Credit Partner Wanted!

I am looking for an equity partner on a Vashon waterfront cottage, walking distance from the Vashon ferry, in King County. Here is the way a credit partner works:

 

 --You will pay no out-of-pocket expenses; I will cover all closing costs, monthly payments, taxes, insurance and repairs.

 

--We will both be listed on title, and as additional insured on insurance policy.

 

--You will receive 100% of the depreciation on the property.

 

--We will split 50% of the net proceeds upon sale of the property (do we want to set a cash-out time in the future? 10 years? if there is no sale, we can figure buy-out at current tax-assessed value).

 

--We will both have access to the property, subject to any existing leases. (I anticipate keeping the guest suite available for owenrs' use, until the property has been re-sold).

 

--I will handle all marketing, rental and sales transactions at no cost to you

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This kind of deal works particularly well for a high-income earner looking for more tax deductions. I could also purchase this property with a private lender, assuming I was successful in getting seller financing. If you are interested in exploring partnership opportunities on King County real estate, please contact me at HomeLandInvestment@gmail.com

Low Impact Development

Yesterday I attended some training on Low Impact Development for Real Estate Professionals, sponsored by Washington State University Extension and funded by the Washington State Department of Ecology. The training included a field trip to the Kitsap Conservation District in Poulsbo, pictured here.

In the photo above, you can see part of the rain garden watered by run-off from the office roof, an electric vehicle charging station, and a car parked on a StabiliGrid permeable parking lot. This low impact demonstration site also includes a green roof, rain barrels, solar-powered sheds, an 11,000 gallon cistern, and a weather station (AgWeather.net or weather.wsu.edu and look for the Poulsbo South station). All of these elements are features of a low impact development site, where rain and stormwater run-off is captured to irrigate gardens, flush toilets, and reduce pollution to adjacent waterways.

Why is low-impact development so important these days?

Low Impact Development (LID) is one way we can help keep our waterways, as well as the surrounding land, healthy and safe. LID seeks to manage stormwater onsite, either by encouraging it to soak into the ground, or using plants to transpire it back into the atmosphere. It focuses on protecting existing natural landscape features to minimize the amount of impervious hard surfaces.

LID strategies create more beautiful and easily-managed landscapes, replenishes drinking water supplies, reduces contamination of local waterways, preserves or restores trees and vegetation, attracting birds, butterflies and other wildlife. Effective LID development may actually reduce development costs, as well as stormwater management costs.

Regulations are coming, especially on larger-scale commercial developments with vast amounts of hardscape surfaces which have historically contributed to stormwater run-off, erosion, air quality degradation, and pollution of ground water. And the marketplace, especially here in Western Washington, is especially receptive to more green development.

The Kitsap Conservation District will even pay local homeowners $500 to put in a rain garden, or a permeable parking lot. Contact your local conservation district for other financial incentives for those considering LID.

For more information on low-impact development, please visit http://lowimpactdevelopment.org, and happy investing!

Choosing The Contractor That Is Right For You

There are many decisions in life that you have to make. Some are easy, and others very hard. Choosing the right contractor for your home improvement needs should be just as important, and will be one of the most crucial decisions you’ll ever have to make depending on the scope of work. If you are planning a few “must dos” around your home, it serves to do your homework on your contractor, and prepare yourself. In the grand scheme of things, your findings, and research will have an impact the tipping scale. It could make a difference in the outcome of your future home improvement project, whether a blissful experience or a shocking train wreck. You hear the stories, they do exist. Here are 5 tips to add to your checklist:

(1). Verify license and insurance: do not be afraid to ask for proof of insurance with general liability coverage for at least 1 – 2 million dollars. Depending on where the subject is located, some management companies mandate as high as 5 million in coverage and should include workers compensation. Why is this important? This insurance covers a range of mishaps from accidents to pure negligence and innocent, but costly oversight. You do not want to have to pay for something you did not cause. 

If you are not working with a licensed contractor, you are walking a tightrope without a net. The Department of Consumer Affairs requires an exam to be taken, finger prints to be kept on record, and registration of contractors in their area of expertise. If DCA does not know who your contractor is, you won’t either when something goes wrong, and your contractor does not return your call after being paid.

