Sunday, May 27, 2012

Help Wanted--Real Estate Sales

Here I go, putting my neck in the noose again—but I say it’s time.

And I am speaking directly to the ladies and gentlemen who once thought about getting a license and going into real estate, or those who were licensed but got out of the real estate business because they couldn’t make a living and so found themselves a real job somewhere when the market tanked, I say (with a drum roll please) it’s time to reconsider.

Maybe you remember the old “8 Ball” which was a parlor toy shaped like a pool ball of the same denomination, to which when you asked a question that could be answered by a yes or no—and then turned it upside-down, in a small window on the bottom of the 8 Ball--the answer would appear.  Well fans, today when you ask the 8 Ball about getting back into real estate, the 8 Ball says, “All signs point to yes…”

And those signs are: (1.) growth in the volume of homes sold, (2.) growth in the sale prices of homes being sold, (3.) amazingly low interest rates, and (4.) a general pick up in the retail and business sector.  All this coupled with (5.) a perceived shortage of agents means that newly minted agents will have a real opportunity to succeed, and formerly successful agents should become stars.

Even if you’ve never considered selling real estate before, it’s still a good time to consider this as a profession.  I have been a broker for something over 25 years and I can tell you that if you are smart, motivated and willing to work long hours, you will make a good living.  Even people who are only average—but willing to work full time--will sell 8-10 houses a year.  And that can provide a tidy income.

Let’s think for a minute how Realtors get paid.  Suppose you become a Realtor, and you have a client who wants to buy a house costing $200,000.  After showing the client a number of homes, one is chosen, and you write up the offer—for the sake of simplicity, let’s say the offer is accepted at full price and so it’s $200,000.  You note from the multiple listing services that the other agent (the listing agent—in this example you are the selling agent) is offering 3% to the selling agency, the one that brings the buyer.  That’s $6,000.  Of course you still have to split that with your agency, and for the sake of math, I am assuming you are splitting the commission evenly--but at $3,000 per sale, times say, ten sales during the year, is and annual income of $30,000. 

OK you need to consider that not all transactions are for $200K, and there are deductions: taxes, license fees, expenses of all kinds (auto, phone, insurance and etc.).  My message is you won’t get rich being average.  But if getting rich is not your goal, many agents make a nice additional income for their families.  If getting rich is your goal, in real estate, much is possible.

There are systems, there are coaches, there are Internet lead generators, there are tapes and DVD’s which all claim to grow your business.  In fact there are so many “methods” and goodies to grow your business that you can go broke buying and trying them.  But if you’re willing to pick up the phone or just knock on doors and introduce yourself, you will find business where you never expected it to be. 

Real Estate is a business of knowledge and personal relationships.  I won’t say those patent systems, which promise immediate wealth and fame, are bogus, most have some merit.  But when a Realtor has confidence, buyers—and sellers—can sense that confidence, and that’s the basis of a sale.  Once you make a sale,  you just do that again and again.

Real Estate has been down so long it’s hard to get excited about the immediate future of the business, but now’s going to be a great time to get started. 

Dane Hahn is a real estate professional practicing in NH and Florida.  You can reach him at or on the web at

Saturday, May 19, 2012

Boys and Girls Gone Wild

For the last couple of weeks I have been discussing the countries in Central America which might have some appeal to Americans who would consider becoming "Ex patriots".  Within the column I have referred several times to the book, Atlas Shrugged a novel by Ayn Rand.

It seemed particularly relevant to me as I watch the machinations of our present Administration and Congress. The book explores a United States where many of society's most productive citizens refuse to be exploited by increasing taxation and government regulations and so they simply disappear. If you check the headlines today, people are not so much disappearing as they are relocating.  Major companies are making their off-shore subsidiaries into their new headquarters with a couple of strokes of a pen--for them this changes the tax structure they have to live under.

Individual citizens are researching the viability of moving to other countries to protect the wealth they have built over a lifetime of work and investment.  The dollar continues to cheapen making everything--even  foods and commodities more expensive.  As the dollar "shrinks", the cost of everything increases.  The increases are not smooth, but you'll see, they are coming.  As our Administration allows the printing of more paper dollars you'll be able to watch your weekly expenses grow.  This is the cost we all pay to support the Boys and Girls Gone Wild in Washington.

The news media likes to point to the cost of gasoline as the flag flown to show how bad inflation is--and yet now gasoline is getting cheaper.  But in truth, all prices fluctuate, just note that what's cheaper today will be more expensive tomorrow, and vice versa.  To see what's going on watch the cost of a restaurant meal, or a dozen eggs, or the increases in your insurance bills and electricity at your house. It's like we're all in a big partially filled swimming pool, and the water level is rising. Before long, the shorter ones of us will notice the rising water level, but soon enough we'll all see the effect.

Of course real estate is also a commodity.  Prices of real estate will also rise as the dollar gets weaker. That's a good thing if you are a property owner and have the idea you will hold property for a price increase.  But if you buy a house at market rate today for, say $200,000, and if inflation is at 10% a year, in five years the cost of the same house will be in the range of $300,000.  It seems like you've made money, but the difference is not because the house has additional value, but because our "coin of the realm": the dollar, will have lost that much purchasing power.

And so it is that Atlas Shrugged seems even more relevant today.  In spite of the fact the book deals with the captains of industry, and not so much the folks up and down main street, none the less, the needs and desires of all of us are the same.  The business mavins are led by John Galt into a general strike against the events of the day--not too dissimilar to Greece or Spain or Occupy Wall Street--except on an executive level. Galt describes the strike as "stopping the motor of the world" by withdrawing the minds that drive society's growth and productivity.

In their efforts, these people "of the mind" hope to demonstrate that a world in which the individual is not free to create is doomed, that civilization cannot exist where every person is a slave to society and government, and that the destruction of the profit motive leads to the collapse of society. The protagonist, Dagny Taggart, sees society collapse around her as the government increasingly asserts control.
Rand's heroes must continually fight against "parasites", "looters", and "moochers" who demand the benefits of the heroes' labor. Atlas Shrugged has been called an apocalyptic vision of the last stages of conflict between two classes of humanity – the looters and the non-looters. The looters are proponents of high taxation, big labor, government ownership, government spending, government planning, regulation, and redistribution."

"Looters" confiscate others' earnings by force and include government officials, whose demands are backed by the implicit threat of force. Some officials are merely executing government policy, such as those who confiscate one state's seed grain to feed the starving citizens of another; others are exploiting those policies. Both use force to take property from the people who produced or earned it.

"Moochers" demand others' earnings on behalf of the needy and those unable to earn themselves; however, they curse the producers who make that help possible and are jealous and resentful of the talented on whom they depend. They are ultimately as destructive as the looters – destroying the productive through guilt, and appealing to "moral right" while enabling the "lawful" looting performed by governments.

Looting and mooching are seen at all levels of the world Atlas Shrugged portrays, from the looting officials Dagny Taggart must work around and the mooching brother Hank Rearden struggles with, to the looting of whole industries and the mooching demands for foreign aid by the starving countries of Europe.

Atlas Shrugged is a great work and worth the read.
Dane Hahn is a real estate professional practicing in Englewood Florida,  He can be reached at  See him on the net at

Monday, May 14, 2012

Virtual Paintout

Been Down So Long It Looks Like Up To Me

I’ve always wanted to find a one-handed lawyer.  Not that I want a lawyer with only one arm.   But whenever I ask my lawyer a question he answers me by saying, “well, Dane…on the one hand you could do this, and then on the other hand you could do that.”  I think if he only had one hand, I might get a straight answer.

And so it is that I find myself mimicking my lawyer, saying that on the one hand, the bad real estate market seems to be over. At least in Florida, here the inventory of resale homes is shrinking and the inventory of new homes is growing. All the while rates are still low (albeit mortgages are hard to qualify for just now). 

While on the other hand prices remain low, lower, lowest.  And so while this is awful news for sellers—and coupled with no certain date of a recovery; it could not be better news for investors and new residents in the area, who are picking up nice homes for a song and finding honest to goodness mansions for something less than a symphony.

A great friend who is about to retire called the other day asking me to send her listings of homes for sale on a golf course, with a pool, for under $400,000.  She is a Realtor from Maine, wanting to retire here, and so she honestly understands residence value.  You will smile to hear that there are dozens of homes that would fulfill her list of “must-have” needs, but most are closer to $250,000 than to $400,000.  I told her, “on the one hand there are lots of homes you will like, but on the other hand you may not have to go all the way up to $400K.”

A new client of mine wants a house with every bell and whistle.  Saltwaterfront with a dock, plus a pool, plus high ceilings, plus granite, plus multiple garage stalls, plus, plus, plus.  The houses I first found all seemed to lack one or more of his “touchstones”.  Then I found among the expired batch of homes in the “once for sale for almost $2 million” group, one that looks now like it will be perfect for him and his family--and is for sale by a bank for about one fourth of the original asking.  So on the one hand these special houses are out there, but on the other hand, they’re hard to find.

