Taking Back America

13. November 2011 by admin.

 A good example of small investments in America can change our economics in the future.

From the NY Times:

 

November 12, 2011

Buying Underwear, Along With the Whole Store

By AMY CORTESE

SARANAC LAKE, N.Y.

THE residents of Saranac Lake, a picturesque town in the Adirondacks, are a hardy lot — they have to be to withstand winter temperatures that can drop to 30 below zero. But since the local Ames department store went out of business in 2002 — a victim of its corporate parent’s bankruptcy — residents have had to drive to Plattsburgh, 50 miles away, to buy basics like underwear or bed linens. And that was simply too much.

So when Wal-Mart Stores came knocking, some here welcomed it. Others felt that the company’s plan to build a 120,000-square-foot supercenter would overwhelm their village, with its year-round population of 5,000, and put local merchants out of business.

It’s a situation familiar to many communities these days. But rather than accept their fate, residents of Saranac Lake did something unusual: they decided to raise capital to open their own department store. Shares in the store, priced at $100 each, were marketed to local residents as a way to “take control of our future and help our community,” said Melinda Little, a Saranac Lake resident who has been involved in the effort from the start. “The idea was, this is an investment in the community as well as the store.”

It took nearly five years — the recession added to the challenge — but the organizers reached their $500,000 goal last spring. By then, some 600 people had chipped in an average of $800 each. And so, on Oct. 29, as an early winter storm threatened the region, the Saranac Lake Community Store opened its doors to the public for the first time. By 9:30 in the morning, the store, in a former restaurant space on Main Street opposite the Hotel Saranac, was packed with shoppers, well-wishers and the curious.

The 4,000-square-foot space was not completely renovated — a home goods section will be ready for the grand opening on Nov. 19 — but shoppers seemed pleased with the mix of apparel, bedding and craft supplies for sale.

“Ooh, that’s nice,” said Pat Brown, as she held up a slim black skirt (price: $29.99). She and her husband, Bob, a former professor of sociology at a local community college, live in town in an early 1900s home furnished with deer heads and other mementos from Bob’s hunting trips. The couple — who were voted king and queen of the village’s annual Winter Carnival in 1999 — bought $2,000 worth of shares in the store early on, and later bought a few more during a fund-raising drive.

“It’s been a long process for all of us. We’re very proud to have it finally become a reality,” Ms. Brown said. Her husband, a vigorous-looking man who had a neatly trimmed white beard and was wearing a cowboy hat, added, “This is a small town trying to help itself.”

Think of it as the retail equivalent of the Green Bay Packers — a department store owned by its customers that will not pick up and leave when a better opportunity comes along or a corporate parent takes on too much debt.

Community-owned stores are fairly common in Britain, and not unfamiliar in the American West, where remote towns with dwindling populations find it hard to attract or keep businesses. But such stores are almost unknown on the densely populated East Coast. The Saranac Lake Community Store is the first in New York State, its organizers say, and communities in states from Maine to Vermont are watching it closely.

Indeed, community ownership seems to resonate in these days of protest and unrest, when frustration with Wall Street, corporate America and a system seemingly rigged against the little guy is running high. But rather than simply grouse, some people are creating alternatives.

“It drives me crazy when people criticize how our system works, but they don’t actually go out and try anything,” says Ed Pitts, a lawyer from Syracuse who along with his wife, Meredith Leonard, is a frequent visitor to the area and has invested in the store. “This is more authentic capitalism.”

SARANAC LAKE is known more for its natural beauty and clean air than for experimenting with new forms of commerce. Nine miles from the Olympic town of Lake Placid, it is surrounded by lakes and mountains. In the past, it drew summer residents including Albert Einstein and Theodore Roosevelt, as well as tuberculosis patients who came to the village to take “the cure” of fresh air. Today, many of the village’s onetime “cure cottages” are filled with tourists who come in the summer months to hike, canoe and unwind, swelling the population threefold.

