Show Me the Way to the Kabuki Theater: Adventures in Property Management

I recently met with a young relative seeking my advice about the possibility of launching a career in real estate. How do I compress what I have been doing the last thirty years into a coherent narrative of “career?”

I entered this business with eyes tightly shut and a leap of faith that my best friend from high school really knew me well enough to trust that this was work I could do. Bicbic had a silver tongue and could talk anyone into doing anything. In her real estate dealings, she could talk anyone into buying or selling just about anything, skills she had refined by selling horse property in Southern California.

So, in I went shadowing my friend to learn the business. My problem was she was determined to throw her all into the big ticket speculative land investment bucket and I had not even learned to sell a bucket for a lean to.

Fortunately for me, Bic’s prima donna ego was bruised by our broker and she threatened to move both of us to another brokerage house. I am not one for threats. I don’t like it, we don’t get along, let’s move on. The broker we had chosen to migrate to was a meticulous task mistress. I moved on (Bic stayed behind when the original broker capitulated and agreed to her earning larger commission splits, private office, etc.) and learned to enjoy the more nuanced pace of finding homes for families. The interaction with people and even the detail involved with contracts made for a balance of physical and mental skills I enjoyed.

My growing family of husband, toddler, and pre-teens had me re-route into a couple of career turns before finding a niche in property management, an animal unto its own in real estate. I honed my skills in people management with the wonderful, colorful characters who rented in Guam’s equivalent of a mid-city apartment complex and their equally unique business counterparts.

There was the housewife who burned her kitchen not once, but twice, and had to be asked to leave, totally oblivious as to whatever would cause us to do that.  There were the gardeners, the mechanics, and the little old Kim chee maker who fermented her highly praised wares in her bath tub and sold them to her neighbors and probably to the mom and pop store in the neighborhood, too.

There was the flash flood requiring an evacuation of ground floor occupants in a tiny rowboat. The tenant who vanished causing us to post notices on the door and to a last known address before we could clear out her apartment and dispose of her effects. Did she meet her demise while traveling with no one left behind to be notified?

Then there were the aging oriental ladies, one in particular who layered on make up kabuki style whom the maintenance manager nicknamed “Mama San.” That manager too was a character in his own right. Divorced from a southeast Asian wife, he had put in time as a Buddhist monk, yet loved to crank up the volume worthy of the Wagnerian tunes he favored.

As I shared with my young cousin, this kind of work entails more counseling than any other skill I possess. I have done everything from cautioning wide eyed young “businessmen” about the dangers of under capitalizing their ventures; trying to find help for an aging resident with no local support system who was exhibiting signs of dementia; to driving to the site of a raging fire fueled by liquor stored in the warehouses that had contained them. There was marital friction, roommate and elder bullying, mediation of all stripes, the entire gamut of human foibles and emotions. I am still grateful that I did not have to deal with “remains.” I guess I can claim that no one died on my watch (on premises, at any rate).

I am certain there are more tales to tell but will refrain at this time. They were interesting times! Thus concludes the re-telling of the first half of my adventures in real estate.

The Problems with Guam

Astute insight into our problems in paradise. We truly need to put more effort into keeping our spaces clean and litter free. NO DUMPING!

Freedom is Never Free

July 21, 1944 was the beginning of the battle for the liberation of Guam. The only U.S. soil captured by enemy forces during WWII, the Chamorro natives of Guam endured extreme suffering and privation during two and a half years of Japanese military occupation.

This sixty-ninth anniversary of the celebration of freedom from captivity finds most survivors of that time gone to their eternal reward. Those of us still living today have fewer direct links to the people who were exposed to the horrific conditions of that time.

My mother, God rest her soul, gave very few details of that time. Garrulous and a lover of conversation, the rare tidbit she shared about that period consisted of their family’s flight into the deep of the jungle to keep her and her sisters away from Japanese soldiers.

It was typical of the survivors of Guam’s occupation by Japan’s imperial army to keep their stories tightly within themselves. Sometimes among each other they would reminisce, but there was an almost unspoken vow to silence. Perhaps it was survival mode continuing to blot out the unpleasant. A desire to shield their children from the ugliness of that time and war.

My uncle, my mother’s younger brother, did eventually share some of his adventures with my grandfather at that period. This was over fifty years later and had echoes of the lost innocence of a twelve year old boy. Flights into the hills to elude occupying soldiers; foraging for food; running to his sisters to warn them of approaching enemy and to assure that dirt was smeared on their faces to hide any hint of beauty that might attract unwelcome attention.

This uncle went on to fight in the Korean War. Knowing his history now, I think his PTSD (post traumatic stress disorder) had its genesis when this young boy lived through the Second World War with an air of bravado to hide his fears.

The sixty-ninth anniversary of Guam’s liberation from bondage should be celebrated. Honor the memory of the brave soldiers who gave up their lives for freedom. Honor those who died at the hands of cruel interlopers. Honor the survivors who lived to form families and pass on their faith and strength to offspring. Honor freedom in a country that epitomizes true democracy. But remember also that democracy and freedom last only as long as its citizens are vigilant. Do not allow your freedoms to be eroded in the name of safety, health or equality.

Happy Liberation Day, Guam! Remember that liberty is a gift from God.

Hold or Fold?

Guam landowners have what might be considered an impractical approach to their land. Coming from the clan perspective where extended families settled together on “mutually owned” plots, individual titles were not a common practice. This stems from a combination of thrift and a suspicion of the land registration and legal systems. This has led elder land owners to hold unimproved property at almost all costs. The desire to make some money, but to never sell has led families to enter into long term ground leases generating very little revenue. This ultimately derives limited financial gain to Guam families for several generations. But the goal of never selling family land is achieved. Done properly, lease or sell decisions can be made to benefit current and future generations.

What to do when faced with the opportunity to either sell or lease a parcel of land? First, hire your own advisors. A real estate professional can assist you in determining land value both for sale or lease. A Realtor (R) can prepare a valuation commonly known as a BPO (brokers’ price opinion) or a CMA (comparable market analysis) often at no charge. Do note that these reports, like real estate appraisals, have a very limited time of usefulness. They give an opinion of value at the time they were prepared. Do not rely on valuations older than six, preferably three months.

Take the valuation information prepared by the real estate professional and have a finance expert run analyses to determine whether a lease or sale is more beneficial to your current situation and future plans. This is the time to discuss your financial goals. Tax planning advice may be warranted, as well, if large sums are under consideration.

There is a third option possible and that is a tax deferred exchange, also known as a 1031 exchange. But that’s for another post.

Hire experts who will work for you. In this information age there is plenty of help to enable you to make informed decisions. Decisions that may impact your family for a very long time.

Casting Shadows

We don’t have much need in the tropics for a rodent who leaves his burrow to predict the progression of weather. In recent days in Guam we have enjoyed some very welcome cool air and breezes. The optimists smile smugly and enjoy the wearing of fashion of the non-tropical variety. The pessimists claim that this is the herald of the ice age; the end times, the (fill in the blank).

In the time it takes for a groundhog to pop out of his tunnel, the first month of the year seems to have come and gone. Spring cleaning looms along with the other harbinger of Spring, tax filing time. This chore can cast shadows of its own, especially if, like me, you have not kept your accumulation of papers and receipts up to date. Before you agonize yourself into paralysis, consider things that you can do in the short term to save you money. Sure, you can look into switching to a hybrid or smart vehicle to save on fuel. You can program your hot water heater to cycle on and off at specific times. There are numerous other steps one can take to save on everyday living expenses. But we’ll save those for the frugal living, smart money blogs.

An expense often overlooked by homeowners is the home tax exemption, a portion of property value exempted for the privilege of living in and maintaining your primary residence. This is a benefit not available to everyone everywhere. Check your state and local real property assessor for availability in your area. Guam is fortunate in that there is a Home Tax Exemption available to homeowners. The Government of Guam has a formula that roughly exempts the first $50,000 of the assessed value of the improvements (your home) from property taxes.

If you do not currently have this property tax exemption, complete the Home Tax Exemption form which can be obtained from the Department of Revenue and Taxation, Real Property Tax Division. Do it soon. The deadline for submission is March 15, to be eligible for the exemption this tax year.

A similar exemption is available for senior citizens age 55 and older. Again, this is only available for the home you live in. Other requisites include a Guam minimum residency requirement and qualifying of the property.

Sunny without shadows. Spring is looking up, after all!

I Can’t Have a New Car?!! Note to Property Virgins

Are you considering buying a home? Have you looked through home magazines, studied architectural styles, gone on line to see what is for sale and at what price? Preparation for home buying begins well before any of these activities take place.

Preparing to buy your largest, longest term investment begins when you deposit the first paycheck from your first job; you buy your first item on credit. Your credit history, which is really what a credit report is, will affect the amount you can borrow. It will also be a big factor in the interest rate you are offered on loans.

Save, save, save! Even if you are able to qualify for a low down, no down mortgage loan, there will be application, closing, and direct costs you are expected to underwrite. If not used for your home purchase, the savings will come in handy when you discover that window coverings, appliances and many other items needed for home occupancy are not included with your home.

Banks will look at your credit report, job history, outstanding loans. You should be in your current job for at least two years and have been careful with how you use credit. Go to your bank, since you already have a relationship, to get a pre-qualification worksheet from the mortgage department. You may also want to check out another financial  institution for comparison. Make sure it is a preliminary qualification only and that your credit report is not pulled at this time.

Use the amount your have been pre-qualified for to check if prices for houses you would like are within the range your bank has suggested. A pre-qualification is very preliminary, using only your income and debt information. An actual loan application will determine if your credit will qualify you for a loan and will involve your payment of a fee.

Learn about homes for sale in the community, the prices, the sizes of homes and lots. Look at what other homes such as condominiums are going for, as well. Condos are usually lower priced than single family homes. Oftentimes, they are what you can buy within your price range. Your first home is usually the hardest to buy. With no track record, the banks want to make sure that you can afford your monthly mortgage payments and living expenses.

Now that you know how much you can spend, the fun, or frustration, of finding a home begins. Find yourself a good real estate agent. A Realtor(R) is an agent who is a member of the National Association of Realtors and subscribes to a higher standard of practice. Ask for recommendations from friends or check on line and follow up with a phone or personal interview. If you are comfortable with an agent, they listen, and seem to understand what you want, then begin to schedule looking at homes.

Once you have found your home, made the offer to purchase and had it accepted by the seller, you will begin the loan process. If your credit meets the bank’s requirements, the home then needs to qualify. This is the process whereby inspections, if you have requested them, are performed. The foremost report is the appraisal. A professional appraiser will be engaged by the bank to determine the value of the property.

If you and the home have overcome the qualification hurdles, you are on your way to home ownership. Be advised that the bank will perform one last credit check immediately before closing on your purchase.

The moment you submit your loan application, be very conscious of anything you buy on credit. It’s easy to get carried away with new furniture, appliances, even a new car to park in your new garage. Buyers have discovered to their deep regret that shopping while their mortgage is being processed is not a good thing. The bank can yank the rug, and the house it is in, right out from under you. Your loan is processed and approved based on the condition of your credit at the time of application. Significant changes can affect your credit worthiness. Be wise with your use of credit.

Home ownership is still one of the best investments you can make. Something you own will always have more meaning to you than a temporary abode. You can make improvements as you wish and the mortgage loan interest deduction is still one of the American tax system’s most revered ways to reduce your tax liability. Biba home ownership!

Is Your Home Ready for Prime Time?

You probably know that some planning is needed to prepare a house to be sold. But are you aware that this is an ongoing process for as long as you live in your home? Here are some considerations for you, the homeowner. Even if you say that you will never sell your home, you will live in it forever, consider the legacy you will leave behind. You will rent rather than sell? The same things apply.

We pay a lot of attention to staging a home to sell. Staging, for those who do not watch HGTV, real estate, and  home improvement shows, is the art of preparing a house to be sold on the real estate market. Staging is similar to interior design but serves only to highlight a property’s appeal by emphasizing the space, defining functionality, and enhancing the overall attractiveness of the living areas. It entails the removal of clutter and the strategic placement of a few pieces of furniture.

Curb appeal is the appearance of a home from the outside. This consists of assuring that the exterior paint and trim are bright and fresh; walkways are clean and clear; grass is neatly cut; plantings and trees are trimmed with all cuttings removed. When customers drive up to see a property, their first impression is the defining moment of  how, or whether, a transaction will occur. You can compare this to the impression you make upon arriving for a job interview. I have had customers ask me to drive on past a house they perceive is not going to meet their expectations. Curb appeal is product packaging for real estate.

I must emphasize how important it is to get a house ready to go on the market. Preparation will bring buyers to see it and get the best price for a home. Care of your property should be an ongoing effort. We live in a harsh tropical environment so paint, roof coating, wood maintenance, insect, rust and mildew prevention are a regular battle to keep up. Home maintenance will pay off in the long-term.

Home improvement is another area in selling that is often underestimated while families are living in their homes and enjoying the fruits of their labor. Home additions and extensions are a common occurrence in our family centered community. The family grows, and in Guam, where moving up to a larger home is not often considered, you decide to add another room and then later, another. Get the proper permits. Hire a reputable contractor. Pay the money to get your improvements done right. Add only quality renovations that will truly improve your property. At a minimum, make sure that additions are within the legal setbacks for your property. Act as if the Department of Public Works, or other regulatory agency, will cite you for improper building activity. Someday enforcement will be promoted.

Look at your home as an asset you may some day want, or need, to sell. It is disheartening to inspect a house that the owners need to sell quickly because of a legal or medical emergency. Walking through, I oftentimes need to point out the setback problems, the substandard extensions, the additional kitchen in the extension because a “little rent” could be collected for extra income. The additions are usually not appealing and buyers hesitate to offer to buy this type of property. These are all issues that can impede a sale where bank financing is involved. Even an improperly sited fence can affect buyer and loan approval. These homes end up being sold, greatly discounted, to a cash investor. Quite often they go into foreclosure or are ordered to be sold in bankruptcy court action. Not selling, you say? A refinance is still bank financing.

Buyers who can offer the highest and best price for a house normally need to finance their purchase. Gambling on a cash buyer to purchase your home is just that, a roll of the dice. A cash buyer often has a specific amount of cash to spend so you won’t be getting top dollar from that source.

Always be in a position to readily sell your house if it becomes necessary. It is often your greatest asset. Treat it as such and you will reap the rewards that careful planning will accomplish.

Who Owns This Land?

People new to Guam will often comment about the large amount of unimproved land on the island. ” Why is land to buy so scarce? How can you say land is scarce when there is so much undeveloped boonie area? Housing shouldn’t be so high when there is so much land. ” These are some of the comments I face when taking around customers or newcomers to the island.

Why does it appear that we have all this excess land that no one is motivated to develop? Guam landowners think the highest and best use of land is to “preserve it for the kids, the next generation.” Land ownership is probably the last stronghold of the original clan system from Chamorro society. Chamorros shared everything in common, including land. Families lived together in a compound on land owned by an elder, usually a grandfather. Land ownership is a western concept that grandparents were still struggling to wrap their minds around. Most dealt with inheritance issues by not addressing it at all. Even in this current time, probates for family members who left no provisions for inheritance, continue to be heard in the courts. In my own family, nearly fifty years after my grandfather’s demise, probate of his estate continues to inch its way painfully through the legal system. He left behind seven children, one having already predeceased him. His youngest daughter, my aunt, is the sole child left and remains to untangle the morass of claims and issues.

Most of these issues are emotional. My grandfather had sons who left the island in their youth. They left to escape the hardscrabble life of farming in Guam. His sons joined the military or became merchant seamen. His daughters left because they married husbands who wanted better lives for their families, as well. Once my grandfather died, there was nothing left but these lands in Guam to connect my relatives to their roots. Why did my grandfather not leave provisions for property distribution, then?

In my grandfather’s case, I think he did not see a reason to embrace the American way of land ownership. My mother once told me that  my father had asked my grandfather for title to a piece of property so he could build a home for his family. My grandfather’s reply to him was to go ahead and build where he wanted, it was all right. My father, however, having lived in the US of A, insisted that title transfer needed to take place before he would invest in building. My grandfather did not relent, and died intestate, leaving his heirs nearly fifty years later still trying to figure out whether to sell his final huge parcel or subdivide and close out the probate once and for all. Pop lives on if only because his various children, and now, his grandchildren, still cannot agree on the best move; some still reluctant to sell property and distribute cash from sales proceeds instead. Never mind that property already distributed has generally already been sold by his various heirs.

Yes, a lot of land remains undeveloped in Guam. Most is probably tied up with a story such as my family’s. The cautionary take away here being to make provisions for accession of your real property.

RE-MAzing Race, or How to Build Up Your Team

Yesterday was team building day for my office. Each quarter during the year, a different department plans the activities and potluck that will help our “team” bond and become more effective in working together. We have participated in tag team kayak paddling and tugs of war, along with other cooperative events.

This event was “RE-MAzing” race. Patterned after the amazing race reality program, it is an update of the scavenger hunt. We did not find objects to bring back, but rather, clues to get us to the next location. The different department personnel were mixed together, but it still came down to who could run faster, seek quicker and think ahead better than the other teams.  A few participants have revealed, however, that they merely followed the teams ahead of them without finding/following the actual clue. Expediency or laziness? What was actually gained here? Is this a playing out of what takes place when we sell real estate? The expression “work smarter, not harder” is the mantra in the real estate business. Were these team members just following through with that call?

I don’t know how well we’re doing with building up our team, but if getting out in the open and loosening up some muscles is a measure of success, then I suppose we are doing well. We still have to work on getting everyone to arrive on time so we can begin as planned. We’re working on it. It’s called “team building.”

Please Meet the Artistes

Manamko art community in Guam

2011 ATTEOGM – Poster_19 Jul 2011

Getting ready for an “elder” art show I’ll be showing in. Manamko is the Chamorro (Guam’s native tongue) term for elders. It’s a very enjoyable time for me and my fellow art workshop participants.