The Brink Tank

Tesla to Save Suburbs with Electric Cars?

2008-07-03T09:51:00.000-07:00

Tesla Motors, makers of the remarkable electric super car that can accelerate as fast as a Ferarri, putting the Prius to shame, has just announced plans to begin production of a $60,000 electric sedan that would seat five and go 225 miles between charges. The Model S would effectively put the price of an all-electric car that doesn't sacrifice performance within reach of a much larger segment of the population.

This is a big development for our energy-strapped nation. It was unknown whether electric battery technology was advanced enough to be cost-effective for people without deep pockets. A $60K price point in just two years would be a game changer, and in 10 years electric cars could be ubiquitous. Tesla’s co-founder and chairman, Elon Musk, is on the record with a prediction of a sub-$30K offering in four years at the most according to Palo Alto Daily News. Unless Tesla is bluffing, they may have discovered something special in battery technology, which may just save suburbia from an inevitable death.

However, Tesla has disappointed before with production delays and an inability to deliver enough supply to the hundreds of customers yearning for their environmentally-friendly race car, so there are plenty who doubt that Tesla can deliver on their goal to bring electric cars to the masses.

If you are interested in investing in the future of the auto industry, you may have soon have such an opportunity. Musk has told C-Net that there are plans in the works for a Tesla IPO by the end of 2008, which would raise an estimated $100 million. But perhaps an even better investment option is to head over to the Tesla Motors site where you can pay $55,000 to lock in a production slot for the 2009 Tesla Roadster. As your delivery date approaches, you could sell your spot in line for a nice profit, which you can then put toward a more practical Model S in 2010.

Home For Sale: Fully Furnished; Concubine Included

2008-07-01T16:45:00.000-07:00

It is said that home is where the heart is, but usually home and heart don’t sell as a package deal. However, desperate times call for desperate measures, and one Ms. Deven Trabosh—who apparently lost her dignity with her equity—is selling her house and her hand in marriage as a package deal. It’s like Indecent Proposal meets the Amityville Horror.

Because the story is so sensational, Trabosh has been getting plenty of coverage on the offbeat news waves, and I hesitate to give her any added attention. I’d rather write about the economic impact of recession on the sex trade and plastic surgery industries, but Ms. Trabosh represents both subjects nicely, as seen in this Boston Globe article. Most coverage of this debacle has made it out to be a human interest story, portraying this woman—in her own words—as “a Princess Lost in America” with a fetish for European men, but it is far more compelling to view it in terms of a different kind of interest: the return on investment for any sap who decides to play house with Ms. Trabosh, or—as I like to call her—the Trabesty.

Florida’s real estate market has been one of the hardest hit in the country, and now may be the best time to buy property as a long-term investment. With so many foreclosures available, is it really a good investment to buy a luxury home at more than the full asking price? The Trabesty listed the home at $340,000 on a traditional real estate site, which is already somewhat steep for such a saturated market, but then she upped it to half a million in the house/harpy package deal. Apparently, she thinks she’s worth roughly $160,000 dollars. How...generous.

We can only assume that most interested buyers will be interested mostly in the Trabesty’s tangible assets, which were described in the article as “Barbie-esque” though they are more appropriately labeled “Barbie-qued”. Over time, these assets can be expected to depreciate significantly, require high-maintenance and all without any hope for resale. It is true: Like all “alternative investments,” buying Ms. Trabosh’s claw in marriage may offer benefits that can’t be put in monetary terms. But so can investing your money in deserving, investor-driven charities instead of buying a shot with an opportunist who may just divorce you and take “her” half of the house in a matter of months.

Any lonely fellow who contacts the Trabesty—and they do—is advised to conduct full and proper due diligence. I recommend seeing if she can be leased before committing to buy, and I certainly recommend a pre-nup to go with this aging pin-up. Trabosh says she is offering a fairy tale come true. I’ll certainly agree that the story is "grim", but will she find Dunce Charming? If you believe in fairy tales, her character is more likely to end up in the oven than at the altar.

Walk Score Helps Consumers Walk Away From the Pump

2008-06-26T09:04:00.000-07:00

Earlier this week, I reviewed the new beta version of Hoodeo and lamented that it wasn’t more pedestrian-friendly. More people are beginning to consider the price of gas when choosing the location of a new home and Hoodeo didn’t do much to find walkable communities for interested users. In pointing this out, I would be remiss to not mention a site that has a leg up in this regard: Walk Score.

Walk Score gives areas and addresses a score on a scale of zero to 100 based on distance to retail, entertainment, restaurants and cafés. This is good news for people looking to trade their house and car keys for a condo and a pair of Mephistos and who want to find a neighborhood that will give them a reason to step out of the house without worrying about gas prices.

Walk Score’s system is limited, however, because it cannot account for tough hills, lack of infrastructure (safe sidewalks and crosswalks) and other obstacles which may make even a short distance a major obstacle. Most suburban areas will rank well below 50 points, which is considered unacceptable. This lack of walkability is precisely why suburbs may soon be less in demand in coming years (See our article Stepford No more: The Death of Suburbia). For now, Walk Score is only appropriate for people living close to downtowns or communities with a pedestrian-friendly town center.

Walk Score just released a list of the most walkable neighborhoods in my own area, Seattle, with an overall score of 72. To compare, the man at 1600 Pennsylvania Avenue enjoys a score of 86 (assuming he can count that high). Meanwhile, the home of the King of Rock (Graceland, that is) scores a measly 32. That’s still much better than the King of Pop can do: Neverland Ranch scores a perfect 0. Maybe that’s why Jacko abdicated to Dubai, which will probably have self-cleaning conveyor-belt sidewalks before the boom there is over.

Wandering back on track—Walk Score is limited, but the developers know this, so with time it may provide a much more accurate and useful tool. Though a little too arbitrary for use on its own, it could help some homeowners narrow the field, and used in conjunction with sites such as Hoodeo, it may have users running, not walking, to the best place of all: Home Sweet-New Home.

Hoodeo: Online Dating For Neighborhoods (Without The Social Stigma)

2008-06-24T10:34:00.000-07:00

As the stigma attached to online dating diminishes and real estate sites continue to boom, it was only a matter of time before someone decided to play matchmaker for neighborhoods and the people who love them. Enter Hoodeo.

Hoodeo, now in beta form, was launched by the team behind eppraisal.com and works on the basis of one idea: It's better to find the right neighborhood first, and then find the right home within it. How does Hoodeo determine the right neighborhood for you without knowing you, your lifestyle, your family or your DNA? With a brief questionnaire, of course!

The Hoodeo Q & A is short and not terribly dry. My favorite question would have to be:

"Ugh… work… but you have to pay the bills somehow. How would you classify your profession?"

Cute, huh? Based on your answers, Hoodeo creates a list of your top 10 most compatible neighborhoods. The results are placed on a chart which is part Venn Diagram, part dartboard, part fruit pie based on your respective flavors: Lifestyle (Green Apple), Property (Peach) and Price (Blueberry). Dead center is a bull's-eye, but I found it impossible to get one of those no matter how I fudged with the questions. See? It's just like online dating.

If it all sounds too simple, that's because it is. Ultimately, the Q & A is too short to really get an accurate idea about your lifestyle or your needs. Furthermore, regarding Location Location Location! you can't narrow the fields based on your commute (method and time). I don't think it's too much to ask that they add this in later versions given how important it is becoming for some people to avoid long and costly travel times.

Hoodeo has its heart in the right place in trying to bring homebuyers one step closer to true love, but like many sites that make a science of compatibility, what sounds good in theory falls flat in practice. Hoodeo's system doesn't even pry enough information out of you to find that perfect place with perfect, unfeeling, mechanical precision, so the results are particularly disappointing. Until Hoodeo can improve on its system, I say follow your heart...or your real estate agent.

Real Estate Investing Game

2008-06-23T08:10:00.000-07:00

I’ve always thought it would be interesting to have a game about real estate investing, but the few I’ve seen have been lackluster at best. Typically these games over-simplify things and in the end don’t really teach players anything about real estate investing. I finally came across a real estate investing game that is actually decent: The game is called Real Estate Empire. It is not perfect by any stretch of the imagination, but it is entertaining and someone who is new to real estate investment may even be able to learn a thing or two.

Some things the game has which set it apart from the others are that it takes into account things such as the economy, market cycles, credit, savings and professional skills. In the game, players can select from one of five different professions including real estate agent, contractor, interior designer, handyman and MBA. Each has a skill set that can help in the game as well as an accompanying savings and salary. To win the game you have to make more money than the competition--namely, the 4 remaining professionals.

