Real Estate Information

Would you want to be notified when another online property auction happen in Santa Cruz County? Of course you would….

From the Sentinel Correspondent Ewen Callaway

 $442,000 in online property auction - With neither gavel nor auctioneer, 5 months ago Santa Cruz County staged its most successful tax-defaulted property sale this week, peddling 10 parcels for more than $442,000.

The county's first eBay-style online auction garnered 752 bids from 38 people in six states. Generally, fewer than 10 people bid in previous county auctions, said Treasurer Fred Keeley.

The online auction "draws a larger field of folks who have the willingness to bid these properties up," he said.

The properties, which were more than five years past due on property tax payments, sold for between $8,900 and $121,100 to bidders in California and Hawaii.

The money first goes to pay a total of $51,100 in back taxes. The previous property owners have one year to collect the rest of the auction proceeds — $391,489.50 all together. If unclaimed, the county divides the money among cities, schools, and other tax recipients.

Dunstant Smikle of Camarillo bought the cheapest property, a 4,300 square-foot sliver of land in Scotts Valley on Lockhart Gulch Road. He hasn't seen the land yet, but hopes to build a small house or cabin.

"Where else in California can you find property for $9,000?" Smikle said.

A controversial Felton property also sold. Damaged in a 1982 mudslide, the county condemned a house on View Circle, just north of Henry Cowell Redwoods State Park. Raymond Tate, the owner since 1986, fought the county and ultimately lost an 18-year legal battle.

"They've forced my hand," Tate old the Sentinel in 2001. "Now it's time to go for the jugular"

The county spent $11,000 to tear down the house in 2004.

Al Tamesabi of San Marcos bought the 1.25-acres for $13,600.

Initially 28 properties were available, including a Santa Cruz Home one block from West Cliff Drive and a large house on Highland Avenue worth more than $700,000. Those properties and 15 others fell off the auction block before the three-day sale started on March 12. The owners had until midnight March 11 to pay the taxes they owed.

Maryland-based Bid4Assets ran the auction for a flat fee of $75 for each property sold. Keeley said the county saved $10,000 by not running a live auction.

Santa Cruz County now plans to hold future tax-defaulted property auctions online.  I will notify you when, just email me at Patti@PattiLyles.com

Q. How do vacation rentals work in Santa Cruz?

A. First of all this is a function of specific rules (ordinances) in City of Capitola and the lack of any rules in the City of Santa Cruz, and in Santa Cruz County areas. 

As for the City of Capitola, there are strict ordinances that govern daily/weekly/vacation rentals. (That is any time period less than 1 month or 30 days.) The property must be zoned commercial and in the Village, Downtown to be rented in this manner. Also, there is a 10% hotel tax (otherwise known as room tax or transient tax) due at all times. Penalties for not paying this are extreme. 

Most is positive about vacation rentals. They are a vehicle to “have your cake and eat it too”.

You buy your Beach House, enjoy it when you want to (or when it’s not rented) and collect about four times the normal rent per month. A rule of thumb is vacation rentals get about the same income per week as you would get per month in the off-season. Of course, you must deduct cleaning, advertising, bookkeeping, maintenance, hotel tax, and any management charges. This total can range anywhere from 25%-45% of the price charged to the guest.

Another perk is the constant appreciation that Beach Properties in Santa Cruz County have enjoyed. Even in so-called down markets,  Beach Homes here have stayed strong since most are cash buyers that are not relying on large loans or high LTV’s (loan-to-value) and our limited product inventory.

Contact Patti@PattiLyles.com

http://www.santacruzrealestatehomes.com for more information about real estate or buying a vacation rental.

Once you leave Capitola, both north and south, you are in Santa Cruz County designation. These areas include Rio del Mar, Seacliff, Seascape, La Selva Beach, Manresa, and Pajaro to the south. To the north of Capitola, there is Opal Cliffs, Pleasure Point, Live Oak, and the Yacht Harbor. All of these areas have no restrictions except to pay the 10% Hotel Tax.

The City of Santa Cruz also has little or no restrictions on vacation rentals that I know of except the 10% Transient Tax due. Fortunately, this Hotel Tax goes to either the City or County areas where the property is located and into those coffers for use on roads and maintenance of that local infrastructure.  When choosing areas for your new beach home that you intend to rent, be sure to call one of the several local vacation rental management companies or a network of owners who want to manage their own. (You can call or email me for this list.) It is important that you ask which property areas are in most demand and exactly what amenities should the property have to get the most rent and be most desirable for vacation tenants.

