Friday was a lousy day for me. It ended with the flooded house I'll tell you about someday. It started with yet another house that is on the market, but not really.

This one is not a foreclosure or a short sale. It is merely a house where the absentee landlord is sick of being a landlord. It’s fully occupied. The agent gave me the lockbox code and confirmed the showing. She told me to knock on the doors. She didn’t call the tenants.

My client and I met some lovely tenants. They were polite and the apartments were clean. They spoke only Spanish. They didn’t laugh at my accent, but then again, I am not sure they understood what I was saying, either.

If you like the direction downtown Boston has taken over the past decade or so, Tuesday was your day.

A wave of sleek, new glass-and-steel condo high-rises has sprouted up on seemingly every street corner, from the Ritz-Carlton Towers off once woe-begotten lower Washington Street to the Mandarin Oriental next to the Prudential Tower.

And the big win by Mayor Thomas M. Menino ensures we will see more of the same as the economy starts to pick up steam.

Under the mayor’s tenure, City Hall's development arm has given a green light to a flood of new condo and apartment units downtown, most of them of the luxury stripe.

And a recent zoning proposal from the Boston Redevelopment Authority, which surfaced just a couple weeks before the mayor’s big victory, sets the stage for more such development.

I guess my post on starter homes inspired Rona to revisit the issue.

Well her great post on Tuesday has got me worked up again on the issue of starter homes.

In theory, starter homes are great. You buy a say, a small ranch, and then as your family grows, you sell it for a modest gain and move to something larger.

But in practice, especially in the Boston area, there are some huge problems with this.

For starters, you may have noticed, builders are just not cranking out those beginner Capes and ranches as they were, say, in the decades after World War II.

Times have changed and so has the Boston real estate market.

The region’s economy has changed dramatically in the past three decades, with the growth of elite industries like high tech, finance and biotech.

High-paying jobs in these fields have drawn in a new and wealthier class of home buyers, helping bid up prices even as lower income and middle class folks have fled to less expensive areas of New England and the country.

Since the discussion about appraisal last week turned into a discussion of the value of “green,” here are a few tidbits about green commercial buildings to chew on:

The Fireman’s Fund made a statement this week saying that for commercial buildings, being not green will be a liability in the future. They offer a 5 percent reduction in insurance for green buildings.

Green buildings can boost real estate owners’ bottom line by protecting and building net operating income, attracting and retaining quality tenants and improving the environment. Simply put, green buildings create a triple net effect, benefitting [sic] the owners’ bottom line, its tenants and the environment,” said David Cohen, senior director of real estate, Commercial Insurance at Fireman’s Fund.

The Fireman’s Fund states these risks for non-green buildings:

OK, I really don’t get the whole 40-B thing.

That’s the 1960s era law that enables developers to override local zoning restrictions in towns where less than 10 percent of the housing is deemed affordable.

The developers, in turn, can them come in and build big new housing complexes that include a significant number of relatively “affordable ‘’ units.

Supporters say it has created nearly 30,000 units of affordable housing over the past few decades.

But there are critics – and there are lots of them – don’t like the law one little bit.

They’ve collected the tens of thousands of signatures to put a repeal of 40B on the state ballot in November 2010.

The landlord-tenant series is on hold while I find a reliable attorney source for you. Keep the questions coming; write me....

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Remember John Dough? For those who are new to the blog, John bought a bank-owned condo to flip in Boston. I introduced him in November, last year. He told you about how he chose his this project, and his financing. He began the rehab in December.

Readers have been asking me how he fared. Most assumed his silence meant he was in trouble. Not so, readers! He is just a superstitious guy who didn’t want to post until the deal was signed sealed and delivered. John closed a while back. He's already looking for the next project. Now that the dust has settled, he sent me the story of his successfully completed first project…

Now, the rest of John’s story:

I wanted to give an update on our success. Budget-wise we did fine. We were way over in electrical, but were way under in painting and cabinets. The snag in the electrical work was that we didn’t properly budget for arc fault breakers and for the number of recessed lights (there were tons.) We saved on the cabinets and painting by doing the painting ourselves and going with a different brand of cabinet than what we’re used to (same quality and look, though). We ran into extra expenses with improving the common area. (We may still get those back from the other unit owners.)

