Property Grunt

Tuesday, January 29, 2008

I heart Kelly Kreth

You know you love her.

The last couple of weeks have been quite tumultuous for Kelly Kreth, from being unjustifiably ousted from the NY Press and replaced by another sex columnist who’s stories were straight out of Sex and City and in a sense they came from the same place since the new columnist’s stories were complete fiction.

However, those of you who know Kelly Kreth, she has more lives than Judith Regan. Kelly is able turn her lemons into mojitos and everyone is more than eager to drink what she is serving. Since being fired from Dwelling Quest she has reinvented herself as a master of real estate public relations and launched her own company, which has become a roaring success representing clients that include Darren Sukenik, the Oro and Century 21 which hired 8 months after they bought out Dwelling Quest. She has also pioneered the use of online video for residential real estate.

She also is a very honest and hilarious writer, presenting her personal life with all the naughty bits. Kelly is also a darling of the morning shows on British telly.

The Grunt’s relationship began when I heard about her firing from Dwelling Quest and became completely outraged and went on a one blogger campaign to defend her rights as a blogger and spread the word of this injustice. Since then, I have seen this woman grow into a successful writer and business woman and it doesn’t look like she will ever stop

Lysandra Ohrstrom of the The New York Observer and a member of Tom Acitelli's crew has written an absolutely fantastic profile of the divine Ms. Kreth which presents the life of this glamourous PR Maven and author.

The article discusses the following:

Her rise from the ashes after being fired from Dwelling Quest.

What really happened at the NY Press

Her loco love life.

Of course what really got the Grunt going was this.

In the fall of 2005, Daren Hornig, one of the developers of Meatpacking District condo The Prime and back then the CEO of brokerage Dwelling Quest, fired Ms. Kreth, his in-house publicist, for keeping an on-line diary. The firing came barely two weeks after Mr. Hornig had lured Ms. Kreth back to his firm from her perch at the Shvo Group.

She blames her “evil assistant”—who had been briefly promoted during Ms. Kreth’s three-week stint at Shvo and who was promptly demoted upon her return—for playing up a diary entry in which she calls the behavior of a superior “shrill, loud, and classless."

Dwelling Quest threatened to sue, and police investigated death and harassment threats Ms. Kreth allegedly lobbed at company employees.
The saga caught the attention of The New York Times, Crain’s, and the Internet’s gossiping classes when The New York Post published an article on Sept. 28, 2005, portraying Ms. Kreth as the victim of Mr. Hornig’s unethical treatment. Bloggers rushed to her defense, turning Ms, Kreth, briefly, into an Internet poster girl for the First Amendment.

Property Grunt, an anonymous New York real estate blogger, wroteon the day The Post article came out that he was “proud” to assist “Kelly in publicizing her story... And with exposure from The Post, I am positive her story will go national. Stay strong Kelly! We got your back!”

To say that I was thrilled by being mentioned by in such a positive light in the New York Observer. would be an understatement. Therefore I will indulge in one moment of narcissism and soak this small yet noble moment Kelly has provided me.

That aside, I truly hope that someone with the literary fortitude recognizes what we all have known for a long time, that in the football game of writing, Darren Star and Candace Bushnell aren’t even qualified to hold Kelly Kreth’s jockstrap because she is a regular Eli Manning.

Keep making those Mojitos Kelly because everyone is lining up to go to your party.

The Law of Equivalent Exchange

Humankind cannot gain anything without first giving something in return. To obtain, something of equal value must be lost. That is alchemy's First Law of Equivalent Exchange. In those days, we really believed that to be the world's one, and only, truth.

Alphonse Elric, Fullmetal Alchemist

Last Sunday night's 60 Minutes did a piece on the whole subprime mess. Even though they were exploring known territory it was quite sobering to see lines of people get credit counseling and the footage of foreclosed homes.

There are segments of the program that really hit a nerve or two.

Most of the mortgages issued in Stockton, and half of those now in default or foreclosure, were something called subprime loans, meaning less than prime quality. The borrowers often had sketchy credit, were financially strapped or lacked sufficient income to qualify for a standard mortgage. After a year of artificially low payments, the interest rates on subprime loans jumped all the way to ten or 11 percent.

But Jerry Abbott, who runs the Coldwell Banker office in Stockton, says it didn’t concern the borrowers, many of whom were getting mortgages for more than their houses were actually worth.

"They were getting loans in excess of 100 percent of the value of the property," Abbott says. "That type of thing. So, most of 'em were actually putting a little bit of money in their pocket at close of escrow."

"So, they were getting paid to buy a house?" Kroft asks.

"They were getting paid to buy a house. Yes. Yeah," Abbott says.

And strangely enough, it didn't seem to bother the lenders either, who were collecting huge fees just for landing the loans.

"Whatever they wanted to state for their income. The bank accepted that at face value and made the loan based on that income," Abbott says.

Abbott says borrowers got the money, without a down payment.

Jim Grant calls it an invitation to fraud. "You apply to a bank, or a mortgage broker for a loan. And you would fill out a form. And you would say, 'I have an income of, oh, $400,000 a year.' They say, 'You do? Fine. Just sign right there.' And they would nod, and because they were being paid, not by the veracity of the information, but by the consummation of the deal. The lending office would say, 'Ah. You have verified this?' 'Why, yes, we have.' And the lending officer would say, 'Great. So do I,'" Grant says.

"And he got a cut, too?" Kroft asks.

"Yes, oh, yes. Everyone gets a cut," Grant says.
Cheap money and plenty of it to go around and when you throw in some greed you get this mess.

Almost all of the people involved in the transactions made huge amounts of money, then passed the risk onto someone else. Instead of keeping the dicey loans in their own portfolios, the big banks and giant mortgage companies that originally underwrote them, resold the mortgages to big New York investment houses.

Firms like Bear Stearns and Merrill Lynch sliced the loans into little pieces and packaged them up with other investments, then sold them to their best customers around the world as high-yield mortgage-backed securities, turning sows' ears into silk purses, all with the blessing of rating agencies like Standard & Poor’s.

"At every step in the way, somebody has his or her hand out, getting paid. And everyone, for the time, is happy. The broker got paid. He or she was happy. The lending officer, ditto. The rating agencies got paid for passing judgment on these securities. They, too, were pleased, and their stockholders were happy. And on and on. And it would never end, except that it did," Grant says.

It was all predicated on the idea that real estate prices would keep going up, and up and up, and for a long time they did. But by the summer of 2005, speculators flipping houses in Stockton had helped drive the price of that four-bedroom house to more than $400,000 and the market began to soften, then to tumble.

All of a sudden those subprime borrowers who had taken the free money found themselves upside down, owing more on their new house than it was worth.

It’s not exactly clear how a mortgage broker was able to qualify Phil Fontenot and his wife Kim Monroe for their $436,000 house, from which they run a small day care center. They say they wanted to move to a better neighborhood. A mortgage broker approached the Fontenots and offered to get them a loan. They told her the most they could afford, at most, was $2,500 a month. But the monthly payment on the adjustable rate mortgage she gave them quickly jumped to $4,200.

"Did you understand any of this?" Kroft asks.

"No, not really. Not much of it," says Phil Fontentot, who also says he didn't have a lawyer look over the paperwork.

"But you knew this was a big decision, right? You were borrowing hundreds of thousands of dollars," Kroft remarks.

"I didn't really look at it like that," Fontenot says.

"How did you look at it?" Kroft asks.

"I looked at it as far as my family. I can get my family off of this block," he replies.

"And that we could pay the payments that she said that we could pay," Fontenot's wife Kim adds. "But after it was all said and done, and the paperwork was drawn up, it was something different."

But Matt and Stephanie Valdez say they knew exactly what they were doing when they bought a small two-bedroom for $355,000. They could afford the initial payments and planned to refinance the mortgage before the interest rate jumped to 11 percent. But they couldn't do it because the value of the house had fallen below what they owed on the mortgage. They say they can afford the higher payments, but see no point in making them.

