doing just fine. As expected, closed sales in the first month of the year were somewhat slow which has been the trend for the twelve years I've been tracking the Cocoa Beach housing market. Historically December is the slowest month of the year followed closely by January. (See the monthly breakdown of the last eight years in the chart below.) Things pick up quickly after January and the five months March through July usually account for over half of the year's sales. I think we can expect that trend to continue in 2016 especially considering the big jump in inventory. The for-sale condo inventory in Cocoa Beach and Cape Canaveral increased to 281 units by the end of January. That's over a hundred more than just five months earlier.

During the month 43 condo units closed compared to 46 last January. Sales of note included the following:

• A gorgeous 3 story, 12 year old townhome in Cape Canaveral with peeks of the ocean and 3087 square feet and two garages closed for $725,000.
• Two direct Banana River Harbor Club units in Cocoa Beach closed in January. One was a 2nd floor 3/3 with 2417 square feet that closed for $515,000. The other was a 2nd floor 3/2 with 1805 square feet and sold for $384,000.
• An unusual 5th floor direct ocean Driftwood of Cocoa Beach. This unit was actually two combined units with a total of 4 bedrooms, 3.5 baths, 2 carports and 2507 square feet. It sold for $448,000.
• A furnished 3rd floor direct ocean Canaveral Towers 3/2 in original condition. Weekly rentals allowed in this building makes for an excellent income opportunity. It closed for $370,000
• Another weekly rental building, Sandcastles in Cocoa Beach, had two closed sales in the month. Both were west end 2/2 corners with side ocean views and 1286 square feet and garages. The north side 7th floor with a better view closed for $352,000 and the 6th floor south side unit closed for $320,000.
• A north facing 11th floor 2100 Towers 2/2 with 1400 square feet and a garage closed for $350,000.
• A remodeled 4th floor direct ocean Park Place in downtown Cocoa Beach with 1316 square feet and a garage closed for $337,500.
• A furnished direct ocean 2nd floor Ocean Pines 2/2 in downtown Cocoa Beach closed for $325,000. Had 1353 square feet and a garage and was in original condition.
• A 1st floor direct ocean Beach Winds 2/2 just north of downtown Cocoa Beach sold for $292,500 in five days. It was the extra wide Sand Dollar floor plan with 1478 square feet and had a garage.
• A 1st floor beautifully remodeled and furnished direct ocean Sea Oats 2/2 with 1278 square feet and no garage sold for $280,000 in eight days.

Single family home inventory is still tight with only 66 homes for sale in the two cities. In the month of January eleven homes closed at prices between $175,000 for a fixer-upper 3/2 to $1.15 MM for a five bedroom direct ocean home south of downtown Cocoa Beach.

Snowbird season is in full swing with the golf course and the grocery stores clogged once again. Expect to spend up to three hours playing nine holes at the Cocoa Beach Country Club and wear protective padding if braving the aisles of Publix. Many of those sweet snowbird ladies are hockey fans and will not hesitate to check you against the cooler door if it looks like you're breaking away for the express lane.

If venturing out to the schools or Country Club area around 8 AM or 3 PM, remember the detour around Minutemen Causeway between Brevard Ave. and Cedar. You'll thank me if you approach the detour on any street other than North 1st. Take N. 2nd, 3rd or 4th to Cedar and avoid the bottleneck that the school traffic causes twice daily on North 1st St.

"Always remember: Success is due to your intelligence and effort. Failure is due to the political party you didn't vote for."  ___Morgan Housel

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Flipping: Getting Rich Buying and Selling Real Estate

Flipping: Getting Rich Buying and Selling Real Estate
Individuals that flip real estate typically have found a quick way to get rich. The process involves purchasing a home at an inexpensive price, making significant improvements, and then selling it on the open market for much more than was originally paid. However, it may be that you are financially strapped, and cannot find the avenue to begin this profitable venture. There are alternatives to consider before deciding whether or not to invest in buying and selling real estate for flipping.

