Another Sullivan Multi Holiday Party Is In The Books!

Thanks to everyone who joined us at Eggspectation last week for the annual Sullivan Multi Holiday Party. As always, everyone behaved themselves (for the most part... John!) and a great time was had by all. Didn't get the invite?? Call us at the office and make sure you get on the list for next year... It is the premier event of the season!

What does the Fed rate cut mean?

Everyone's talking about the Feds latest move. Here's a great article about possible implications...

http://bankrate.com/brm/news/fed/winners-losers.asp?s=1&caret=3

Sullivan Multi Open House

Thanks to everyone who made it out to our "office warming party". It was great to see everyone. With days getting shorter and hectic schedules, it meant a lot to have folks take time out of their day and come check out our new digs. For those who didn't attend, you missed out on some great conversation and more importantly, free beer!

Lessons for Buyers

Everywhere you turn you hear the talk about foreclosures and the failing mortgage market. We have certainly seen the effects here is this office, but not neccesarily in the ways you would expect. Prices have definitely made an adjustment downward, which can be good or bad, depending on which side of the table you are sitting. But business hasn't ground to a halt as some outlets would lead you to believe. Instead we are seeing more "creative financing" if you will, and more people being able to jump on opportunites that just weren't there before. Last month Chris talked about a property that sold as a bond for deed, and since that post we have completed another. Our current contracts include three short sales, and our closings in the last few months have included several seller financed properties. So the story right now seems to be the following:

1) Now is a good time to buy but you will probably need some cash in your pocket to do it. Gone are the days when anyone with a pulse could buy property, but there are loans out there and people are starting to come down on their prices.

2) There are financing options out there if you don't have much cash. Seller financing can be a really good option for both buyer and seller. Short sales can be long projects without guarantee, but can be a good investment if you have the patience and time. Bond for deed gets you instant equity if you find the right property and can get the seller to bite, though it is a riskier option to both parties.

3) If you are handy, this is a great time to buy. There are fixer-uppers coming onto the market regularly and with prices moving south you can make the sweat equity work if you aren't afraid to dive into the project yourself.

4) Make a low offer if you have the comps to justify the price. In some cases properties are going for significantly less than they are listed for simply because that is where the value is shifting and the evidence is there to prove it. You won't always make it work, but you have a much better shot than you did a year or two ago.

Market Activity Picking Up

After a tediously slow July and August, the multi-unit market in the Greater Portland area finally seems to be picking up. In the last two weeks alone, 18 units have gone under contract. The Sullivan Multi Team put four units under last week alone and are activly negotiating several more contracts. We'll keep you posted as these deals continue to come together.

I received an email recently from the owner of a three unit in Westbrook wondering if now would be a good time to sell. In the email, the owner stated that she and her husband had purchased the building in February of 2006 and made about $35,000 in capitol improvements. They now live forty-five minutes away and are tired of traveling to mange the building. She wondered if she could sell now and make her money back, or wait a year and try then. Below is my response to her inquiry:

“ In my mind, the most notable factor in Westbrook real estate values for the coming months will be the reassessment which is going to drastically increase property tax, including investment and owner occupied multi family property. Historically, Westbrook has been a nice alternative to Portland for investors looking to capitalize on the proximity to Portland, yet earn more of a return on their investment due to lower prices, lower taxes and comparable rents. This increased expense coupled with rising interest rates will put pressure on values and stagnate prices. I don’t see your building going up in value over the next year.”

I hate to give someone bad news, but there are some valuable lessons here:

1. Never buy a property that is out of the way for you to manage. No matter how good the numbers look on paper, over time, your time is worth something and you should be cognizant of this when looking for investments.

2. Unless the climate is ripe for a flip, plan on holding on to your investment for five years or more. Longer is better. Logistics should (with few exceptions) never be a deciding factor in deciding when to liquidate an asset.

Sullivan Multi Happy Hour

Sullivan Multi hosted a happy hour on Wednesday night for our clients, friends and family. It was a great night of talking, laughing and yes, a little drinking. We even found time to discuss the market conditions and catch up with our newest multi owners as well as some folks who have been at it a while. Everyone seemed to enjoy themselves and it was awesome to be able to get everyone together. Hope to do it again soon!!

Outside the box...

Sullivan Multi closed a “bond for deed” deal last week. If you are not familiar with a bond for deed, as explained by John Graham, it is a mechanism whereby the title is held in escrow by the seller's attorney until payment in full is received from the buyer. The seller’s current mortgage(s) stay in place and the buyer pays the seller an agreed upon monthly payment and the seller then uses this money to pay the mortgage holder. The buyer is responsible for all management, upkeep, expenses, taxes and insurance, ect. The buyer owns the building but uses the seller’s current mortgage.

If the buyer does not pay, the seller can take the building back over in as little as forty five days. The risk for the seller is that the building could potentially be managed poorly or allowed to be run down.

The risk to the buyer is, while doing capitol improvements and paying the seller on time, the seller could potentially stop paying the mortgage. In that scenario, the bank could foreclose, leaving the buyer with no recourse.

As bad as everyone feels about the sluggish pace of the market lately, this climate seems to bring out the serious investor who knows an opportunity when they see one. As lenders pull their purse strings tighter and tighter, buyers and sellers will continue to find creative ways to transact property.

We've Moved!

Effective July 2nd, 2007, the Sullivan Multi office will be located at:

306 Congress St
Portland, ME 04101

Our phone number will still be 207-771-5556.

Feel free to stop by and check out our new space!