"The house keeps going down, payments keep going up. Where's the logic in that? And how can we fix it? I mean, that's what this whole thing's about for us is how can we fix this? And if we can't fix it, then what do we do?" Matt Valdez asks.

"Why pay a $3,200 payment on a 1200-square-foot home? It makes no sense," Stephanie Valdez adds.

"That's what you agreed to do when you bought the house," Kroft points out.

"Fine. If the value is going up. But we're not going anywhere. The price or the value is going down. It makes no sense because we will never be able to refinance and get a lower payment. There's no way," Stephanie Valdez replies.

"You're saying, essentially, that you're going to stop making payments on it? You're just gonna let it go into foreclosure?" Kroft asks.

"You know, that's the only advice we've gotten so far is walk away from the home. We don't want to do that to our credit. Why can't our mortgage company work with us?" she says.

There is a certain cold logic to just walking away.

Kevin Moran, the real estate agent who gave Kroft the tour of foreclosed houses in the Weston Ranch subdivision, says it is happening every day. They were never really invested. Most of the people who lost the houses didn’t lose any money because they never put any money down. Though their credit is damaged, and they could face legal action in some circumstances, they got to live in a new house for a couple of years, and some of them even managed to get some money with home equity loans or by refinancing.

"Nobody seems to be saying, 'Look, I made a contract with you. I borrowed money from you. I'm gonna do everything I can to pay off that obligation.' People just seem to be saying, 'Look, take the house. Good-bye. I'm leaving,'" Kroft says. "There was a time, I think, when people felt really bad about not paying off a debt."

"Yeah, I think in those days, loans were made by your local banker or building and loan associations or savings and loan. They were guys you saw in the grocery store. They were on the little league team with you, the PTA, the school. And I think as mortgages became securitized and Wall Street became involved, they became very transactional and there was no relationship built with the borrower and the lender. And I think that makes it easier for someone to see it as an anonymous party at the other end of the transaction and just walk away from it," Moran says.

"Just a business decision," Kroft says.

"A business decision that has to be made," Moran agrees.

"It turns out that if you give people free money, they will take it without really worrying too much about giving it back. Because after all, it was free," Jim Grant says.

Asked if it's a case of greed, Grant says, "Greed, sure. Greed on both sides of the table."

"What do you mean?" Kroft asks.

"Lenders and borrowers," Grant says. "Everyone was gaming the system."

That is not to suggest that there aren’t huge losers in all this and much suffering and particularly hard-working people who have lost their dream. Home values are plummeting, and the housing sector - one of the largest and most vital parts of the American economy - has ground to a standstill, pushing the country towards recession.

The Wall Street and foreign investors are now stuck with the millions of distressed properties on Sean O’Toole's map, the unsold condos in Miami, the unfinished apartments on the Vegas Strip, the developments in Atlanta that are sitting idle and the thousand stucco houses in Stockton. Not even Kevin Moran, who has copies of the foreclosed mortgages, can figure out who exactly owns them.

"That’s the fascinating part of this whole debacle we’re in. Mortgages are sold in mortgage backed securities, so they’re pooled. I’ve seen everything from some of the largest financial institutions in the country, and you see 'Deutsche Bank' in a series and a series of numbers and letters to a mortgage pool," he says.

The pools are part and parcel of those high-yield mortgage backed securities everyone gobbled up a few years ago, and are now stuck in the windpipe of the world's financial system. No one wants to buy them, so no one can sell them.

"Bonds marked triple-A are now quoted at 50 cents to the dollar, 40 cents on the dollar. Some of them, much less," Grant says.

"How much on the dollar, do ya think?" Kroft asks.

"Some of them are worth nothing on the dollar. Nothing on the dollar. This is the worst thing that has happened to Wall Street in a long time," Grant says.

Asked how many of these securities are out there, Grant says, "A trillion with a T-plus."

