Justin Reese

The only way to truly know what an asset is worth is when it trades. Only at that time, when a buyer and a seller publicly agree on a price, is the asset's worth uncovered.

Therefore, the question about what an asset is worth is a personal question and the answer can vary widely between different people. A clear example is the sentimental value that comes from a family heirloom... to one person it would be worth a fortune and another very little if anything at all.

Often investors have a set of requirements that must be met... usually based on financial returns. In your case, in addition to financial returns, you might also want some personal use for your kids, or for building a portfolio and some retirement money, or for tax benefits or protection against inflation.

I think, from an investment point of view, this property is priced attractively. There is good cash and upside with rents. I also think, that like stocks, it is almost impossible to time the market perfectly. If you can get close, and hold for 7 to 10 years, you are extremely likely to benefit from asset appreciation and monthly cash gains.

Hope this helps.

Thanks,
Justin

Many current realities in the market make me think we may be near the bottom of the cycle and we are close to a turning point in the residential real estate market. These realities include declining housing inventory, increasing buyer competition, slowing price depreciation, and rising builder confidence.

However, there is still investor risk that stems from the impact of future foreclosures, rising unemployment, and stricter underwriting standards.

We may be close to the bottom of the market. My guesstimate is that, on average, Los Angeles will take about 5 years to recoup the losses it suffered in the 3 years from July 2006 to July 2009.

Thanks,
Justin

Justin Reese, JRealty
2711 N. Sepulveda Blvd #229, Manhattan Beach, CA 90266
o) 310 545 5269 | c) 310 980 1660 | f) 310 545 7804
justin@jrealty.org | www.jrealty.org | www.justinreese.me

South Bay residents will honor those who have died in service to their country as well as current and former members of the military at several events over the Memorial Day weekend.
Here's a community-by-community rundown of local activities:
INGLEWOOD: Ceremony 11 a.m. Monday at the Memorial Obelisk Monument at City Hall, 1 Manchester Blvd. All are invited to the free event, which celebrates the lives of war heroes from the community and pays tribute to those currently in the armed forces. For more information, call 310-412-8700.
LAWNDALE: Brakfast at 9 a.m. Monday at the City Hall Memorial Wall, 14717 S. Burin Ave. Reservations are required. Due to limited seating, only the first 80 reservations will be accepted. To make a reservation, call 310-973-3270.
REDONDO BEACH: Ceremony from noon to 1:30 p.m. at the Veterans Park at Catalina Avenue and Torrance Boulevard. For more information, call 310-540-6044 or go to www.emptychair.org
RANCHO PALOS VERDES: Ceremony at Green Hills Memorial Park from 10 a.m. to noon. Highlights include the release of 100 doves and 1,500 balloons (including 250 yellow ones symbolizing the return of troops from war and 250 black balloons representing American POWs and MIAs); a parade of colors presented by all branches of the armed forces, veterans groups, and local police and fire departments; the Lomita sheriff's station's mounted posse; aerial fly-overs; skydiving teams; and a National Guard display of Humvees. Keynote speaker will be Michael B. Donley, secretary of the Air Force. The entire community is invited to participate in this year's free observance. Green Hills Memorial Park is at 27501 S. Western Ave. in Rancho Palos Verdes. Call 310-521-4460 for more details.
TORRANCE : Sen. Jenny Oropeza, whose district covers Torrance, will honor local residents who made the ultimate sacrifice for their country from 11 a.m. to 12:30 p.m. Saturday at the James Armstrong Theatre, 3330 Civic Center Drive. The families of those killed while serving in the U.S. military will be presented with California flags that have flown over the state Capitol. Among those being honored are Capt. Matthew Ferrara of Torrance, who served in the Army's 2nd Battalion, 503rd Airborne Infantry Regiment, 173rd Airborne Brigade Combat Team; and Specialist Lester G. Roque of Torrance, who served in the Army's 2nd Battalion, 503rd Airborne Infantry Regiment, 173rd Airborne Brigade Combat Team. The event is free and open to the public and will include a short program and patriotic music by the JROTC Redondo Union High School band. For more information, visit www.senate.ca.gov/oropeza or call 310-318-6994.
WILMINGTON: Veterans of Foreign Wars Post No. 2967 and Ladies Auxiliary, along with American Legion Post 287, will host their annual Memorial Day services at Wilmington Historical Cemetery, 605 E. "O" St., at 11 a.m. Monday. Service will include posting of the colors, a guest speaker, a memorial tribute and a gun salute.

Thanks,
Justin

Justin Reese, JRealty
2711 N. Sepulveda Blvd #229, Manhattan Beach, CA 90266
o) 310 545 5269 | c) 310 980 1660 | f) 310 545 7804
justin@jrealty.org | www.jrealty.org | www.justinreese.me

When is a lease option a better idea than putting your home up for sale in the usual manner?
Like most financial questions, the answer to this one will vary widely between different scenarios. Really the underlying question is should the seller sell now or lease then sell later. I have an actual case that I am currently working on that deals with this, but before I talk about that example I want to clarify a few things about, what I will call, a Lease Option Buy (LOB) transaction.
1) There are three separate agreements associated with this transaction.
a. A residential lease agreement (CAR FORM LR)
b. An option agreement (CAR FORM AO)
c. A purchase agreement (CAR FORM RPA)
2) The lease agreement must be executed, but the option and purchase agreement may or may not be executed. The Tenant has the option to buy the property, not the obligation to buy it
With that said, I'll quickly discuss the thought process behind the seller's decision to pursue a LOB.
The seller has a property that is currently worth about $350,000. However, the seller has about $450,000 worth of debt on the asset. The seller is not behind on their payments. The seller thinks that, in about 2 years, the property will be worth around $450,000. The seller wanted to find a LOB Tenant.
I found out that market rents for this property were about $2,000 per month. I found a tenant and negotiated rent of $2,200 per month, for 2 years. The option period was 2 years and there were several contingencies, including a provision for on-time rent payments, cash requirements at closing, and other financial requirements. The purchase price, if executed, would be $475,000.
This outcome worked out terrific for the seller. They are current with their mortgage payments, they have extra income from higher rents, income from the option purchase, and an higher than expected sale price. If the option is not executed, the seller has only came out better because we are nearing the end of the downward pressure on housing prices and the tenant financed the seller through the difficult period.
I am currently doing this with several properties. I am getting very experienced with this scenario and happy to discuss/ answer any questions. Please see http://jrealty.org/landlord.htm and http://justinreese.me Please feel free to contact me at any time.

Thanks,
Justin

Justin Reese, JRealty
2711 N. Sepulveda Blvd #229, Manhattan Beach, CA 90266
o) 310 545 5269 | c) 310 980 1660 | f) 310 545 7804
justin@jrealty.org | www.jrealty.org | www.justinreese.me

I recently got a call from a client/ developer who was upset because he spent $1.4 million on abeautiful house that is now worth about $1 million. The property is currently rented and earning $4,500 per month. This is a client with a lot of cash and generally doesn't require many loans. He asked me for advice and I told him the following: