Working with a Real Estate Agent

One of the key members of your real estate investment team will be your real estate agent, if you do not already have a real estate license. Real estate agents are typically paid by the seller of a property, so as a buyer you usually do not pay out-of-pocket when using an agent.

As a seller, you would typically pay the commission for both sides of the transaction, for both a listing agent and a selling agent (buyer’s representative). However, commissions are negotiable, and either party to the transaction may pay commissions. The amount of commission paid is also negotiable, although six percent (3% to the listing agent; 3% to the selling office) is the most common.

Commissions are paid to real estate brokers only, and not directly to the sales agent. The real estate agent is an independent contractor, but works under the supervision of a licensed real estate broker (Note that as of July 1, 2010, a licensee will be called a real estate “broker” not salesperson; and their supervisor will be called a “Managing Broker” rather than simply a “broker”).

Most real estate agents will focus on listed, rather than unlisted, properties. But if you make your agent familiar with your investment focus, they may notify you before a property is listed on the NW Multiple List Service (NWMLS), or in the case of commercial properties, on the Commercial Broker Association (CBA) listing service.

There are legal responsibilities that bind real estate agents and brokers. Many of these duties are defined in a brochure called “The Law of Real Estate Agency,” which an agent should provide prior to having you sign any other paperwork with them. It defines ethics and responsibilities towards principals in a real estate transaction.

A good real estate agent will be an expert in his or her chosen area of focus. This agent will have a very good idea of values in their focus area, and can provide guidance on any number of related real estate issues for their client. The agent can typically assist a seller in setting a reasonable sales price, based on similar sales in the same general area. The agent can advise you on the home improvements most likely to increase the value of the property. He or she can provide referrals to handymen and contractors that can do the work required.

This agent will also provide an extensive marketing plan to sell the house quickly that may include consultation on staging; professional photographs; flyers; yard signage; listing on the multiple list serve; advertising to other agents, clients and brokers; reverse marketing; open houses; hotlines; internet marketing; direct mailing; virtual tours; website features; blogs; print advertising, and more.

A good agent may be able to save his client money by effective negotiation on price. The agent will handle all paperwork to comply with local, state and federal regulations. A good agent is keeping well-educated through required clock hours that help them become the expert you want to hire.

The agent will oversee a transaction through pre-approval, loan application, inspection, escrow and right through to closing to make sure that everything is being done in a timely and accurate manner. A good agent makes all of this look effortless, and it is sometimes difficult for a client to understand why they are paying such a large commission for what seems like easy work.

Should you the investor study to become a real estate agent? Keep in mind that a real estate professional is held to a higher standard, and that you will need to disclose to sellers and buyers that you hold a real estate license. Recognize that when you are making a low offer to purchase a property, that you are foregoing the opportunity to list it. Recognize too that a real estate licensee is paying desk and transaction fees to a broker, subscriber fees to belong to the multiple listing service, marketing costs to find sellers and buyers, educational fees to meet clock hour requirements, licensing and business fees, among other expenses associated with getting and maintaining a real estate license.

As a real estate broker, I enjoy having the knowledge and expertise needed to be fluent in the laws and language of real estate. I find it gives me an advantage in working with buyers, sellers, and other real estate professionals. I also recognize that it is a commitment of time and money that may be more than what many other investors may be willing or want to do. If you are an investor who does not have a real estate license, I'd be happy to talk with you about buying or selling investment real estate!

100% Waterfront Occupancy at 75% of the Value!

Attention, investment partners and homeowners looking for a big bargain!
BUY 75% interest for 100% occupancy of this 1960’s Northwest contemporary home with spacious 2323 sq ft, just 3 miles from the Seattle-Bremerton ferry dock!

Buyer is purchasing a 75% interest (fractional ownership) in the property. Fractional ownership terms: $250,000 represents a first lien 75% equity ownership position in the property! Seller maintains a 25% interest (equity ownership) in the property, but majority owner gets 100% of the occupancy and tax benefits of homeownership. Buyer to cash out seller's equity position in five years, through refinance or other pay-out; or buyer and seller to split profits 75/25 if sold within five years.