Come winter, though, the town’s Main Street quiets down and local residents reclaim places like the Blue Moon Café, which dishes up food and gossip. So when the local Ames store closed, few major retailers were interested in taking its place, despite the town’s efforts to woo them.

Wal-Mart was the exception. But its interest in building a supercenter larger than two football fields sharply divided villagers. Signs for and against Wal-Mart sprouted on front yards. At heated town meetings, people would shout: “You can’t buy underwear in Saranac Lake!”

In the end, Wal-Mart decided not to pursue the store; a spokesman said that “no single factor” contributed to the decision. But the tensions the debate stirred up only made the lack of shopping options more glaring.

That’s when a group of residents exploring retail alternatives heard about the Powell Mercantile, a community-owned store in Powell, Wyo., that was born of a similar dilemma. The Merc, as it is known, was established in 2002 after the town’s only department store, part of a chain called Stage, shut down.

“There was a great concern that Main Street would fail if we didn’t have a store to replace the Stage,” said Sharon Earhart, who was director of the Powell chamber of commerce at the time. Ms. Earhart and a few other residents raised more than $400,000 from local residents in three months by selling $500 shares, and opened the Merc.

The Merc prospered from the start, with fashion brands sharing space with rancher-appropriate Wranglers. When space in an adjacent storefront opened up, it expanded to 14,000 square feet. Now coming up on its 10th anniversary, the Merc does about $600,000 in annual sales and has turned a profit most years, even paying investors a $75 per share dividend in one particularly good year.

Powell’s Main Street is now thriving, with a wide range of retail outlets. The store “created a very positive domino effect,” Ms. Earhart said, to the extent that it can be hard to find parking space.

When she came to speak at a town hall meeting in Saranac Lake in 2006, nearly 200 people showed up. Following the Powell model, the Saranac Lake organizers put together a business plan and assembled a volunteer board of directors made up of local professionals.

The board then approached a local lawyer, Charles Noth, who created a prospectus and filed it with New York State authorities. By limiting the offering to residents of New York, in what is called an intrastate offering, the organizers were able to avoid more complex and costly federal securities regulations. (The Powell Merc also raised money through an intrastate offering.)

“I had done a lot of investment proposals but nothing quite like this,” said Mr. Noth, whose family has roots in the area and had recently moved here full time. “The idea of a community store is pretty unique.” He became an investor, as did his brother, the actor Chris Noth (best known for his role as Mr. Big in “Sex and the City”).

“We didn’t want it to be a cooperative or nonprofit,” explained Alan Brown, a former banker and the board’s treasurer (and no relation to Pat and Bob Brown). “We wanted it to be just another business on Main Street.”

It was also important that it be widely owned, so the shares were priced at $100 and the amount any one person could buy was capped at $10,000. Shares can be bought and sold or willed to future generations. The store’s projected near-term annual revenues of $350,000 to $400,000 will most likely be eaten up by operating expenses, said Melinda Little, the store’s interim board president, but in the future, investors could receive dividends.

Getting the first $80,000 was easy, but the board found it hard to keep people’s interest and raise new funds, especially as the recession hit. Board members organized fund-raisers to keep the project in front of people. One year, the board had a float in the Winter Carnival, featuring a clothesline with underwear hanging on it. The share offering will close in December.

Many residents, and even board members, were skeptical that the store would ever open. “We had our dark hours,” said Mr. Brown, the treasurer.

THOSE have been dispelled, for now. The first day, the store rang up $7,000 in receipts. Not surprisingly, underwear was a big seller.

“This is cool,” said Diane Kelting, who was waiting in line to buy a gray poly-rayon cardigan ($36.99) and a “hard to find” bra. “I have two young daughters and I can bring them in here now rather than shopping online,” added Ms. Kelting, who is not an investor in the store.

Heidi Kretser, who also attended the opening and is an investor, said online shopping had drawbacks. “Nowadays you don’t even know if the reviews are genuine. If I can actually see it and feel it and talk to someone about it, it just makes for a nicer shopping experience.”

