The ups and downs of interest rates and what they mean for buyers

The following is an article submitted by Mortgage Advisor Steve Nimmer.

It seems like every week we hear news about fluctuating mortgage interest rates. They're up, they're down, they remain unchanged...it's a lot to digest. Educating buyers about how mortgage interest rates work and how changes in rates can affect their loans in process can prove invaluable.

Many factors can influence mortgage rates. The role of the investor, bond prices/yields, other market-driven and policy-driven rates, and lender competition all play a role in determining mortgage interest rates.

Investments
Mortgages are one of the many investment products on the market today that investors "purchase" to realize a profit. Investors, such as Fannie Mae and Freddie Mac, buy mortgage-backed securities, which compete with other investment products in the marketplace and are influenced by the current Treasury bond yields. Mortgage-backed securities also provide fixed coupon payments to investors similar to bonds, but carry more risk and often better returns.

Other Rates
In addition, many other types of interest rates affect mortgage rates. Rates on bonds and securities go up in order to attract investors and the prime and LIBOR rates go down in order to attract borrowers. The Federal Reserve also sets specific rates to ensure stability and balance in the economy, and while the Fed does not set specific targets for mortgage rates, it does indirectly end up influencing them because these rates tend to move in the same direction as other financial interest rates.

Lender Competition
Lenders also compete against each other, balancing what their investors want to buy against what a homebuyer is willing to pay – and what the competition is offering.

Contact me today for more information about interest rates.

Steve Nimmer
Coldwell Banker Mortgage

(912) 604-3834
NMLS #: 186680

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Q3 Coastal Empire Economic Monitor Reports Encouraging News

Q3 Coastal Empire Economic Monitor published by Dr. Toma reports economic growth in the Savannah MSA.

Employment, retail sales, tourism and housing construction numbers were all positive. For specific data please view the images below. After an elating read, Dr. Toma concludes that "a recession in likely in the absence of a resolution that avoids the impending tax increase and expenditure reduction."

 

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Fiscal Cliff Hogwash

I don't claim to know it all, but when I read JLL reports projecting increased growth and the benefits of the fiscal cliff, I have to wonder if as an industry we only see the trees and not the forest. Which also happens to be on fire.

Core markets (D.C., Chicago, L.A., New York, Atlanta, San Fransisco, etc) that are seats of industry and goverment will almost always do well. And there are smaller markets, like Savannah, that have the real estate throttle wide open.

The problem is that articles glossing over the fiscal cliff, Patient Protection and Affordable Care act, Up-Eurs Zone volitility, etc. make a key error. They presume that decreased uncertainty will equal increased economic growth. Such is not the case.

In his acceptance speech Obama did reduce uncertainty and make some very specific tax proposals. In particular, he promised to:

• Raise the top marginal income tax rate to 39.6%.
• Raise the top short-term capital gains tax rate to 39.6%.
• Raise the top long-term capital gains tax rate from 15% to 20%.
• Raise the top tax on dividends from 15% to 39.6%. There will also be an additional 3.8% tax on dividends as of January 1.
• Replace the alternative minimum tax with the "Buffett Rule." That means the highest income-earners will pay a minimum 30% tax rate on wages, interest, dividends and capital gains.
• Raise the estate tax rate from 35% to 45%.

Every day bits of "Obamacare" are translated into Treasury code and released to the public. These new rules are not reported by media, but their effects are. Layoffs, decreased hours, diminished bonuses, hiring freezes are now daily reports.

In unrelated news, inflation has ticked up, jobless claims are up, poverty rates are spiking.

How can going over "the fiscal cliff" possibly help commercial real estate or the economy as a whole?

The authors gush "Continued low interest rates will prompt people to buy!" True, but lending standards are still tight because banks don't want to lend money if they can't make a decent profit. They'd rather keep the cash in excess reserves for the Fed to pay them interest on.

"Less uncertainty in healthcare means more real estate deals!" I've lost two medical office deals due to the new certainty of taxes and regulation in the last month.

Let's get real about the fiscal cliff: there won't be one. Obama owns this budget deficit now. He must act on it or his legacy will be mud. When has Congress ever had a problem compromising to let federal spending continue?

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Refinance to plan for employment uncertainty

I had lunch yesterday with a mortgage broker, a digital advertiser and a flooring wholesaler. Apart from Thanksgiving and Disney World plans, conversation mostly concerned the regulations that are published as the Patient Protection and Affordable Care Act legislation is turned into Treasury code. Everyone there except for me (being self-employed) is concerned about the potential impact on their employment.