How does this work? 75% interest for the buyer is the larger share of a legal "tenancy in common" ownership. Tenancy in common is a form of concurrent ownership that can be created by deed, will, or operation of law. Several features distinguish it from joint tenancy: A tenant in common may have a larger share of property than the other tenants. The tenant is also free to dispose of his or her share without the restrictive conditions placed on a joint tenancy. Unlike joint tenancy, tenancy in common has no right of survivorship. Thus, no other tenant in common is entitled to receive a share of the property upon a tenant in common's death; instead, the property goes to the deceased's heirs.

Home boasts a main floor entry which leads into a dramatic great room with floor-to-ceiling windows, new hardwood flooring, refurbished kitchen cabinets, and vaulted ceiling atop heavy timber construction. Located off the main living area, the custom kitchen includes tiled counters, skylight, and JennAir cooktop range.

The main level has three carpeted bedrooms with good-sized closets. A separated full bath is located in the main hallway, with one room having a tub/shower combo and vanity, and the adjacent room with a toilet and vanity. The large master suite has a vaulted ceiling, double closets with louvered doors, and private bath, with two skylights, double vanity, vinyl flooring, and tiled shower and countertops.

The finished, daylight basement level of the house opens to a large family room with views of the water, a wood stove fireplace, and its own separate lower level entry from the yard or from the garage. An additional ¾ bath is located off the lower level bedroom. The lower level also has a built-in one-car carport and a one-car garage. The house has been well-maintained with new septic (2004), new roof (2006), and new oil furnace (2006). Now with new hardwood flooring, new dock, refurbished cabinets!! Potential renovations for additional equity might include bathroom and kitchen upgrades and adding a downstairs kitchen to create an ADU or MIL unit.

Current tax assessed value of this parcel is $378,000 (75% would be $283,500).

OPEN HOUSE THIS EASTER SUNDAY, 2-4 PM! Find out why Money magazine voted the Bremerton/Silverdale area among the top areas in which to invest in housing!!

Who's on Your Team?

Depending on your own skills and preferences, you will need to depend on professionals in several different areas of expertise if you are buying, selling or investing in real estate. They may include all or some of the following:

Real Estate Agent: Unless you have your own real estate license, you will probably be using agents to help you find, negotiate, or market property. In exchange for their expertise, they typically receive a commission for their work. Real estate agents can advise you on all aspects of real estate acquisition, finance, negotiation, and marketing, including trends in the market, values of specific properties, legal requirements and paperwork, along with referral s to contractors, brokers, escrow agents, lenders, and other real estate professionals. They can be a valuable source of information.

Lenders:
Mortgage lender 1-4 units
Mortgage lender (commercial)
Hard money lender
Private lender
I am of the opinion that an investor can never have too many lenders. As with all of these professionals, ask around. Check with fellow investors and find out who they use. Line up your lenders, and get pre-approved with at least one mortgage lender and one hard money lender in advance of making any offers. Lining up private lenders is another whole area of expertise, and we will cover this topic in more detail in a future blog.

Insurance Agent: As soon as you buy a property, you will need insurance. Best to line this one up in advance as well. Get referrals from your real estate agent.

Real Estate Attorney: I love my membership in Pre-Paid Legal, as I can call any time I need legal advice for a mere $17 per month. I call all the time—to update my will, seek guidance on landlord-tenant law, draft property easements, and so much more. At the same time, I also have 2-3 good attorneys I can use for anything that requires more consultation—and so should you! Find a reputable real estate attorney to add to your “team!”

Escrow/Closing Agent: If you are doing creative investor-type real estate purchases, you might find that you need a specialized closer, and not your traditional escrow agent. Have one of each—the traditional escrow agent or attorney to close your simple deals, and perhaps find a closing agent through your REAPS network who understands “Subject To,” simultaneous closings, assignments or other “unusual” closings commonly done by investors.

Contractors: whether you are a rehabber, a landlord, or just a plain old homeowner, you will need to develop a list of your favorite plumber, electrician, carpenter, framer, painter, roofer, flooring installer, handyman, and on…and on…and on. This is one list that you will be continuously updating—even after you get to the point of having a regular core crew of guys (and the occasional gal).

CPA/Accountant/Bookkeeper: It’s not just about keeping the books straight for taxes. It’s also about keeping your records in order to avoid lawsuits, maximize tax deductions and profits. These professionals keep you honest, and can help you find ways to keep more of the money you earn!

Home Inspector: Don’t wait until you put in an offer—line this professional up now. Once you submit an offer, you typically have ten days to get any inspections done on your property.