As the game progresses you can buy, fix up and re-sell homes. While one of the downsides to this game is that it basically focuses on the fix and flip strategy of real estate investing, I think it does a pretty good job covering it. Players have to make sure they negotiate a good deal when they buy and decide which repairs to make and which ones will ultimately provide the highest return for them. When they sell the home they have to decide if they want to use an agent (to sell it faster and potentially for more money, but with higher costs), or go it alone. The game even takes into account peak selling seasons, so selling in winter is harder than selling in the spring or summer.

Another cool feature the game has is that it teaches credit and savings. In order to buy a home you first have to have a down payment, and you have to build your credit up along the way as well. At the end of each month, players have to decide which bills to pay and whether to use savings or credit to pay them. As the player pays their bills off, their credit gets better and their credit lines increase and subsequent mortgage rates available to them become better--just like in real life. This part of the game is pretty cool and this is the only game I’ve ever seen that incorporates this piece, which of course is vital to investors.

Rather than explain the entire game, though, I’ll provide you with a link to the place where you can download a trial version and play it for yourself. The trial version is just like the regular game, only a trial game will end after 60 minutes of play time. That is plenty of time to decide whether or not you like it, though, so I recommend checking it out if you like this sort of thing. Happy playing…

http://www.logler.com/real-estate-empire

HotPads Helps Answer The Question: “Rent Or Buy?”

2008-06-16T08:43:00.000-07:00

With a new mapping tool released by Hotpads.com, called the rent ratio heat map, users can now quickly and easily determine whether it makes more sense to rent or to buy in a certain area. The tool evaluates each area based on the rent ratio—or ratio of rental pricing to for-sale pricing—and assigns the appropriate heat map color.

While the tool is not perfect, it is a very cool idea that I’m sure will evolve with time. A couple of problems I noted were the comparison properties and the buying costs used to calculate the ratio. In their comparison, they use the number of bedrooms to determine the costs. The problem with this, of course, is that the apartments and other multi-family rentals examined are very different from the homes to which they are being compared. In areas like Manhattan, where single family homes are virtually non-existent, this comparison model makes sense. However, in suburban areas that have a high concentration of single-family homes, things are going to get a little off. Most people in the suburbs would prefer to live in a home rather than an apartment for various reasons. As a result the prices for rental homes tend to be considerably higher than apartments.

Another problem is with the cost they assign to the buy side of the equation. They simply take the cost of the home, but neglect to consider any additional expenses involved in home ownership. This of course includes property taxes, utilities (typically higher than in apartments), maintenance and so on. These costs vary greatly based on which state, and even city, you are in. For example, property taxes in Texas are more than double those in Washington.

This tool is a great idea, and as it evolves and becomes more accurate it will become an incredible resource for people to consult. It is most definitely worth checking out, and you can even use it as a starting block when evaluating neighborhoods, but don’t let it take the place of additional due diligence. This tool is not meant to be the final word on whether a person should actually choose to rent or buy; it is simply meant to be a starting point for them.

Trump Golf Resort Delayed: Birdies Have The McDonald Bogeyed

2008-06-11T13:06:00.000-07:00

Scotland may be the home of golf and bagpipes, but a protracted battle to stop Donald Trump’s $2 billion dollar golf resort has proved that the nation’s love of golf and old wind-bags is not unconditional. Trump argued yesterday for the resort in northeastern Scotland, on a stretch of shifting sand dunes on the coast 12 miles north of Aberdeen.

Trump has had quite a few snags in the last year. This latest bout of fiscal fisty-cuffs has been raging for some time, and as always Trump is reluctant to admit defeat. It may not just be bull-headed pride, though, as he claims that the project was inspired by his mother’s own Scottish heritage.

But tartan touting has not helped The McDonald in his fight, and resistance from environmentalists and residents—including a landowner who refuses to sell his family farm—has Trump’s kilt in a twist. The stretch is home to several species rare to the island, including cute, little otters and cutely-named kittiwakes (second only to titmice, in my book) and a golf course might spell doom for their populations. Badgers are also known to have their dens there—distant relatives of his, I imagine.

His rebuttals to concerns regarding the resort’s environmental impact are sub-par. From a USA Today article:

"People won't play a course if it is environmentally harmful," Trump said. "They don't like it, they don't feel good about it and they won't play it."

The United Nations Foundation may say otherwise given their address of the rising popularity of the sport worldwide and the concerns of environmentalists , but Trump has his own experts...and...

