In Florida its not so hard to be Green
With all due respect to Kermit and our Governor, it is not so hard being green as long as you are smart about what you attempt to control. With all the initiatives and lofty talk, the extraordinary 400 pound gorillas in Florida’s room are automobile usage and smart development. The combination of poorly maintained cars and urban sprawl are easily the most environmentally unfriendly combination in the state, dwarfing all other carbon footprints or any other pollution measure you care to use. Were we to require cars and trucks to be tuned and burn fuel efficiently, we would reduce emissions by tons and increase fuel efficiency on the roads by tanker loads.
We also need to promote urban infill. This is where developed areas, that already have infrastructure in place, are permitted to creatively add density and combine living, working and retail environments. Such infill should be combined with further expanding public transportation systems in intelligent ways such as buses. The need for cars diminishes further reducing emissions and gasoline consumption.
Light rail systems and the like can be studied, but they require a substantial investment in infrastructure at a time when funds are just not available for such capital investment. Before we begin some new quest to "green" the state, spending millions to explore new programs, let us work on the things that are already out there before us that will improve the quality of all our lives in tangible meaningful ways in the near term.
David Levin
Post a Comment
Real Estate and The Titanic
What is the difference between the current real estate market and the Titanic?
-The Titanic had a band.
A variation of an old and a bad joke to be sure. But it underscores the current situation. The real estate market is going through a very painful part of the cycle. There is nothing anyone can do to stop this inexorable juggernaut called the market.
The calls for government intervention or for the Fed to come to the rescue ignores two facts- the problem is still growing, its magnitude yet to be fully determined, and no one really knows what is the “fix” to the problem. Everything that can create a more difficult situation is working in concert against problems easing any time soon. Housing inventories continue to rise, access to credit has become harder, equity requirements have gone up, interest rates have risen, house prices continue to fall and all are combined with an economic slowdown affecting every aspect of the real estate and credit markets.
The truth is that this ship is sinking and realistically that cannot be stopped. What we don’t know is how far is it to the bottom and what happens once we get there.
More thoughts on that at another time.
-The Titanic had a band.
A variation of an old and a bad joke to be sure. But it underscores the current situation. The real estate market is going through a very painful part of the cycle. There is nothing anyone can do to stop this inexorable juggernaut called the market.
The calls for government intervention or for the Fed to come to the rescue ignores two facts- the problem is still growing, its magnitude yet to be fully determined, and no one really knows what is the “fix” to the problem. Everything that can create a more difficult situation is working in concert against problems easing any time soon. Housing inventories continue to rise, access to credit has become harder, equity requirements have gone up, interest rates have risen, house prices continue to fall and all are combined with an economic slowdown affecting every aspect of the real estate and credit markets.
The truth is that this ship is sinking and realistically that cannot be stopped. What we don’t know is how far is it to the bottom and what happens once we get there.
More thoughts on that at another time.
In Real Estate Desperation usually trumps Principal(le)
Although we all believe Thou Shalt Not Steal is an inviolate commandment, when your child is hungry and you do not have money for food, stealing a loaf of bread, most would agree, seems to be okay.
When we find ourselves with our financial backs to the wall, we also find we are willing to do whatever we need to do to fight our way out of the corner, sometimes ethics notwithstanding. In this market the people who bought at the top may find themselves underwater for decades. They will be willing to go to great lengths to protect their financial position. In this gray area is the following anecdote, which is based on a story I originally saw last January in Seeking Alpha:
The market is falling apart. A house bought in 2005 in a subdivision of similar houses for $750,000 with zero down is now worth $450,000- $500,000- if it can be sold at all. The subdivision is filled with foreclosures and short sales yet no buyers have stepped up to start filling the vacancies. A homeowner in the neighborhood approaches the bank that holds the mortgage on a house a few doors down. The bank is willing to sell the house for $450,000. The homeowner gets approved for a mortgage on the new $450,000 house and moves in. He immediately stops payment on the old house and gives back the keys though a deed in lieu of foreclosure. The old bank is left holding the bag. The new homeowner has a much lower level of debt that is manageable. Although he now also has a big ding on his credit report, he has his house and until he needs to buy a new car on credit, he is sitting pretty.
Sobering thoughts for a market yet to find a bottom.
When we find ourselves with our financial backs to the wall, we also find we are willing to do whatever we need to do to fight our way out of the corner, sometimes ethics notwithstanding. In this market the people who bought at the top may find themselves underwater for decades. They will be willing to go to great lengths to protect their financial position. In this gray area is the following anecdote, which is based on a story I originally saw last January in Seeking Alpha:
The market is falling apart. A house bought in 2005 in a subdivision of similar houses for $750,000 with zero down is now worth $450,000- $500,000- if it can be sold at all. The subdivision is filled with foreclosures and short sales yet no buyers have stepped up to start filling the vacancies. A homeowner in the neighborhood approaches the bank that holds the mortgage on a house a few doors down. The bank is willing to sell the house for $450,000. The homeowner gets approved for a mortgage on the new $450,000 house and moves in. He immediately stops payment on the old house and gives back the keys though a deed in lieu of foreclosure. The old bank is left holding the bag. The new homeowner has a much lower level of debt that is manageable. Although he now also has a big ding on his credit report, he has his house and until he needs to buy a new car on credit, he is sitting pretty.
Sobering thoughts for a market yet to find a bottom.
Real Estate Flippers and Joni Mitchell
I’ve looked at life from both sides now
And only after that can I make an informed decision.
Although Joni Mitchell never expected to be singing about understanding real estate, she was right. There are two ways to look at a property before you can make a decision on what you are willing to offer to purchase it.
Single Family investors often look towards the 65% of As Repaired Value (ARV) as the target maximum offering price, less any costs to improve or repair the subject property. In other words, if the value of a property when it is ready for sale is $100,000, then the “flip” investor will be willing to offer $65,000; if $10,000 in repairs is required to make the property market ready, that number would be reduced to $55,000. This gives the investor room to carry the property, sell the property and ultimately make a profit in the process. However, if you intend to hold the property as an income-producing asset, the analysis is different. And in a market where sales do not always materialize, a “Plan B” is a wise and necessary consideration.
Now you are measuring cash flow. A proforma income statement must be developed based on rental income and operating expenses to establish a Net Operating Income. Based on the appropriate capitalization rate, the investor then knows how much he/she believes the property is worth. Then the investor must also factor in the cash requirements of a mortgage loan. So the investor knows how much to pay based on his/her required return as well as the cash flow of the investment. Investors do not rely on assumptions that include appreciation in price to get them out of a hole on the back end. As many are now learning, this appreciation does not always materialize.
Only after these two ways of looking at the property are reviewed can the investor/flipper know if he or she has adequately covered his bases and is prepared to take on the project.
And only after that can I make an informed decision.
Although Joni Mitchell never expected to be singing about understanding real estate, she was right. There are two ways to look at a property before you can make a decision on what you are willing to offer to purchase it.
Single Family investors often look towards the 65% of As Repaired Value (ARV) as the target maximum offering price, less any costs to improve or repair the subject property. In other words, if the value of a property when it is ready for sale is $100,000, then the “flip” investor will be willing to offer $65,000; if $10,000 in repairs is required to make the property market ready, that number would be reduced to $55,000. This gives the investor room to carry the property, sell the property and ultimately make a profit in the process. However, if you intend to hold the property as an income-producing asset, the analysis is different. And in a market where sales do not always materialize, a “Plan B” is a wise and necessary consideration.
Now you are measuring cash flow. A proforma income statement must be developed based on rental income and operating expenses to establish a Net Operating Income. Based on the appropriate capitalization rate, the investor then knows how much he/she believes the property is worth. Then the investor must also factor in the cash requirements of a mortgage loan. So the investor knows how much to pay based on his/her required return as well as the cash flow of the investment. Investors do not rely on assumptions that include appreciation in price to get them out of a hole on the back end. As many are now learning, this appreciation does not always materialize.
Only after these two ways of looking at the property are reviewed can the investor/flipper know if he or she has adequately covered his bases and is prepared to take on the project.
The Portal of Change in Florida Real Estate
The current issue regarding the future of space flight from Cape Canaveral is representative of the larger challenges facing Florida.
We have always assumed that we are the portal to space. Sure the Air Force has a place to shoot stuff into the sky (Vandenberg). But Cape Canaveral, the Kennedy Space Center was the epicenter. Now we are being told that in fact there are other potential places such as Virginia from which to launch ourselves to the heavens.
The state has historically enjoyed a unique position in the country. Our wonderful climate, the beaches, easy accessibility and, last but not least, the affordability of Florida made it the natural, and we thought the only, destination for everyone from the North. And now we are realizing that it is not true.
It is not the hurricane threat, although certainly they are not fun. I would rather be on Disney’s Mr. Toad’s Wild Ride than having lived through Wilma, or Katrina, or Jean. Instead, people have changed, other places have changed and so have we. These things all act together to make Florida a less natural, less attractive place to come. And we must realize that to effectively promote our State as a still terrific place to be in order to effectively compete.
People are generally healthier. They enjoy the sun and warmth, but not to keep the rheumatism from affecting their frail bones. From here on out, active people come. Bike Trails, the surf, tennis courts and the like are the attractive amenities rather than shuffle board and early bird specials. People have broader choices, as healthier more active lifestyles last longer.
Other destinations have realized this and are capitalizing upon it. Active communities are being created throughout the country- from sea to shining sea- and everywhere in between. Even the places that traditionally have seen the older people leave are working to keep them in their familiar surroundings.
Lastly, Florida has changed. The quaint, old Florida is quickly being lost to a newer more modern State. Slow, relaxing and inexpensive lifestyle is being supplanted with density, urban sophistication and a much higher cost of living.
There are substantial opportunities for us to grow and prosper. But we cannot forget what makes us unique and attractive. We need to capitalize on our strengths while addressing the issues that confront us to continue to make Florida a great place to live.
We have always assumed that we are the portal to space. Sure the Air Force has a place to shoot stuff into the sky (Vandenberg). But Cape Canaveral, the Kennedy Space Center was the epicenter. Now we are being told that in fact there are other potential places such as Virginia from which to launch ourselves to the heavens.
The state has historically enjoyed a unique position in the country. Our wonderful climate, the beaches, easy accessibility and, last but not least, the affordability of Florida made it the natural, and we thought the only, destination for everyone from the North. And now we are realizing that it is not true.
It is not the hurricane threat, although certainly they are not fun. I would rather be on Disney’s Mr. Toad’s Wild Ride than having lived through Wilma, or Katrina, or Jean. Instead, people have changed, other places have changed and so have we. These things all act together to make Florida a less natural, less attractive place to come. And we must realize that to effectively promote our State as a still terrific place to be in order to effectively compete.
People are generally healthier. They enjoy the sun and warmth, but not to keep the rheumatism from affecting their frail bones. From here on out, active people come. Bike Trails, the surf, tennis courts and the like are the attractive amenities rather than shuffle board and early bird specials. People have broader choices, as healthier more active lifestyles last longer.
Other destinations have realized this and are capitalizing upon it. Active communities are being created throughout the country- from sea to shining sea- and everywhere in between. Even the places that traditionally have seen the older people leave are working to keep them in their familiar surroundings.
Lastly, Florida has changed. The quaint, old Florida is quickly being lost to a newer more modern State. Slow, relaxing and inexpensive lifestyle is being supplanted with density, urban sophistication and a much higher cost of living.
There are substantial opportunities for us to grow and prosper. But we cannot forget what makes us unique and attractive. We need to capitalize on our strengths while addressing the issues that confront us to continue to make Florida a great place to live.