For Ms. Kretser, a coordinator with the Wildlife Conservation Society who grew up in the area, the store is about more than convenience: “I’ve always loved the idea of thriving hamlets throughout the Adirondacks, and part of that is healthy downtowns.” Like other residents, she would sometimes drive the 50 miles to shop at the big box stores in Plattsburgh, “which could be Anywhere, America.”

Big boxes may offer a wide variety, she said, as her daughter Leena selected some pink yarn and buttons and her son Owen ran over clutching a knit animal hat. But “the size is not compatible with communities like ours,” she said. “And money does not stay local.”

And profit? “If we end up with a profit that’s another perk, but we’re in it for the community,” Ms. Kretser said. The Saranac Lake Community Store and others like it reflect a growing shift among some communities to lessen their dependence on global businesses and invest their resources in homegrown enterprises that contribute to the welfare of the community. These efforts flow from studies showing that, dollar for dollar, locally owned companies contribute more to local economies than corporate chains. That is because more money stays local rather than leaking out to a distant headquarters.

In a recent analysis of nearly 3,000 rural and urban areas across the United States, a pair of Pennsylvania State University economists found that the areas with more small, locally owned businesses (with fewer than 100 employees) had greater per capita income growth over the period from 2000 to 2007, while the presence of larger, nonlocal firms depressed economic growth.

“There is definitely a trend towards community-rooted alternatives,” said Stacy Mitchell, a senior researcher at the Institute for Local Self Reliance, a nonprofit research and educational organization. Citing the Occupy Wall Street protests and Move Your Money campaigns, she said, “More people are interested in taking the economy back.”

Cooperatives — nonprofit businesses like food stores and credit unions owned by and run on behalf of their members — are one common manifestation of the trend. In a co-op, each member gets one vote, and excess revenue not reinvested in the business is distributed among members either as rebates or, in the case of credit unions, lower fees and better interest rates. In the United States, a University of Wisconsin study estimated, there are more than 29,000 co-ops generating $654 billion in revenue, and the number is growing.

Community-owned stores are not as well known and are structured as profit-making corporations, but the aim is the same: to keep ownership and control in the community, and to share the prosperity.

The Saranac Lake Community Store is a C corporation, the typical big business form, but the resemblance ends there. If and when there are profits that are not plowed back into the store, they will be distributed to investors — many of whom are also the store’s customers. The store’s three employees are paid a modest salary, but one that is above average for the area, and receive health benefits and paid sick days. “That was very important to us,” said Ms. Little, the board president.

THE store’s planners sought advice from residents and merchants to determine what was most needed — an effort that continues. Under the title “product offering suggestions,” on a notebook placed near the store’s checkout counter, shoppers had scrawled “larger hats and gloves,” “watchbands” and “women’s flannel-lined jeans.”

The planners also tried to avoid competing directly against local merchants, who mainly line half a dozen blocks along Main Street and Broadway. For example, the store offers a limited shoe line, since there are shoe stores in town, and sticks to brands like Minnetonka moccasins, once made in nearby Malone and not carried elsewhere in town. The strategy appears to have won over local merchants. The Coakley Ace hardware down the street offered the store discounted paint and supplies, while the nearby Rice Furniture provided carpet at cost.

“I’m of the belief that if you have more offerings in the community, more people will view it as a place to shop,” said Pete Wilson, owner of Major Plowshares, an Army-Navy store in town. “It’s giving people more reason to stay downtown, and that should benefit other retailers.” He bought a share, along with one for each of his two daughters.

But community stores are not for everyone. Even with the backing of a local bank and economic development corporation, organizers of a proposed community store in Greenfield, Mass., returned $60,000 to investors this year after concluding that it would be difficult to raise the remaining money needed.