By the end of 2008, refinancing was basically impossible. There are many factors why, but it’s amazing how much things have changed since 2007. It was sell or bust.

Sam Schneiderman, Broker-owner of Greater Boston Home Team continues his Monday series:

As I learned more about real estate and investing, I learned that sometimes a seller will participate in financing the sale of a property if they have sufficient equity. Some will finance the entire sale after the buyer pays an acceptable deposit. Some will give the buyer a second mortgage with favorable terms. When sellers offer financing, a savvy seller or listing broker can use seller financing as a negotiating tool to get a higher price.
Seller financing is most commonly used with investment property and in sales between family members. It can be used in any transaction, provided that it is disclosed to the lender up front. Some banks will provide financing on a short sale or a foreclosed property that they are selling, while others refuse to finance that property ever again.

In a low interest rate environment, some sellers find it attractive to collect a higher rate of interest on a second mortgage than they could collect with a CD or bank account. In a high interest rate environment, some sellers offer low rate financing to make their properties more competitive and attract more buyers. When financing can be tough to get or a property needs significant work before it can be occupied or rented, long or short-term seller financing can keep a deal together.

Personally, I have used seller financing to purchase investment properties with little or no down payment. Since most lenders require PMI (Private Mortgage Insurance) for financing above 80% of the purchase price, I negotiated seller financing to make up the difference between my down payment and the amount needed to avoid PMI or meet loan program requirements. I favor seller financing with deferred payments that don’t start for a year or more.

Sam Schneiderman, Broker-owner of Greater Boston Home team continues his weekly series:

Last week, I discussed renovating my first single family with my fiancé. Like many renovators, we did most work without permits except the kitchen installation, which we understated on the permit to save a few dollars on fees.

I was still a real estate dummy and thought that permits were a formality that allowed the city to track improvements and increase my taxes based on those improvements. Now, after 25 years of brokerage and appraisal experience, I have a very different perspective:

Over the years I’ve seen numerous sales either that cost sellers money or fell apart due to lack of permits. More than a few wood stoves were removed due to hazardous installations. Countless decks have separated from buildings because they were attached with nails instead of bolts. Water damage is common when flashing is not used properly. (In one case, the entire corner of a building, including porches and walls suffered extensive structural damage because flashing was poorly installed.)

Another seller had to cut two feet off a deck before the town inspector would sign off on the permit so they could sell. The worst situations occur when bedrooms are added without adequate emergency exits and there is a fire later or when improperly installed heating systems leak deadly exhaust fumes into living spaces.

So are the outer suburbs doomed to become the slums of future decades?

Or is this just more propaganda from the anti-sprawl folks who want us all to live in overpriced condo projects next to the local commuter rail or subway station?

Here are two interesting, but very different takes.

Sam Schneiderman, Broker-owner of Greater Boston Home team continues his weekly series:
Last week, I explained how my fiancé and I bought a single family after our three family purchase fell apart: a decision based heavily on emotion. We were desperate for a home and liked the idea of renovating and living in an “affordable” single family. We bought an ugly duckling that had nothing but upside potential. It was 1984; we were young, naïve and had “vision”.

There were no home inspectors yet, so we hired a pest inspector. The rest was up to us. The house obviously needed a kitchen, bath and “heavy cosmetics”. Every interior inch needed serious help.

During the hot, humid “dog days” of summer, the smell of cigarettes and the seller’s filthy dog would haunt us, hastening our desire to get the walls and floors refinished faster to seal out odors. Over the next few years, we methodically finished one room at a time when we weren’t working to earn money to put back into the house.

Last Monday , Sam Schneiderman, Broker-owner of Greater Boston Home team discussed how his ideal three family purchase came to an abrupt end. His weekly series continues:

Last week, I described how the seller cancelled my three family purchase because my lender would not commit to financing without having the exterior painted before closing. The seller’s agents weren’t happy that the lender was moving so slowly, and the seller wouldn’t extend the mortgage contingency so that we could explore other financing options. She put the house back on the market and sold the property within days for an extra $10,000.

Fortunately, I gave proper notice and got my deposit back. Unfortunately, it was a month to moving day.
My landlord rented my apartment and my fiancé and I were about to become homeless.

A friend told me about a single family right around the corner from him. We looked and got seduced by the low price and the idea of renovating. Without looking at another house, we made an offer on the spot. We were feeling kind of desperate and thought it would be nice to live so close to my friend.

Continuing his Monday series, Sam Schneiderman (Broker-owner of Greater Boston Home Team) returns to the story of his journey from a real estate dummy to real estate professional:

Around 1984 my fiancé and I were living in a rental while renting out my recently renovated studio that was too small for us. I was getting used to the concept of collecting rent that covered my expenses and mortgage. I figured that if I could do that for 28 more years, I would own the place outright and create some nice income.

We wanted to buy a three family to live in while the rents would cover our PITI (Principal, Interest, Taxes and Insurance). The numbers actually worked back then because prices were not driven by condo conversion potential.

Interest rates were down to 14% from their 18% high, creating a surge of buying activity causing three families to sell quickly at top dollar. Each property that came onto the market came on at a higher price.
We found a solid three family with good apartments, but the outside had peeling paint. We considered that when we made our offer and figured that we could get the outside painted once we moved in.

I welcome back Sam Schneiderman from Greater Boston Home Team.
Today, he is looking back at his first condo, calculator in hand.
In the first two posts of my Monday series describing my journey from a real estate dummy that overpaid for a run down bachelor pad to an experienced broker and investor that bought a family home 28 years later, I reviewed the 1981 purchase and renovation of a studio condo in Cleveland Circle.

Let’s wrap it up with a comparison of the cost to own that condo then and now. The results surprised me.

In 1981 the monthly rent was around $365. The condo finally cost me $31,600 (around 7.2 times the annual rent).

A 90 percent, 30 year fixed rate mortgage at 16 percent was around $382 per month and I estimate taxes and condo fee at around $75 a month. I’m not sure if PMI (Private Mortgage Insurance) existed then, but I didn’t pay it. The bottom line is that the total cost to own the condo in ’81 was around $457 per month.

Today, the neighborhood has gentrified. Monthly rent is $1175. Estimated value is $165,000 (11.7 times annual rent.)

A 90 percent fixed rate mortgage for 30 years at 5.25% plus PMI is $858/month. Taxes and condo fee add another $269 per month with a residential exemption. Today’s cost to own that condo would be $1127 per month.

I welcome back Sam Schneiderman. Sam is a colleague and native Bostonian who will share his experiences and lessons learned during his journey from first-time buyer to home owner, renovator, landlord/investor and successful broker. He is president & principal broker of Greater Boston Home Team. And now, Sam's story, part 2:

When we concluded last week it was 1981 and I had just closed on my first condo in Cleveland Circle, a well-worn student ghetto with weekly apartment break-ins. I bought an unrenovated 1929 studio with the original bath and kitchen that featured oversized orange, green and white flowers on the kitchen wallpaper. Every inch of the place needed serious help!
Sure that I had just made a huge mistake; I started removing layers of wallpaper. My vision of converting that dark studio into a bright open plan kitchen/living area with a breakfast bar, double bed sleeping alcove (stolen from part of the kitchen) and foyer/dressing area with a 7’ closet began to invigorate me.

With six weeks of free rent in another apartment before starting to pay rent PLUS mortgage payments, I was focused on sticking to my five-week rehab plan. When the developer learned that I was removing five feet of wall, he made me hire a structural engineer that took a week to write a one-page report before I could proceed. Kitchen cabinets arrived late, installers rescheduled and flooring finishers never showed up.

Today, I would like to introduce Sam Schneiderman.Sam is a colleague and native Bostonian who will share his experiences and lessons learned during his journey from first-time buyer to home owner, renovator, landlord/investor and successful broker. He is president & principal broker of Greater Boston Home Team, an established boutique brokerage and consulting firm serving buyers, sellers and homeowners in all price ranges throughout urban and suburban Boston. Sam brings us over 28 years of perspective on the Boston real estate scene. He will be blogging here on Mondays.

Since this is my first post, it seems that you should know a bit about what contributes to my outlook on real estate. By sharing some of my experiences, I hope to provide a longer term perspective of the market to our younger readers and bring transparency to my comments to everyone else.

I bought my first condo in the 1981. As a real estate dummy, I paid the asking price of $30,000 for a studio condo with parking in one of Brighton’s first condo conversions because I liked the building. Luckily, I was able to get a below market 16 percent mortgage for 90 percent of the purchase price, while market rates hovered around 18 percent. I would have happily paid 18 paid if the numbers worked for me.

Remember John Dough? You met him on November 6. He bought a bank-owned property with the intention of finishing the renovation and selling it for profit. You heard about his private financing on November 18th. Now, John has a loan, he has a deed, he has a budget. He's picking up his hammer and getting to work.Here’s John in his own words:

Getting to Closing in One Piece: It’s been awhile since I last commented on our progress so here is an update. After we secured our financing we had about three weeks until closing. It was pretty uneventful. Title was clear, taxes were owed, and the water/sewer bill had to be paid. The bank owning the unit agreed to pay the taxes, but would only pay a 1/3 of the water/sewer. So we had to pay the balance, which wasn’t much ($400 or so) and we also had to insure the property which meant that we’d be paying for the share of the other condos in the building that were bank owned. That cost was about $1200 for a half year master insurance policy. We plan to recoup 2/3 of that cost when the banks try to sell their units. With all that going on, we closed about a week later than expected but we weren’t subject to the usual fees that banks invoke when you don’t close on time. We now owned the condo.

“John Dough" has a condo redevelopment project in Boston. You met him here on November 6th. Below, John tells us about how he got his capital in the current finance market:

Before I started this project, a colleague and I were able to obtain financing from a local bank for a different condo “shell” (gutted to the studs.) In that case, they agreed to financing the purchase price including our full construction budget, with us putting down 30% and paying a couple of points.

So, we figured that with this newly found property the same bank would be willing to give us the same deal. No such luck. The financial crisis of 2008 was in full swing and the same deal was off the table. In fact, we contacted several local banks and they either said “no way” or didn’t even bother to respond.

“John Dough" has a condo redevelopment project in Boston. You met him here on November 6th. Below, John tells us about how he got his capital in the current finance market:

Before I started this project, a colleague and I were able to obtain financing from a local bank for a different condo “shell” (gutted to the studs.) In that case, they agreed to financing the purchase price including our full construction budget, with us putting down 30% and paying a couple of points.

So, we figured that with this newly found property the same bank would be willing to give us the same deal. No such luck. The financial crisis of 2008 was in full swing and the same deal was off the table. In fact, we contacted several local banks and they either said “no way” or didn’t even bother to respond.

I am pleased to introduce “John Dough.” He volunteered to tell his tale of flipping a property when the chips are down. Crazy? We’ll see!

Here’s John, in his own words:

I’m looking to find out if a property can be flipped in the next few months. My name is John Dough and over the next few weeks, I will chronicle my progress as I -- along with two other investors -- acquire a property, renovate it, refinance it, and then try to sell it. My personally feeling is that if you buy in a good location, at a price point that works with the comps, and you produce a quality product that is superior to your competition, you can flip in just about any market. Time will tell if I’m right.

How I found the right place:
My favorite search on MLSPIN is by “price per square foot”. I have been looking through that over the past few months and have found some gems. Problem is that the search usually results in a list of properties with street names I’ve never heard of. So I use the interactive map search on the Zip Realty website. I know all the good parts of Boston; I just don’t know all the street names. So, I can zoom into the locations I prefer and can see if anything good pops up. That is how I found this property. It is located in what I would consider an emerging area, as far as desirability goes.

I am pleased to introduce “John Dough.” He volunteered to tell his tale of flipping a property when the chips are down. Crazy? We’ll see!

Here’s John, in his own words:

I’m looking to find out if a property can be flipped in the next few months. My name is John Dough and over the next few weeks, I will chronicle my progress as I -- along with two other investors -- acquire a property, renovate it, refinance it, and then try to sell it. My personally feeling is that if you buy in a good location, at a price point that works with the comps, and you produce a quality product that is superior to your competition, you can flip in just about any market. Time will tell if I’m right.

How I found the right place:
My favorite search on MLSPIN is by “price per square foot”. I have been looking through that over the past few months and have found some gems. Problem is that the search usually results in a list of properties with street names I’ve never heard of. So I use the interactive map search on the Zip Realty website. I know all the good parts of Boston; I just don’t know all the street names. So, I can zoom into the locations I prefer and can see if anything good pops up. That is how I found this property. It is located in what I would consider an emerging area, as far as desirability goes.