Asked who bought them and owns them, Grant says, "You know, state pension funds, the hedge funds bought them. Foreign central banks own some of these things, if you please. So the ownership is very widely dispersed, which accounts for the general anxiety, and the persistence of anxiety."

Frontline recently did a report on the effect of the online world has on teenagers one of the issues they examined was narcissism and from one study it appeard that America was becoming more narcissistic than ever.

Not only do I agree with that study but I would also add a new term which is financial narcissism. Bottom line is that no one wants to take any responsibility for the decisions they have made.

Aside from people like the Fontenots who had no idea what they were getting into, a large segment of the population were gaming the system and were trying to get a free house plus some extra cash on the side through refinancing and maybe a home equity loan.

Whether these were flippers or serious buyers, they got caught before they could unload. So they act as their own loan sharks and suck out as much as they could from these homes and pull a bust out by walking away from their homes.
It completely took me off guard that callousness of the Valdez’s.

"Why pay a $3,200 payment on a 1200-square-foot home? It makes no sense," Stephanie Valdez adds.

"That's what you agreed to do when you bought the house," Kroft points out.

"Fine. If the value is going up. But we're not going anywhere. The price or the value is going down. It makes no sense because we will never be able to refinance and get a lower payment. There's no way," Stephanie Valdez replies.

"You're saying, essentially, that you're going to stop making payments on it? You're just gonna let it go into foreclosure?" Kroft asks.

"You know, that's the only advice we've gotten so far is walk away from the home. We don't want to do that to our credit. Why can't our mortgage company work with us?" she says.

Then why the hell did you buy the house in the first place? Did you not do your due diligence? Did you not see the worst-case scenario? Did you not take a hard look at finances to see if you could afford this home in the long run?
There is no sense of shame or responsibility. The only thing that matters is what’s in it for me. Although I am alarmed at these attitudes, I can understand where it comes, after all they see these everyone else make a ton of money and be able to walk away from trouble. Why can’t they?

This is no longer an equivalent exchange. What we have now is some heavy interest tacked onto this exchange but I am not just talking the money aspect, I am talking about the emotional, psychological and spiritual interest that this is all going to be with us for a very long time.

Monday, January 28, 2008

A lot this going around.


I have no idea where to begin because it all has been so overwhelming.

In a nutshell the Fed is attempting to head of a recession with a combo one two punch of lower interest rates and stimulus package which includes tax rebates.

A lot of people are unhappy with Bernanke’s approach.

One day after the Fed slashed its benchmark interest rate to head off a possible recession, a small minority of economists warned on Wednesday that the central bank was in danger of invoking the same remedies that it did after the bubble in dot-com stocks burst seven years ago.

Though most experts agree that the economy is on the brink of a recession, and some even contend the recession has already begun, critics say the Fed’s attempted rescue looks uncomfortably similar to the aggressive rate reductions that aggravated the speculative bubble in housing.

“We’ve literally forgotten that this is the very policy environment that led to the housing and mortgage problems in the first place,” said Michael T. Darda, an economist at MKM Partners, an investment firm in Greenwich, Conn. “We’re not going to see another housing bubble, but we could see more inflation.”
Beyond the danger of higher inflation, some analysts warn that the Federal Reserve and its chairman, Ben S. Bernanke, could also lose credibility by appearing to act in knee-jerk response to plunging stock prices.

“They risk being seen as bailing out equity investors,” wrote Adam S. Posen, deputy director of the Peterson Institute for International Economics in Washington. “It makes it look as though stock market fears are driving the Fed to action.”

As for the stimulus package, the objective is to obviously get is all to buy s**t.

The obvious risk is that once people get their hands on the cash, they will apply those funds to their living costs which include home costs and credit cards. But here is where it gets funkier. Let’s say some people were smart enough to exercise fiscal responsibility and managed to get a stranglehold on their spending. Do you think they are going to blow their wad on a flat screen or an SUV? Hells no! They are going to shove all that in the bank somewhere safe. And how do banks make money? They lend it out this money. And here we go again.

However, I am not sure it will ever get that far since banks have tightened up their lending standards and I think everyone will have burned through their rebates to pay off their outstanding bills.

This article in the NYT shows how failure is rewarded in Wall Street.

UNDER the stewardship of Dow Kim and Thomas G. Maheras, Merrill Lynch and Citigroup built positions in subprime-related securities that led to $34 billion in write-downs last year. The debacle cost chief executives their jobs and brought two of the world’s premier financial institutions to their knees.

In any other industry, Mr. Kim and Mr. Maheras would be pariahs. But in the looking-glass world of Wall Street, they — and others like them — are hot properties. The two executives are well on their way to reviving their careers, even as global markets shudder at the prospect that Merrill and Citigroup may report further subprime losses in the coming months.

Mr. Maheras, who left his job as co-president of Citigroup’s investment bank this fall after being demoted, has had serious discussions with several investment banks, including Bear Stearns, about taking on a top management position, people who have been briefed on the situation said. And he has also been approached by investment firms willing to back him to the tune of $1 billion or more if he decides to start his own hedge fund, these people said

I am not really surprised about this. History is littered with infamous figures from Mike Milken to Mel Gibson who have been bad boys and have made the comeback.

What I do know is this that there is a ton of chaos on the horizon which makes this a day trader’s paradise.

And yes. I did catch tonight’s 60 minutes on the subprime mortgage mess and I plan on doing an entry on it tomorrow.

I would also like to do a shout out to Fly Rig. This is a site which is planning on becoming the alternative to Craigslist.

In Flyrig’s words it has broker reviews, searchable local interest information (such as restaurants, stores, and schools), and public transportation information combined together in a Google maps mashup. Users can also rate brokers and comment on their listings, pointing out discrepancies between the description and actual unit, or providing additional information on local interest points.

This is will be a huge help for people looking rentals. In my experience I have shown clients the same apartments they have seen with other agents and of course who gets blamed for that? This site will allow clients to keep track of apartments they have seen.

Tuesday, January 22, 2008


Heath Ledger 1979-2008

I know I should be writing about the stock market. Or other real estate news. But I am just really taken aback right now. I would not call myself his biggest fan but I respected his work and I thought he had a pair of cojones when he took the Joker role. After I saw a clip of his performance as the Joker, I realized this guy could hold his own with Nicholson any day of the week. But at this moment I honestly could care less about his film career.

What really upsets me is that a little girl is going to be raised without her father. He will never see her graduate from high school and never see her get married. And she will never be taught how to drive by her father. And she will never dance with him at her wedding.

Damn it.

Thursday, January 17, 2008

It looks like I picked the wrong week to quit blogging

I haven't quit. I am just going along with the theme of this clip.

So take your pick of disasters. We have Citibank banging on every door possible in Dubai and other foreign countries desperately trying to get cash. And it appears that misery loves company because now other financial institutions are joining the growing league of losers.

Bernanke right now is at precipice of history where whatever he does will not affect his legacy and the country but the entire world. Right now he is shifting through his bag of tricks to find temporary stimulus measures.

Ben S. Bernanke, chairman of the Federal Reserve, has told lawmakers that he can support short-term tax cuts or spending measures to stimulate the economy, even if they increase the budget deficit, as long as the measures are quick and temporary.

Oh this will definitely provide stimulus, for the parties that directly benefit from these measures. In other words the haves, not the have nots.

The New York Times has written an excellent piece on Bernanke and for those of you who believe in interest rate cuts, here is something to shake you out of that dream.

Bernanke also has strong reasons to worry, however, about easing rates too much. Inflation has failed to fall as the Fed expected. (In fact, lately it has been rising.) Also, lower interest rates induce foreigners to switch out of dollar-denominated investments like Treasuries and into currencies with higher yields. Thus, any rate cut would tend to escalate the stampede out of the dollar.

Say goodbye to those foreign buyers.

And of course let us not forget the beatdown the stock market is taking.

On the New York Front, real estate is giving warm fuzzies all around.