If your employment contract is likely to be renegotiated to comply with the Patient Protection and Affordable Care Act, it is an idea to refinance your property NOW.

You could reduce your monthly payment and capture low interest rates for the next 20 - 30 years. If you are concerned your hours may be cut to 28 per week, that $200 month savings on your mortgage will come in handy!


Lenders I recommend:

For residential:

Kirsten Ray, IKON Financial
9 one two-354-eight 555

400 Mall Blvd, Ste G
Savannah, GA, 31406

Lucy Bukowiec, BB&T Mortgage
912-9 two one-8752
http://www.bbt.com/lbukowiec

326 Mall Blvdsavannah, ga, 31406
United States

For commercial:

Deepika Paul, EVP, United Community Bank
912-2 three five-3147

8201 White Bluff Road
Savannah, GA, 31406

Anne-Marie Jones, First Citizens Bank
912-23 one-two 194
13 E. York Street
Savannah, GA, 31401

And the attorney to handle it:
TJ Hollis, Lee Black Rouse and Hollis
Nine one 2-355-0023
7395 Hodgson Memorial Drive.
Savannah, GA 31406 

 

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

New Savannah Real Estate Scam Artist

Absentee Home Owners Beware!

Five vacant homes in Savannah this week have been unlawfully rented out by a man saying his name is Lafayette. He claims he is the home owner and rents the property to unsuspecting tenants.

"Lafayette" even goes as far as having updates done to the home like new paint. Four of the homes belong to investors and one was listed by one of our REALTORS.

Please check your vacant homes personally or call your REALTOR. The Savannah-Chatham Police department has a case open. If this happens to you please contact them at 912.651.6675. Also you might want to check Craigs List to make sure your properties are not listed there for rent.


A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Blizzards on Eisenhower Drive

No, not weather resulting from Hurricane Sandy, but rather the construction of a new Dairy Queen at the southeast corner or Hodgson Memorial and Eisenhower Drives.

I am relieved that another prominent corner is not going to become another gas station / future brownfield. I believe this is the same group that owns local KFCs and Taco Bells.

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

AJ&C Garfunkel buys Abercorn Common

The Savannah Morning News reports that David Garfunkel with AJ&C Garfunkel purchased Abercorn Commons for $24.2 million on Thursday.

Considering KimCo paid $40 million for Chatham Plaza in June 2007 and sold Largo Plaza in March for $10 million, this seems like a heck of good deal.

Kudos to the Garfunkels for bringing the development back to local owners and keeping the it in the local economy! Next step is to get the center back up to 100% occupancy, which won't take them long at all.

Read the full article at Local investor buys Abercorn Common

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Atlanta developer to build luxury outlet mall near Savannah

This project has been in the works for the last five years and I am glad to finally see it coming to fruition!

Posted: October 10, 2012 - 12:38am  |  Updated: October 10, 2012 - 7:46am
Reported in the Savannah Morning News by Mary Mayle 

The company that built the Mall of Georgia in Gwinnett County and the upscale St. John’s Town Center in Jacksonville, Fla., is planning a 560,000-square-foot luxury outlet mall in Pooler.

The Outlet Mall of Georgia is projected to open in the summer of 2014 in the southwest quadrant of I-95 and Pooler Parkway with four anchor stores, a food court, restaurants and a wide variety of shops.

The proposed $200-million project is set to break ground next spring and would create as many as 2,000 construction jobs, according to Ben Carter of Ben Carter Enterprises. When fully open, the mall would create between 1,700 and 2,000 retail jobs, Carter said Tuesday.

The 170-acre site will accommodate another half-million square feet for peripheral retail and hotel construction.

While financing is not complete and he would not name potential tenants, pre-leasing has begun, with interest from a number of high-end retailers, Carter said.

Abercrombie, Brooks Brothers, Coach and Louis Vuitton are among the tenants in the Jacksonville mall.

“From a visitor’s perspective, one of things that is missing here is really quality retail,” Carter said.

The Savannah engineering and architectural firm Kern-Coleman is working with Carter on the project.

Carter’s unscheduled presentation came at the end of the Savannah Economic Development Authority’s monthly meeting and was greeted with enthusiasm.