“Under cross-examination by the Royal Society for the Protection of Birds, Trump drew snickers from the audience when he said he knew more about the environment than his consultants did. He acknowledged he had not read environmental reports that he commissioned.

"‘I would consider myself an environmentalist in the true sense of the word,’ Trump said.”

The panel, it would seem, rightly sees this as the steaming pile of haggis that it is. Though Trump remains optimistic, the best he can hope for is a scaled-down version...but he would never settle for anything but the best. Methinks the kittiwakes are safe for now.

Deciding If You Should Buy A Franchise

2008-06-09T08:16:00.000-07:00

When it comes to buying a franchise, there are a lot of resources available. Few of them, however, will truly prepare you for the decision of whether or not to purchase a franchise. I found this out the hard way when my wife and I invested in our first franchise.

Investing in a new or existing franchise is different than buying an existing business and thus requires a different focus of evaluation. Although buying a book about small business ownership may be helpful, there are many franchise-specific issues and considerations that an investor should address before deciding to take the leap into franchise ownership.

Rick Bisio, one of the most successful franchise consultants in the industry, has recently released a book titled "The Educated Franchisee." In it, he distills the information he’s learned not only from being a franchisee, but also from coaching hundreds (perhaps thousands) of individuals through the process of deciding whether a franchise is right for them. There are many resources related to small business, but few truly capture the unique challenges of the decision to buy a franchise.

Bisio clearly has a grasp of the one of the most important considerations when looking at a franchise opportunity: “buying a franchise is not the destination, it is the vehicle.” With this in mind, the book aims to address the question of whether a franchise is the proper vehicle for achieving an individual’s personal and financial goals. At the end of the book, the reader should be able to answer the three crucial questions any serious investor should consider:

1. Is a franchise right for me?
2. How do I find the right franchise opportunity?
3. What should I expect out of franchise ownership?

If you’ve been considering small business ownership and are open to the idea of a franchise, I recommend you pick up a copy of "The Educated Franchisee." $20 is a small price to pay to ensure you are making the right decision to invest your time, energy and hard-earned dollars in a franchise business.

It’s also a no-risk scenario. Bisio is offering a 100% refund if the book doesn’t “[help] you decide which franchise opportunity [is] best for you or [educate] you whether buying a franchise [is] the right move.”

Google Mortgage MarketPlace: It’s Coming…

2008-06-06T15:39:00.000-07:00

Zillow recently made headlines with their new mortgage marketplace, but Google is quietly testing a mortgage marketplace of their own in the U.K. Whether or not that means that Google will bring the marketplace to the U.S. is unclear, but in all likelihood if things go well in the U.K., we can probably expect to see it hear too.

After seeing the success that Zillow has had with their tool--over 28,000 loan requests in the first two months, according to Zillow-- I can’t see why Google wouldn’t also be successful. Google’s viewer base is more than 50 times larger than Zillow’s and they have a lot more money to throw into designing a great tool for users.

What does a Google Mortgage Marketplace mean? Well, it likely means even more competition among lenders, which means lower rates for borrowers. The main questions will probably revolve around service. Sure it’s great if someone quotes me a loan, that’s lower than another lender, but how can I know that they are going to actually close it? Is this lender someone who is going to pull the old promise the world trick only to hand over something completely different at the closing table?

These are questions that Google is going to have to answer if they hope to have success with their new tool. What I would love to see is the ability for users to rate lenders (it doesn't appear that Google's UK mortgage marketplace has this ability). Much like they have with their shopping site. That way users could compare not only quotes, but also past service records, which offers a much better solution for borrowers. Zillow offers a rating system as part of their mortgage marketplace, and if Google wants to take this thing to the next level they would be wise to add one too, maybe even with some additional features to what Zillow offers. In the end, Google’s name and size alone should allow them to control this marketplace, and I foresee them doing just that.

Estately.com Expanding To Include Portland Properties

2008-06-04T13:57:00.000-07:00

Estately.com, a real estate search website that uses referrals to connect consumers, real estate professionals and brokerage companies, is expanding outside Washington state by "adding 35,000+ Portland homes to our existing database of nearly 50,000 Western Washington homes," according to a recent blog post on Estately.com announcing the news.

"The site incorporates interactive mapping and displays details about the proximity of schools, parks, transit stops and restaurants to selected properties. Consumers can subscribe to get updates on price changes for properties and can save property notes," according to Inman News.

Estately.com users can search properties in specific neighborhoods and choose from agents in Estately's referral network by viewing competing bids anonymously. "The company has an agent-ranking algorithm that narrows the list of agents for a given area, and Estately staff research these agents and conduct interviews with some agents in developing its referral network," according to Inman News.

"We hope we make it easier for you, Portland, to search for a home in the hip neighborhoods--Hawthorne, Woodstock, Lloyd, Belmont, The Pearl District, and Sellwood--and the less hip ones. We also hope we make it easier to decide if a house is actually right for you," according to a blog post on Estately.com.

For more information on Portland real estate, see our previous article, Steady Growth in Portland Real Estate.

Facebook Application Helps Buyers Decide Where To Buy Property

2008-05-30T13:35:00.001-07:00

I just discovered a new Facebook application which could help change the way people buy property. The name of the application is Facebook Neighborhoods and the basic gist of it is that users are able to meet and interact with their neighbors. The tool is pretty far-reaching; it covers many countries and neighborhoods already and is growing rapidly. I believe the tool is originally intended for neighbors to communicate with one another and stay updated, but I think it could also be used as a great tool for potential homebuyers and investors alike.

Once you are in the Facebook Neighborhood tool you are able to browse through neighborhoods, see what is going on in the particular neighborhoods and also see the names of other people living in the neighborhood. Typically, unless you are friends with these people, you won’t be able to view their full profiles--in case you were wondering what type of people are in the neighborhood--but you can send them messages.

For real estate investors, talking to neighbors can be one of the more beneficial due diligence tasks they can undertake. Neighbors are going to know whether there is a drug house in the area, or a neighborhood thief or numerous other helpful things. They might even know things about the particular house in question. Many times I’ve found that the neighbors know about damage the house has suffered (which homeowners are supposed to disclose, but sometimes things magically slip their minds), or specifics about the sellers such as why they are selling and so on, which can be helpful in negotiation. You might be surprised at what types of things can come up when you talk to neighbors.

Obviously not all the neighbors are going to be part of the Facebook Neighborhood, so prospective homebuyers are probably still better off at least attempting to knock on the neighbor's door (especially for the property-specific information), but for those who are too shy for face to face confrontation--or maybe just don’t have the time--this could be another way to conduct due diligence.

I would use this tool to accomplish a wider neighborhood survey of sorts. I would craft a message that asks a few questions about the neighborhood, send it out and then see what type of responses I get. I wouldn’t ask anything specific about the house, but would start the message by saying I’m thinking about buying a certain property in the neighborhood and just wanted to get a little more info about the area. By throwing out the address--even though I don’t ask directly for property information--if they have some juicy information they just might share it. Mainly I’m looking for information regarding the neighborhood. What do they think of the schools? How is the homeowners association (depending on how wide the neighborhood is; there may be different HOAs)? Any problems with crime? How do they like living there? Things like that. People like to share this type of information, and it will be useful whether you plan on living in the home or renting it out. This initial communication could also serve as a spring board for further relationships with the neighbors so that you can ask them for help in the future for things such as checking on how your tenant is maintaining the property (helpful for out of area investors) and so on.

Questions are your friend when conducting property due diligence and this tool just provides homebuyers an easy way to connect with people who might have the answers they are looking for.

PolicyMap Offers Tons Of Info For Investors And Developers

2008-05-23T14:59:00.001-07:00

PolicyMap is a new online service that was created by The Reinvestment Fund, a non-profit organization that funds neighborhood redevelopment. I read about PolicyMap on Future of Real Estate Marketing blog and thought it sounded like an interesting service. When I went to check it out, I was astonished by the amount of information and customization they offered.

Real estate investors or developers who need to do extensive demographic research should definitely check this site out. They offer more than 4,000 different demographic variables for which you can customize maps and reports. They cover the standard ones such as crime, income and so on, but they also have powerful ones you can’t find anywhere else, such as an estimation of a neighborhood's population in the year 2012 and many others I just don’t have space to mention.

All of this information does not come cheap, however.

They offer limited data and customization for free upon registration, but for the real goodies you have to be prepared to ante up. Their standard subscription starts at $200 a month, and they don’t even publish their premium subscription price. If you are a developer or real estate investor who does a significant amount of deals, though, I think their service is well worth the price. This is especially true if you have to put together presentations for money partners or others as part of your investments. PolicyMap offers data that would make your presentation much better, in addition to tools that should make gathering the data and putting into presentable format much easier.

