Using the Web and social media to sell real estate

Sam Zell, real estate billionaire, and Warren Buffet, billionaire who also does real estate, are both convinced that the market is going to rebound nation wide by mid 2011. They also say that within a year or so the residential housing problem should largely be behind us (read the full article here). Is it good news or bad news?

I think it is very good news because the nation wide improvement will be preceded by local markets that will recover faster which means good opportunities for medium term investments, like 12 months, which are very common in today real estate market and very acceptable also to international real estate investors.

The package I am proposing to my investors right now, for example, is a 12 months package where we buy a property at a discount, we rehab very fast and put it back on the market with a lease option agreement for buyers who have less than perfect credit.

This strategy allows to get buyers pretty fast and lower holding costs, since the property starts to produce cash flow while the prospective buyers straightens out his credit and gets a loan. The whole process never takes more than 12 months which is very acceptable for an European investor who is accustomed to one or two years wait time for his investments in Europe.

So I predict a sharp rise of interest from foreign investors in the US real estate market.

Roberto Mazzoni

P.S. If you are a Realtor or an investor who wants to deal in international real estate, leave a comment on my blog of follow me on Twitter or Facebook.

Warren Buffet, the billionaire entrepreneur become very famous for his foresight, recently sent his annual letter to his shareholders. This year he has a special section dedicated to real estate where is is directly involved because Berkshire Hataway Inc, his company, owns the house manufacturing company Clayton Homes.

According do Buffet’s analysis, the manufactured homes market is in very serious trouble because the economy is still slow and because of the number of new houses that started production in 2009 (housing starts) is the lowest in 50 years in the US. The overall figure being: 554,000 compared to the 2 million annual production that was going on a few years ago.

New house starts (new construction beginning) is at the lowest in 50 years.

It is a dramatically strong reduction that has serious impact on employment (it is actually pretty easy to find tradesman and construction people available for work today) but that is helping the recovery of the general real estate market.

Indeed, with so little new homes being constructed or manufactured, the inventory on the market has a chance of being unloaded faster. Actually January has been a very slow month after the rush of the buyers who wanted to take advantage of the tax credit that was supposed to end in December 2009, but Buffet sees the dramatic drop in new houses as a very good indicator for the overall real estate market and he estimates that within a year “the residential housing problem” should largely be behind us.

Looking at the figures, 650 thousand net housing units were added during 2009 and during there were not as many new households: about 650 thousand, therefore just enough to balance the houses that had been added but not enough to seriously reduce the inventory, which should instead start reducing for real in 2010. How fast? It depends on what the banks do with their foreclosure backlog and how people will take advantage of the tax credit and of the government support to new first time home buyers.

Roberto Mazzoni