And there is no denying the challenges of competing with mega-retailers whose scale and clout give them enormous cost advantages. Craig Waters, Saranac Lake Community Store’s general manager, has had to be creative, stocking American-made products as much as possible and paying reduced prices for merchandise that has not sold at brand-name stores. Mr. Waters, who lives in Lake Placid, also relies on longstanding connections with suppliers. He worked for decades as a buyer and manager for May Department Stores, which merged with Federated Department Stores, now Macy’s Inc., in 2005.

The prices appeared reasonable. Brightly colored rubber rain boots for children were $16.99; women’s all-cotton sleep pants and tank top (in a moose print) were $19.99 and $12.99. A waffle-knit, fleece-lined men’s hoodie was $59.99.

The Saranac Lake store is off to a strong start, although the trick will be to keep people coming back after the holiday season — and the novelty — have worn off. “We had a lot of people saying it wouldn’t work — and it might not,” said Mr. Wilson, the owner of Major Plowshares. But its existence could set an example for other disenfranchised communities and perhaps prompt shoppers and residents to think about where their dollars go.

“Most people are coming in to pick up some thread or clothing. They’re not coming in to get a political lesson,” said Mr. Pitts, the Syracuse lawyer. “But it’s nice to have a place that you can point to as an alternative.”

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How Stupid Can a Realtor Be? Very…

4. November 2011 by admin.

How Stupid Can a Realtor Be? Very…

Amazing post that I listed on Active Rain.

Read this.  So sad.

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Never Forget the Value of Freedom

29. October 2011 by admin.

National Juggernaut: This Cartoon Seemed Far-Fetched In 1948

This 1948 Cartoon brings home to us the value of Freedom.

We would not be investors without this. Take the time to watch!

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Massachusetts Supreme Court Revokes Ownership of Property Purchased at Foreclosure Auction

25. October 2011 by admin.

The highest court in Massachusetts ruled that a homeowner who bought a foreclosure that hadn’t been properly conducted by the foreclosing bank in 2006 didn’t have legal ownership of the property. 

The decision by the Supreme Judicial Court casts a cloud over the legal ownership of any properties in Massachusetts where banks didn’t properly convey title when foreclosing. The problem has gained attention nationwide because of banks’ use of “robo-signing” and other dubious practices that may have broken chains of title on foreclosures.

You can’t lose what you never had – or can you? The Massachusetts Supreme Court ruled earlier this week that Francis Bevilacqua, who purchased his home at a foreclosure auction in 2006, never had legal title to the property since the lender had no right to foreclose on it in the first place[1]. Five years later, the robo-signing bank’s “dubious practices” stand to cost Bevilacqua, who purchased the home long before the issues with title associated with robo-signing came to light and believed that the title was clear, his home.

“[It’s] scary,” said Bevilaqua’s attorney, adding that people with this new type of cloud on their title “don’t know they have this problem.” Prior to the state’s U.S. Bank vs. Ibanez decision, in which the Supreme Court ruled that the prior owner of a property has claim to a property if the foreclosure process is proved invalid, Bevilacqua would have been considered to have clear title. However, theIbanez case changed the game because, according to the decision, if “the bank held nothing [due to improper foreclosure], Bevilacqua acquired nothing and had no standing as a result”[2].

Although Bevilacqua attempted to clear the title upon learning of the issue recently, his petition, based on a statute “designed to allow the holder of a clouded title to clear that title,” was denied by the state Land Court. The court ruled – and the Supreme Court upheld the ruling – that Bevilacqua did not have the necessary “plausible claim to the title” since he acquired the title following an invalid foreclosure[3]. The ruling makes it clearer, at least in Massachusetts, how courts will respond when ownership of properties that were foreclosed on during the “robo-signing era” comes in question. They will likely rule in favor of the former homeowner.

There is still a possibility that Bevilacqua will be able to keep his home via a foreclosure proceeding on the prior owner. His lawyer has stated that they will proceed with this option. There is currently no information available on how the former owner of the home plans to respond to the news.

