1031 Exchange Timing Issue

Normally the 1031 tax deferred exchange of investment property allows for 180 days from the sale of your relinquished property to acquire the replacement property. That is what most people remember as the amount of allowable time. People tend to forget the second line of that regulations which states -or until the next tax return filing - by the way, that is not a direct quote. 180 days is maximum time allowed and it can be shortened if you file your taxes. An example would be if an investor closes escrow (through a 1031 exchange) on Dec. 1st. 180 days ahead would be approximately the end of May (depending on leap years, etc.) If you file your taxes on April 15th or sooner - that date then is the last day of your exchange. The reason for this moving target is that the IRS wants both legs of the exchange reflected on the tax return. The solution is simple to keep the full 180 days - file an automatic extension. Then, when you actually file your taxes, you will have hopefully completed your exchange and can reflect the whole transaction on the form.

My office partner Christine Kim and I attended a live home auction on Tuesday in San Jose off of Capitol and 680. There were some 25 bidders in attendance with down payment cashier's checks in hand. Three properties were to be auctioned - all three were open for public viewing over the last few weeks. A small starter house in the 7 Trees area started at $50,000 (an obvious teaser price if I ever saw one) and sold for $207,000. The second home which was in a similar area with additional square feet sold for $280,000. The bidding depth was light. There were only a few serious bidders - or perhaps after the $50,000 price was blown up, the other bidders quickly became quiet. The interesting thing about this auction was that the winning bid was not contractually binding - it still had to be presented to the bank (REO department) for their approval of the price. The bank could easily reject the offer as too low and the deposit money would be immediately returned. This is the background of why many REO listings on the MLS had previously been offered at auction. Yes, there is always a winning bidder, and no, that does not guarantee that the home will sell. More definitive of a market is when there is no "strike-price" and the auctions are "absolute". Then the true market value is more easily achieved. Worth the effort - yes - we suggest the drive through at In and Out Burger prior to the auction to keep you content through the process.

Full Catwalk Loft Santana Row Short Sale with SR View

Great short sale opportunity in Santana Row's DeForest Building. This is an "A-3" floor plan with the full catwalk. 1,250 square feet. View of Santana Row. Blonde wood cabinets in kitchen. Very nice unit. This may be one of the last financially strained sales in Santana Row. Prices for these units were $100,000 higher less than a year ago. Call me for a tour.

Santana Row Short Sale Loft Condo

There is a very good opportunity to purchase the largest "A" model in the DeForest building. 1,250 square feet of two story loft with the full catwalk and an outdoor approximately 600 square foot patio facing the back side. Offered at $550,000, this short sale will sell at a very good value. And, do not be discouraged by short sales anymore. I am seeing decisions by the banks coming in within 30 days. I just had a two-lender short sale approved for a fourplex in that timeframe. Now is the best chance since the units first sold to buy into Santana Row. Call me for a tour.

Los Gatos Bank REO - Huge, Good Condition & Pool

3,500 square feet on an over 10,000 square foot lot in a pretty part of Los Gatos off of Quito Road. Very nice pool and two story "trex" decking and pool house! Not Los Gatos schools although schools are very good. Offered at $999,900 - this home had offers a few weeks ago and just fell out of escrow. Very nice deal and great home to live in for a very long time. Call me for a tour - you will be intrigued.

Large Family Home Sunnyvale Bank REO $679,900

1,832 square feet with 4 bedrooms, 3 baths, two story home in a nice Sunnyvale location near Fair Oaks and El Camino. Well priced and in good condition. Come check out one of the opportunities in a nice Sunnyvale neighborhood.

Two Bank REO Homes in Evergreen (San Jose)

Two awesome opportunities from Countrywide's REO listings in Evergreen:

Fronda Drive at Flint, 4 bed, 2 bath, 1772 square feet, nice quiet street, good sized lot, in very nice condition $495,900

Nickel Avenue off S. King, 3 bed, 2 bath, 1,200 square feet, great starter single family home, offered at only $340,000!!!

Let me know if you want to see any of these deals.

Commercial Short Sales

The commercial short sale market is dramatically different than the residential short sale market. The commercial market is just starting to have negative issues, about a year after the residential market started to slide. What was normal a year ago in the residential market - banks not willing to negotiate short sales and being quick to foreclose - is the way commercial banks are acting now. They have yet to "get it" and will learn the hard way. I am dealing with a short sale in a commercial warehouse condo right now and the banks involved (a major bank and the Small Business Administration as a second lender) are not willing to consider a short sale until the borrower defaults for a few months. Foolish attitude. The residential lenders realized that this did not make sense about 6 months ago and the transactions started to flow. The commercial lenders will have to go through this learning curve too - hopefully not as long - we shall see...

