Single-family rental investors struggle to make money in California

for rent sign1 Single family rental investors struggle to make money in California

Single-family rental investors struggle to make money in California

Rising home prices, low inventory and high demand are all working together in California to create seven of the top 10 worst markets to invest in single-family rentals.

A list released by HomeUnion, an online residential real estate investment management firm, analyzes first-year SFR returns, or cap rates, in each market. The cap rate is the relationship between an investment property’s net operating income, rents less expenses, and the market value of the property.

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Home flipping reached 10-year high

umgedrehtes haus Home flipping reached 10 year high

Home flipping reached 10-year high

Rising home prices are bringing more house flippers out of the woodwork, and that may be a sign of an overheating housing market. The number of active home flippers last year was the highest in nearly a decade, and it is only growing.

Nearly 180,000 family homes and condos were flipped in 2015, according to RealtyTrac. A flip is defined as a home that is bought and sold again within the same 12 months. Flips made up 5.5 percent of all sales last year, and that is the first increase in the flip share after four years of shrinking. Flipping increased in 75 percent of U.S. markets, and the profits are growing as well.

“As confidence in the housing recovery spreads, more real estate investors and would-be real estate investors are hopping on the home flipping bandwagon,” said Daren Blomquist, senior vice president at RealtyTrac. “Not only is the share of home flips on the rise again, but we also see the flipping trend trickling down to smaller investors who are completing fewer flips per year.”

Jim Pinson works with investors to flip houses on the south side of Chicago and does two or three flips of his own each year in the Oak Lawn area. Home prices in Chicago have not soared as much as in other parts of the nation, but there are still a lot of distressed homes available for sale, and plenty of investor demand.

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Foreclosures surge in Southern California, but for how long?

20177 Foreclosures surge in Southern California, but for how long?

Foreclosures Surge in Southern California, but for how long?

Foreclosures in Southern California hit their highest level in two years in January, according to new data out Thursday. But market-watchers say it’s more a matter of lenders clearing their books than a new wave of bad loans.

The number of homes repossessed by banks in Los Angeles County nearly tripled from December to the highest level since December 2012, according to data firm RealtyTrac. Similar patterns were seen in Orange, Riverside and San Bernardino counties.

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Foreclosure Activity Increases in 32 States

foreclosure6 Foreclosure Activity Increases in 32 States

Foreclosure Activity Increases in 32 States

There were a total of 327,258 U.S. properties with foreclosure filings in the third quarter of 2015, down 5 percent from the previous quarter but up 3 percent from the third quarter of 2014, according to Realty Trac’s recently released Q3 and September 2015 U.S. Foreclosure Market Report.

The annual increase in the third quarter marked the second consecutive quarter where U.S. foreclosure activity increased on a year-over-year basis following 19 consecutive quarters of a total of year-over-year decreases.

Among the nation’s 20 largest metro areas, those posting the biggest decrease in foreclosure activity in the third quarter of 2015 compared to a year ago were Riverside-San Bernardino (in Southern California (down 21 percent), Los Angeles, California, (down 21 percent), San Diego, California (down 20 percent and Miami, Florida (down 16 percent).

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Foreclosure scam leads to 35-year prison sentence

Auction Scam 1024x678 Foreclosure scam leads to 35 year prison sentence
One of two brothers convicted of leading a nationwide foreclosure scam was sentenced Wednesday to 35 years in federal prison for stealing titles to more than 300 homes.

Federal prosecutors in Sacramento said 40-year-old Charles Head of Pittsburgh and 17 other defendants obtained more than $90 million in fraudulent loans and caused more than $50 million in losses between January 2004 and June 2006.

Head and his brother, Jeremy Michael Head, 34, of Huntington Beach, were convicted in May 2013 of mail fraud and other charges. Charles Head was convicted of additional mail fraud charges in a second trial in December.

Jeremy Head is awaiting sentencing. Their attorneys did not immediately return telephone messages after Wednesday’s sentencing.

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$1.5 million Fraudulent Foreclosure Scheme

real estate fraud $1.5 million Fraudulent Foreclosure Scheme
An Orange County man was charged Wednesday with running a $1.5 million fraudulent foreclosure scheme – after a federal judge had ordered him to pay $5 million in civil penalties in previous cases.
Terrill “Terry” Meisinger, 74, of Seal Beach was charged on June 25 with two counts of wire fraud and one count of aggravated identity theft. Meisinger, who has been in custody since June 11, was scheduled for arraignment Wednesday afternoon.
If convicted, Meisinger could face up to 20 years in federal prison on each charge of wire fraud, and two years for aggravated identity theft.
According to the U.S. Attorney’s Office, Meisinger persuaded a distressed homeowner to sign a quitclaim under the pretense that he could broker a short-sale agreement that would release the homeowner from his mortgage on a property on Monte Alban Drive in North Las Vegas, Nev.
“But, instead, Meisinger caused a deed of trust to be recorded on the property, which was followed by a fraudulent bankruptcy on behalf of the person who supposedly now held an interest in the home,” the U.S. attorney said in a statement.
“Meanwhile, Meisinger rented out the home to another person while foreclosure proceedings were stayed as a result of the fraudulent bankruptcy.”
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Home Prices Jump, Number Of Distressed Properties Drops In LA County

foreclosure sign1 Home Prices Jump, Number Of Distressed Properties Drops In LA County
The number of distressed properties sold in Southern California and statewide has plunged dramatically over the last five years, resulting in higher home prices, according to a real estate industry group.

In January 2014, nearly 16 percent of all homes sold in Los Angeles County were distressed — a category that includes short sales and real estate-owned (REOs) properties — compared with 62 percent of all homes sold countywide in January 2009, according to data cited by the California Association of Realtors (CAR).

Data also showed REOs comprised 60 percent of all sales statewide in January 2009, while short sales made up 9.1 percent of all sales but rose to as high as 25.6 percent in January 2012. Short sales currently make up 9.2 percent of all sales.

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Orange County ‘foreclosure rescue’ fraud ring convicted

la fi mo foreclosure rescue fraud 20131203 002 Orange County foreclosure rescue fraud ring convicted
A federal jury in Sacramento after a five-week trial has returned guilty verdicts against three men who operated an Orange County-based “foreclosure rescue scam,” according to U.S. Atty. Benjamin Wagner.

Convicted on Monday were Charles Head, 36, a former Los Angeles resident; Benjamin Budoff, 46, of Colorado Springs; and Domonic McCarns, 39, of Irvine.

Wagner described Head as the leader of the operation that extracted more than $5.7 million in equity from victims’ homes, many in California. Evidence in the just-completed and a previous trial revealed that Head and his co-conspirators caused more than $15 million in homeowner losses.

The scam used several names, including Head Financial Services and Creative Loans, from March 2005 to June 2006.

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High-End Houses Lure Flippers From New York to California

Luxury Home High End Houses Lure Flippers From New York to California
Home flipping, in which a buyer quickly resells a property for a profit, is becoming more popular for high-end houses in the U.S. as deals for cheaper residences slow.

There were 968 single-family houses priced at $750,000 or more that were sold by flippers in the third quarter, according to RealtyTrac, which defines the transactions as those that occur within six months of the previous purchase. The figure was up 34 percent from a year earlier, while rapid trades within the broader market fell 13 percent, the Irvine, California-based foreclosure-data firm said in a report today.

Investors who buy homes and sell them within months are finding they can make more money with houses in higher price ranges from New York to California. Flippers for cheaper homes are facing competition by investors such as Blackstone Group LP (BX) that are acquiring thousands of single-family homes to turn into rentals, while fewer properties are entering the foreclosure pipeline as real estate prices rise and the job market improves.

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Investors Cooling on ‘REO-to-Rent’

foreclosure sign1 Investors Cooling on REO to Rent
For the past three years they have been swarming over the hardest hit housing markets, buying distressed properties in bulk and pushing prices higher by double digits. The idea for these investors was not to buy and flip, but to hold and rent. Now some investors say they have priced themselves out of the market.

“Higher prices are reducing returns on investment, and investors are responding by cutting back on their purchasing plans until conditions sort out,” said Chris Clothier, a partner in and Premier Property Management Group, which commissioned a national survey of investors conducted by ORC International. “Fewer foreclosures, rising property values and competition from hedge funds are making it tough to find good deals on distress sales.”

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