Property Manager: Many investors try to save money here by doing this themselves, but if you do be sure that you are up to speed on the latest laws. Tenants love to sue landlords, and if you’d rather not deal with tenants, you might just want to hire a property manager.

Assistants: Start by delegating more mundane and routine tasks when you are ready to do so. I like to hire teens or seniors to hand-address envelopes for my direct mail campaigns, but I also use virtual assistants. I like ODesk.com for my virtual assistants, but there are several virtual assistant sites on the internet you might like to use.

So, You Want to be a Real Estate Investor?

How much time are you going to be able to devote to this real estate endeavor?

If you currently have a full time job, I would advise you to keep it—at least until your real estate business generates enough money to replace your current income. This is especially important in today’s constricted job market.

If you have a job with a good income, you should be able to qualify for a mortgage. Your job should provide you with funds to contribute to your retirement account, and perhaps to pool with another investor with whom you might like to partner. Many self-employed full-time investors are no longer able to get a mortgage on their stated income, or because they have already reached the limit on the number of properties they own.

Many of these investors use hard money or private funds, when they would be just as willing to take on a partner who can get a mortgage at today’s low interest rates. This option would expand the possibilities for exit strategies, perhaps turning a flip into a cash-flowing long-term hold. Network with them, if you are still working and still learning about real estate investment.

Did you know that you can self-direct your Investment Retirement Account (IRA) to invest in real estate, and not just stocks and bonds? Many people are unaware that they can do this. There are many fine IRA custodians like Equity Trust and facilitators like Bellevue-based Guidant Financial that can help you set up your account to do just that.

While a full-time employee may not have much time to devote to investing, he will likely have funds to invest. And that will provide incentive to partner with a more senior investor who is looking for funds or an equity partner. If you are simply looking for a passive investment with greater returns than you might earn on the rest of your investment portfolio, then lend money to an investor you trust with a consistent track record. Or partner with an experienced investor from whom you wish to learn.

In the process of lending money, you will receive paperwork that you may find yourself using later when you are looking for private lenders yourself! Look over their prospectus on investment, and ask questions about how they intend to generate profit. You will learn much about putting together a professional presentation, about buying criteria, marketing, and about potential exit strategies. One of the biggest mistakes new investors make is quitting their job too soon.

If you are in a real estate-related industry, you may never decide to quit your job, as this may be a good source for leads, referrals, commissions, financing or other resources.

However, if you are unemployed, retired or self-employed, you have the opportunity to dive into investing full time. Real estate investing is MORE than a full-time job, despite what some national gurus might have you believe. I guarantee you will not be sitting on a sunny beach sipping margaritas while your business works without you—at least not in your early years.

Investing is a discipline that requires hard work, education, consistency, systems, and persistence. Learn all you can, and surround yourself with people who are successful, positive, and believe in you. There will be plenty of obstacles, rejection and naysayers along the way. Make strong connections among your contacts at your local real estate investment association, because they will remind you that IT CAN BE DONE, and our members are out there doing it. And you can too! If you are willing to do your homework, and take action!

Kitsap Waterfront Open Houses

I will be advertising waterfront open houses near my listing at 2525 Rocky Pt Rd in Kitsap on Easter Sunday, April 4 from 2-4 pm, during my own Open House. I will be promoting ALL the open houses in my advertising, and making a list available to all my Open House guests of waterfront homes that will be open that afternoon. There are potentially a dozen properties, all priced under $400K that I could possibly include.

Would you be interested in participating? I'd love to have you join us! More details to follow....

PS. Hurry! Homebuyer tax credits expire April 30th!