Home Loan Modification Blog

I just started building a blog for home loan modifications. Obviously this is a large and growing aspect of real estate this year and for sure for years to come. Please see what I have offered and let me know what you think. Thanks!

3 Townhouses Milpitas Bank REO under 200k

There are now 3 bank owned REO townhouse style units for sale in Milpitas from $175,000-$196,900. All are two bedroom one bath units, some are two story "townhouse" style floor plans with 1 car garages! Great rental properties in a city with excellent future growth of infrastructure (think Bart, light rail, the Great Mall and condo towers) and schools. Good time to buy these and rent them out.

Foreclosure Statistics Bay Area Counties

These are the tallies so far for the foreclosures in each of our Bay Area counties. Interesting that the very expensive counties (San Francisco, Napa, Marin and San Mateo) have fared quite well. My two cents on that is - these areas did not have many buyers taking option ARM loans with very low down payments - thereby having healthier financials and more ability to weather storms. This doesn't mean that those areas will get by without turmoil, it just may be lighter and later. I (of course) like the fundamentals in the South Bay - jobs in the long run will be here, there is a scarcity of land and we have a lot of foreclosures from which to choose. Now we are even seeing some good deals on the 85 corridor and the west side.

Napa 539
Sonoma 1804
Marin 286
San Francisco 434
San Mateo 1011
Santa Clara 4738
Alameda 5679
Contra Costa 7877
Solano 3816
Santa Cruz 689

San Jose Bank REO 2 Bedroom Condo $139,900

Very nice location in gated complex off Capitol and McKee, 2 bedrooms, 1 bathroom very nicely remodeled, offered at $139,900. 828 square feet of sunny space. Complex is large and has lots of amenities. Interior was well kept and updated. Upstairs unit with balcony. Low association fee of $230. Sold for $355,000 in October 2006! Good deal that won't last. Consider renting this out for $1200 per month or maybe more. Call me for a tour.

Very Nice Bank Owned Fourplex in Cambrian Area

Well priced fourplex just reduced to a very attractive price near Almaden and Blossom Hill. This now bank owned deal sold for $880,000 in 2005! Now offered at 665,280! Two units are vacant - which in this market is not a difficult issue. Rents are up and vacancies are down. The banks tend to vacate buildings that they foreclose on. Fully occupied gross rents should be in the $52,000 range for all 2 bedroom 1 bath units with garages. This was listed at $734,900 and now with the price reduction, it will move. Call me for more info.

List of San Jose Bank REO's Intero has Listed

700 ADELINE AV
Townhouse (Class 2)
4 bed(s) /4+ bath(s)
871 sq ft
San Jose (San Jose)
$603,900

3274 FRONDA DR
Detached Single Family (Class 1)
4 bed(s) /2 bath(s)
6,120 sq ft
San Jose (San Jose)
$495,900

3119 AGATE DR
Detached Single Family (Class 1)
3 bed(s) /1 bath(s)
7,280 sq ft
Santa Clara (Santa Clara)
$374,900

2245 ELLIOTT ST
Detached Single Family (Class 1)
3 bed(s) /2 bath(s)
5,544 sq ft
San Jose (San Jose)
$354,900

1635 NICKEL AV
Detached Single Family (Class 1)
3 bed(s) /2 bath(s)
5,044 sq ft
San Jose (San Jose)
$340,000

3906 MARLETTE DR
Detached Single Family (Class 1)
3 bed(s) /2 bath(s)
3,570 sq ft
San Jose (San Jose)
$315,000

3608 KELTON CT
Detached Single Family (Class 1)
4 bed(s) /1 bath(s)
6,262 sq ft
San Jose (San Jose)
$289,900

1106 WEEPINGGATE LN
Townhouse (Class 2)
3 bed(s) /1 1/2 bath(s)
871 sq ft
San Jose (San Jose)
$255,000

10310 JERILYN CT
Detached Single Family (Class 1)
3 bed(s) /1 bath(s)
4,606 sq ft
San Jose (San Jose)
$240,000

1125 OAKVIEW RD
Detached Single Family (Class 1)
2 bed(s) /1 bath(s)
3,486 sq ft
San Jose (San Jose)
$237,900

1055 N CAPITOL AV #116
Condominium (Class 2)
2 bed(s) /2 bath(s)
1,024 sq ft
San Jose (San Jose)
$195,000

3269 SAGITTARIUS LN
Townhouse (Class 2)
3 bed(s) /1 bath(s)
1,460 sq ft
San Jose (San Jose)
$152,000

259 N CAPITOL AV #201
Condominium (Class 2)
2 bed(s) /1 bath(s)
1,742 sq ft
San Jose (San Jose)
$139,900

All of these are very interesting bank owned foreclosures. Call or email me to tour and write an offer on these good deals.