Obtaining a loan to purchase real estate that is much lower than its true value is often easier than purchasing traditional homes. Choose an area in town that is desirable where you can purchase homes inexpensively. Make sure that it has the right amenities, with no huge negative impact, like being positioned next to the landfill. This will only limit the potential buyers.

Do extensive research by talking to available real estate agents that are familiar with the area, and the viability of the current real estate market. Avoid sinking your hard-earned dollars into a home until you are 100% sure the current real estate market is solid, and you can reasonably expect a quick sale.

Once you have found a dilapidated home, or one in need of major aesthetic repairs, have it inspected to ensure it has no major structural defects. By choosing houses that need significant cosmetic improvements, such as enhancing the landscape, exterior and interior painting, new flooring, and new bathroom fixtures, you will be able to perform the work quickly.

Be sure to choose only improvements to the home that will not drain your bank account. Over time, you will become highly adept at home improvement projects and will be able to perform any of these duties yourself. You will also learn to hone your skills by using repair manuals or watching other individuals in the work they perform.

Once the home is complete, you can either sell it on the open market, or rent it out for a monthly fee. Renting the home is an ideal solution if it is not selling quickly. Be sure to ask the going rate for rent comparable to other properties in the neighborhood. The amount of rent charged every month should be at least equal to the value that someone would pay for a mortgage. Any additional funds that are collected over and above the money you have put out to purchase and improve the property can be put toward the next home for flipping.

It is highly advisable to develop positive relationships with contractors and real estate agents. Over time they will likely reduce their standard fees when working on your home, or showing you new properties to purchase. In addition, it is important to fully understand all of the building codes and regulations in your area whenever purchasing a new home.

With a little basic knowledge, flipping homes is easy process, and one that can generate a tremendous amount of income again and again.

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Fast And Easy Ways To Add Curb Appeal To Your Home

Fast And Easy Ways To Add Curb Appeal To Your Home
If you're getting ready to sell your house, proper curb appeal can increase the sale price and make your home look more attractive to potential buyers. The outside of your house speaks volumes, and many buyers won't even bother to look at the inside of the house if the outside doesn't look good. If you are getting ready to put your home on the market, try these inexpensive ways to add curb appeal to your home.

One fast and easy way to add instant curb appeal to your home is to paint your front door. Your front door is one of the things that people see first. Try painting your door a striking color like blue or red. You want your door to stand out from the crowd, but make sure it blends in with your house as well. You can paint your door in just a few hours.

If your mailbox has seen better days, why not give it an upgrade as well? A brand new mailbox adds definite curb appeal to your home. A mailbox is affordable and easy and fast to install. Potential buyers will be more drawn to a mailbox that is shiny and new. A rusty, dented, crooked mailbox does not say good things about your home. A new mailbox doesn't take long to install either.

Flower boxes add curb appeal, and everyone likes to look at them. They add a bit of European charm to your home that can increase its value. You can buy them inexpensively at your local home improvement store. Attach them under your windows and to your front porch. Choose some brightly colored flowers to plant in them. Make sure to water and maintain your new flowers, because dead wilted flowers take away from your curb appeal.

Another way to add instant appeal to your home is to upgrade your light fixtures. If your porch light is looking dated, add one that has a modern look. Try to find one on sale to save money. It won't cost much to hire an electrician to install it because the job is pretty simple. Solar path and entry lights look great and don't cost anything to install. They don't cost much money and they are easy to install yourself.

Finally, new house numbers add the finishing touch to your exterior. If your house numbers look old, worn and faded replace them with contemporary looking numbers that add polish and shine to your exterior. Choose numbers that complement your exterior. You can buy inexpensive numbers from a hardware store and install them yourself, or for a more dramatic effect, have custom numbers made.

When you're selling your house, you want to make the best first impression that you can. It can make the difference between a potential buyer passing right by, or wanting to go inside and find out more. Don't lose buyers before you even get to show them the house by scaring them off with an unattractive exterior. Add curb appeal and get your house sold.

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