The Real Estate Bloggers

Indiana University Basketball Announcer Todd Leary Arrested on Real Estate Fraud

February 7th, 2010 • Tom Royce • 0 comments • Related • Filed Under

Todd-Leary As the real estate markets falter, the scams that came out of the boom are coming to light and are catching some people that you would not expect. The newest one, former Indiana University basketball player and current announcer Todd Leary was arrested.

The charges were that he took title insurance escrow funds totaling 1.3 million dollars. Leary is the more famous person rounded up in this scam. His boss, Joseph Garretson, plead guilty earlier in the week for stealing 2.7 million.

Leary has been relieved of his duties as color commentator for Indiana University basketball.

The charges against Leary include conspiracy to misappropriate real estate title insurance escrow funds, by improperly transferring about $1.3 million to a bank account he controlled. Court documents also say Leary once worked for a title insurance broker who pleaded guilty in a $2.7 million scheme.

Leary played for Indiana University in 1989-94, including its 1992 NCAA Final Four team. He is an analyst for IU’s radio broadcasts. via LATimes

more

Leary, 39, of Carmel, is accused of conspiring with Garretson between July 2008 and February 2009 to commit a variety of felonies, including conspiracy to commit conversion or misappropriation of title insurance escrow funds, conspiracy to commit theft and conspiracy to corrupt business influence. The majority of the charges are Class C felonies, with penalties of up to four years in prison each.

Garretson is accused of arranging mortgage refinancing loans for area clients and failing to use the money to pay off the initial loans, causing mortgage holders to default.

Under the terms of Garretson’s plea agreement, he faces no more than 12 years in prison when he is sentenced in April, according to court documents. After Garretson’s arrest last fall, Leary called Evans – a mutual friend – and told Evans he was “a big part of Garretson’s situation,” documents said. via the Journal Gazette

A Rant on Congress, The President, and Commercial Real Estate

February 2nd, 2010 • Tom Royce • 7 comments • Related • Filed Under

Can I be blunt. Our government is nuts.

On one hand it is sending signals to the New York Times that they are worried about commercial real estate, yet at the same time they are following a White House that recommends a 1.9 trillion dollar tax increase on businesses and the wealthy and wants to punish banks with an additional tax increase.

Morons.

I understand that they ran on helping the little guy, but let’s face it, the problems we face in commercial real estate are big boy problems. If there is no money to invest in labor, you need smaller offices, and smaller factories, and smaller distribution centers.

And when the government takes more money, there is less to invest in the private sector. Not exactly rockey science.

And when you announce new programs on a monthly basis that will impact the private sector with additional costs and regulations that may or may not pass, the private sector stops taking risks.

Again, not exactly rocket science.

If you in Washington want to experiment, that is fine. The people elected you to your offices and you have that right.

But what you can not do is then not expect consequences from your experiment.

Like the little boy who does the science experiment and makes a mess of his Mom’s kitchen when it blows up, you have to deal with the consequences.

The problem is these folks are running their experiment, making the mess, and then using a credit card to try to pay the folks to clean it up. And the guys who are supposed to clean it up are not going to take a credit card from a 9 year old boy.

So let’s be serious. If you want to worry that the credit markets, commercial real estate markets, and the residential real estate markets start functioning again, you need to change your game.

Stop printing money and making us worry about devaluation and inflation.
Stop changing the rules of the game every few few days so we know if we can make any money or not. We make investments to earn money.
Stop making us look stupid by backing one initiative and then changing it mid game.
Stop threatening us and making us look like the bad guys when all we are trying to do is keep the system going and feed our families.

Right now we are all on eggshells and we don’t want to play another round of Russian Roullette with your administration.

CalPERS Looking For Real Estate Advisors

February 1st, 2010 • Tom Royce • 1 comment • Related • Filed Under

CalPERS Are you looking for easy money and a low bar?

Then CalPERS, the massive public employee retirement plan in California, may have the gig for you. They are looking for real estate advisor’s to guide there investments.

California Public Employees’ Retirement System(CalPERS) is looking to add real estate advisors to its special projects’ spring-fed pool, IM Weeklyreports. The plan does not have a fixed number of consultants, who will join the spring-fed pool.via emii

But don’t worry, if past results are indicative of future earnings, you can last a few years in this lucrative position if you lose less than 500 million dollars. That is what the previous advisors from Black Rock Inc. lost the pension as they advised them to invest in the Stuyvesant Town and Peter Cooper Village Project with Tishman Speyer Properties and themselves.