In summary, the positive aspects of vacation rentals are the following: you have your own Beach House when you want it (maybe with a locked closet or room to keep your personal things on site); you enjoy the appreciation over the years; you off-set the expenses with great income; someone else (if you have a management company) takes care of the problems and maintenance; short-term rentals allow more owner control than long-term; you may need to use your assets for income gain; it’s good for the economy of Santa Cruz – tourism is our #1 business. People who rent vacation homes shop, eat, and are entertained in our little Paradise. Call or email questions

or comments regarding where to buy and how it works

Outside Magazine issue latest issue names Santa Cruz one of the nation's best cities.

Santa Cruz Home owners once again have proof they live in one of the best towns in America. The upcoming issue of Outside magazine names Santa Cruz in its annual list of the most desirable places to live.

The editors at Outside Magazine said they chose Santa Cruz for its mix of laid-back and cosmopolitan atmospheres. The story describes it as, "old-time hippie culture, complete with dread locked street urchins and lots of wheatgrass, blending with the Volvos and BMWs of the high-tech crowd".

John Bradley, a senior editor for Outside Magazine, said the magazine was looking for "smallish" towns that could blend outdoor treasures with an active nightlife.

"It's that juxtaposition in lifestyle of sports and culture that makes Santa Cruz unique," said Bradley. In its profile of Santa Cruz, Outside recommends hiking in Henry Cowell Redwoods State Park, surfing at Cowell's and tasting local wines at Soif Wine Bar.

Living in paradise does have its drawbacks, though.

Resident Kris Carson, 60, admitted it was hard to make a living in Santa Cruz, and the housing prices don't help.

Santa Cruz has one of the highest costs of living on Outside's list.

But Carson said it's worth it because, "Santa Cruz lets me be myself" As an avid sailor Carson said he loves being near the water. He also acknowledged Santa Cruz's proximity to San Francisco as a bright spot, especially because Santa Cruz "is a terrible town for restaurants," said Carson, a construction manager.

Even those who don't live in Santa Cruz are influenced by its charm.

"It's magical," said Stacie London, who attended UC Santa Cruz and is now an industrial design artist who lives in Los Angeles. "It has everything you'd want for a healthy lifestyle"

London and her husband said they are considering moving here after spending just a few days in town and driving Highway 1 from Half Moon Bay. They said they are impressed with the friendliness of the people and the diverse array of cultural and physical activities. "This would probably be a great place to raise children," said Luis Herrera, London's husband.

This is not the first time Santa Cruz has graced the magazine, popular with outdoor enthusiasts. In 2003, the magazine named Santa Cruz the best college town in America.

The editors at Outside chose one town with a population less than 100,000 in each of nine geographic regions. The August issue hits newsstands July 10.

Contact your real estate agent Patti@PattiLyles.com or look at her site at www.santacruzrealestatehomes.com or www.luxurysantacruzhomes.com for Vacation homes, beachfront and oceanview homes.

Best Towns in AmericaOutside Magzine selected the nation's best cities, with less than 100,000 residents, to live in by region. Santa Cruz was given the honor for the California coast. http://www.gadling.com/2007/07/17/outside-magazine-s-best-towns-2007/

 #1California Seaside: Santa Cruz.

• Northwest: Bend, Ore.
• Rocky Mountain: Jackson, Wyo.
• Southwest: Santa Fe, N.M.
• Midwest: Iowa City, Iowa
• Northern Lakes: Duluth, Minn.
• Southern: Asheville, N.C.
• Atlantic Coast: Portland, Maine
• New England: Burlington, Vt.

Getting Out Of A Dead Market - The Case For Taking What's There And Movin' On
Patti Lyles @ http://www.santacruzrealestatehomes.com

There of course those who might disagree, but as I've said so many times before, buying small residential income properties in Santa Cruz haven't made sense for quite awhile now. Furthermore, I can envision any scenario resulting in positive change so radical that small units become investor friendly in the foreseeable future.

Larger properties offer different dynamics than the little guys, but I still don't see how the rising rents will have much of an impact with the cap rates remaining so relatively low. You just know though, that with the future rents in Santa Cruz almost sure to be higher than they are now, that investors will be attracted to the larger projects in good to excellent areas. With home prices what they are, more and more folks will be renters - a demand factor guaranteed to raise rents region wide.