Harry Macklowe has screamed uncle by unloading the GM building. This is probably the best option for him at this point. The question is that will he get the price that he wants? The only real contenders are buyers who are drenched in liquidity because if he was having trouble getting financing to hold onto the GM building the there is no way in hell lenders are going to put up the cash for the buyers. And with the current volatility in the market those liquid heavy buyers are going to gouge him as much as possible.

Then we have this little ditty from the New York Times, which was trying to figure out what will be the next phase for the New York City Market. It pretty much covers the bases on the Wall street bonuses being paid in stock, lenders tightening up standards and apartments hanging out on the market longer than usual. It is chock full of interesting information that I recommend everyone to read.

There is one quote that really stood out for me and not in a good way.

Diane M. Ramirez, president of Halstead Property, is less concerned about a recession because the inventory of property on the market is currently low. She said that in the recession of the late ’80s, Manhattan dropped sharply because the city had an oversupply of apartments. “We had a deeper, longer recession than most cities,” she said. “We lost 20 to 50 percent value.”

The operative word here is currently. Which means now. Now inventory levels are low. What about the upcoming year? Can Ms. Ramirez tell me how things are going to be? Does she have a crystal ball? Because I sure as hell can’t tell what is going to happen to inventory levels a year from now.

What I do know is that we are dire straits right now to the point that inflation has hit its highest in 17 years.

Citibank plans on laying off a lot of people and they won’t be alone in cutting the flesh. If the recession hits hard enough, a lot of those people may decide to cut and run especially those who own. It will be probably more expensive to live in New York city since Bloomberg is considering rolling back 7% tax cut and getting rid of the $400 dollar rebate.

And let’s not forget those ARMs and other funky mortgage products buyers used to get that piece of the Manhattan dream. Are owners going to have the money when those mortgages reset?

With these variables and other ones that have yet to make themselves known it is possible that inventory levels could actually skyrocket with people needing to liquidate.

I think Jonathan Miller sums it best.

Another Inman News Real Estate Connect conference is behind us and as a result, I feel more informed, was able to meet new industry people, be exposed to new concepts, was able to see many colleagues, get another Inman bag full of pens and post-it note thingies. In other words, it was time well spent.

Brad Inman provided a great overview of his interpretation of where the market was going to the audience at the close of the conference, which was rational, clear and in many ways, the distillation of all the information and filtered spin that was presented over the previous three days. I need to listen to Brad more often - I wish his summary was available (Hey Joel, how about his summary for Inman TV?)

Housing market direction discussion throughout the conference was essentially presented by two camps which seemed to parallel the ongoing presidential primaries:
· Sales agents, brokers and NAR current and former employees [ie Republicans] — This group is nearly always providing a silver lining because they are paid for their ability to sell a vision or idea. Thats their job. Thats being said, I was surprised at the quantity of pollyanna-isms still peppering the reasoning why housing will recover in 2008. In the last two main session panels on the last day, it was very interesting to hear a lot of discussion about second home units and how they posed no greater risk than primary home units because they weren’t flips (reality check: when someone loses their job, which mortgage payment do they stop first: their family home or the ski lodge condo?)

· Economists and academics [ie Democrats] — There is an old saying that economists are paid to worry. Prescribers of the red light theory (people are more likely to remember the negatives such as all the red traffic lights they hit, rather than the green) love this stuff. The keynote panel discussion was terrific, (Barry Ritholz and Noah Rosenblatt were great at laying it all out) but everyone needed to receive counseling for depression when it was over.

Thats why this period of housing turbulence feels a lot like the presidential primaries. Its all about how the information is presented, whether or not its in the right context and whose interests are being served.

I have a headache.

Thursday, January 10, 2008


Are you really a financial wizard or do you just play one on tv?

This morning on the Today Show Jim Kramer and Erin Burnett were discussing the state of the market and at one point Jim Kramer did not want to mention the word recession for he did not want to feed into the psychology of the market. Then he went on saying the best thing that the Fed could do was lower interest rates because it would jump start the housing market because people would start buying houses again. I can't believe he said that. I wish I recorded it on my DVR, but I will try and track it down.

