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larrywww

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Reply with quote  #331 
You're welcome, Rick.

I guess we are all waiting to see what happens next.
mlreits

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Reply with quote  #332 
To echo what Rick said, thanks for the summary Larry. Although many of us don’t post often, we read often so please don’t stop posting when you come into good info.

Cheers!

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GeorgeB

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Reply with quote  #333 
Thanks for the great video and summary Larry.
GeorgeB

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Reply with quote  #334 
After watching the video, it appears Bruce Norris is leaving California for Florida, or did I misunderstand him.

He says things are pretty bad in California, which I can understand, but it seems he may be doing it for retirement purposes too.

Isn't the weather in Florida absolutely horrible, or am I mistaken. I know it's a popular destination, but I always thought the weather was unbearable.
larrywww

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Reply with quote  #335 
So, I don't think Bruce is moving there in terms of his personal residence, at least, I haven't heard that.  I think he has hired employees to run the Florida operation, though I haven't been there myself.

And I do believe he is not giving up his California business.

But I think you are 100% correct about the weather----Florida is VERY humid everywhere---I am not aware of any exceptions to this generalization.  It may be an OK place to visit---but I agree with you---I would NOT be happy living with all that humidity.

An anecdote: Bruce and Aaron gave a podcast last week in which Bruce describes how Amanda Han (the CPA) looked after she first arrived at the hotel for Bruce's Florida boot camp---pretty much wilted by the heat and humidity.  The humidity is absolutely as bad as everyone says it is--Bruce was even laughing about it.

But it is true that I think Bruce will be investing the majority of his personal fortune in Florida----that is where his retirement nest egg is going to be located.  Although he will continue to invest in California real estate through his California business.




Paul

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Reply with quote  #336 
Larry, I tried to find a link to the Norris-Dalton Florida Fund operating agreement. I can't find one. Did you?

I've been interested in Bruce's HML programs for years, but few are offered, and they sell fast. I gave up some time ago.

From what limited information I've seen, I'm not interested in his Florida offering. He has a co-sponsor, Dalton, there is substantial execution risk because it's all new construction, and they have no full, real-estate-cycle experience in this type of project. That is completely different from Bruce's California HML program of loaning to flippers and buy-and-hold rehabbers. Construction loans have a lot of moving parts as opposed to HML loans to flippers.

On the plus side, and this is a big positive, I don't think they are using any leverage. If a recession does take place, they should be able to ride out the storm without any concerns of a lender getting nervous and revoking their line of credit.

As for the comments on Florida weather: Judging Florida's weather from Southern California, especially coastal So Cal, isn't too relevant. Bruce and his local, Florida developer aren't marketing to California end residents. Their projects are targeted to northeastern snow birds and snowflakes (anyone know the difference – now living in North Carolina, I do.) 

If you live in the northeast, and you want to relocate south, Florida's your destination. For reasons too obvious to mention, migration from New England, the News – York and Jersey, usually zip right past the Carolinas and Georgia on I-95, and once in Florida, the Sunshine State, only then consider they're ready to make cash offers because they've got the bucks from their northern equity sale – they're now buying into Florida, where comparative value rocks.

Florida will always be at the bottom of the northeastern funnel. If you lived your life in a snow state, it doesn't take much convincing that retiring in a sand state is the way to go. Bruce knows this.

However, there's no track record and no way to recession test the Norris-Dalton Florida Fund.
larrywww

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Reply with quote  #337 
I agree with your observations, Paul, always astute observations.  As I'm sure you know, I didn't bring up humidity, another poster did.  But, as you point out, most snowbirds aren't going to worry about the humidity when their alternative is to spend another miserable winter in the northeast.

I really don't know much about these HML loans and right now I'm not in a position to do any more comprehensive due diligence---I'm not even sure I would want to invest in Florida---even if it has favorable demographics.  If, as you say, these are HMLs for a construction loan, then I agree with you----I have been astounded by the fees Norris charges for this type of loan in California.   And Norris requires that the buyer pay for a company that monitors progress and only disburses funds on a very conservative basis. If these are the kind of loans Norris is selling, then Yes, I would be somewhat skeptical too.

And I don't know where to find the particular document you mentioned.

But I would observe that those of us who want to invest in trust deeds----there may soon be a day of reckoning----how long is this going to be a viable strategy when the federal government is going to cut interest rates to the bone?  Hasn't happened yet, but there are hints we are trening in that direction.

Bruce's track record out of state is an interesting story in its own right I suppose.  I did not follow him to Texas in 2005.  In a recent podcast, Bruce indicated that he held these properties for a rather long time---maybe like a decade or so----and when he sold he lost 10% of the value.  (And he says he lost this amount on 100% of his properties). He now says this was a successful venture, though I suppose it all depends on how you evaluate success.  I do recall a podcast where Greg Norris felt strongly it was a mistake because it was such a pain to manage these properties----and Texas isn't known as a market with necessarily mild or easy tenants.  But I suppose Bruce did net most of his equity---so on that basis it could be counted as a success.  But I would be somewhat skeptical about what kind of returns they were receiving for the very long time they held these properties.  The problem is that I have never met anyone who followed Bruce---so I don't know firsthand how it really worked out from a buyer's perspective.

The other problem is that Bruce's original investment was when land in Florida was arguably cheaper---so for him it's probably going to work out no matter what happens.
larrywww

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Reply with quote  #338 
So, some investors are still unsure about the market.  What do they really need?

How about an interview with Christopher Thornburgh (just posted on Norris Group)----although unfortunately I do NOT see him listed as one of the speakers for I Survived Real Estate this year.




I won’t summarize his remarks but suffice it to say he appears very optimistic about the state of the economy and not at all pessimistic about real estate. This is in line with his views previously summarized views earlier in this thread

The truly odd thing is that the recent actions to impose a 5% cap (plus cost of living ) on rent increases may do more to depress real estate than all the gloom and doom predictions. But that issue may be handled in another thread since I haven’t really analyzed this new development I am informed that the California legislature will consider passing this law on 9/13. Among other provisions is a just cause requirement to evict tenants that would make it more difficult to evict tenants. And rental increases since 3/15/2019 may be nullified. Needless to say none of this is good news. Although I hear that the new rules only apply to properties constructed before 2004. Again I haven’t reviewed the law. The summary above was sent to me. Actually I hear that single family rentals are exempt unless owned by a corporation and possibly other entities but this would apply to apartments so this is a huge deal. The newspapers say this law may not pass, so stay tuned. They mentioned in the La Times that this bill was considered dead on arrival in the legislature until the current governor resurrected it. It’s amazing to think that by virtue of a signed law apartments are going to be less valuable and this with very little warning. I imagine that apartment owners maybe wish they had sold before the new law went into effect but they had very little warning. I would be interested to see how much this affects the value of California apartments, especially since it will be effective for more than a decade---it would sunset on January 1, 2030.  (The original version would have sunset in 3 or so years). Also is it going to be harder to finance these type of purchases

A lot of unanswered questions
I have read that if an investor owns 10 or fewer homes then they are not covered, at least under some circumstances. Anyone who owns 11 or more houses is not going to be happy IMHO though I would seek a legal opinion before doing anything drastic.  And, who knows---maybe it won't pass.  One silver lining---all those hedge funds that bought houses will be covered----Welcome to California.  (I never liked those guys---neither did Bruce Norris).

Some commentators have expressed the opinion that the law's impact may be limited since in alot of counties rents are relatively flat anyway----given the healthy rent increases that have already occurred.  But the "just cause" limitation on ending a tenancy is also a serious hassle---meaning it will be difficult to get rid of problem tenants.  And the landlord is also required to pay a relocation fee of one month's rent in order to get the tenant to leave---regardless of the tenant's income.  So, I definitely think this law is going to have an impact on landlords.  Statewide rent control is NOT something you can easily ignore---I do NOT think it makes any sense to underestimate its impact.

I also hope there is a backlash against the current governor for making such an abrupt decision with so little prior notice.
larrywww

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Reply with quote  #339 
I Survived Real Estate 2019 just posted on Youtube. (I think this is the entire presentation---there are 2.5 hours).

No earth shattering news for me.   Sean O'Toole and Bruce agree that the current affordability of 30% is really the new 17%---at least the market obviously thinks so.  The consensus seems to be that whatever will crash the market and start the recession---it won't be real estate.   And the recession will (apparently) be mild.

Bruce surveyed all of the experts about when the recession might start----no real consensus, IMHO.  

Though spoiler alert: Propertyradar is now on the verge of going national.  (No specific date, but they are working on it.)

Actually, from the way he says it---it could happen soon.  ("We are right on the cusp of going national . . .")

I sure hope so---looking forward to that.

Which means that no matter where you live, you should keep a lookout for propertyradar in your state.


GeorgeB

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Reply with quote  #340 

Recession likely to be years away thanks to Trump’s bullish effect on market – Nobel prize winner Robert Shiller


https://www.rt.com/business/471423-trump-economy-recession-expansion/

larrywww

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Reply with quote  #341 
So, Bruce has announced a new report for February of 2020---Turmoil.

But I don't quite get why we are seeing a new report.  Last year we were living "on borrowed time"----and this year we STILL are, apparently.  So what does the new report add?

Or are we going to see a new report every year?

Has anyone figured this out?  I assume that Bruce and Aaron will do a video about the new report---though I don't think they have done one yet.



https://www.thenorrisgroup.com/event/turmoil/
GeorgeB

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Reply with quote  #342 

California’s Rendezvous With Reality

https://amgreatness.com/2019/02/27/californias-rendezvous-with-reality/



Any opinions on how this is going to play out?

rickencin

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Reply with quote  #343 
The Horror!:

"California’s 40 million residents depend on less than 1 percent of the state’s taxpayers to pay nearly half of the state income tax, which for California’s highest tier of earners tops out at the nation’s highest rate of 13.3 percent.
 

In other words, California cannot afford to lose even a few thousand of its wealthiest individual taxpayers. But a new federal tax law now caps deductions for state and local taxes at $10,000—a radical change that promises to cost many high-earning taxpayers tens of thousands of dollars.

If even a few thousand of the state’s 1 percent flee to nearby no-tax states such as Nevada or Texas, California could face a devastating shortfall in annual income."

"But the health, educational and legal costs associated with massive illegal immigration are squeezing the budget. About a third of the California budget goes to the state’s Medicare program, Medicaid. Half the state’s births are funded by Medicaid, and in nearly a third of those state-funded births, the mother is an undocumented immigrant.

California is facing a perfect storm of homelessness. Its labyrinth of zoning and building regulations discourages low-cost housing. Its generous welfare benefits, non-enforcement of vagrancy and public health laws, and moderate climate draw in the homeless. Nearly one-third of the nation’s welfare recipients live in the state, and nearly one in five live below the poverty line."


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GeorgeB

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Reply with quote  #344 

California Home Prices Are Soaring. Here's Why | WSJ


GeorgeB

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Reply with quote  #345 

Victor Davis Hansen- Keynote Address: California at the Crossroads





Very interesting presentation by a very knowledgeable person.
macoluco

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Reply with quote  #346 

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GeorgeB

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Reply with quote  #347 

Housing Permits Surge to 12 Year High, Starts Rebound

https://www.breitbart.com/economy/2019/11/19/housing-permits-surge-to-12-year-high-starts-rebound/
rickencin

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Reply with quote  #348 
Quote:
Originally Posted by GeorgeB

Housing Permits Surge to 12 Year High, Starts Rebound

https://www.breitbart.com/economy/2019/11/19/housing-permits-surge-to-12-year-high-starts-rebound/


What happened to all the doom and gloom about a real estate bust?


"Newsom wanted to go bold on housing. Have he and lawmakers delivered so far?"

https://calmatters.org/housing/2019/09/newsom-california-housing-done-not-done/

"What Newsom said he’d do: Both conservative and liberal housing experts attribute California’s astronomical home prices and rents to a lack of supply. Over the past decade, California has averaged less than 100,000 new homes per year,  significantly slower than that of most other states.

"Newsom set a goal of 3.5 million new housing units to be built by 2025–about 500,000 per year. He outlined a suite of proposals he hoped would make it easier for builders to build: altering the state’s oft-abused environmental-impact law to allow more housing, revamping how local governments get their tax dollars and clamping down on cities that obstruct new construction.

"Newsom may live to regret that 3.5 million figure."





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