“The announcement today that Ben Carter is developing a luxury outlet mall in Chatham County is fantastic news,” said David Paddison, SEDA board chairman. “In addition to the massive construction investment, job creation and additional tax revenues, the Outlet Mall of Georgia will be a significant amenity for our residents, visitors and the millions of travelers passing through the I-95 corridor.

“This will be the signature outlet project on I-95 between Florida and Virginia”

Savannah is the second largest tourism market on the regional coast with 12 million tourists per year compared to Myrtle Beach at 14 million, Charleston at 4 million St. Augustine, Fla., at 3.4 million and Hilton Head Island at 2 million, according to Carter’s research.

“The closest comparable malls along the I-95 corridor are in Virginia and Florida,” he said. “While the Savannah regional trade area alone would not be sufficient to support a mall of this size, the tourist and traffic counts along the interstate more than make up for that.”

Traffic counts on I-95 run approximately 68,000 vehicles a day or 24.7 million annually.

“This is going to be huge for Pooler and all of Chatham County,” said Pooler Mayor Mike Lamb. “This is the shopping piece we’ve been looking for to make us a more complete city.”

Pooler has been in the bulls eye of targeted growth in the area for the last decade, and Lamb credited city council and staff with helping the city make good growth decisions. “We are ready for this,” he said. “Ben Carter Enterprises is the real deal, and we really appreciate them choosing our city.”

Savannah Area Chamber of Commerce President Bill Hubbard agreed.

“There’s a lot of work still to be done, but this is a great organizaion with tremendous capability,” he said.

“We are eager to help in any way we can.”

Read more about the Outlet Mall of Georgia at Upscale outlet mall proposed for Pooler and Atlanta developer to Ben Carter build luxury outlet mall near Savannah.  

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

The Last Time This Indicator Flashed Buy Was 2002

Just read this entire article. It is too good to minimize with a summary.

Alternatively, read the full article at The Last Time This Indicator Flashed Buy Was 2002.

Oct 9th, 2012 | By Chris Mayer

I just locked down a 2.875% interest rate, fixed for the 15-year term of the mortgage. No points. With rates like these, I find myself rethinking the idea that I want to pay off my mortgage.

I can do a lot better than 2.875% investing the money. If I just sock it away in gold, I bet I’ll come out way ahead. Finding investments that clear such a low hurdle is not that difficult. This is true especially in commercial real estate, where you can use modest leverage and lock up tenants in long-term leases. You make money on the difference.

Right now is a great time to do this, if looked at from a historical perspective…

The 10-year Treasury rate is 1.64% as I write. That is what investors are willing to accept to lend money to the U.S. Treasury for a 10-year term. It seems absolutely crazy. But the Treasury rate we see is something of a forced smile.

The U.S. Federal Reserve, as you know, pledges to keep rates low. So interest rates — probably the most important prices in the whole constellation of prices — are essentially the victim of price fixing. This will have sickening consequences down the road for the U.S. economy, the stock market, the U.S. dollar and more. But for now, it is a license to print money by borrowing cheaply and investing in property.

To see why, you have to understand that Treasury rates are the platforms on which borrowing rates stand. I was a banker before I started writing newsletters. I remember following the “Treasury curve” (all the Treasury rates for different terms) with great interest because we priced our loans off Treasury rates. So if I were in banking today, I might quote a rate of 250 basis points over the 10-year Treasury rate. That would be 1.64% plus 2.50%, for a rate of 4.14%. The rate would change as the Treasury rate changed, or until locked in.

So that’s why Treasury rates are so important. Now let’s look at cap rates.

A cap rate is a real estate term you should know. It’s easy and intuitive to understand. It is basically the annual return you earn as an owner in the property. So if you buy a building for a million bucks and it generates $100,000/yr in profits for you after expenses, then the property has a 10% cap rate. (The $100,000 divided by your $1 million purchase price.)

The cap rates available in the real estate world are attractive when viewed against the 10-year Treasury yield. A wider spread between the two means you can earn a wider profit margin. As you can see in the nearby chart, the post-2008 spread is the widest it’s been since the great 2002 bottom.

From 2002, the NAREIT Index — composed of real estate investment trusts, or REITs —earned nearly a threefold total return over the next five years. That’s pretty good. And I think the odds favor you this time around as well.

There are differences, of course, and I don’t expect an exact replay. In 2002, the NAREIT Index yielded 7%, versus just 4% today. But the spread is more important than the raw yield. And the spread we have today is wide — if only artificially because of the actions of the Fed.