Did this guy really work at Goldman Sachs? If he did then he was overpaid. Even if interest rates were to plummet to the center of the earth, I doubt it would help the housing market. First of all the majority of the population is tapped out and I am not talking about money I am also talking about their credit, equity, everything. Banks, mortgage lenders and any institutions that were caught in the subprime undertow are only interested in keeping their heads above water.

There is no psychology or mind games being played. This s**t is for real. Even at Real Estate Connect they are aware of the downturn.

If Kramer keeps up with this bulls**t alot of people are going to switch to the Fox Business Channel.

Wednesday, January 09, 2008

Lay The Hammer Down

I still love this show!

Cityhammer is New York's #1 Remodeling Directory which not only lists home improvement providers but also provides ratings for these providers.

Cityhammer is the brainchild of Josh Brown and his amigo Ryan Perrotti who created this site after realizing the need for people to find the best qualified professionals and to avoid the worst ones.

Before the New Year, I had the chance to do an interview with Josh.

1. What motivated you to create City Hammer?

I had a baby in March of 2006. We spent January through March looking for help in turning the dining room in our upper east side junior four into a nursery. We needed a temporary wall guy, a painter to cover the walls, an electrician to do outlets in the new room, a handyman to assemble the crib and changing table, and a baby proofer to make sure the rest of the apartment was safe.

We had the "Big Yellow Book" which is just names and phone numbers,recommendations from friends (wrong numbers, no reliability) and the super/ maintenance guys in the building (the literal definition of "last resort").

Everything online was totally generic, like a digital phone book. Or worse, a lead-generating site for contractors, meaning 3 pages of forms to fill out, then waiting for the highest-bidding contractor to buy your name as a lead and call you when they get around to it (I'm from New York, I don't think so!).

Basically, I felt that in a city of 8 million people, it was about time that somebody built a directory of home improvement providers that was by New Yorkers, For New Yorkers. I developed the site with my best friend and a veteran of the residential Real Estate and Lighting Industry Ryan Perrotti....and was born.

2. What is the objective of your site?

Our goal is to provide a true directory of customer-ranked Home
Improvement Professionals for people in the New York Area. We know we're doing something important every time we see a person who needs remodeling help emailing or calling one of the 500+ contractors and designers who have listed themselves on the site so far.

3. Do you have a construction background?

I call myself "the least handy guy in NY"; I call the super to change the batteries in my remote! My background is actually on Wall Street, but Ryan is definitely more construction-oriented than I am. Basically the site is built for people like me.

4. Since creating the site, what are the craziest stories you have heard?

Where to begin...people moving into brand new condos and ripping out 50 grand worth of kitchen cabinets and appliances for a redo (leaving vikings and subzeros on the curb!) people calibrating the distance from chernobyl to the town in spain where their tiles were made before purchase, lonely housewives complaining about phantom leaks to get a plumber to visit one-bedrooms outfitted with soundproofing for a recording studio, roof-top gardens commissioned and Hell's Kitchen parents in the midwest or on the west coast hiring top shelf interior designers for their recently-graduated sons and daughters' new apartments, sight unseen.

5. What are common mistakes people make in hiring a contractor?

I am constantly amazed at how much thought and time people will putinto researching a movie or a restaurant that will cost them under 100 bucks, compared with how little time the average person spends finding a remodeler or designer to help them create the space they're going to live in for years to come. I would say that a casual recommendation from a friend is not enough when it comes to fixing and redoing a home. Another reason to read up on a Pro is to verify that they are
licensed and insured to do the work you are requesting.Plenty of people will take a job, but not everyone is qualified to complete it.

6. What steps would you recommend people take in dealing with contractors?

I would say get multiple estimates, take a hand in picking out the
materials (wood flooring, tiles, paint colors etc.) and realize that sometimes, "cheap" is "expensive". You may be doing yourself a big favor by going with the mover or electrician or general contractor that comes highly rated and recommended, rather than the lowest bid. The cheap option can cost a lot more emotionally if you're unhappy with the outcome, or financially if the work needs to be redone.