In the good news column, I closed on two houses one day last week.  It seemed like old times again.  I had almost forgotten the excitement of bringing two contracts to the table the same day.  And since that day last week it has occurred to me that Richard Farina’s book title; Been Down So Long it Looks Like Up To Me. Applies to most of us in the real estate business.  To wit: any good news just seems spectacular, while bad news is expected.  Nonetheless, I am hearing more good news than bad right now, and hoping that the marginally good news regarding a general increase in employment will continue to boost the real estate market. 

On a sad note, Richard Farina, the author of Been Down So Long…never lived to experience his own wild literary success;  he fell off the back of a motorcycle on the way home from the publication party for this book, and was killed instantly.  So on the one hand, his life was just getting good, and on the other—well you get it.

Dane Hahn is a real estate professional practicing in Englewood, Florida.  You can reach him at or by phone at 941-681-0312.  See him on the web at

Paying Off the Mortgage--Good Idea?

My wife and I spent a few days visiting a great friend, a single gal who is only a few years from retiring from a teacher’s position in a school district in Maryland.  She asked me—after a few glasses of wine—the one question that I hear all the time, “should I pay off my mortgage before I retire?”

This used to be the American Dream—to retire almost debt free—but with all the options that we have now, maybe it’s not so much today.  And so, the right answer is, it depends.

There are a ton of variables related to coming up with the right answer, and of course I won’t print her financial information here, but the things we discussed and that will make a big difference are, what kind of income will you expect to have after retirement, and what expenses can you anticipate—from where you sit today?

If you have recently refinanced your mortgage, so that it is in the 4-5% range; if you will retire with a good monthly income; if you will qualify for social security and medicare concurrently with your retirement; if you have some savings that can carry you through any lean times; if you are healthy and have a family history of longevity; then you might want to evaluate paying off your mortgage.

The real question is, is it smart to pay off the mortgage, and thereby eliminate the monthly housing expense, by spending real cash to do it?  And of course this presupposes that you will want to live there for some time and that the house is neither too big or too small, that it is in the part of the country where you want to stay, and that you can’t imagine there will be any expenses relative to the house that will come as a huge surprise over the next few years—like a new roof or the like, which might make you wish you still had your cash.

Here’s what I see as the most important elements of her situation.  What is the rate of interest she’s earning on her savings account compared to the rate of interest she’s paying on her mortgage? All other things being equal, if you are paying 5.5% for your mortgage and earning less than 1% on your savings, then your money would be better used by eliminating the mortgage.

But would using your cash to pay off your mortgage leave you with enough of a cushion to live on for the rest of your life (or until you decide to sell your home at some point and use the equity/proceeds to cover living expenses – if you should decide to do that).

Let’s look at these elements individually.

As for the interest rate comparison, it would seem pretty clear that using some of your savings to pay off your mortgage makes good financial sense. I’m basing this conclusion on the assumption that using some of that money to pay off the much higher interest rate mortgage (even after factoring in the income tax benefits of it) seems logical to me.

Probably the harder part of this decision is whether or not the cash left over (if you do pay off the mortgage) would be enough.  If your annual expenses are under control, the question to be answered is whether or not those expenses can be covered by the fixed income sources (retirement, social security, savings, and other income if any). If they can, then keeping a 6 month cash cushion may be sufficient (knowing of course that if push came to shove, you could sell your home at some point and get the equity back out of it to live on). On the other hand, if you would need to tap into your remaining funds to supplement your income sources, then the decision may not be so straightforward.

And then there are the conspiracy theorists who think the Administration and Congress may throw all of us a curve, and the value of the dollar will melt away.  But even if we suffer high interest rates and rampant inflation, the only real effect that would have on paying off a mortgage is that your savings will earn a higher interest rate, and the cash value of your house will go up.  There will be lots of other problems, but not in this example.

Any devaluation of the American dollar notwithstanding, after weighing the payoff decision, if you still aren’t comfortable with what to do, my opinion is  you should get with a Financial Planner and crunch some of the numbers specific to your situation. It will likely cost you a little bit to do that but the expense will be “short money” and may well be worth it in the end.

Dane Hahn is a real estate professional with Tarpon Coast Realty in Boca Grande, Englewood and Sarasota.  He can be reached at or 941-681-0312.

Moving to Central America

As I was saying last week, some friends and I supposed that if our American Political Administration became any more socialistic, as some pundits presume—and depending on the elections of 2012--there might be a small exodus of “movers and shakers”.  The decision to go somewhere outside the US would be a function of life being so different here that men like John Galt and Ben Franklin would find it impossible to live the life we have come to cherish and the life our fathers and grandfathers envisioned when they fought WWI and WWII. (And Korea and Viet Nam)

This column is a continuation of the one I presented last week, and deals with the “what if” of where a businessman, still either employed with a day to day responsibility to employees and family, or partly retired might consider living, outside of the United States. You may not have given this much thought for yourself, but even if you only watch HGTV's “House Hunters International”, and wonder what it would be like to live outside the US, you share in this fantasy.

The countries that seemed to be the most likely were generally in Central America. The five countries that were discussed were Costa Rica, Panama, Equador, Colombia, and Belize. Of course Mexico and Honduras have many appealing areas too. One of our group liked China—but try learning the language…

Everyone wanted ease of access (location and airports), a lower cost of living and taxes, lower cost and better availability of land, and like the Pilgrims, we wanted to see the success of other Americans living there, including ease of language, and stability of currency. Also the quality of life is a key to making such a move, our discussion touched on the relaxed atmosphere and living amidst a culture that’s less obsessed with work and consumerism. There’s less government intrusion, fewer lawyers making things difficult for everyone, and—despite what the popular media would have you believe—lower crime rates.

The atmosphere differs from country to country of course, which is why it makes sense to follow the advice you hear so often: live in a place for a while before you buy real estate there. Places that seem perfect on vacation may not be perfect for an entire year.  Our group of potential ex-pats is actively planning familiarization trips before the 2012 elections, just to be sure; but I stress, they are doing all this, “just in case”.

Weather itself is a key factor for many expatriates. Panama City and parts of Mexico can feel like Florida in the summer. But it can get downright cold and damp in some Central American mountain regions. Some prefer the “eternal spring” climate you get in the highland mountain areas of Panama or Ecuador, venturing down an hour or two to the beach a couple times a year. Others want a permanent beach life, with sun and sand every day of the year. Our group didn’t want to be in ski country of Argentina or Chile, but you might. If you are thinking about such a move, make sure you evaluate your preferences when picking out potential destinations.

What’s most appealing in Latin America may be the pace and culture, and the reduced cost of living is a major factor as well. Whether you are young and your income is low, or retired with a fixed income, you can easily cut your monthly cost of living down 30 to 60% without making a lot of sacrifices. It’s possible for a couple to live on less than $1,000 a month in Ecuador or Nicaragua, and still have a great life, but bump it up to $1,500 or $2,000 a month and you’ll have a maid, a gardener, and one or two restaurant meals a day.

The cities of wealthier countries such as Argentina, Chile, or Mexico will cost far more than those in less developed countries, but you will still spend less overall for a better quality of life. We were less interested in living in major cities like Buenos Aires—but even that doesn’t cost what it does to live in vibrant New York or London: the cost is more in line with living in Des Moines or Tulsa—but with a lower tax bill.

Even in nearby Mexico, only those who live in fancy beachfront penthouses or in gated American-style housing communities are paying anything close to what they would at home. Away from Mexico’s coastal tourist zones, finding a nice two-bedroom apartment for less than $500 a month is not difficult, and usually that’s with utilities included. A typical locals’ lunch will be two or three dollars. In most areas you can easily do without a car.

Where my friends will go will depend on so many things; expected level of comfort, the choice of the countryside or a city, and how much living space is needed.  Some folks claim they are willing to live like a local, but in fact I would not expect to see my friends with dirt floors and an outhouse…but rather a gated and walled-off main house with one or two casitas and some land for crops.  You’ll see plenty of both from Mexico down through the tip of Patagonia.

My research indicated that the cheapest overall, while still being attractive places to live in Central America, would be Guatemala, Ecuador, Nicaragua, and Honduras (apart from popular Roatan), while Panama is less expensive as a renter than an owner. Prices there have risen rapidly in the past decade. If you just heard about buying in Costa Rica, you’re about 20 years too late. An ocean view building lot that would cost a half million dollars in Costa Rica, for example, would be more like $50,000 in Nicaragua. There’s a similar differential in home and condo prices. Subtract a zero when you cross the border.

For South America, the least expensive countries with a sizable expatriate population are Ecuador, Peru, Uruguay, and Argentina—in that order. Brazil’s currency fluctuates like a small boat on a stormy ocean, so it’s a tough one to classify. Chile gets more expensive each year, but has the best infrastructure.

Remember that Panama and Ecuador use the U.S. dollar as their currency, so you don’t have to worry about exchange rate changes in either of those. The Belize rate is pegged at a steady 2-to-1 exchange. Mexico’s rate can vary 30 or 40 percent from year to year. In many Latin American countries with their own currency, rents are usually listed in local pesos, but if you buy property it will be negotiated in dollars.

Is any of this going to actually happen? Will this band of Floridian snowbirds live up to their
Plan, or is all this just a cocktail induced conversation?  Time will tell.  But as I say, they are discussing their “life boats” and if the time comes—they will be prepared.

Dane Hahn is a real estate professional, you can reach him at  or by phone at 941-460-8979.  See him on the web at

Sunday, May 6, 2012

Where Would You Go if the S**t Hits the Fan?

Sitting around the pool the other evening—with a very high end group of businessmen, the topic of our conversation turned to: where would you move to if living in the USA became difficult? And by difficult, our conversationalists meant impossible in one way or another. The worst case in our discussions would be if the American administration became fully socialistic to the degree that personal property was confiscated—but the discussions were longest and strongest in the “more likely” category—in which we assumed extreme inflation brought on by a cheapening dollar and possibly default on government loans.

The players in this circle were financially able to live anywhere, but they each prefer to say where they are—for now.  And where they are in the winter is Florida, but they also have homes in various locales around the northern states in the US.  These are conspiracy theorists, who are already hoarding precious metals.  This discussion was about their personal “life boat”, where they would go if getting out of the USA and going somewhere else to live for some time became important.

You may not have the same drive they do, modifying the Marine credo, “when the going gets tough, the tough get going”  but even if you only watch HGTV's “House Hunters International”, and wonder what it would be like to live outside the US, you share in this fantasy.

What would it be like to live there? And where is there? And who is John Gault? Questions for thought.

More and more people spend their days working from home—employers are happier today not to have to provide a desk and phone for workers who can do as good a job working from home.  It’s a double win--for the employer, he saves the costs of providing space for the employee—and the employee can save the commute, and maybe the cost of day care for a child while he/she works from home.

As I say, the guys around the pool could afford to live anywhere.  And so the conversation wandered, but the topic was: “Why don’t I find a place to live (just in case) and prepare to work from there. The short list of places that might make sense to the group were warm and not too far from Florida. They discussed Costa Rica, Panama, Columbia, and Equador. Most of this selection came from a thin knowledge of the cost of living in each country, the beauty of the natural topography, the language needs, and the safety of the economy and political outlook. So there is a bonus if Americans are already there.

Even plain vanilla retirees have flocked to Mexico in the past decade. Some half a million U.S. citizens are living there full time or close to it. The Social Security office says more checks are sent to Guadalajara, Mexico than any other city outside the US. But other sunny spots have also seen a huge influx of retirees, including Costa Rica, Belize, Roatan Island in Honduras, and the highlands of Panama.

More intrepid adventurers have ventured further south to Ecuador, Argentina, Uruguay, or Brazil to take advantage of great buys on real estate and cheap salaries for domestic help. In recent years these retirees have been joined by younger and younger expatriates who are taking advantage of the ability to do their job from anywhere with a high-speed Internet connection. These younger residents don’t receive the same incentives that retirees do, but with the cost of living a fraction of what it is in more developed countries, they still come out way ahead.

Here are some of the factors to consider and resources to check into when thinking about a move to Latin America, either on a sabbatical or as a full-time residency:

Costa Rica used to offer incentives to rich (by their standards) gringos to move there and watch the foreign investment flow in like a river. It worked so well that they finally stopped offering the incentives and didn’t even grandfather in the people already living there. But the construction crews didn’t miss a beat. The momentum kept going. So some parts of the Pacific Coast of Costa Rica are now more expensive than parts of the U.S., fed by a property bubble caused by “crazy California money” flowing down south.

But many other Latin American countries still offer great incentives to expatriates. There is usually an age requirement—though this can be as young as 45 in some cases—and residents must prove an ongoing income over a certain amount per month. This amount is high by local standards but low by first-world standards: $1,000 a month in Panama and Nicaragua, $1,500 in Honduras, and $2,000 in Belize for instance. Nicaragua will actually waive the age requirement if your income is high enough and Honduras will waive it if you invest $50,000 in a business that employs locals.

If you can meet the official requirements—including a letter from police stating that you haven’t been convicted of a felony—you get a whole basket of goodies. These may include a fast-track residency permit, duty-free importation of household goods, reduced or eliminated property taxes, a tax waiver on construction materials, cheaper medical care, and even discounts on travel and entertainment.These vary from country to country.
More on this topic in next week’s column.

Dane Hahn is a real estate professional practicing in Englewood, you can reach him at  or by phone at 941-460-8979.  See him on the web at