Can you do any worse? If you can bring a deal to the table that would lose only 100 million or so you may have a pretty healthy gig on your hands with CalPERS.

The California Public Employees’ Retirement System officially has lost a $500-million stake in the biggest deal ever in the U.S. for a single piece of residential property.

The owners of Stuyvesant Town and Peter Cooper Village, a complex of 56 buildings with 11,000 rental units near the East River in Manhattan, have agreed to turn the property over to creditors after defaulting on $4.4 billion in debt.

CalPERS had committed 26.5% of the partnership led by Tishman Speyer Properties and Black Rock Inc., one of the fund’s real estate investment advisors. “This was one of our investments when the real estate market was peaking during 2005 and 2006,” said Clark McKinley, a CalPERS spokesman. “Performance was negatively affected by the aftershock of the market collapse. via LATimes.com

Good News: REITs Trading at 20% Premium to Property Values

February 1st, 2010 • Tom Royce • 1 comment • Related • Filed Under

Apartment-complex With the real estate market struggling to gain a foothold, news that the stock market is pricing Real Estate Investment Trusts (REITs) at a 20% premium to their property values is worth sharing.

While prices have not bottomed out according to experts, the market is nearing a range that there is optimism in the long term outlook and that rents will provide positive cash flow for the REITs.

Most important, REITs have already soared from their lows. The Dow Jones Equity All REIT index, which lost three-quarters of its value from February 2007-March 2009, has doubled since spring. REITs now trade at a 20% premium to the net value of their real estate, estimates Green Street Advisors.

To bulls, that premium is deserved given hopes that commercial-property values will rise as the economy recovers. Feeding that optimism: Publicly traded REITs, unlike many private rivals, have raised debt and equity to strengthen their balance sheets, giving them the cash to buy distressed properties.

Landlord Association Recommends High Credit Standards For Tenants

January 29th, 2010 • Tom Royce • 7 comments • Related • Filed Under

A recent report from The National Association of Independent Landlords recommends that landlords complete background checks for tenants.

And it makes perfect sense.

But you have to wonder what people are going to do if they have been foreclosed upon and are looking for a place to live. There credit is shot and quality landlords are going to give them a pass instead of renting to them.

It may explain why so many families are now renting before they lose their home to foreclosure just to avoid this predicament. And these same families instead of fighting to save their home are banking their mortgage payment to use as a high deposit on their potential rental property.

A proactive foreclosure abatement process could probably take some pressure off the marketplace instead of the intense downward spiral we find ourselves falling into.

Running a thorough background check is essential. The National Association of Independent Landlords urges property owners to:

Verify employment and salary. An applicant’s monthly income should be at least triple the amount of the rent.

Corroborate rental history. Confirm it is the actual landlord giving the reference, not a friend or relative posing as such.

Avoid applicants with a history of collections, evictions and judgments.

I’ll Take Some Eggs, A Gallon of Milk, and a 3 Bedroom Ranch?

January 27th, 2010 • Tom Royce • 11 comments • Related • Filed Under

Just because you can do something does not mean you should do it.

Stop-and-shop Someone please explain that to the braintrust of Re/Max of New England. Seriously.

They are planning on opening up 17 offices in Stop & Shop grocery stores. Again, my reaction is seriously?

The idea of going to a grocery store to buy a house just degrades the brand. There is no alignment there. Eggs, milk, and Re/Max just does not do the brand justice.

If I was a Re/Max agent in New England I would be screaming at management. Imagine having to do desk duty next to the register? And if they do not listen, time to get new Keller Williams business cards.

Would you like Paper or Plastic?

Jay Hummer, executive vice president at Re/Max of New England, said the Natick company signed an agreement with Quincy-based Stop & Shop Supermarket Co. late last year to open as many as 17 real estate offices in Stop & Shop supermarkets within the next year. Most of the potential locations are in Southeastern Massachusetts.

Hummer said Re/Max franchisees were told about the opportunity to open offices in the stores last week.

“It’s something we’ve been working on for a year now,” Hummer said. “It’s a great way for our broker-owners and agents to be able to connect with the consumer … in a very convenient location.” via Enterprise News

Update:

It gets worse, I found this prototype of the office at the Boston Globe. Imagine going over your mortgage information and other personal information in the middle of a supermarket? Or stressing over an offer and a kid rolls a shopping cart into you? The office is open air…

Check it out.

Remax-stop-and-shop-office

Tags: Re/Max

The Real Estate Economic War- Explained in a Rap Song Hayek vs Keynes

January 26th, 2010 • Tom Royce • 0 comments • Related • Filed Under

We are living in a period where the great economic arguments are being fought out right in front of our faces. The battle between Hayek and Keynes really has been waged with economic policy and governmental policy in our backyard. The real estate world.

There was a great rap video done, and I promise you, I am not a huge rap fan but this is amazing, where they explain the differences between the two different schools of economics. If you have teenagers watch it, and if you are a real estate professional it is not a bad watch either. They do explain the issues involved very well.

Stuyvesant Town And Peter Cooper Village Poster Child of Easy Credit Excess

January 25th, 2010 • Tom Royce • 2 comments • Related • Filed Under

Petercooper When we look back at the implosion in the real estate markets, the example I see being used the most will be Tishman’s purchase of Peter Cooper Village and Stuyvesant Town in New York City. This will be the poster child example.

I bring this up because today Tishman Speyers Properties gave up their ownership stake in the properties to their creditors. What most likely is the biggest deed in lieu of foreclosure in the history of mankind.

The only people happy over the debacle of the Stuy Town purchase are the MetLife shareholders who made out like bandits, and some bankers that pocketed the extraordinary fees from the deal.

The property’s owners signaled they would be unable to reach a deal with lenders and instead decided to allow creditors to proceed with what amounts to an orderly deed-in-lieu of foreclosure, which means a borrower voluntarily gives the property back to lenders to avoid a foreclosure proceeding.

“It has become clear to us through this process that the only viable alternative to bankruptcy would be to transfer control and operation of the property, in an orderly manner, to the lenders and their representatives,” the venture said in a statement to The Wall Street Journal. “We make this decision as we feel a battle over the property or a contested bankruptcy proceeding is not in the long-term interest of the property, its residents, our partnership or the city.” via the WSJ

Congressman Calls For Abolishing Freddie Mac and Fannie Mae

January 23rd, 2010 • Tom Royce • 1 comment • Related • Filed Under

Barney Barney Frank, the Democratic Representative from Massachusetts and Chairman of the House Financial Services Committee, has called for the abolishment of Freddie Mac and Fannie Mae.

Frank, you should remember, is the Congressman who said that the companies were in great shape just before they imploded and are now on the hook for over 400 billion in public assistance. Oh, and Frank is also the one who drove the companies into that situation as he used them as tools of a social experiment forcing lending downstream to borrowers who could never repay their loans.

But ignore all that, it does not matter anymore. Now Congressman Barney Frank has a real plan. Just get rid the evidence of Congressional excess and experimentation and let’s start again.

Sorry Congressman, we have long memories here.

“The remedy here is…as I believe this committee will be recommending, abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance,” said Rep. Barney Frank (D., Mass.), the chairman of the House Financial Services Committee.

His comments initially rippled through bond markets on concerns that the government might pull away from the mortgage market. Many believe that’s unlikely and that any revamp would include continued government involvement. The government took over the companies in September 2008 as loan losses mounted.

Some Republicans have argued that the companies should ultimately be reduced in size and privatized, while at other end of the spectrum, some analysts have recommended turning the companies into government agencies. But several industry groups and academics have suggested that the government is likely to continue playing at least some role in the future of the companies. via WSJ

Las Vegas Fountainbleau Hotel Project Bought By Icahn

January 21st, 2010 • Tom Royce • 0 comments • Related • Filed Under

Fontainebleau-resort In what may be a brilliant bottom feeding move, Carl Icahn has bought the failed Las Vegas Fountainbleau project for 156 million dollars.

The project has been stuck after investors have lost nearly 2 billion dollars as the Las Vegas hotel market has slowed, investment capital has shrunk, and the over-saturation of the market has become more pronounced.

But, and a big but, Icahn now has such a low cost of entry that he can finish the project and still make money at a much cost basis. Meaning, rooms and drinks can be cheaper giving him an immediate competitive advantage the days the doors open. Not a bad place to be in a slow market.

His winning bid of $156.5 million is a relative pittance, compared to the $2 billion the casino’s backers already sunk into its construction.

An investor seeking out some of the most depressed real estate in the nation would do well to turn to Las Vegas. According to Clear Capital, home prices in Las Vegas have dropped 63.7 percent since their peak. In 2009 – when many other large markets were beginning to show signs of life – property prices dropped 27.4 percent. via NASDAQ