NAR Releases New Commercial Real Estate Listing Service

2008-05-16T11:40:00.000-07:00

The National Association of REALTORS (NAR) launched a new commercial real estate listing service called Commercial Source yesterday. The new site can be found at www.commercialsource.com and should offer the commercial real estate leader LoopNet.com a run for their money. With the strong backing of NAR, Commercial Source already has a leg up on the competition.

Browsing the site I found it to be laid out well, with an attractive design. As an investor, though, one problem I came across was with the property searches. It doesn’t appear that they have any sort of advanced search, and their available options are a bit limited. If I’m trying to narrow down my search to a specific type of property, I'm going to have a more difficult time on this site than LoopNet, for example.

As this is a new site, though, I’m sure changes such as this will come with time. For a first release, I think NAR did a good job on this site and I will definitely be keeping my eye on Commercial Source. Other than LoopNet, I really haven’t been impressed with any of the other commercial real estate listing sites out there, so this new competition is welcome in my eyes. Hopefully this pushes both sites to make improvements and become even better.

HomeGain Launches Agent Blog Platform

2008-05-15T11:06:00.000-07:00

Last month, HomeGain, an online real estate marketing company, announced the launch of their new blogging platform for customers of real estate agents.

HomeGain’s Source4Sellers marketing system allows agents to sign up as bloggers on the network and to post their contact information and profiles for consumers seeking real estate.

Users searching for homes in a particular neighborhood will see a display of blogs related to that neighborhood or area from agents working there. Consumers then have the option to contact agents directly from the website through their blog.

Since HomeGain is known in the industry as a lead-generation and sales tool, the blog provides an identifiable way out of that niche by allowing agents to receive some of the web traffic that would otherwise be reserved for HomeGain’s site.

Many other service provider blog programs allow agents to communicate only with other agents, but this tool, designed for the consumers use, is intended to allow direct interaction between agent and consumer, giving agents another way to market themselves and gain exposure to the right buyers.

Clean Edge Can Help Investors Profit From Clean Tech

2008-05-15T10:55:00.000-07:00

The world needs to be saved. The global climate crisis threatens our planet. But for every mayor like Greg Nickels of Seattle, who encourages people to drink tap water rather than bottled, or for every consumer who chooses reusable tote bags when shopping, there are thousands of cars and factories cropping up in developing countries such as China and India that cancel those actions out.

Small steps by individuals certainly can help, but major progress is not going to be made in solving the worldwide crisis without major action.

Major action will happen when people realize they can profit from making environmentally conscious choices.

To that end, Clean Edge is here to help.

The company, founded in 2000 by Ron Pernick and Joel Makower, is a research and publishing firm that strives to help investors, companies and governments learn about and profit from using clean technology.

Clean Edge "tracks and analyzes clean-tech markets, trends, and opportunities through its network of partners and affiliates," according to the company's website. "Clean Edge, with offices in the San Francisco Bay Area and Portland Oregon, offers unparalleled insight and intelligence on the emerging clean-tech economy."

Clean Edge's products and services include market research reports, the Clean-Tech Investor Summit, strategic consulting services, a daily newsfeed and a monthly newsletter. But perhaps the most useful and unique tool they offer investors are the NASDAQ Clean Edge U.S. Indexes. These are "benchmark indexes which track U.S.-listed clean-energy companies," according to the website.

"The NASDAQ Clean Edge U.S. Index (CLEN) and the NASDAQ Clean Edge U.S. Liquid Series Index (CELS) are modified market capitalization-weighted indices designed to track the performance of companies that are primarily manufacturers, developers, distributors, or installers of clean-energy technologies. An exchange traded fund (ETF) is based on the NASDAQ Clean Edge U.S. Liquid Series Index and is sponsored by First Trust Advisors L.P.," according to the website.

If enough people invest in clean technology, and make clean technologies viable on a large scale, the world can be changed.

Neverland Ranch Avoids Foreclosure: Peter Pan Still Truant But Optimistic

2008-05-13T13:28:00.000-07:00

Michael Jackson, the original Lost Boy, has negotiated a way out of foreclosure just days before his Neverland Ranch was to be auctioned. Colony Capital purchased the $23.5 million loan from Fortress Investment Group and will begin negotiations with Jackson to save his beloved sanctuary/ruin/amusement park from hell.

For the ruined pop icon—who hasn’t darkened the doors of the decaying Indian village or fed exotic animals in his private zoo, now home to domestic algae, for almost three years—it is a sad testimony to his inability to accept the end of his inane and insanely decadent lifestyle. He may simply be hoping to preserve what little equity he has. Half of his 50 percent stake in the ATV music catalog is in place as collateral for a $200 million loan he negotiated three years ago to restructure his debt.

As for his benefactors at Colony Capital who purchased the loan, I cannot say whether they expect to ever be repaid by Jacko or if they expect to eventually take the dilapidated Nymphenberg off his hands as an investment property. The 2,800-acre estate has been valued as high as $120 million, but it is in desperate need of repair: the cost of which will no doubt figure into any deal to purchase it, lowering the sale by a sizable margin if Capital chooses to sell it as a single property.

If the property were subdivided, it could be sold piecemeal for a better profit overall (I call dibs on the Bumper Car tent). It is safe to assume that Neverland will never be restored to its former, nightmarish glory. It took an...extraordinary individual to dream up the theme and layout of the Ranch, and it would take an extra-extraordinary individual to buy it as a residence. If Neverland ever reopens its doors intact, it will as almost certainly be as a tourist attraction, but given its history and the fact that its former occupant is still breathing (in an oxygen tent, through one nostril), it won’t be a viable one until Jacko is fairy dust.

I think the surest investment with the abdicated King of Pop would be a life settlement. To quote the crocodile: Tick tock, tick tock. As a one-time human being, Jackson still inspires some sympathy in me, but the bottom line is he is finished, and he won’t turn a real profit again until he’s halfway to the first star on the right, straight on ‘til mo(u)rning. For now, I only wish him and the goodly pirates at Colony Capital the best of luck.

The REX Agreement: Capitalizing On America’s Real Estate Pessimism

2008-05-12T09:56:00.000-07:00

Unsure about whether your home may see much appreciation over the next five years, and looking for some liquidity on your home equity? Then a REX agreement might be the solution for you.

What is a REX agreement? What it boils down to is an exchange of cash today for a share in the future appreciation (or depreciation) of your home. Let’s look at an example:

Say your home is worth $1 million today. You decide to take a payout from REX of $100k in exchange for a 40% stake in the future change in value of the home. Without getting into the more complicated parts about how REX structures their agreement to share in the appreciation or depreciation and get their original funds back, let’s consider three different options for sales price of the home after five years.

Sales Price	Gain/Loss	Homeowner Share	REX Share	Homeowner Gross	REX payout	Homeowner Net
$1,100,000	$100,000	$60,000	$40,000	$960,000	$100,000	$1,060,000
$1,000,000	$0	$0	$0	$900,000	$100,000	$1,000,000
$900.000	$100,000	$60,000	$40,000	$840,000	$100,000	$940,000

If the homeowner sells for a larger amount, REX will keep a portion of the upside. If the homeowner sells for a break-even price, then the homeowner has been able to use the original $100k payout without any costs other than origination fees for the REX agreement. If the homeowner sells for less than the original appraised value, then REX will actually lose a portion of the original $100k payout it gave to the homeowner. In other words, REX only gets paid (other than a return of their payout) if the homeowner makes money.
While these scenarios may sound enticing as an alternative to using a loan, there are some other key factors to know about the REX agreement:

Appraisal value – REX’s appraisals will likely come in lower than the bloated appraisals we’ve come to expect in the past. REX requires 6 comps, twice the number of most residential appraisals, and is much more particular about ensuring those comps are actually good comparables for the property.

Owner occupation – Thinking of using a REX agreement to take some cash out of your home to go buy a new house? That’s a no go. Part of the agreement states that you will continue to occupy it as your primary residence.

Closing costs – Although REX started with few closing costs, typically paid by REX, they will begin charging a 3% origination fee within the next few weeks.

Home values – For the deal to work for REX, your home probably needs to be worth $350,000 or more. The average home price that REX has been funding is about $750,000, which is one of the reasons it has only ventured into 6 of the higher-priced states (California, Washington, Oregon, Illinois, Florida and Massachusetts). There are other states that REX anticipates coming online before the end of the summer, including Colorado, Connecticut, Rhode Island, Maryland, Virginia and New Jersey.

Five year timeframe – The REX agreement includes penalties for selling your home before five years have passed. The penalties are steep during the first year (25%), declining by 5% each year after that. After five years there is no penalty, but REX still shares in any gains in the home’s original appraised value.