Pet Friendly Vintage View Apartments in Leschi

TWO elegant units to choose from on corner lot in beautifully-remodelled brick triplex. Lots of architectural details, hardwood floors, new appliances, leaded glass front door windows, old world charm with up-to-code conveniences, in a desireable location. Both units come with its own off-street garage; and plenty of free street parking available for visitors. Walking distance to Lake Washington, stores and restaurants in a quiet residential neighborhood just 2.5 miles from downtown Seattle. Updated energy-efficiency reduces tenant's utility costs for electric heat. Landlord pays for garbage, water, sewer, exterior lighting, regular yard maintenance, and professional property management. Tenant just pays electricity (and additional desired services such as phone, cable and/or internet). Both units are one-bedroom, but the upper unit has a sweeping view of Lake Washington, Cascade mountains and Mt Rainier, with 1100sf on the entire upper floor. Main floor unit will be available APRIL 1ST and rents for $1150/mo. Upper floor unit is available NOW, and rents for $1225/mo. About the neighborhood: Neighborhood is close to Capitol Hill, Central District and the Madrona restaurants area. It is walking distance to wooded trails to Lake Washington. Douglass Truth Library, Samarya Yoga Center, Red Apple grocery store, a couple of coffee shops, Amazon.com, Lowe's and Walgreen’s. Transportation: Easy access to I-90, highways, and bus lines. Several bus routes nearby go to various areas including Capitol Hill, downtown, Queen Anne, south Seattle, University District, etc. (#2, 3, 4, 8, 14, 27 and 48).

Distressed Multifamily Apartments Wanted!

Home Land Investment Properties Inc. is seeking distressed multifamily properties and apartment complexes in the greater Seattle area. We prefer close-in neighborhoods of Green Lake, Ballard, Lake Union, Fremont, Eastlake, University District, Queen Anne, Madrona, Leschi, Central District, Madison, First Hill, Capitol Hill – basically from downtown Seattle up to Northgate.

Speciifically, we are seeking 5-25 unit multifamily properties, and mixed use properties with ground floor commercial and apartments above. We are looking for SERIOUS sellers and DISTRESSED properties, that are either below 90% occupancy or in need of significant rehabilitation. The seller may be retiring and looking for a quick sale, is tired of managing, or has poor management in place. Units may be outdated, and in need of major upgrades or repairs.

We are looking for properties with seller financing terms. We are looking for sellers willing to carry a 1st or 2nd mortgage, with a balloon payment after a minimum of five years. If this sounds like a good fit for you, please contact us at HomeLandInvestment@gmail.com

The New Investor

As a new investor, you have to decide exactly WHAT KIND of investment makes the most sense for you?

Single family or multi-family? Residential or commercial? Land development? Fix and Flips? Long-term rentals? Discounted notes or mortgages? Tax liens? Foreclosures? Lease Options? Etc.

There are so many ways to make money in real estate that it can be overwhelming to the new investor. A common mistake by new investors is to attempt doing EVERYTHING rather than narrowing their investment focus. If you can’t tell someone your investment focus in 30 seconds or less, you probably don’t have one.

Find something you like and stick with it! We have many successful investors among the local real estate association members that use any number of real estate strategies to achieve their goals. Why do they choose a particular investment path over another?
Here are some examples:
Former Real Estate of Puget Sound (REAPS) President Mark Schmale learned from a national guru about retailing homes. “ …As I took more courses I added other creative methods, such as Lease with Option, Deed Subject to and creative Owner Financing, so that I could purchase different types of property than just junkers. Currently, most of my income is derived from wholesaling, which is the process of putting a property under contract to purchase at a bargain price, and then assigning my rights and obligations as the buyer under that contract to a new, usually cash buyer.”

Ballard Partners broker and REAPS member Joe Beyer read many books on various types of investment techniques. “My first house was purchased on a seller contract in 1988,” explains Joe. “Since then, I've continued to invest in multi-family real estate focusing on seller financing. I now own six buildings of 2-6 units, four of which I have obtained with seller financing at favorable terms.”

REAPS member David Tamburello had a disastrous first week investing in foreclosures when he started five years ago, because “…we didn't know how to approach the homeowners and [we were] saying all the wrong things. Eventually I bought a package from Dwan Bent Twyford and Sharon Restrepo at a REAPS seminar. After 3 months we closed our first deal and made $20,000 without a penny out of our pocket.” They would continue to focus on foreclosures for the next year and a half before the state of Washington changed laws related to distressed homeowners.
Because of the uncertainty, David decided to focus on commercial real estate in Kansas City. “This past year we closed on 9 houses,” admits David.

REAPS Board member Paul Galasso got tired of corporate America and longed to get back to his entrepreneurial roots. “I got into investing with the express reason to replace my job. I started buying single family properties using Subject To and Lease Option tactics. Within 14 months I was able to replace not only the income from my dot com job but my wife’s as well. Since then I have churned out enough properties to enable me and my wife to live well and to do things that I had only dreamed of. We switched over to multi-family properties in the beginning of 2008.”