So I think this idea — as with almost all investment ideas — has a time window. When the low interest rate party starts to get into the wee hours and the barmen look ready to make a last call, we’ll have to diligently step for the exit to beat the rush. That won’t happen until at least 2014.

Another caveat to my bullish real estate call is that you have to be a little picky. Not everything is cheap. Already, some of the best properties in the biggest cities are at full price. Here is a snapshot of the cap rates in the central business districts of four American cities that shows you the big differences in markets:

You get much better value if you look at secondary cities.

As I’ve noted before, the opportunity in real estate is especially attractive because there is still a lot of debt coming due. Including 2012, and through 2016, there is $1.7 trillion in commercial real estate debt coming due. (In Europe, there is nearly a trillion dollars of debt maturing in just the next three years.) Borrowers will have to refinance that pile. They will likely have to put cash in the deal — or sell. The latter creates great opportunities for buyers of real estate.

My own 2.875% mortgage reminded me of the advantages afforded those with good credit and their ability to borrow at super-attractive rates. The same is true in the corporate world. Now is the best time to use these advantages in real estate since 2002.

Sincerely,

Chris Mayer
 
A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Ga. Ports report strong start to fiscal year 2013

Published: October 9, 2012 by The Associated Press

 

SAVANNAH, Ga. — The Georgia Ports Authority says the states shipping terminals in Savannah and Brunswick are off to a promising start in the new fiscal year that started July 1.

Georgia ports chief Curtis Foltz says the Savannah port handled more than 522,000 containers in July and August, an increase of 4.4 percent from the prior year. Overall tonnage of cargo moving through Savannah and Brunswick was up 5.6 percent to more than 4.5 million tons of imports and exports during the same two months.

The increased container traffic through Savannah was caused entirely by a very strong August. Port officials reported container traffic in July actually dipped 4 percent compared to the previous year.

Foltz released the figures Monday as the port authority's board met in Brunswick.

Read more here: http://www.macon.com/2012/10/09/2206443/ga-ports-report-strong-start-to.html#storylink=cpy

 

Read the full article at Ga. Ports report strong start to fiscal year 2013              

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Keys to understanding opportunities in real estate

By David Sherman | October 2, 2012 10:04 am as seen in http://www.pionline.com

Summary: The savvy commercial real estate investor knows that properties with stable, long term tenants that produce  reasonable (an amount determined by individual criteria) fetch top dollar. Other properties with slightly more risk (expiring leases, high maintenance, vacancy, refinancing needs, etc) are dirt cheap. The goal is to find the mispriced riskier properties, install new management and add significant value, and then sell as a safe investment for a nice profit. Investors are duplicating this process with properties from single family homes to skyscrapers.

Key Memorable Points:

Income is expensive, but bricks are cheap.

As traditional debt capital remains limited, new sources form.

A steady supply of overleveraged assets will continue to come to market.

Fundamentals have bottomed out in most major markets.

Mispriced risk creates attractive investment opportunities.

Read the full article at Keys to understanding opportunities in real estate

A. Joseph MarshallColdwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Buyers Closing Costs for Commercial Real Estate Purchases

Buying commercial real estate in Savannah, Ga. without the services of a broker? Here is an article you must read to have the best understanding of real estate closing costs.

by Daniel Doran - 25 September 2012 on http://realtybiznews.com
Closing a commercial real estate deal involves many of the same costs as you would find in a residential closing. The main difference is the costs are normally much higher for a commercial deal due to the additional research required in not only closing on the physical property but the financial aspects as well.

It is normal for commercial real estate closing costs, even for an inexpensive property, to run into the thousands of dollars. As a buyer you need to be aware of these costs and factor them into your overall price
for obtaining the property.

All of the closing costs are negotiable between the seller and buyer. As a buyer you can, and should, have it stated in the contract which party will be responsible for each cost at closing such as title insurance, deed stamps, surveys and settlement fees just to name a few. However, since RESPA (Real Estate Settlement and Procedures Act) does not apply to properties that have more than 4 residential units, your lender is not restricted in what they can collect from you at closing.

For example, in a residential closing the lender can only collect a certain amount of money to hold in escrow for expenses like real estate taxes and insurance. In a commercial real estate transaction there is no limitation and your lender could require you to put significantly more money into escrow or charge higher loan administration fees, points or any other cost they deem acceptable. Because of this it is critical you negotiate all of the fees for your loan with your lender well in advance of closing.