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Congresswoman Susan Davis - New Short Sale Bill

25. October 2011 by admin.

Congresswoman Susan Davis Introduces Bill to Help Homeowners Avoid Foreclosure

Washington – As homeowners in San Diego and across the nation continue to tangle with banks, Congresswoman Susan Davis (D-San Diego) introduced legislation to give people another tool to avoid foreclosure and the subsequent damage to the their credit rating.  The Short Sale Transparency Act will require Fannie Mae and Freddie Mac to disclose the minimum asking price they are willing to accept for a short sale if the first offer is rejected.

“People deserve a real chance to avoid foreclosure. It is unfair to expect someone to complete a short sale instead of abandoning their home to foreclosure, if the banks don’t meet them half way,” said Davis.  “So many homeowners are willing, even eager, to work with banks to get out from under the mortgage and protect their credit rating.  But far too often, they find themselves in a guessing game as to what dollar amount will complete the sale.”

For many Americans a short sale, the sale of a home below its value, is a last chance to avoid foreclosure.  However, when the asking price is unknown, short sales become less viable because homeowners are essentially shooting in the dark when submitting bids to a bank.  As a result, loan servicers can repeatedly deny short sale offers without giving homeowners guidance on the price the bank is asking.  Ultimately, this back and forth ends in foreclosure.

On the other hand, if an offer is, for example, $2,000 short and the homeowner knows this, they could find a way to make up the difference in order to complete the short sale.

Disclosure is essential to ensuring fair transactions between investors and borrowers. Fairness to consumers is critical to boosting the economy and ending the cycle of foreclosures.

{For our investors– this will change the market drastically!!  What effect do you think this will have on your Real Estate investments?}

Congresswoman Susan Davis - Press Release

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Why buy notes & buy them now!

17. September 2011 by admin.

Mortgage notes are a great investment.

To round out my clients portfolios I always suggest they buy some notes. Why is this a good investment?  Let’s turn to the goal of every investor. I believe that every investor has one goal in common: TO BE THE BANK.  Let’s face it, the banks grow their money, have a great return, have repetitive income, leverage all their investments, and sit back with guaranteed return. The closer an investor is to becoming the bank, the greater their wealth is. That includes private money lenders, owner finance, cash buyers, tax liens and mortgage notes.

What’s interesting about mortgage notes is now is the time to buy bulk non-performing notes.  Well you say, “Why would I want to buy NON-PERFORMING notes? Aren’t I just getting someone else’s headache?” Let’s look at the logic of this. Firstly, banks are not in the Real Estate investment industry– WE ARE. When a note is non-performing, especially if it just went non-performing there are some great investment options:

• Restructure the loan to make it performing:  so you take 8% interest loan and make it 6% interest and you sit back and collect the money.  Not bad.
• Lower the mortgage amount: you just bought the note for 70cents on the dollar, so you lower it 10%- happy homeowners and happy you.
• You  foreclose: remember you bought it for 70cents on the dollar so if you foreclose you own this house for 30% lower than its mortgage and you can still wholesale it out at market price. Since it is already paid for hold it for the best market price.
• Short-sale:  They have a mortgage of $200K, you bought it for $140K– short sale it for $170K and you still make quick money.
• Foreclose and turn it into a rental property. Guaranteed income and sell it later on when the market is better– it’s just like holding the mortgage: revenue and tax write-offs. Make your own bulk REOs for other investors.
• Sell the notes to smaller investors:  we sell notes at a minimum of $2.5M but my smaller investors want in- offer it back out to smaller investors (1/2 million) the notes you don’t want.

Buying notes is a logical and lucrative business. It’s also passive so can be done with your self-directing IRA.

Right now I have $35M in non-performing notes available: all over the US. Minimum is $2.5M and it’s going for 63 cents of the BPO (Broker Price Opinion). The way it works is I send you a spreadsheet of the amount, city, state and last paid mortgage.  You sign a Non-Disclosure Agreement and send us proof of funds and your choice of the notes.  We send you the addresses.  You go to a Realty Broker and get a BPO on all the properties. We negotiate your BPO and ours and come to a meeting of the minds. We close and you do any of the above.

We also syndicate investors so if you have a smaller amount you want to invest, we will combine funds in a LLC for the group, who can buy the notes.  For more info email me directly at investors@StrikerRealty.com  Or visit  us at http://www.StrikerInvestmentTeam.com

Go be the bank!  And make money!  Cheryl

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NJ Home Sales 2nd Quarter Opptomistic

2. September 2011 by admin.

2^nd Quarter NJ Home Sales & Price Report Now Available

 

 

The NATIONAL ASSOCIATION OF REALTORS^®‘ (NAR) released the 2011 Second Quarter Metropolitan Area Home Prices/State Resales report. Two bright spots that displayed increases from the second quarter of 2010 were Wayne, N.J./New York and Atlantic City, N.J. NJAR^® Chief Executive Officer Jarrod C. Grasso said, “Considering the volume of distressed properties on the market right now and those still in the judicial pipeline, New Jersey’s prices have remained stronger than expected. Prices should strengthen even further upon clearing of this surplus.”ViewNJAR^®’s full statement.

The Garden State’s drop in existing home sales was significantly higher than the national average, but it is important to consider in the year-over-year analysis that last year during this period, potential buyers were timing their purchases to obtain the federal home buyer tax credit.

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Freddie Mac Warns of Short Sale Fraud

26. August 2011 by admin.

Freddie Mac Warns of Short Sale Fraud

Interesting article on short sale fraud.

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Commercial Land Available

24. August 2011 by admin.

Commercial land available in  NJ.

Mostly funded. $1.8M, looking for 20% investor own 20% of LLC-Medical office zoned near hospital.

Appraised at $2.8M and current market is $2.5M.

A one time deal, must move fast if interested. Email for

details include city approvals, appraisal, engineering specs,

potential end-buyers for medical buildings.

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Investors Outdo Banks Offloading Distressed Properties: Report

14. August 2011 by admin.

Investors Outdo Banks Offloading Distressed Properties: Report
Third-party investors are much faster at reselling foreclosures than banks, according to ForeclosureRadar, a California-based tracking firm.

ForeclosureRadar keeps close tabs on foreclosure activity in states along the country’s western seaboard, and the company says one market dynamic that it’s found to be consistent throughout the area is that investors are moving foreclosed homes at a more rapid pace than lenders who take possession of REOs.

In Oregon banks take an average 156 days longer to sell foreclosed inventory than third-parties, according to ForeclosureRadar’s report.

California banks on average take 104 days longer to dispose of REOs than third-party investors do to resell their distressed assets.

Arizona and Nevada banks both take an average of 70 days longer to move inventory than investors, while in Washington the resell timeline is 52 days more for banks.

Looking at ForeclosureRadar’s historical data, the resell timelines for investors and banks were separated by fewer than 8 days as recently as February in Washington and Oregon, and fewer than 20 days in Arizona and Nevada as recently as January.

In California the disparity between the two disposition channels has been 70-plus days, going back at least a year.

“Our statistics clearly show that real estate investors continue to far outperform banks in dealing with distressed properties,” said Sean O’Toole, CEO and founder of ForeclosureRadar.

Armed with this information, O’Toole takes issue with the government’s recent push to turn foreclosed homes into rental properties.

“Politicians and bureaucrats are putting pressure on banks to become landlords, which will hurt local economic activity, as fewer properties are made available to local investors,” he said.

O’Toole expects the foreclosure rental strategy to also take its toll on the businesses of real estate agents, contractors, and property managers, as well as homebuyers in need of affordable housing.

ForeclosureRadar’s report also showed that foreclosure filings decreased throughout the company’s five-state coverage area, continuing a trend seen over the course of several months.

Activity on the courthouse steps was down from a month ago everywhere except in Washington where foreclosure sales to third-parties rose 44 percent.

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