REAPS President and new mother Katherine Swanberg began investing in rentals as part of her future retirement plan. “Also, I always imagined being able to teach my kids to work on my properties…. The payoff would be to use the property to fund their college when tuition comes due. This makes more sense to me than giving my kids an allowance.”

As for me, I also jumped into rentals with an eye towards retirement. My first two investment properties were in the Oklahoma city where my daughter went to school. I still own them, because they cash flow. Now I am focused on purchasing residential properties in Seattle, using seller financing, to wholesale, fix and flip, or buy and hold.

What are your personal strengths that you bring to investing? What are your likes and dislikes? Are you great at construction, and can’t wait to remodel (another) building? Or do you want to stay as far away from a hammer as possible? Are you a great community organizer? Do you thrive on building partnerships and teams? Do you love negotiating and dealmaking? Are you intrigued by finance and economics? Are you proficient at recordkeeping systems, accounting, or financial analysis? Do you have financial resources to invest? Make a list. Your strengths will help you narrow your investment focus to dovetail with your skill set.

No one is good at everything. Where are you lacking? If you are working full-time, then you may lack time to search out good deals. If you are new, you may lack experience or knowledge in your chosen area of expertise. Don’t forget to make a list of areas where you may need help—and then list steps to take to address those needs. Perhaps you will want to partner with someone who has the strengths you lack, but for whom you can offer something they need in return. Perhaps you can apprentice with someone more experienced? As far as building your knowledge, don't forget to join your local real estate association, and network, network, network!

Working with an equity partner

As a fellow investor, I am also interested in networking with other investors. Please let me know about your investment needs and wants. I am looking for equity partners interested in investing in Seattle area single family and small multifamily homes. I work with two types of equity partners. One type is the person who can qualify for a mortgage, while I pay the out-of-pocket expenses and do the work necessary to prepare an investment property for sale or rental. This works well for people that have good incomes from a job, are looking for additional tax deductions, but have limited time to invest.
Another type of equity partner has time, but limited funds to invest. They may want to learn about investing, while they help me locate and acquire properties that we will own as partners. The percentage of ownership will vary, depending on the time and expertise they have available to commit. I train these partners, and they work under my supervision. As a broker, I can also supervise investors who are planning to work as real estate investing agents and property managers.
And of course, I am always on the hunt for property to buy and for private lenders who are looking for a better rate of return for their funds than they can make on their IRAs or bank deposits.
If you, or someone you know, may be interested in some of these options, please let me know!

Homebuyer Credits and Mortgage Rates

Two government programs which have kept home purchases affordable are set to expire within the next two months.

The Federal Reserve's Mortgage Backed Securities (MBS) purchase program will come to an end March 31. This will likely cause mortgage interest rates to rise from their current historical lows.

April 30 is the deadline to get a home under contract in order to qualify for the stimulus Home Buyer Tax Credit program (up to $8,000 to first time homebuyers and up to $6,500 to repeat purchasers). The buyer has until June 30 to close on their purchase.

While none of us has a crystal ball, it appears likely that loan rates will be higher in the near future and stimulus money from the government will not be renewed. These deadlines will affect both purchase and refinance funds.

If rates were to increase by 1%, for example, people who qualify for a $200,000 purchase today may only qualify for a purchase of $180,000 after the increase.

If you or someone you know is planning to purchase or refinance a home, now is the time to secure low interest rates and get money back from the government! Please contact me at HomeLandInvestment@gmail.com if you are looking for a great home deal to snag before these deadlines.


Keep in mind that you may also qualify for the Mortgage Credit Certificate (MCC) program, which has no current expiration date, if you are a first time homebuyer or haven't purchased in the last 3 years. There are always choices, but certainly more with today's low, low home prices. So please contact me if you are thinking of buying, because time is running out on some great financing options.

6832 Yakima Ave in Tacoma

Here is the property that we will be fixing up in Tacoma. It is located in the Wapato Lake community, at 6832 Yakima Avenue, a solid working-class residential neighborhood.

It mostly needs carpets replaced, new paint and a thorough cleaning. It needs a new hot water heater and a new oven/stove. There are some eyesores in the neighboring properties that need to be addressed. It needs fences painted, repaired or replaced. It needs other cosmetic improvements. We are looking for contractors now to give us bids, while we wait for confirmation from the bank that they have accepted our offer to purchase this property.