While there is nothing stopping you from closing a commercial real estate transaction on your own, it is highly recommended you use the services of a qualified real estate attorney. Although this presents an added expense at closing that can run anywhere from $1,000 to $5,000 or more depending on the size and complexity of the deal, it is money well spent. A mistake made at the closing table can cost you untold tens of thousands of dollars over your entire length of ownership of the property.

With all of this in mind, here is a basic breakdown of what you can expect each party to pay for in a commercial real estate closing.
Seller Paid Expenses

1. Title Policy covering the basic insurance requirements but if your lender requires specific endorsements to the title policy then the buyer can expect to pay for those endorsements.
2. ALTA Survey. Most lenders will require a new survey before lending on a commercial property. These surveys can cost anywhere from $800 and up depending on the property involved.
3. UCC Searches. These are similar to title searches except they are done on any personal property or equipment that is being sold as part of the transaction. The UCC is similar to a mortgage that is placed on property. The UCC search tells the prospective buyer if there are any remaining liens on the property and equipment being transferred.
4. State and County Transfer Taxes. This is normally the deed stamps required by the local jurisdiction to be paid whenever title changes hands on a piece of property. The rate collected is set by the state or county.
5. Pro-rated expenses up until the day of closing. For example any utility bills such as water/sewer or electric that are paid on a monthly or quarterly basis will be paid by the seller up to and including the day of closing. This is also true for any real estate taxes that are owed on the property. The seller is responsible for paying all taxes owed up to the day of closing.
6. Costs to clear title. This includes any amounts needed to pay off the sellers existing financing on the property, record satisfactions of liens or mortgages, payoffs to municipalities, or any other expense that must be paid in order for the seller to deliver clean title to the buyer.

Buyer Paid Expenses

1. Environmental Due Diligence. This includes a Phase I or Phase II environmental study on the property. However many times a contract will state the seller will reimburse the buyer for this expense if any undisclosed contamination is found in the report that causes the closing to be canceled.
2. Title Endorsements. As stated above, these are endorsements to the title policy such as an environmental hazard endorsement that the buyer’s lender requires in order to fund the loan on the transaction.
3. Municipal Transfer Taxes that may be required such as operating permits or pre-paid business licensing requirements.
4. Special Survey Additions such as a flood search or topographical contours of the property or aerial views required by the buyer’s lender.
5. Property Inspection expenses. These include the expenses you incurred as part of your due diligence to determine the status of the property both structurally and for its intended use.
6. Financing Expenses. These are any fees charged by the buyer’s lender to facilitate the funding of the transaction and can include the cost of recording the mortgage, assignment of rents, recording the deed, lender administration and closing fees.

Some expenses are shared by both parties such as the settlement closing fee charged by the title company to perform the actual signing and recording of documents. Also any escrow fee charged by the title company to transfer the funds from one party to the other.


Daniel Doran is a 20+ year veteran in the real estate industry. He is a previous owner of a law firm, mortgage and title company. Daniel has also written several books on mortgage modification, short sales and real estate investing. He currently specializes in Commercial Finance and Real Estate Development and is a graduate of Manhattanville College and Brooklyn Law School. You can contact Dan at Buildings By Owner. Read the full article at Buyers Closing Costs for Commercial Real Estate Purchases


A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Q2 2012 AASU Economic Report

Armstrong Atlantic State University in Savannah, Ga. published the Coastal Empire Economic Monitor last week.

Summary: The Savannah MSA saw moderate growth in the last quarter and economic forecasts are positive. Poor national and international political and economic decisions could undermine this growth in Q3 and 2013. Click on each image to view in a larger frame.

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Principal Bets on Commercial Property As Bond Yields Fall

I understand that if Putin, Trump or Soros buy gold, even when gold prices are down, investors following that market also buy. And likewise if they sell gold, investors sell their gold, too. The idea is that even you aren't privy to the information Trump, Soros and Putin have, they are doing what they're doing because they have a good reason for it.

The same is true with commercial real estate investors. The big difference is that the information they have is available to all.

Summary: PFG "said it’s turning to real estate to increase investment income as near record-low yields pressure returns from bonds."