(2). Lowest estimate does not always get the charm: if you have gathered countless estimates on your project, at various amounts, the lowest does not equal a score. Be very careful in your decision making. A bathroom renovation is not a shirt, and in this business you really do walk away with what you pay for. If you are considering the lowest estimate, get your questions ready, and find out why the estimate you have is so much lower than the others you have gathered. Compare apples to apples. Trust me, there is never a true bargain. You are paying for the discount somewhere. Buyer beware, as we say.

(3). Research your contractor’s record: we live by internet, and chances are if your contractor has a history of shoddy work, it is has been posted on some community online forum or with the Better Business Bureau. The BBB maintains open and closed files on complaints and will rate your contractor. If your contractor has open, and unresolved matters with the BBB, you may want  to consider moving on to the next candidate. Regardless of the reason, you do not want to have the “shame on you” experience. 

(4). Memberships or affiliations: if your contractor has loyalty to his trade, he will belong to various associations related to his craft. Though this should not be considered a deal breaker. A contractor who participates in trade associations has a vested interest and demonstrates focus in their community as reputable tradesmen. They take what they know, and do seriously, and want to maintain the faith of their customers. If the research on your contractor falls short on everything including their affiliation with any trade unions or associations….run.

(5). Check references: a HUGE must. Depending on the scope of your home improvement needs, whether it is a kitchen, basement, bathroom renovation; just taking a contractor’s word that they can do the job is not enough. Ask for references, and when you get them, consider taking a look at the finished product. Best visual is proof with the naked eye. Be sure to ask about the experience from start to finish: How long did the work take? Was the work completed within the time noted on the contract? How did the customer find the contractor you are thinking of using? Have they used the contractor for other work? 

I would not encourage getting too much into the cost because styles, make, design, material, and overall layout will not be the same as yours. There are many factors that impact the bottom line in any renovation. In the end, you want to walk away feeling that you made the right choice, and your gut will never be wrong. If it feels wrong, it usually is.

Seller's Market?

Seattle had the tenth fastest residential sales market in the country during the month of April. 47% of all houses listed for sale sold in less than two weeks! See more details here:

http://www.bizjournals.com/seattle/morning_call/2013/05/seattle-is-nations-10th-fastest.html?ana=fbk

Happy Investing!

Introduction to 1031 Exchange

This article was forwarded to us by Sherrie Sommerseth with Chicago Title, and reprinted here with permission:

As we roll into the summer, it’s refreshing to see continuing economic improvement mirroring the growth of income property sales and 1031 Exchanges. However, the excitement of an increased property sale value can be quickly diminished with unexpected taxes. Many real estate investors are surprised to learn that taxes on their profits are substantially higher this year. When investment real estate is sold in 2013, some taxpayers could pay up to 20% capital gains tax, a 3.8% healthcare tax, depreciation recapture tax and varying state imposed taxes. Added together, these taxes can total anywhere between 30-40%, making 1031 Exchanges an invaluable wealth preservation tool. 

Tax deferral is the hot topic in the real estate community and a 1031 Exchange still allows taxpayers to defer all of these taxes by simply rolling their profits into another property or properties. While the concept of a 1031 Exchange is straightforward, some investors and advisors may not have participated in a transaction for many years and may need to be updated on how to properly execute a 1031 Exchange.

Know your options and make informed decisions for your next 1031 Exchange transaction. Register today for IPX’s two complimentary webinars!

A 1031 Exchange Introduction and Refresher Webinar

This webinar will be held on June 12th and will provide a comprehensive foundation of 1031 Exchange information. Learn the basic rules and regulations and how to apply these to your transaction for maximum benefits.

Click here to register for the June 12th webinar

Advanced 1031 Exchange Issues Webinar

This webinar will be held on June 19th and will discuss the most recent changes in tax deferred exchanges and will cover topics such as reverse exchanges, build-to-suit exchanges, using seller financing in a 1031 transaction, and related party issues.

Click here to register for the June 19th webinar

Happy Investing!

Wanted to Buy: Seattle Apartments!

