PLN Blog (805) 527-9282 (click on photos to enlarge)
Welcome to the PLN Blog. Its purpose is to provide regularly updated facts and opinions we want to communicate to our community of Southern California real estate investment private lenders and borrowers. This will help you to better understand our opinions of the various local current real estate markets, current and emerging opportunities in those markets, conditions currently affecting your investments, and factors influencing our operation at PLN. We welcome questions you would like to see answered here. Click here to ask a question.
Updates to this PLN Blog are planned to occur at least each quarter or sooner.
Southern California PLN's Investment Market
Second Quarter 2010
Southern California Housing Market Statistics - According to Data Quick Inc.real information data base statistics, the Sourthern Califorina market seems to be improving. Here is a comparison of 1st Qtr.2009 and that of 1st Qtr 2010: Mar - 09 Mar 10 % Chng Sales Volume 19,506 20,476 +5.0% Median Price 250,000 285,000 +14.0%
Participating Loan Program continues its success - At the the right are the BEFORE and AFTER photos of the latest PLP property to be resold. This 3 unit Pomona property was purchased in November for $250,000 at a foreclosure sale and recently went into resale escrow at 349,950.
Pomona 3 unit BEFORE
Pomona 3 Unit AFTER
First Quarter 2010
PLN hopes this New Year finds you filled with inspiration, hope, and friendship to help you meet the challenges, opportunities, and blessings that you will encounter in 2010.
Participating Loan Program is a success: Started this past summer, the Participating Loan Program (PLP) has had its first cycle of completed flips. PLN Lenders share 50/50 in the net profits with the borrowers. This has resulted in annualized profits to PLN Lenders of over 20%. At the right are examples of BEFORE and AFTER photos on one of the typical PLP properties.
Call for current investment opportunities in the Participating Loan Program.
Rand St in Moorpark BEFORE
Rand St in Moorpark AFTER
Up to 50% Profit Participation on Flips
May 2009
TD Investors Can Now Participate in the Profits of Flipping Properties: PDJ's Private Investors Network is now offering opportunities for a limited number of investors to participate in a greater way in the profits earned by borrowers who flip properties in this great market of property buys. Instead of earning a fixed, high interest of 14-15% on the trust deed (which is great), we have a limited number of trust deeds that we have been able to structure with the investor receiving up to 50% of the net before tax profit on residential properties that are being flipped. That can produce annualized earnings in the range of 20-50%.
April 2009
Market Update: This year continues with a very active wholesale market. Fantastic opportunities continue to exist for Wholesale Buyers and Trust Deed Investors. Wholesale Buyers continue to gobble up properties, often at 55% or less of the cost to build them. This brings great high return opportunities for PDJ's Private Lenders Network of Trust Deed Investors because these Wholesale Buyers need financing more than ever as the institutional financing markets are effectively closed to them. Private Trust Deed Investors fit right in to the profit team needed to complete these spectacular buys.
New Home being purchased at 52% of cost to build
September 2008
Project Highlight: Carson, CA. This year PLN funded the purchase and rehab of this 4BD/3BA home that was purchased for $275,000 from Indymac Bank (before it failed). At the time, it appraised for over $600,000 if it were nicely rehabbed. The project is now complete (see before and after pictures at the right & below) and during the rehab process was taped for the TV show "Flip This House." (The show will first air Sept 27 at 5pm and 8pm and on Sept 28 at 8am on the TLC Network.) This opportunity is very typical of today's great deals that are available to rehabbers looking for big profits and for the trust deed investors who provide the funds for these projects.
Carson Project - Before Rehab
Carson Project - After Rehab
Myth Alert #2 - Selling As Is in this Market: Last month we addressed the myth of Throwing Good Money After Bad. In this market, another myth has developed. The myth is that when you own an unfinished or not move-in-ready property, you have a choice of either finishing the project (almost always PLN's recommended action - see last month's article) or selling it As Is. In most cases for now, these are not the real choices. The probable real choices are either finishing the project or letting it sit month after month collecting dust, trash, and weeds, and being exposed to trespassers. It will likely not sell As Is at any price.
So Glad You Asked: San Bernardino, CA. I am about to rehab a SFH house as an investment. What is financially the best way to do this? Request bids from several contractors/providers. Then taking into account your own funds available and the contractor bids received, plan to get the work done for at least 30% less than the bids. If at all possible, purchase all major materials yourself - doors, windows, tile, fixtures, hardware, appliances, flooring etc. With only a few exceptions, pay the contractor only for the labor and installation materials. Have the contractor work within your budget not their bids.
Here is a very profitable tip that applies when purchasing materials: For example, if you are purchasing windows, measure all the windows needed. Then, price them, in person, at one supplier you like. Now fax or email a request for a quote to a number of other suppliers. Pick the best of the best from all quotes of individual window prices and them go back to first supplier and offer them the whole order if they give you a discount from the best of the best prices. Next time, offer a similar deal to another supplier in order to spread the opportunity around. Click here to ask a question.
Don't Sell "As Is" - Finish it!
August 2008
Victorville, CA – Typical of a Good News - Bad News -Good News Market:OnJuly 10, 2008 Victorville's Daily Press newspaper reported thatThe City of Victorville has been named the second fastest growing city in the nation, second only to New Orleans, the U.S. Census Bureau reported Thursday. That is the first Good News.As PLN has funded many successful development projects in Victorville and surrounding communities over the past 5 years, this statistic was not such a big surprise to me. It, however, exemplifies what has been the best of times and the worst of times in many Southern California areas during the last 2 years.As developers, large and small, rushed to meet a need for housing in rapidly growing areas, last year the finance markets failed causing a short term over-supply in housing.Consequently, housing prices generally have dropped over 35% during the past year alone.That’s a big OUCH for developers and their lenders caught in the last phase of construction development this past year.That’s the Bad News. The final Good News, however, is that more people are still coming to such areas.Victorville’s city’s management is very pro-growth and aggressively seeking to attract new employers, build new roads, and expand city services.Housing demand will absorb current supply and time will yield another successful real estate market to those current owners who can endure and be patient. Meanwhile, many good undervalued purchase deals are available right away to those with cash or those who can find financing.Opportunities for high yield private lending investments are everywhere.
Myth Alert #1 - Throwing Good Money After Bad: In this market, I have seen in some lenders who have taken back a property by foreclosure, a great reluctance to properly prepare a property for resale or rental because they claim they don’t want to throw good money after bad. In my opinion, this is almost never an appropriate description of what happens when you invest more money to protect or perfect your security by finishing a project. My experience shows the by not advancing more money into a project you own, you are losing $2 or more for every needed additional $1 not invested. Said another way, for each $1 you additionally advance, you should look to receive $3 or more back.My strong recommendation is to almost always finish a project to a turn-key, move-in condition. So Glad You Asked ( ??? your questions here ???)Click here to ask a question.
Victorville Investment PLN Projects from the past
Always Finish that Incomplete Project
Paul D. Johnson - P.O. Box 359, Simi Valley, CA 93062 - (805) 527-9282