Key Quotes:

“The debt market is very strong, the equity market is growing” in commercial property, Chief Investment Officer Julia Lawler said in a presentation to investors today. “The fundamentals continue to improve, largely because there’s a lot of supply constraints.”

 Lawler said her firm has profited by acquiring real estate and attracting new tenants.

“We opportunistically buy distressed properties, lease them up and sell them,” she said. “It’s been a great performer for us.”

If huge multi-national companies are looking to add value to distressed commercial real estate to incease their bottom line, shouldn't you consider it, too?

Read the full article at Principal Bets on Commercial Property As Bond Yields Fall

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

QE3 – Pay Attention If You Are in the Real Estate Market

Catherine, News & Commentary on September 17, 2012 at 12:09 pm ·                            

 

By Catherine Austin Fitts

I used to have a deputy who said that the FHA mortgage insurance funds were where mortgages went to die. That was, however, before the creation of MERS, derivatives and the explosion of mortgage fraud during the 1990′s which in combination with the “strong dollar policy” engineered what I have referred to as a financial coup d’etat.

The challenge for Ben Bernanke and the Fed governors since the 2008 bailouts has been how to deal with the backlog of fraud – not just fraudulent mortgages and fraudulent mortgage securities but the derivatives piled on top and the politics of who owns them, such as sovereign nations with nuclear arsenals, and how they feel about taking massive losses on AAA paper purchased in good faith.

On one hand, you could let them all default. The problem is the criminal liabilities would drive the global and national leadership into factionalism that could turn violent, not to mention what such defaults would do to liquidity in the financial system. Then there is the fact that a great deal of the fraudulent paper has been purchased by pension funds. So the mark down would hit the retirement savings of the people who have now also lost their homes or equity in their homes. The politics of this in an election year are terrifying for the Administration to contemplate.

Various court squabbles over the MERS system for registering mortgages are also nipping at the Fed and Treasury heels. It is hard to win a presidential election in 3100 counties when multiple federal agencies are in the local courts trying to foreclose on half the county while supporting arguments that a national registration system is free to violate local property laws with impunity.

Why should the sheriff respect your rights if you take the position that the county has no rights and local property laws are meaningless? In fact, the Sheriff does not have sufficient staff time to process foreclosures and protect the local citizenry from the growing crime that results from hard times. The Sheriff is also running for election and the people who vote for him or her comprise a much larger group than the handful of local professionals on the big banks payroll, including those processing foreclosures for FHA, VA, Farmers Home and Fannie and Freddie.

So, it looks like the Fed decision last week to buy $40 billion a month in mortgage paper is the ultimate plan to clear the market once and for all of fraudulent mortgages, mortgage backed securities and related derivatives. This means Fannie and Freddie will be bailed out and winding down through the back door. This means the big banks may be paid in full for your mortgage. It also means your pension fund assets will not be marked to market – at the price of debasing the purchasing power of your assets and benefits.

The Fed is now where mortgages go to die. Thousands of mortgages on homes that do not exist or on homes that have more than one “first” mortgage are now going to the Fed to disappear. Thousands of multifamily and commercial mortgages will be bought up as well. As this happens, trillions of dollars that have been amassed offshore will be free to come back into the US to buy up and reposition land, farmland, residential and commercial real estate and other tangibles.

With documents shredded, criminal liabilities extinguished and financial institutions made whole, funds can return without fear of seizure.

QE3 proves beyond any shadow of a doubt that the extent of the fraud was as bad as I said it was. You can count up the bailouts and QE1, QE2, QE3 the numbers speak for themselves. The fraud was indeed in the many trillions of dollars. It was intentional. It was a plan.

Now, the $64,000 question for those whose house is underwater or whose mortgage is in default is whether or not you still owe on your mortgage. Certainly, you still do as a legal matter. If the bank has been paid off, arguably in some cases several times, why not you? Let’s see if Fannie, Freddie and the big banks are under orders to quietly pass through a portion of their largesse to troubled homeowners in amounts sufficient to unfreeze the market. If you are in a workout situation, you need to take notice. If enough mortgage write-offs flow through, the Democrats will quickly amass a lock on the elections in November.

If you are in the market to buy a home or other real estate, you also need to pay attention – a major turn is now underway. Watch to see how much the banks pass through to homeowners and property owners to see how fast and big the turn may be. Watch to see the inflow of funds from offshore. This is not only funds returning but investors around the world looking to exchange their dollars for tangible assets to protect themselves from debasement of the dollar denominated deposits and securities they hold. Watch to see what the renegotiation of federal tax policy and the reengineering of the federal budget in response to the “fiscal cliff” do to reposition housing and real estate prices and cost of financing for an inflow looking for large accumulations.