The smaller units - 2-4 - are selling for, (throw out the high and low) $650-900K  for duplexes, on up to $1.2mil-2,5mil for fourplexes. The owners of these properties wouldn't buy them again at their current values. Ask ‘em. Some of them would immediately start laughing. I have asked some of them, and the ones who've bought in the last 18 months or so regret their decision - sometimes bitterly. But when they think about selling, the thought is quickly squelched. "Just can't do it" they say. Owners say this even when they bought it two hundred grand ago - and will profit handsomely.

Why?

They aren't sure of where else they'd take their equity. Most have read or heard from others about the markets investors like these days - but don't seem to have the confidence, or maybe enough solid info to pull the trigger. I'm guessing many of them are still strong believers in the Santa Cruz Real Estate market, expecting it to bounce back. You can't blame ‘em, that's been their experience the last 40 years or so. Why should this market be different?

Indeed.

The only question now is - how long will it take for them to realize the prices for their type units don't make any sense whatsoever - and most likely won't ever again?

So, what should they do? EXIT NOW

If they're still in growth mode, and their equity to value ratio is favorable, (they have a bunch of equity) they should be moving their capital by way of a tax deferred exchange to an area more hospitable to investors. In other words - find the exit sign and take your equity elsewhere. What many of these investors don't realize is they can easily afford to acquire 2-4 times the property they now own - and with significantly younger buildings to boot.

Here's a quick example.

One client took a small Seabright duplex and executed a tax deferred (1031) exchange. He sold for just over $799K  last October.  He traded into just under $1.2Mil of better located and much younger properties. His tax shelter (depreciation) literally rocketed upward. He now owns five small properties (huge flexibility), his capital growth rate is now turbo-charged, and he's taken himself out of management. That last one didn't exactly upset his wife. 

You're in a changing forever-changed market. You can trade yourself into a far better position - in every way you'd want.

I urge small unit owners in Santa Cruz County, and the many regions just like it, to think long and hard about their current circumstance. Ask yourself - what reasons compel you to keep putting up with the status quo?

Let's review.

Increase the value of your portfolio by two to four times.
Move your tax shelter into the stratosphere.
Get your capital growth rate going in the right direction again - and faster
And for dessert - get out of managing the dang things.  
 

There's no case for a growth oriented investor to keep their equity in Santa Cruz- or any place like it.  We can do a 1031 exchange and get you into a higher cap rate local in 80 days.

What would you do with all the above listed improvements to your investment portfolio and no more management?

I rest my case.

• Q: What is a TIC?
  A:TIC is simply a form of concurrent real estate ownership.  TIC is an abbreviation for "Tenant in Common".  This form of ownership may be used when more than one person (or entity) owns a property. Some of the main characteristics of TIC ownership are:
  • Two or more people co-own a parcel of real estate without the right of survivorship.
  •  Each co-owner can choose who will inherit his/her ownership interest upon death. 
  • TIC owners own percentages in an undivided property rather than particular units or apartments, and their deeds show only their ownership percentages.

• Q: What types of properties are owned as TIC's?

A: Any real property can be owned as a TIC.  The common types of real estate that we see owned as TIC are as follows:

• Residential TIC's - Most typical in areas like San Francisco and New York City where several parties co-own a multi-unit property with each owner desiring exclusive use of a unit.  The exclusive use is derived from a separate Tenant in Common Agreement. 
  

• Vacation TIC's - Vacation home buyers and resort developers use the TIC form of ownership instead of the traditional timeshare arrangement.

• Commercial TIC's - Income property investors pooling resources to co-own large commercial or institutional grade real estate.

• Q: What to be aware of with a residential TIC?

A: There are numerous considerations when acquiring a residential TIC, just a few to consider are:   

• The exclusive use to a unit will only come from a well written TIC agreement.
• Each co-owner can sell his/her interest at any time although the sale may be subject to right of first refusal by the other owners and/or buyer approval, as per the TIC agreement.
• Many lenders will not provide individual loans for TIC interests, so group financing may be necessary.
  

• Q: What are the possible pros and cons of a commercial TIC?