We want to get it fixed up and ready to sell before the end of April, in order to take advantage of any remaining first time homebuyers hoping for tax credits before they expire. It should come back onto the market at around $155,000.

So these are all the rough estimates at this point. Let's see how close we get to our targets!

I bought at the auction!

I bought a 1400 sf home in Tacoma to fix and flip yesterday at the REDC auction in Seattle. I was the winning bid on another house, but originally just runner-up on this one. However, the winning bid on this house had failed to provide the necessary funds and I was given the option to purchase both (in retrospect, I should have done this, although I could not demonstrate that I had the funds available to purchase both at the time). Instead, I chose to purchase this one. Of course, it does need work--about $20,000, we estimate.

"We?" Well yes, I have a partner on this one. The only way that either of us could have purchased this house for cash. Together we will fix it buy, market and sell it--and then split profits.

I will include photos and details of the house in tomorrow's blog. But this is a good opportunity to talk about what one needs to do prior to buying at any auction. We were fortunate in that we were able to get into this house in advance and do an inspection prior to attending the auction. As the REDC auction is typically the lender's sale of last resort, these are difficult properties--needing more repair or with other issues such as less desirable locations than other bank-owned REOs. The property was also vacant, which eliminates lots of issues with evicting tenants or owners.

This house is in a good solid working class neighborhood, near shops, restaurants, highways, and the lovely Wapato Lake park. It is not in a war zone. Very important. This is a nice, decent residential neighborhood.

Then we went back to check comps on sold properties in this area in the last six months. I like to have at least 4 comps to feel confident about values. This neighborhood had 9 solid comps. So good activity, good confidence in the ARV (After Repair Value).

We then estimated our repair costs by breaking out each of the repairs we would expect to have to do to this property. We then subtracted these costs and determined 70% of this amount to allow for error and profit margins. We then deducted the 5% we were required to pay for the auction premium to determine our maximum bid on this property.

Our purchase price was actually below the seller's reserve price, so the seller (the bank) has 15 days to decide whether to accept our offer. This gives me additional confidence that this is a reasonable price for an investor to pay for this property. Stay posted!

Price Reduced! Exceptional Waterfront Value!

Beautiful sunset waterfront property a steal at this new price! Just $300K!!!Spacious, secluded home on 120' of no-bank waterfront
w/boat dock, boat launch & outdoor firepit in coveted Rocky Point neighborhood! Views from every room, incl all 4BRs & huge decks for
entertaining! Abundant wildlife, gorgeous sunsets, mature landscaping in wooded, parklike setting. Bring your kayak! Pre-inspected, w/AHS
Home Warranty. Cash flow rental? B&B? MIL/ADU duplex? Best value for Kitsap waterfront!
Possible seller financing with top offers. Adjacent (buildable) .7acre parcel may be purchased separately. For more details, email HomeLandInvestment@gmail.com

Sweet Starter Bungalow in Seattle (Unlisted!)

Location-Location! Charming 2 bedroom home in Ravenna with lots of OWC and hardwood floors, unfinished basement and attic. New vinyl siding,gas furnace and roof. Kitchen has been remodeled. Very tastefully decorated. You will love the fenced garden retreat with koi pond and raised garden beds in the back yard. Extra off street parking behind the house. Walking distance to the University of Washington and close to Greenlake.

Location is north of 45th and south of 65th Streets, east of Interstate 5.

Tax Assessed (2009): $328,000
Zillow Zestimate: $347,000 ($308,000-375,000)

Comps:
1209 NE 56th St Sold 2/19/2010 $380,000 3BR/1BA 1100sf 0.30mi from subj property

810 NE Ravenna Blvd Sold 1/29/2010 $309,000 2BR/1BA 1000sf 0.37mi fr subj property

5016 Keystone Pl N Sold 1/06/2010 $494,900 2BR/1BA 1010sf 0.48mi fr subj property

Lots of recent updates completed. Needs about $10,000 worth of improvements--replacing bedroom carpets, replace tub surround, minor touch-up painting or repair, remove popcorn ceilings, level southwest corner of living room.

Total Investor/Buyer Acquisition Cost: $260,000 (includes assignment fee)

I can help you find great deals on homes like this in desireable Seattle neighborhoods! For more information on this or other homes like this, please email me at HomeLandInvestment@gmail.com

Mortgage Tax Credit BIGGER than First-time Homebuyer Credit!