Finally, the way the Fed has engineered the Slow Burn to date is to continually offset monetary inflation with labor deflation. It is worth contemplating how much labor deflation will be required to offset QE3 and how sufficient additional labor deflation might be engineered. Ben Bernanke was quite clever to tie QE3 to unemployment. The problem has become the solution, which is the basis for QE-Infinity.

Read the full article at QE3 – Pay Attention If You Are in the Real Estate Market

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

In commercial real estate, the other shoe(s) are falling

Portland Business Journal by Rance Gregory, Morrison Street Capital

Date: Tuesday, September 4, 2012, 10:57am PDT - Last Modified: Tuesday, September 4, 2012

Yes, we've all been reading about colossal 1 ton shoes that will fall on the commercial real estate market. And yet it hasn't happened the way we've been expecting it. Rance Gregory explains why.

Summary and Key Quote.

Commercial real estate simply does not mark-to-market as quickly as do stocks and bonds, no matter how many derivatives the industry puts in place to make bets on the direction of the market or how badly some wish it would be so. In reality, commercial real estate has been a slow-motion train wreck for the past five years. There has been real damage and pain, but it has occurred largely out of view, in loan workouts, consensual foreclosures and complex recapitalizations, resulting in paper writedowns and real losses.

Why then hasn’t the crash been loud and sudden? Why do many have the feeling the industry is recovering or has recovered? It seems many industry veterans were expecting to fight the last war, remembering a saving and loan collapse and a consolidated government-sponsored (RTC) fire sale of troubled assets. Instead, the actual mechanisms involved provided banks with additional capital (TARP), or worked on healing the background credit markets (CMBS) through programs such as TALF, PPIP, etc, in the hopes of stabilizing the system and providing time for the industry to work through its problems in a more organized way.

The answer is that it wasn’t one giant shoe, rather many thousands of smaller shoes, dropping one loan at a time, scattering across a diverse commercial real estate landscape, leaving behind alternating spots of utter destruction and patches of renewal.

 You can read the full article at In commercial real estate, the other shoe(s) are falling

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

CarMax to open Savannah store in spring 2013

I've gotten two phone calls about this in the last few days, so I'm posting the article that appeared on SavannahNow.com

The article is short and here in its entirety.

Posted: June 22, 2012 - 12:19am

By Adam Van Brimmer

Used car retailer CarMax announced plans Thursday to open its first Savannah location next spring on Abercorn Street.

The Richmond, Va.-based company will build its store on the 8.2-acre vacant lot owned by the Backus family located just south of Montgomery Cross Road. The CarMax location will share that stretch of Abercorn with several other car dealers, including Hoover Chrysler, Savannah Mitsubishi, J.C. Lewis Ford, Vaden Chevrolet, Fairway Lincoln and Southern Motors Honda.

The CarMax site was listed for $3.8 million by Rhett Mouchet and Michael Bone of local commercial real estate firm Kulp Mouchet. Mouchet declined comment for this story, citing a confidentiality agreement.

The Backus family has owned the property since the 1960s, when they bought it as a future home for their Cadillac dealership. The Backuses never built on the site, keeping the Cadillac dealership at their East Victory Drive location instead.

CarMax’s planned Savannah store is one of 10 the company will open in the next 12 months. CarMax announced a Columbus store as well.

CarMax is the nation’s largest used-car retailer with 112 stores in 27 states with approximately 30,000 vehicles in its inventory. The company was developed by executives of defunct electronics retailer Circuit City and opened its first store in Richmond in 1993.

CarMax did $10 billion in sales in 2012, with net earnings of more than $413 million.

CarMax is unique among auto dealerships in that its sticker prices are non-negotiable and sales associates work on flat commissions. Additionally, any vehicle on any of CarMax’s lots nationwide can be purchased from any store location.

Or you could read the full article CarMax to open Savannah store in spring 2013

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Investing In Real Estate As “Tenants In Common” in Georgia

Here's a good article by Donna S. Robinson written on 03 September 2012. She is a real estate investor and investing coach located in Atlanta, Ga.

Summary: Purchasing property as tenants in common is a way to own and enjoy a property with the freedom to sell your portion of the investment (based on total invested by group) without permission of the other investors.