A: The pros and cons of each commercial TIC will be largely dependent on the uniqueness of the underlying real estate.  In general, some of the pros and cons of this type of investment include:

• Pros
  
  • Allows individual investor access to better/larger properties
  • Professional Property Management
  • Economies of scale
  • Predictable and stable cash flow
  • Diverse tenant mix
  • Non Recourse Financing
• Cons
  
  • Liquidity, no established secondary market
    
  • Group decision making
  • No ability to individually pull money out (refinance)
    

• Q: Can a TIC be part of a 1031 Exchange?
  A: Provided the real estate is used for business or investment purposes real estate owned as a TIC can qualify for a 1031 Exchange.

• Q: If I sell a TIC and 1031 Exchange, do I have to buy a TIC?
  A: No. In a 1031 Exchange, property that is co-owned with one or more individuals can be sold and the replacement property can be individually owned.

 SHORT SALES:  THE LEAST YOU NEED TO KNOW.  The last 3 offers I wrote in Santa Cruz Real Estate would have been short sale transactions

•q       "RISKY" ALTERNATIVES TO THE SHORT SALE:

Become an "Equity Purchaser," aka "Shark." One who is a Non-Owner occupied "equity investor," buying a sellers equity at a DEEP DISCOUNT, to bring loan current. The EP is often deeded onto title. Seller's often remain in the property as co-owners, or rent back from the EP. The plus for the seller is no damage to credit, with a place to live, without moving.

Beware of the "Foreclosure Consultant," who charges a separate fee (not a commission) for a "Rescue Plan" Consultation, and does not have any agency with bank, buyer, or seller. This means no fiduciary responsibility. "Consultants" often do not hold real estate licenses. Both Equity Purchasers and Foreclosure Consultants invite Civil Code Violations CC 2945 and 2945.11, which protect distressed sellers from fraud by the above. 

Be aware of the: "Soldiers and Sailors Act" by Congress, which provides protection with an Automatic Stay of Foreclosure, for military.

•q       A "SHORT SALE" IS DEFINED BY: "ALL liens of record PLUS costs of sale, EXCEEDING CURRENT MARKET VALUE." Said to be "Upside- Down" in payment.

Simply put: Seller owes more than what they can sell for.

This includes, but not limited to: Tax Liens, Mechanics Liens, 1^st TD, 2 TD, 3TD et al., Unpaid Judgments and Small Claims, and Unpaid HOA Dues. (Many people who do not pay their mortgage are also not paying many other bills, which may be secured by real property. For example: Home Equity Lines of Credit (HELOC's), Mechanics Liens, and Boat Notes).

•q       BANKS DO NOT INITIATE SHORT SALES. SELLERS & AGENTS DO:

The above Beneficiaries (aka "Bennies") are always negotiated with by the seller, or assisted by the agent. Lien holders rarely agree to 6% listings. Commissions can range from 1-5%, depending a number of factors.

•q       "VALUE OF A SHORT SALE VS. THE COST OF FORECLOSURE" ANALYSIS:
 
This is performed by the bank. Banks take up to 45 days to perform this analysis, only after a Short Sale Package is submitted.  All lien holders must weigh options before committing to a Short Sale, IN LIEU OF A FORECLOSURE. By foreclosing, lien holders assume all the risks by taking back the property:

•q       RISKS INCLUDE:

Exposure to vandalism by the seller, deferred maintenance costs, cost of actual foreclosure process, the months of unpaid mortgage, (at least 4 months!). Also, the cost spent marketing the REO (Real Estate Owned), and commissions paid to future agents.

•q       A four-month process is typical from Notice of Default (90 Days/ 3 Moths), to a Notice of Trustee's Sale (21Days/3 weeks), and is sold at auction by Trustee's Sale on day 22 if no resolution is reached, AND NO BK IS FILED.

•q       Many sellers will file chapter 7 Bankruptcy, forcing a "Stay of Foreclosure." Some sellers do this simply to buy time sufficient to close a current escrow, and then just cancel the BK application. This is known as "Stopping the Clock" of the four month process. Once a bankruptcy is accepted, a bank IS NOT ALLOWED to offer a Short Sale to the seller, and will be sold at a BANKRUPTCY SALE.

•q       The bank then hires attorneys to file for a "Relief of Stay" which allows them to continue foreclosing even though you are in BK.

•q       However, courts are reluctant to approve this, and prefer a BANKRUPTCY SALE in order to pay off more creditors than a NON-JUDICIAL FORECLOSURE would, provided there is more equity over and above paying off the lien holders. Other "Non-Secured" creditors may be able to be paid off.

Example: If 450k is owed on the home, and the home can sell for 600k, the courts know the bank will "under price it" to recapture just the loan and costs- but not a penny more, especially in a declining or even a flat market. Banks want to "cut their losses." Courts want to realize the MAXIMUM RETURN, where Banks want only the note value and costs.

(In a rising market, banks are willing to price REO's along side the competition, going with the upward trend).

•q       WHAT TO ASK A SELLER:

It is very much like a traditional listing except for the "sense of urgency," caused by deadlines and a sense of doom by the seller. Ask the seller: Did the seller disclose All Liens and encumbrances? Are there Late Payments, Notice of Default, or Notice of Trustee's Sale? Determine with a net sheet if there is enough equity to pay all liens AN

Why would a Homeowner even consider a short sale?  What's in it for them?

I just realized that an offer I was about to present was a Short Sale. How was I going to present that offer to a Seller that evening?

We know that one of the conditions of short sale approval, a non-negotiable provision, is the Seller receive ZERO PROCEEDS from the sale. So if the Seller gets nothing, why would they agree to do it? 

Why would they go through all that trouble when it would be just as easy to file bankruptcy and walk away, or, deed back the house to the bank and walk away, or simply walk away, closing the book on that portion of their lives....

What could motivate the Seller to work toward a goal that would result in no monetary reward?  It would have to be something worth more than money.  So, the question is,  "What's worth more than money?"

When I meet with a distressed homeowner for the first time, we cover a lot of ground in a short time. If I've done my job, the barriers are down and truth is on the table. When the meeting draws to a close, I am frequently asked, "Can you keep this (the foreclosure/Sheriff's Sale) from the newspaper? I would just die if my mother/father/sister/brother/neighbor/friend/co-worker found out!"      

To a family in a heightened emotional state, realizing their continued homeownership is not an option, what's really important?  Self Respect?  Dignity?  Integrity?  Reputation?  Pride?   Having some control?  Are these feelings worth more than money?  You bet they are!

The distressed Santa Cruz Real Estate Homeowner, after all measures to save their home have failed,  must be made to realize their remaining choices are limited to allowing their home to be auctioned off at a public sale, a sale anyone could learn about, attend, and possibly become the winning bidder... then endure further humiliation by being subject to a forcible eviction.... Or,  the homeowners can act responsibly, participate in a proactive process to mitigate potential damages, and maintain some degree of control by moving on their own terms.  

After accurately painting a factual, worst case scenario (public auction/forcible eviction/financial consequences) the real estate broker must articulate to the homeowners that he/she is confident that a successful short sale will protect their future creditworthiness, and imply that by acting responsibly and participating in a viable solution...they will experience a renewed feeling of self worth.

          What's worth more than money?  Self respect.

The Buyer's Agent: I have won the most awards for representing buyers!

Never before has the role of specialists in the world of real estate been more important. With buyers and sellers requiring more services, the industry has seen an explosion of agents who specialize in either the representation of sellers or buyers. These specialist agents can provide a wealth of services and maintain a complete impartiality during the sales process as there is only one client to concern them.

Historically the sales transaction and the concerns of the buyer were the purview of a single realtor. However, as the industry has progressed so have the needs of each party and so the specialist arose. Buyers have some very particular needs, and specifically the need to feel that their best interests are seen to. Listing agents are representatives of the home's owner and in that role they have a primary responsibility to that owner. How could they properly look after the needs of an interested buyer as well?

So what is it that a buyer's agent does? Primarily the buyer's agent will begin with the location of suitable properties for their clients. This is usually based upon a list of requirements and desires that the client has communicated to the agent. They will then arrange viewings and recap their findings with their clients and assist in deciding upon a good candidate for an offer. This will be based on the wealth of community information that a buyer's agent commands. As specialists, they are experts on their given area which is critical in the education of clients on the areas that they are considering. Once a property is decided upon, the buyer's agent changes significantly, evolving into an overseer-negotiator role. They will typically coordinate the inspections and conduct the negotiations with the listing agent. This includes the execution of the buyers subjects and the closing of the actual contract.

There is an art to representing a buyer in Santa Cruz Real Estate transactions. It is a role that has become ever more crucial in an industry where customer service is the single most important thing that an agent can offer. If you are in the market for a home then the buyer's agent is the friend that you need to make sure that you are given the service that you deserve.