Paul Scobee from Guild Mortgage gave me this scoop on the Mortgage Credit Certificate (MCC) program, which allows qualified borrowers to get a federal income tax credit of up to 20% of the mortgage interest that they pay annually. Buyers can take advantage of this program in addition to the $8,000 first-time buyer credit...but the MCC will last up to 30 years!


What is an MCC and How does it Work?

MCCs are tax credits that put extra cash in your buyers pocket each month, so they can more easily afford a house payment. This means fewer tax dollars will be withheld from your regular paycheck, increasing your take-home pay.

Applications are accepted on a first-come, first-served basis by a statewide network of lenders. With only a few contributing lenders, Guild Mortgage is a participating lender. Your lender will establish all underwriting criteria, including interest rate, down payment requirement, etc.

MCCs are available with fixed or adjustable rate conventional conforming (i.e., Fannie Mae or Freddie Mac saleable), FHA, VA, and Rural Development mortgages.

As with any program, there are qualifying rules and regulations. For example: in King County the house has to be a single-family residence that does not exceed an acquisition cost of $450,000.

With MCC, a buyer qualifies for a larger monthly payment and hence, a bigger better house! I can refer you to savvy lenders like Paul Scobee at Guild Mortgage--just ask me for referrals!

Snoqualmie Pass Mountain Retreat - Not yet listed!

Newer-constructed home designed for possible duplex conversion. Lg open living rm w/ vaulted ceiling, spacious kitchen w/maple cabinets, island & cozy dining nook. Lg insulated windows w/deep pine sills help you enjoy the changing seasons or beautiful sunrises over Rampart Ridge. 10' ceilings downstairs add extra space to bonus rm & 2 adj bdrms w/pvt bath. Just yards away from the John Wayne Trail, easy access to biking, hiking, xc skiing or playing in the snow. Quick access to I-90.
Contact me for more details on this or other opportunities for properties in the mountains or on the water in the greater Puget Sound area!

REDC Foreclosure Properties

Here are a few properties we visited in Tacoma yesterday. The first and last ones have opening bids at $19,000. This second photo is a 5-plex with an opening bid of $29,000. Solid working class neighborhoods, in close proximity to highways, shops, restaurants, and parks. Well worth taking a look at....Auction is this Saturday for anyone interested.

REDC Foreclosure Tour

The sun is shining in Seattle, so my partner and I are going to go tour some foreclosure properties--more later.

What TYPE of real estate investing?

WHAT KIND of investment makes the most sense for you?

Single family or multi-family? Residential or commercial? Land development? Fix and Flips? Long-term rentals? Discounted notes or mortgages? Tax liens? Foreclosures? Lease Options? Etc.

There are so many ways to make money in real estate that it can be overwhelming to the new investor. A common mistake by new investors is to attempt doing EVERYTHING rather than narrowing their investment focus. If you can’t tell someone your investment focus in 30 seconds or less, you probably don’t have one.

Find something you like and stick with it!

We have many successful investors among members of our local real estate investment association (Real Estate Association of Puget Sound) that use any number of real estate strategies to achieve their goals. Former REAPS President Mark Schmale learned from a national guru about retailing homes. “ …As I took more courses I added other creative methods, such as Lease with Option, Deed Subject to and creative Owner Financing, so that I could purchase different types of property than just junkers. Currently, most of my income is derived from wholesaling, which is the process of putting a property under contract to purchase at a bargain price, and then assigning my rights and obligations as the buyer under that contract to a new, usually cash buyer.”

Ballard Partners broker and REAPS member Joe Beyer read many books on various types of investment techniques. “My first house was purchased on a seller contract in 1988,” explains Joe. “Since then, I've continued to invest in multi-family real estate focusing on seller financing. I now own six buildings of 2-6 units, four of which I have obtained with seller financing at favorable terms.”

REAPS member David Tamburello had a disastrous first week investing in foreclosures when he started five years ago, because “…we didn't know how to approach the homeowners and [we were] saying all the wrong things. Eventually I bought a package from Dwan Bent Twyford and Sharon Restrepo at a REAPS seminar. After 3 months we closed our first deal and made $20,000 without a penny out of our pocket.” They would continue to focus on foreclosures for the next year and a half before the state of Washington changed laws related to distressed homeowners.

Because of the uncertainty, David decided to focus on commercial real estate in Kansas City. “This past year we closed on 9 houses,” admits David. “I'm currently studying to get my Missouri real estate license and working on our new web site www.RisingMarketInvesting.com.”

Board member Paul Galasso got tired of corporate America and longed to get back to his entrepreneurial roots. “I got into investing with the express reason to replace my job. I started buying single family properties using Subject To and Lease Option tactics. Within 14 months I was able to replace not only the income from my dot com job but my wife’s as well. Since then I have churned out enough properties to enable me and my wife to live well and to do things that I had only dreamed of. We switched over to multi-family properties in the beginning of 2008.”

REAPS President and new mother Katherine Swanberg began investing in rentals as part of her future retirement plan. “Also, I always imagined being able to teach my kids to work on my properties…. The payoff would be to use the property to fund their college when tuition comes due. This makes more sense to me than giving my kids an allowance.”

As for me, I also jumped into rentals with an eye towards retirement. My first two investment properties were in the Oklahoma city where my daughter went to school. I still own them, because they cash flow. Now I am focused on purchasing residential properties in Seattle, using seller financing, to wholesale, fix and flip, or buy and hold.

Some of you already know where you want to invest your time and energy, either because of your passion, skill set, or experience. What are your personal strengths that you bring to investing? What are your likes and dislikes? Are you great at construction, and can’t wait to remodel (another) building? Or do you want to stay as far away from a hammer as possible? Are you a great community organizer? Do you thrive on building partnerships and teams? Do you love negotiating and dealmaking? Are you intrigued by finance and economics? Are you proficient at recordkeeping systems, accounting, or financial analysis? Do you have financial resources to invest? Make a list. Your strengths will help you narrow your investment focus to dovetail with your skill set.

No one is good at everything. Where are you lacking? If you are working full-time, then you may lack time to search out good deals. If you are new, you may lack experience or knowledge in your chosen area of expertise. Don’t forget to make a list of areas where you may need help—and then list steps to take to address those needs. Perhaps you will want to partner with someone who has the strengths you lack, but for whom you can offer something they need in return. Perhaps you can apprentice with someone more experienced? As far as building your knowledge, you are to be congratulated on taking an important first step toward success as an investor by following this blog!

The Big Why of Real Estate Investing

First and foremost, why did you decide to invest in real estate?
The answer to this question, the big “why”, will help you sort out your level of motivation and commitment to investment. There are no right or wrong answers here, only insight that will help you narrow down the specific areas in which you may wish to concentrate your time, money and efforts.
Here are some questions to get you started:
Are you simply curious and hoping to learn more about real estate as an investment vehicle? Are you planning to buy your first house? Or have you bought properties before and want to know more? Do you have friends or associates that have done well investing in real estate, and you’d like to join them?
What are your assumptions about real estate investing? Do you believe it is the path-or at least one path- to wealth? Do you have the impression that this path will be easier or quicker for you to achieve your goals? Is there some burning desire or passion moving you in this direction?
What are your financial goals around investing—in real estate, or in any other investments? Is real estate a primary investment vehicle, or part of a larger investment portfolio?
What would you hope to do with any financial rewards from real estate investing? Pay for college? Your children’s education? Retirement? Supplement your current income? Quit your job?
How much money –specifically-- would you need from your real estate investment in order to accomplish your goals? The more specific you can be in answering this question, the better you will be able to chart a path to help achieve it.
Write down your answers to these questions and thoughts about real estate investment as if it were a personal mission statement. An example might be: My real estate investment in rental properties will provide at least $75,000 annually in passive income, on which I could retire in ten years.
Note that this statement assumes a positive outcome we hope to achieve at a specific time in the future, with a specific financial target. It helps the author to visualize a future they desire in concrete terms. Whether it is realistic or not will depend on the specific plans the investor puts into place to achieve it. And of course, like any plan, the specific steps to get there will evolve as the results of previous actions provide outcomes that either meet, exceed or fall short of targeted goals.
Savvy investors are clear about their goals and have plans to accomplish them. They can articulate very clearly what their investment strategy is and why. As a novice investor, you may not have all the answers yet, but this is where you will start: with your Big Why. You can always change or modify it in the future. Your specific strategies, e.g. your specific type of investment, may change as you learn more, but your reasons for investing in the first place probably won’t. They are the motivation to keep you moving toward your investment goals.