Key Quotes:

An example Donna gives:

"For example, let’s say that you wish to purchase 100 acres of land, but you do not have enough cash of your own. However, you do have a couple of friends who would also like to invest. You and your friends agree to purchase the property. In addition, each of you will be investing a different amount of money.

The price of the 100 acres is $100,000. You will invest $25,000, your friend Bob will invest $25,000 but Paul will be investing $50,000. As tenants in common, you and Bob will each own a 25% undivided interest in the property and Paul will own a 50% undivided interest in the property.

An undivided interest means that you can’t pick out 25 acres of land and resell them as a separate piece of property, but you can sell your 25% interest to another buyer, and you won’t need Bob or Paul’s permission to do it. Each tenant in common can sell their entire interest in the deal, but the property remains intact. The new buyer simply becomes a tenant in common. In the title, each owners share of ownership is expressed as a percentage, so in our example the deed would actually state that you own a 25% interest, Bob owns a 25% interest, and Paul owns a 50% interest."

To pursue ownership as a tenant in common, I suggest you call TJ Hollis, with Lee, Black, Rouse and Hollis.

Read the full article at Investing In Real Estate As “Tenants In Common"

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Reports Say That Despite Supports, Commercial Real Estate is Recovering at Slow Pace

Posted by Alex Ferreras on August 27, 2012 in Real Estate

Summary: The headline announces slow CRE recovery across the board, but the text reveals that this is in specific markets. Slow job creation growth and lending restrictions has slowed commercial real estate growth in some areas. Otherwise, increasing demand and favorable lending supports CRE growth across the board.

Things are still positive with vacancy decreasing in varying degrees across industry segments (office, industrial, retail, etc). Multi-family is of course very positive with late coming investors jumping on that bandwagon. Multi-family lenders are flooded as a result.

What could slow things down? Drama in Up Eurs Zone, the "fiscal cliff" everyone is talking about, fall out from the November elections and decreased lending by community banks are making everyone cautious about the future.

Read the full article at Reports Say That Despite Supports, Commercial Real Estate is Recovering at Slow Pace

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Office Markets Continue Trudging Along

Originally posted by Posted by justinp in Commercial Property Research on August 12, 2012

Summary: "While six consecutive quarters of positive new absorption provide evidence that the sector has made it through one of the worst contractionary periods of the last three decades, these levels remain incredibly weak by historical standards.  In fact, demand for office space was so weak that even in the face of little new supply—just 1.6 million square feet was completed nationwide in the second quarter—the level of net absorption seen during the quarter was insufficient to generate a decline in the vacancy rate, which remained at 17.2%.  Of course, with such lackluster job growth it should come as no surprise that the sector continued to struggle."

Savannah's office market sees a change between 2012 Q1 and Q2 of -.6% in office rents and change of -10bps in vacancy. Meanwhile inventory has increased 2.5%. These statistics are courtesy of REIS Reports.

The original article is found here: Office Markets Continue Trudging Along

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Ga. economy forecasted to stall, Athens to sputter

Summary: Political uncertainty in Washington and Atlanta is causing the economy to be cautious now and reserved in the near future. Return here for an update on the Port's activity on September 6th! Create your own fiscal cliff parachute with income producing property!

Key Quotes:  

Political uncertainty is stalling the Georgia and U.S. economies at a time when the power of the state’s second-largest economic engine — its ports — is losing strength, one prominent forecaster warned Wednesday.

Also released Wednesday, a Federal Reserve survey shows business professionals in the Southeast are expecting inflation to rise. 

Both corporate and consumer confidence has been shaken by questions about the election and what Washington will do about coming tax increases and deep spending cuts known as the “fiscal cliff” triggered by congressional failure last year to reduce the federal deficit.

Georgia-based military contractors and installations are bracing for the sting of the cuts.

Rajeev Dhawan, director of the Forecasting Center, said rising oil prices and falling demand for exports add to other factors to push the “pause” button.

“The impact of the slowing global economy already is being felt in Savannah, where growth has decelerated sharply in the past six months, and where port traffic and future expansion will take a hit in coming months,” he said. 

Dhawan is forecasting 1.1 percent job-growth rate for Georgia and an unemployment rate stuck near 9.2 percent for the next two years. 

Read the full article at Ga. economy forecasted to stall, Athens to sputter

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga