Monday Morning Quarterback
Monday Morning Quarterback
(Monday, March 13, 2023)
Ever wonder what a Powerball winner does with all that money??Well, Powerball’s newest winner, Edwin Castro, obviously attended LAC-REIA’s monthly meetings because he took our advice and bought real estate!?And not just any real estate. Castro spent $25.5 million on a new house in the Hollywood Hills.?And he got a good deal too because the house was originally listed for $29.95 million. Last November, Castro bought a lottery ticket?at an Altadena gas station that matched all five numbers plus the Powerball. Castro finally came forward last month?to collect the record-setting $2.4 billion lottery prize. He declined to speak publicly when he collected the winnings but released a statement saying he was “shocked and ecstatic.” Castro, who chose to collect the money as a lump sum of about $997.6 million before taxes, bought the modern mansion under a limited liability company, records show. The splashy purchase amounts to around 2.56% of his winnings. It’s the most expensive sale in Hollywood Hills this year and among the neighborhood’s priciest ever. Tucked behind gates overlooking the Sunset Strip and Chateau Marmont, the hillside home was built last year by Roman James Design, a luxury development company. Wood and concrete adorn the boxy exterior, leading to open-concept, indoor-outdoor spaces with sweeping views of our beautiful city below. The three-story home (plus rooftop deck) has five bedrooms and six bathrooms, as well as a game room, wine cellar, movie theater, wet bar, gym, cold plunge, steam shower and sauna. Walls of glass open to the back, where patios lead to a swimming pool, spa and outdoor kitchen. The property covers just over half an acre. I write this story from that same Altadena gas station (but so far without similar success). In other real estate news, let’s get under the hood…
Jobs Report Shows Strong 311,000 Gain In February. The U.S. created a robust 311,000 new jobs in February, keeping the pressure on the Federal Reserve to raise interest rates even further to tame high inflation. The large back-to-back employment increases could force the Fed to raise interest rates higher than it had planned to slow our economy and loosen up the tightest labor market in decades. The unemployment rate rose a few ticks to 3.6%. Hourly wages rose just 0.2% to mark the smallest increase in a year. And the share of able-bodied people in the labor force climbed to a three-year high. All of these are pressure valves on the labor market and the broader economy from high inflation. Half of the new jobs created last month were at service-side companies such as retailers (50,000), restaurants (70,000) and hotels(14,000) — businesses whose employment still has not returned to pre-pandemic peaks. Government (46,000), white-collar professional businesses (45,000), health-care providers (44,000) and construction companies (24,000) accounted for the rest of the increase in hiring in February. Government employment has played a big role in the surge in jobs in the first two months of 2023, with a combined 164,000 new jobs. Employment fell in transportation, perhaps because of slower consumer spending on goods purchased online. Information companies (mostly high tech and media) also reduced employment. An expanding U.S. economy has shown lots of resilience in the face of rising interest rates, but analysts doubt the good times can last. Higher borrowing costs typically slow our economy by depressing consumer spending and business investment. Just look at the housing market, where soaring mortgage rates have crushed sales and new construction. The same could happen to the rest of the economy if the Fed has to jack up rates more than Wall Street expects.
Foreclosure Activity Continues Increasing Annually. Investors get ready – foreclosures are increasing. According to ATTOM real estate data services released its February 2023 “U.S. Foreclosure Market Report,” there were a total of 30,528 U.S. properties with foreclosure filings?(i.e. default notices, scheduled auctions or bank repossessions) up 18 percent from a year ago. Lenders repossessed 3,831 U.S. properties through completed foreclosures (REOs) in February, increasing 45 percent from last year. States that had at least 100 or more REOs and saw the greatest annual increase in completed foreclosures in February include: New York (up 268 percent); Georgia (up 237 percent); California (up 132 percent); Texas (up 87 percent); and Virginia (up 73 percent). Lenders started the foreclosure process on 20,360 U.S. properties in February, up 23 percent from a year ago. Those states that saw the greatest numbers of foreclosures starts in February 2023 include: Texas (2,187 foreclosure starts); California (2,133 foreclosure starts); Florida (1,831 foreclosure starts); New York (1,318 foreclosure starts); and Illinois (1,170 foreclosure starts). Among the 223 metropolitan statistical areas with a population of at least 200,000, those that had the greatest numbers of foreclosure starts in February, include: New York, NY (1,554 foreclosure starts); Chicago, IL (1,034 foreclosure starts); Los Angeles, CA (710 foreclosure starts); Houston, TX (699 foreclosure starts); and Philadelphia, PA (565 foreclosure starts). Nationwide one in every 4,574 housing units had a foreclosure filing in February. States with the highest foreclosure rates were New Jersey (one in every 2,271 housing units with a foreclosure filing); Maryland (one in every 2,390 housing units); Illinois (one in every 2,443 housing units); Nevada (one in every 2,854 housing units); and Indiana (one in every 2,956 housing units).
Empty Hotels Find Second Life As Multifamily Communities. Even before the coronavirus?disrupted the hotel industry, this sector was already declining. A new CBRE report?shows that the industry had the lowest growth in revenue in 2019 since recovering from the 2009 industry recession. And the pandemic exacerbated the situation, turning many already-failing hotels into ghost towns. As lockdowns and travel bans raged on, many hotel owners were left with the same question: What do you do with an empty hotel??One brand saw the “light” in a dark situation and devised a solution to not only help struggling hotels but assist in solving one of the greatest challenges that plague this country: the lack of affordable housing. Vivo Investment Group, a California-based real estate investment firm, found a way to repurpose abandoned hotel spaces into affordable multifamily units. Vivo Investment Group CEO Dan Norville took notice of the problems impacting the hotel industry (and the staggering need for affordable housing), even before the pandemic, and it set the stage for his solution. Norville had a “lightbulb moment” and changed Vivo’s business model to focus entirely on the adaptive reuse?of obsolete assets, leaning on his expertise in hotels, construction and property management. His plan was to add kitchen spaces to convert vacant hotels into comfortable and affordable housing communities. In early 2020, Norville launched Vivo Living, a division that specializes in converting low-demand hotels into apartments. One of the first successful conversions was one of Vivo’s existing hotels in Mesa, Arizona. When hotels were empty and the outlook for the hospitality industry was bleak, Vivo was on the move acquiring more hospitality properties. In addition to providing unique amenities, these spaces also helped bring back a social environment that was lost during the pandemic. Norville saw an opportunity for residents to connect with others by leveraging common spaces to foster vibrant social hubs within Vivo communities through happy hours, community service events, continuing education opportunities and wellness events. The team was also able to reduce electricity and water usage through the installation of low-flow plumbing and LED lighting. As of today, Vivo has acquired 25 hotels and has successfully renovated 21 of them in 2.5 years.
A Chunk of Rancho Palos Verdes is Sliding Into The Sea. If you drive along the ocean on the Palos Verdes Peninsula you’ll see signs of a disaster waiting to happen. Palos Verdes Peninsula has long been prone to landslides, and the most dramatic landside is affecting Portuguese Bend (an area named after a Portuguese whaling operation). The Portuguese Bend landslide was triggered in the summer of 1956 (nearly two decades before Rancho Palos Verdes became a city) when a Los Angeles County road crew was constructing an extension of Crenshaw Boulevard that would run from Crest Road to Palos Verdes Drive South. The crew dug up thousands of tons of dirt for the project and dropped it on top of the ancient landslide zone, which hadn’t moved in 4,800 years. The extension was never completed, but the weight and movement of the dirt shifted the balance of the earth enough to reactivate the slide, sending the land into a slow-motion descent toward the?sea. A few months after the landslide started, it?slowly tore up 130 of the homes, according to the Daily Breeze. This geological phenomenon has hit a 240-acre area hard over the last seven decades, causing fissures to open in the earth and homes to strain, buckle and drift, sometimes wandering onto adjacent properties. Today, an above-ground sewage pipe snakes along the road today. The pavement on Palos Verdes Drive South is rutted and warped, jutting up and down like an asphalt roller coaster. Worse, the hills are strewn with houses on makeshift foundations, perched on haphazard stilts and shipping containers. The problem: slow motion landslide is threatening to destroy homes and infrastructure. The city has to send a crew once a month to fill cracks, that costs roughly $1 million per year. The solution: a $25-million series of wells that will suck water out of the ground and spit it into the ocean, effectively drying up the?lubricated landscape enough to stop the land from sliding.
Marilyn Monroe’s Former Hollywood Rental Listed for Sale. During her 36 years on earth, Marilyn Monroe?never managed to stay in any one place very long (the first, last and only home the star ever owned was the 1920s Spanish hacienda in Brentwood where she met her demise). Consequently, Los Angeles is riddled with addresses that claim connection to the blonde icon. One of those residences is the French Normandy-style complex known as “Chateau Beachwood.” Located a few blocks south of the historic stone gates heralding the entry to the neighborhood originally known as Hollywoodland (but that nowadays goes by Beachwood Canyon), the ten-unit Chateau was designed by architect Walter C. King in 1936. Long-standing legend has it that the fanciful period revival apartment complex was erected by Warner Bros. Studios to house their starlets.?But in actual fact, it was one of a number of income properties built by newsstand owner S.J. Steinberg. Though far from the most impressive of the myriad places Marilyn was purported to have bunked, this turreted townhouse is certainly not lacking in charms. On its lower level, the 1,200-square-foot unit features a sun-drenched living room, formal dining room, half-bath, kitchen equipped with a Bertazzoni stove and microwave, wine fridge, and Fisher and Paykel dishwasher, and a laundry room with stacked washer and dryer. A kelly-green magnesite staircase ascends to the top floor, which holds two bright bedrooms, both featuring “wedding cake” relief plasterwork and casement windows, and a bathroom adorned with colorful Deco tile and original tub, sink, and toilet in matching seafoam green. Other period details include oak floors, crown molding, built-in hutches, and French doors, while updates include new central HVAC and new 125 amp sub panel. The unit also comes with one dedicated garage parking space. Last sold in 2019 for $785,000, the townhouse is now on the market with an asking price of $899,000.?
This Guy Visited Disneyland 2,995 Days In A Row (Guinness World Record).?What does a guy do when he has nothing to do? I now have the answer to this metaphysical question.?A California man recently set a Guinness World Record?for most consecutive visits to the Disneyland theme park (2,995 straight days of visits). Yikes!?That breaks down to eight years, three months, and 13 days. And yes, it took some dedication. He coordinated the visits around dinner plans, work duties and travel. Who is he??Jeff Reitz lives about 30 minutes from Disneyland, in Huntington Beach, Calif. He was at the theme park on New Year's Day 2012 when he and his friends noticed an advertisement for an "extra Disney Day." It was an event celebrating Feb. 29, the additional day coming up that leap year. Once they reached their goal of visiting the park all 366 days, he just kept going. That first year, Reitz was able to go to the park daily with an annual pass that his family gifted him in December 2011. He later got a job at a medical center and began purchasing his own passes. To him, the daily visits were a constant source of joy. Reitz says that, at the beginning, the annual pass would cost around $500. In the later years, it was $1,400. "So for me, going every day, even at the end, was only about $3.50 a day," Reitz says. "So about the same as someone going to buy a cup of coffee." But why did the streak end??Reitz said his last day at the park was March 13, 2020 — the last day before the theme park closed due to the pandemic. He was five days away from reaching the 3,000 mark. And yes, it was Friday the 13th. His advice for Disneyland first-timers: (1) Bring the largest dose of your patience, and (2) Bring a battery to charge your cell phone.
Colombia Exporting Pablo Escobar's Hippopotamuses. Bogota Columbia doesn’t have a housing crisis.?It has a hippopotamus crisis!?Before Columbian drug lord, Pablo Escobar, was killed by police in 1993, he had a ranch, called “Hacienda Napoles” located 200 kilometers from Bogota along the Magdalena River. In the 1980’s, Escobar illegally imported four hippos from Africa that roamed freely around his ranch. But when his ranch was abandoned after his death, the hippos drifted out of the ranch and throughout the local countryside.?They have since flourished and reproduced in local rivers amidst favorable climatic conditions. The hippos, which are territorial and weigh up to 3 tons each, have spread far beyond the Hacienda Napoles ranch. Environmental authorities estimate there are about 130 hippos in the Antioquia province and their population could reach 400 in eight years. The hippos do not have a natural predator. But they are a potential problem for biodiversity since their feces change the composition of the rivers and could impact the habitat of manatees and capybaras. Last year, Colombia's government declared them a toxic invasive species and devised a plan to control their population. The plan is to take them to India, said Lina Marcela de los Ríos Morales, director of animal protection and welfare at Antioquia's environment ministry. The hippos would be lured with food into large, iron containers and transferred by truck to the international airport in the city of Rionegro, 150 kilometers away. From there, they would be flown to India and Mexico, where there are sanctuaries and zoos capable of taking in and caring for the animals. Colombia is proposing transferring at least 70 hippopotamuses to start. The plan is to send 60 hippos to the Greens Zoological Rescue & Rehabilitation Kingdom in Gujarat, India, which De los Ríos Morales said would cover the cost of the containers and airlift. Another 10 hippos would go to zoos and sanctuaries in Mexico such as the Ostok, located in Sinaloa.
Vendors Expo Returns! Attend our super-duper world-famous "Real Estate Vendors Expo."?Thursday night,?April 13, 2022. The Vendor Expo opens at 6:30 pm. We'll have 40+ of the finest vendors featuring real estate products and services you will want to utilize as you invest in real estate. And stick around after for our featured speaker.?Iman Cultural Center, 3376 Motor Avenue (between National and Palms), Los Angeles, CA 90034.?FREE Admission. (Parking: see below.) Please RSVP at www.LARealEstateInvestors.com.
“Wholesaling” When it comes to wholesaling, there is only one guy you need to learn from.?His name is Cliff Gager. Cliff has not only wholesaled hundreds of properties, he has written books about wholesaling and has traveled the country preaching the virtues of wholesaling.?Cliff will be our special guest speaker at our April general meeting. Don’t miss Cliff’s workshop. Thursday night, April 13, 2023, 6:30 to 9:30 pm. Plus, come early and enjoy our Vendors Expo. Iman Cultural Center, 3376 Motor Avenue (between National and Palms), Los Angeles, 90034.?FREE Admission.?(Parking: see below.) RSVP: LARealEstateInvestors.com.
Parking. Recently attendees have commented about the lack of parking.?But fear not.?If there is no available street parking when you arrive, there are two FREE parking structures just two blocks away. The first structure is at the northeast corner of Motor and Palms. The second structure is at the northeast corner of Motor and National.?From either lot it is short two blocks walk to the Iman.???
?
“LARealEstateInvestors.com” Podcast.?We are so very excited to announce our new podcast, "LARealEstateInvestors.com" (named after our domain) hosted by our very own Bill Gross. Bill has been a Realtor, broker and real estate investor forever!?No one is more experienced in local Southern California real estate than Bill Gross. Each week, Bill interviews real estate professionals sharing their insights and advice for real estate investors. Every Tuesday live at 3:00 pm, and anytime thereafter on YouTube, Facebook, and Google.
?
This Week. Investors will be closely watching to see if Fed officials elaborate on their plans for future rate hikes. The most anticipated economic report of the week, the Consumer Price Index (CPI), will be released tomorrow by the Bureau of Labor Statistics. CPI is a widely followed monthly inflation indicator that looks at the price changes for a broad range of goods and services. Retail Sales will come out on Wednesday b the U.S. Census Bureau. Since consumer spending accounts for over two-thirds of U.S. economic activity, the retail sales data is a key measure of the health of our economy. Housing Starts and Import Prices will come out on Thursday. The next European Central Bank meeting also will take place on Thursday.
?
Weekly Changes:
10-year Treasuries:?????????????Fell????020 bps
Dow Jones average:???????????Fell????1200 points
NASDAQ:????????????????????????????Fell????500 points
Calendar:
Tuesday (3/14):???????????????????Consumer Price Index
Wednesday (3/15):??????????????Retail Sales
Thursday (3/16):??????????????????Housing Starts
For further information, comments, and questions
Lloyd Segal
President
Los Angeles County Real Estate Investors Association, LLC
310-409-8310