Amount of equity – You’ll need to have at least 25% equity in your property, based on the REX appraisal, in order to qualify. REX will provide a cash payout of up to 13% of the value of the property, which would put the total value of liens on your property at a maximum of 88% (75% in loans and 13% in REX’s payout).

Inflation – With a timeframe of a minimum five years without penalties, inflation could likely add value to the home (even if the true inflation adjusted value of the home doesn’t change). In that scenario REX would be entitled to share in their portion of that gain.

On another interesting note, the big money behind REX & Co. is AIG. They are not only a major shareholder, but also the institution providing the bulk of the financing for the actual REX agreements. That ought to say something about what the “smart money” thinks about where the market is headed.

Trulia And Topix

2008-04-17T10:01:00.000-07:00

Trulia is watching you.

This week they announced the development of a widget that will promote listings from neighborhoods based on localized information about the user, capturing the ever-evasive longtail markets.

One site of the 50,000 odd sites that Trulia is seeking to partner with in installing the widget is Topix, a Web-based news community that allows users to post and browse articles relevant to their topics of interest.

Today’s widget launch on Topix will show Topix users a grouping of listings in close proximity to them, and clicks on the listings will send them to Trulia to read further.

"We're really excited about this," Trulia CEO Pete Flint said of the new partnership with Topix. "We've seen the best results when we've gotten down to the hyperlocal level. The great thing about Topix is they have a huge national reach as well as local content."

Topix is the fourth most-popular stand-alone newspaper site on the internet, as well as the seventh-ranked Web site within the newspaper subcategory of news and information sites, according to comScore. Clearly, this partnership will be a great coup for Trulia.

This is not just another widget. Service providers in the real estate industry should see this as a worthwhile tool to promote their businesses online. Topix CEO Chris Tolles says that because the newsfeed is localized, it offers a great opportunity for users to differentiate themselves from other sites. This looks to be another way for service providers to find free exposure on the Web, and they’d be smart to use it.

Franklymls.com: The First Wiki MLS

2008-04-17T09:25:00.000-07:00

Franklymls.com, the first wiki MLS, officially launched in early April promising enhanced searchability, more user-friendly tools and—most importantly—the ability to communally modify postings.

Founder Frank Llosa of Frankly Realty in Virginia says on his blog, “The goal is to add information, and not opinions…competing agents come together to give what the customer wants...more info and photos.”

The site also has a point system to reward agents with outbound links to their sites. One point is awarded for posting a comment, and ten points are awarded for adding a photo album. The user with the most points for a given property gets a link back to their website, and most likely, any business from buyers who view that property through Franklymls.

Two very important things are happening with this site: First, buyers and agents alike now have an all-in-one MLS that focuses on the details of properties, and someday may compete with larger brokerages who have built extensive MLS search pages on their sites. Secondly, the site is an excellent source for buyers agents to market themselves through the properties they show. It’s an easy algorithm: The more properties you comment on and photograph, the more outbound links the site publishes back to you. A marketing no-brainer for any service provider in the real estate market.

Craigslist Launches Blog: (Free) Accusations Ensue

2008-04-03T10:33:00.000-07:00

Craigslist announced the official launch of their first blog today via http://blog.craigslist.org. It’s a departure from Craigslist founder Craig Newmark’s personal blog, which formerly served as a platform for Craigslist announcements and launches and Newmark’s personal musings.

It’s difficult to determine what constitutes a “real blog”, but without RSS capability and with very simplistic formatting, I have a hard time calling this rudimentary announcement page / discussion forum / random gathering of information an actual blog.

The most recent post, however, is quite interesting, and worth a read.

Wave-Powered Boat Sails Nearly 4,000 Miles

2008-04-03T10:31:00.000-07:00

These days, people are quick to jump on solar-powered housing, so why not a wave-powered boat?

69-year old Kenichi Horie has set sail for his second trip from Hawaii to Japan on a wave-powered boat. His maiden voyage in 1996 took place on a solar-powered boat made of aluminum beer cans, much like this one.

The journey—which would take an average yacht a little over a week—will take Horie over two months. He plans to power the electrical equipment (including a microwave) on his boat with solar panels. Momentum is achieved by two panels at the front of the boat, which allow waves to propel him forward.

He plans to carry rice, microwaveable meals and canned food. Oh, and beer. Only the necessities.
Horie’s hope is that his clean-sailing trip will encourage the shipping industry to adopt green habits at sea. Though on a small scale, his trip is proof that it can be done.