I have a cash buyer looking for 100-300 unit apartment buildings to buy, all cash, in desirable north King County locations, from downtown Seattle and Bellevue to the south Snohomish county line. He is looking for Class B properties, 10-30 years old, but is also willing to do new construction on land.

Please message me privately at HomeLandInvestment@gmail.com if you have any leads!

Wendy Ceccherelli

Designated Broker

Home Land Seattle

PO Box 221013

Seattle, WA 98122

ph: 425-270-7292

fax: 888-621-4999

SE Seattle Investment Tour - Reviews

And here are the final batch of comments from attendees on last week's bus tour of SE Seattle:

”It was a very interesting tour today, thank you for organizing it! I got to see some areas that I had not seen before. I would love to talk to the fund manager about what kinds of loans they can do, terms, and conditions. As the city official hinted, they are interested in 100+ units projects, which is beyond my level. It also sounded that 10-20 unit buildings are sort of already taken. It would be great if they could talk about a few projects, describing the goals of the project and how they assisted, to put things in perspective.”

--Alexei Kudriavtsev, REAPS investor

“What a great contribution to the REAPS community and a real value add experience.  Congratulations on successfully pulling it off.  Here is my feedback:

 Went well:

·        Good, knowledgeable, local speakers

·        Active and interested participants

·        Good overview of neighborhoods (though they avoided some of the seedier areas)

·        Discussed retail, multi-family, industrial, and office (i.e., not just primarily one asset class); I really appreciated this part since I have been on other tours that are lopsided in only one asset class

 Considerations for improvement next time:

·        More set up for interactive Q&A, perhaps with all/most of the speakers at the end back at the main office for a wrap-up open discussion before everyone disperses

·        Although there was some discussion of rental rates and an occasional on-the-market price point thrown out, the main thing I still want and didn’t get was a sense of ROI / cap rates in the area.  It would have been helpful to address that directly, and also for the tour to point out some recent actual completed sales along the way to show what an investor can get for how much and what the estimated return would be.

I would recommend doing this again, and I would recommend it to others.  In fact, it would be interesting to know what other areas would support the same model and have tours in other towns.  This area was incentivized to hold it because they want the external influx of investment and improvement, but other areas may be similarly motivated or look at it as a local business generation opportunity as well.  At minimum, I’d bet that a local knowledgeable commercial broker could round up some interesting speakers and have a captive audience of investors for a few hours, all co-coordinated courtesy of REAPS. “

--

Scott Price, REAPS volunteer, Active Commercial Investor

“We had a 'full house' in the 'Chamber', as well as, 'standing room only' on our bus. We met at the Rainier Valley Chamber of Commerce. Our own REAPS volunteer, Wendy, set the tone for a very nice opportunity. We heard from past, present and future Chamber Presidents. Each helped us to become better acquainted with REI opportunities in their local market. For me, this highlighted the role and value of our local Chamber, as an 'ally' to Investors. There were additional notable local contributors that joined our Bus Tour, at two or three stops, of several minutes each. Over all, I rate my experience as having a wonderful contribution to 'rounding out' my experience as an investor. As a point of illustration, I am going to contact my local Chambers, in Pierce County, including Tacoma, to replicate a South Sound version of today's experience. “

--Sharon Zevenberger, REAPS volunteer

“Excellently arranged, very well synchronized and coordinated. Both the information and the networking was wonderful.  I hope we do more of these informational type tours…it is good, just to get to know the city and the municipal connections.  Very well done.”

--Steve Olds, REAPS investor

5 Biggest Home Renovation Mistakes

So your mind is made up, and you are ready for a home renovation project. You have met several contractors, some referred, others you found, reviewed many estimates, even laughed at a few, and feel you have nailed it. Countless pictures have been shown to you, vision has been sold, and you have enough samples in product selection to open your own home improvement store. Are you as ready as you think? 

True, it took you weeks, maybe even months of researching to help make that final decision, and you feel that the contractor of your choice is going to bring your vision to light. This all may be true, but there are mistakes you do not want to make that tend to get overlooked. If you are looking for your upcoming home renovation to be headache free, these are 5 mistakes to avoid running to the medicine cabinet.

Thinking you have enough money

1.       Some home renovations can be a dollar for dollar experience, and you walk away with what exactly you wanted, and paid for. There are times when you may not be so lucky. One should always be prepared for an unexpected surprise. The bigger the project you are doing, the higher your chances are in unforeseen obstacles that may add to your already paid for renovation. You will be surprised what you encounter when you open walls, things like mold, termites, rotted beams, leaky pipes, are some to name a few. 

Ask your contractor to give you a small list of the unexpected for a home like yours. Not all homes have the same issues, there may even be a common occurrence with all the homes in your community since they were constructed at the same time, and more than likely by the same company. Your contractor may be aware of them if he has done work in your area. Thinking you have enough money may not be enough. Have an  emergency fund ready just in case. Your contractor is definitely not going to pay for it or he may be able to add a 10% contingency to be withheld in the event that something arises. If all goes well, the funds withheld are reimbursed back to you.

When size does not matter to you

2.       You have a small bathroom, and want to take it to the next level by replacing your standard tub with a swanky jacuzzi tub. Yes, they are beautiful. They are also space eaters, like that “must have” vanity at Home Depot that is 2 sizes bigger than your existing one. Yes, it can fit, and so does a golf ball down a P-trap. The size may not matter to you at the time, but it will, it always does.

Trend seeker

3.       Yes, that royal blue square shaped, see-through basin looks amazing on that black granite counter-top. Just because, it was mentioned as the top 5 sellers for 2013 does not mean it will be nominated for an Oscar next year. Fads disappear rather quickly, chasing the latest trend can have a short shelf life. When trend seeking, go with a style that does not have to be re-invented annually. Your contractor will love it, but debt seeking is not a trend.

Taking on too much

4.       Home renovations should never be a burden, always have a specific idea in mind, and do not make it complicated by adding on to it with a knee jerk decision. Give careful thought to a process, and what it means to alter them. Changing your kitchen cabinets is one thing, but then deciding on moving your plumbing, and placement of light fixtures can be an overwhelming experience. Taking on too much can leave you with regrets, and a financial obligation to a decision that could have stayed an easy and less costly one.

Blind eye to your home’s bones

5.       So you live in that wonderful cozy cape in the suburbs. The one that was passed down from your grandparents. Yes, an upgrade may likely be in the future. You do not want to ignore the home’s bones, discounting the outside style of the home and going with a modern Italian retro look in the inside can become a cast for a broken bone that will never heal. That white marble floor in your kitchen with the swanky, eat-in white leather nook may work elsewhere, just not in your home. This can also be a hindrance if you ever need to sell the property. Over the top personal customization only serves the owner, and will be an expensive transition back to normal.

SE Seattle Bus Tour - Reviews

Here are a few more reviews of last week's bus tour of SE Seattle, sponsored by REAPS:

"I believe it was very valuable and well organized. I only wish I had entered this market earlier, but have full intentions of going there now! Thank you so much Wendy!"

 

--Steve Erland, REAPS investor and ferry boat captain

" It was good meeting you. Great job on the event, the tour was well done and worthwhile. I would recommend it to others.

The only thing I might change is to offer more in the way of networking after the event. For example, a lunch opportunity in one of the Columbia City restaurants would have been lovely."

--Ann Sammon, real estate broker

 

"I really liked it. Got to get the story about the area for both general interest and for investing purposes. The presenters were very valuable to have ready to explain and give some historical perspectives and address concerns (eg small guys vs institution), incentives. Not sure if every year would make sense. I would get a bit more from a repeated tour but would want more “new” information.

I would recommend it for folks to learn about the market and the programs/incentives available. Maybe more time afterwards to network and meet with the various presenters afterwards. I would present less upfront – incorporate while on bus and then chat afterwards. We will have seen what presenters are referring to after the tour. The upfront intro lengths were good – not too short but not excessive that gets everyone itching to go. Thanks for bringing refreshments.

The other thought I had was whether this is even appropriate for beginner real estate investors. There is so much to start in RE investing; I’d put development at least a rung or two up the ladder. Not to be exclusive for the sake of exclusivity but to help raise the level of conversation of the group. There were definitely seasoned people but also some very new people to RE. But if they want to  start a business (nonRE), this is very applicable."

--Angel Prentiss, REAPS investor