Friday, January 26, 2007


As I was perusing my inbox this morning, I came across an email from Inman News highlighting its list of the Top Real Estate Blogs for 2006. I guess you might call them "The Bloggies".

If there's one theme that unifies the most popular real estate blogs today, it would be (in the words of the late Hunter S. Thompson) "Fear and Loathing".

For starters, check out the award-winning "Housing Panic" (, which goes after David Lerah, George Bush and pretty much anyone who has ever owned a home in California.

"The Housing Bubble Blog" ( screams of imminent collapses in Arizona, Florida and California while interestingly selling ad space on its site to Option One Mortgage.

And "OC Flip Track" ( spotlights the activities of property flippers in Orange County, California, showing current MLS listings with purchase histories, price reductions and the estimated losses of those "investors" who got burned by buying it wrong (and then trying to flip) in 2006.

But perhaps my favorite award-winner is, a northern San Diego-county based site hosted by local real estate agent Jim Klinge. Klinge offers all sorts of doomsday scenarios for the Southern California market, ringing with apocalyptic tones and as recently as today identifying his home market as the "second most likely" to collapse in 2007... then he asks to list your home. Hmmm. (Interestingly, he also includes a link on his site called "Best Places to Live"... which redirects visitors to the Money Magazine article from 2006 singing the praises of Fort Collins - I guess I'll be calling Jim to see about setting up a referral network!)

Well, as you know, I'm not a doomsdayer when it comes to the Southern California market. I do think there is some serious dysfunction in the market - caused in large part by the ongoing unrealistic expectations of sellers and the fact that there are now 505,000 (!) licensed real estate agent in California, 80% of whom have never been through a transitioning market.

Just like here in Colorado, there are some bad loans in the pipeline and some people made flawed assumptions when they bought their homes, so it may take a while to sort itself out. But I don't recommend making the "blogosphere" your primary source for real estate news*... any more than I would recommend taking stock tips from a cab driver in New York City.

* unless, of course, it's from THIS site! ; )

Thursday, January 11, 2007


At 11:36 MST this morning, Denver officially hit the big time. The 2008 Democratic National Convention is coming to town.

As politics is no longer my thing, I will refrain any biting commentary or sardonic wit. (Okay, email me if you REALLY want to know what I think!) I'll just say that, for the city of Denver and the entire Front Range, this is a huge opportunity with tremendous long-term implications.

The last time Denver hosted a national political convention was exactly 100 years ago, in 1908. (For history buffs, the Dems nominated William Jennings Bryan, who lost to William Howard Taft)

The 2008 convention will be held August 25-28 at the Pepsi Center, which in an interesting sidebar, is a non-union facility.

Howard Dean said today that Denver is being recognized by his party as the capitol of not only Colorado, but of the entire Rocky Mountain region. Our fast growing, educated, and increasingly urban population no longer fits the traditional cowboy state stereotype, and the political landscape here is very fluid.

Denver mayor John Hickenlooper said today that the city "will find a way" to come up with the $80 million it takes to host a convention (get ready for an unprecedented wave of parking tickets!)... and while the city has made huge strides in becoming a more cosmopolitan place, let's just hope those party dignitaries don't get lost trying to navigate the 25 miles of farmland between DIA and downtown.

Tuesday, January 9, 2007


When it comes to owning rental property, one of the major benefits has to do with the exceptionally large array of tax breaks that accure to rental property owners.

In "Rich Dad, Poor Dad", author Robert Kiyosaki rightly points out that the entire tax code is built to encourage certain activities (like landlording and real estate investment), while punishing others (like traditional W-2 employment).

For most rental property owners, the tax result is that all your income and expenses, including depreciation, are reported on Schedule E of your tax returns. Virtually every applicable expense is deductible on Schedule E, such as mortgage interest, property taxes, insurance, homeowner association fees, utilities you paid, repairs, and depreciation.

In addition, you can deduct reasonable “ordinary and necessary” travel expenses to inspect (but not occupy) your rental property, even if they are located out-of-state (or in really fun places, like Hawaii).

As an investor deducting your rental property's interest, expenses and maintenance costs, you are very likely to have a tax loss on paper.

That means if your 2006 adjusted gross income is $100,000 or less, you can deduct up to $25,000 tax loss from your passive rental activity. But any rental tax loss exceeding $25,000 must be carried over for use in a future year, or when you sell the property to offset capital gains.

There are scores of good books out there on the subject of real estate tax law. I strongly suggest you take the time to acquaint yourself with the basics. Dolf de Roos is the author of "Real Estate Riches", a concise, easy read that touches on many of the most important elements.

For the new year, I believe everyone should resolve to be proactive about securing their financial future. Read a book, talk to an accountant, converse with an investor... learn what you need to know so that nothing stops you from making an important investment in your future!

Wednesday, January 3, 2007


I just returned from Christmas vacation in Southern California, where I spent six days bouncing around between Orange County, San Diego and Los Angeles. And while it was good to catch up with family and friends, it's also good to be back in Colorado (except for all this SNOW!).

It seems the topic on everyone's mind "back home" is still the housing market. It's kind of funny, because ten years ago no one talked about housing. You found a house you liked and could afford, you purchased, and then you lived in it.

But during the great housing boom of 1998-2005, as the "wealth effect" of double digit appreciation and serial refinancing (i.e. "equity extraction") began to subsidize the acquisition of Hummers and speed boats, personal chefs and extravagant vacations, real estate became everyone's favorite subject.

And marginally-educated investors became wealthy simply by outbidding the pack for second, third and fourth investment homes... raking in those 18% annualized rates of appeciation.  It's a very different story today - SoCal MLS reports that nearly one-third of the 16,000 homes for sale in Orange County are sitting vacant and overpriced. The California Department of Real Estate reports that there are now over 500,000 real estate licensees in the state, up from 220,000 five years ago. One in eighty Californians has a real estate license, and in Orange County one in 25 households has a licensed real estate agent living in it.

Colleagues of mine predict that up to 30% of all outstanding real estate licenses in California will not be renewed. Agents desperate for business continue to create unrealistic expecations for sellers who want to sell, but who don't have to sell. And when it comes to acquiring investment property, working with MOTIVATED sellers is everything.

In a state where less than 14% of its residents can afford a median priced home, winds of change are blowing in California. The Public Policy Institute of California ( continues to report that California is losing upwards of 250,000 residents a year to out-of-state migration, one of the highest rates in the country.

When it comes to real estate investing, I say "stick with the basics". Find stable markets with motivated sellers and let the combined benefit of appreciation and tax advantages fuel your investment portfolio.