- Mario 415-269-6249 cell

List of San Jose Bank REO's That I Like.

1412 Joe Dimaggio Court, San Jose $219900
1263 Kiely Blvd., San Jose $442900
681 Anvil Court, San Jose $469900
1101 S. 12th Street, San Jose $207900
235 Washington Street, San Jose $159900
391 N. 13th Street, San Jose $339900
2024 Sonador Common, San Jose $419500
1598 Sawgrass Drive, San Jose $399500
280 Kenbrook Circle, San Jose $142000

Let me know if you want to tour and write offers on these great deals.

Cap Rates on Single Tenant NNNs Higher

Cap rates should naturally float above where financing rates are. This is especially true in small single tenant retail properties - let's call them the Burger Kings as an example of a NNN deal. On the West Coast, these deals would sell at about a 6% cap rate and purchase prices in the $1.0M - $1.3M range. Over the last decade, most of these purchases were tied to a 1031 tax deferred exchange of a typical rental house owner trading into an easy-management single tenant property. But what happened to the single family market lately? Those rental homes lost value and that stemmed the flow of people exchanging up into small single tenant deals. With buyers in that market drying up, motivated sellers of the BKs have had to lower their asking prices (increase their cap rates) to attract the fewer buyers. AND interest rates are low. So, the spread between interest rates and natural cap rates is unnaturally high. Good time to be shopping if you have cash (for a down payment) to do a deal.

Situations We Can Help With

Please read below and if you or anyone that you know is in one of these situations, we can help.

1. If you are considering a short sale - we have a team that can sell your property and negotiate with the bank to allow a short sale.
2. If you are in a pre-foreclosure situation - received a Notice of Default or a Notice of Trustee Sale - a sale may still be possible - talk to us and we can see what can be done.
3. You would like to know about Loan Modifications - your adjustable rate mortgage has or will increase - we have a team at Intero Mortgage that specifically deals with loan mods.
4. Investment property issues - negative cash flow, under-water on equity, vacancies, etc. The market has adjusted and perhaps an adjustment in management, tenants, financing or some other change will make your investment property viable again.

My team here at Intero will listen to your situation and provide answers and guidance. Please talk to us as the solutions are available if we act decisively and fast.

- Mario Pinedo
415-269-6249 cell
408-342-3155 office
mario@interorealestate.com

New Homes in Millbrae

Our office just listed this wonderful Millbrae new home development. Views and new luxury homes at very good prices.

Prices released at grand opening March 21st!Millbrae Estates is a once-in-a lifetime collection of thirty-seven extraordinary residences nestled on a hillside above the charming center of Millbrae. In addition to the beauty of the setting, locational advantages include an excellent school system, easy access to major transportation routes, and the pleasures of living in a small town that possesses both charm and sophistication.

Homes sizes range from 2,418 -3120 sq. ft. with 3-5 bedrooms, 2 1/2 - 3 baths and a variety of room options to customize the layout of your home. Hallmarks of the distinctive designs include a turreted entry tower, rich stone treatments, expressive balconies, arched doorways and wrought iron details that are a modern expression of classic design. Some homes offers down stairs bedrooms. Home prices are from the mid-$1,000,000s.

Schools: Meadows Elementary 1101 Helen Dr (650) 583-7590. Taylor Middle 850 Taylor Blvd. (650) 697-4096. Mills High 400 Murchison Dr (650) 558-2599.

Driving Directions:

From SF Take 280S, exit Larkspur Ave, Right on Skyline Blvd. Left on Riverton, Right on Clearfield Drive, Left on Alp Way to model homes

From San Jose Take 280N, exit Millbrae Avenue, Right on Riverton, Right on Clearfield Drive, Left on Alp Way to model homes (7 Estates Dr. is a new street)

Cheap Sublease Space Redwood Shores

Motivated tenant with lease through September 2009 offering 4,100 square feet of prime space near Oracle for sublease at $1.95 per foot full service. Downsizing software company can move right away. Landlord will also negotiate a direct lease from September. Market rate asking price is $2.95 per foot full service. Address is on Twin Dolphin Drive off of Holly.