Thanks again Josh!

Monday, January 07, 2008

Death and the Big Mack attack

Happy New Year folks! I am back in action, all I have is a very light cough. This week is going to be insanely busy blog wise.

Teri Karush Rogers has written an excellent article on the emotional trauma of an estate sale. Dealing with the death of a loved one is extremely painful as is the amount of sensitivity associated with selling a deceased family member’s home.

“People don’t maintain a high state of emotions for months on end,” said Thayer Cheatham Willis, a clinical social worker in Lake Oswego, Ore., and the author of “Navigating the Dark Side of Wealth: A Life Guide for Inheritors.”
Family dynamics can be recast for the better if heirs “grow up and realize that they can’t have everything they want,” Ms. Willis said. “That maturation step is when you accept the compromise and accept it with grace — and you see a future that you like. You can definitely come out of it as an improved family.”

As this article has demonstrated, this is a process that takes more time than usual due to family issues and money. That is probably why the passage of time is something that needs to happen in order for the heirs to get their bearings straight.

One passage that really grabbed my attention was the story about two sisters who decided to part ways with their parents’ real estate investments.

Georgea Kapassakis and her sister, Evelyn Capassakis (their father changed the spelling of the family name when Evelyn was born), inherited a trust that included the family home in Bay Ridge, Brooklyn; a vacation home on Long Island; and a number of rental properties. It took the sisters 15 years to finally dispose of everything, with the exception of the Bay Ridge house, which Ms. Kapassakis now owns.
“I felt I was still young at the time and it was too soon not to have any parents; it was too soon for my mother to go,” said Ms. Kapassakis, a speech-language pathologist who was in her early 30s at the time and had 3-year-old twins. “And she helped with baby-sitting, so I had to change my job. Many changes had to take place, and worrying about what was going to happen to the houses was too stressful.”
Her sister, a tax principal and estate-planning adviser at PricewaterhouseCoopers Private Company Services, agreed: “We were pretty much frozen by the inability to undo what my father had put together. He believed firmly in real estate as an investment.”
The pair often found themselves at loggerheads over how to manage the property and whose turn it was to pay for what. “There were times that tensions were pretty high,” Ms. Kapassakis said. “There were many properties, and each one was a headache. We couldn’t handle it personally because we each had our own careers and our husbands had their own jobs. I don’t think we managed it correctly.”
Eventually, the continual stress forced them to part with their parents’ legacy.

I truly believe in real estate as an investment vehicle, however there are certain rules you need to follow in order to be profitable. One rule is that real estate is maintenance intensive. Since you are dealing with a physical product, it needs to be properly managed. Even if you are buying into a REIT, there needs to someone hired to take out the garbage the tenants produce and to collect the rent.

What these sisters actually inherited was another set of newborn babies, which is what managing a real estate portfolio is like. It was their best option to liquidate their parent’s holdings, especially at this stage of the market.

It appears that Harry Macklowe might be in dire straits. According to the New York Times he has a huge 6.4 billion dollar bill to pay.

Awhile ago in a real estate development class, the teacher showed how Macklowe financed the purchase of the GM building. All I can say is that the New York Times article barely scratches the surface of how complicated the financing was.

Will Macklowe be able to pull a hat trick? I have no idea. Obviously with the credit market getting beaten down, it appears that Macklowe’s fundage options are limited. However, this situation reminds me of what happened to Rupert Murdoch did back when he started his American TV Empire. Murdoch had basically leverage himself into a corner, in fact when the payments were due, he showed up to his bankers with news that he had no money and worse he needed more funds in order to keep the business running.

This was a very dangerous time for Murdoch because the bankers could have exercised the option to liquidate everything. In fact there was one banker that was on the edge of pulling down the whole house of cards. However Murdoch was able to persuade them to stick around. From what I also understand what motivated the bankers to cut Murdoch slack was the realization that they were already so deep in the hole with Newscorp they wouldn’t even break even by liquidating now. Maybe this will occur with Macklowe?