Two Ways to Invest in Property When You Don't Have a Ton of $$ to Start Out With

by Dan Jensen
Relocation Services Director - Equity Northwest Properties Group
Investing in Real Estate is a dream for some, a practical activity for others, and the path taken by so many people over years and years of our Country's history to amass significant financial holdings and net worth!

Okay, so RE is a sound path to building your financial empire, but what if you don't have a ton of dough to start with? Is it still possible to invest in real estate?

Short answer is 'Yes Indeed'.

Example/Tool Number One - Option

You see a house you like that's for sale or may be soon... someone you happened to be talking with who said they need to sell their house in the foreseeable future but aren't quite ready at this point. Maybe next year after the kids finish the school year. You express interest in the "possibility" of buying their house and ask if they might consider selling you an Option to Purchase the home - say $500 for the option right to buy the home at a price you both think is "fair".

The Option can be good for any length of time, but let's say this one is good for one year. As time moves along, the value of similar homes increases just a bit, 5% in this case, and the agreed upon price you and the owner set is now a few thousand dollars less than "Fair Mkt Value" for the home. You run an ad in Craigslist offering to sell your Option for $2500 and whoever buys your Option owns the lower price for the house that you negotiated. Whether they exercise the option and buy the house or not, you've made a little extra that allows you to do 2 or 3 similar options and roll up the totals over time to "bankroll" your other RE investment strategies that do require a bit a coin to complete.

Example/Tool Number Two - Lease Purchase

You do your research and find a couple of houses that haven't sold for several weeks. One of the owners just lowered the price on their house to try to attract a buyer, and the other one is running ads that have words like "Urgent", "Hurry", "Must Sell NOW", and the like, telling you they really need to get out from under their mortgage.

You make a couple of calls and ask if they will consider you taking over their payments IMMEDIATELY and put together a Lease Purchase for 3-6 years. The IMMEDIATE relief from their next mortgage payment is enough to persuade one of the owners to accept your Lease Purchase proposal, you write it up with a "Fair" price for their home stipulated, and run a different ad on CL this time...

You're looking for a buyer-tenant for the house. You've made the first mortgage payment ($1600 or so) to your home owner, which buys you a month to find a suitable and interested buyer/tenant for the home.  Your Buyer/Tenant wants to own a home, but they can't get a mortgage for whatever reason, so your Lease Purchase offer makes home ownership possible for them as they repair their credit, season their time at their job, or whatever the case may be.

In short, your are providing them with the opportunity to own a home, something they deeply want, and in doing so, they are not only fulfilling the terms of your Lease Purchase agreement with your seller, but your new Agreement with your Buyer/Tenant is sweetened a bit and will yield money down and a little monthly cash flow for you as well. Well constructed and negotiated, there's likely another bit of cash for you on the back end of the deal when your Buyer/Tenant buys the house!

Not a bad deal throughout!

The details are key here, and too many to try to summarize here, but this Tool allows you to create 1.) cash in hand on the front end, 2.) cash flow throughout the agreement term, and 3.) profit spread on the back end when your Buyer/Tenant executes the purchase of the home.

In both examples above, you have never "OWNED" either home, but you negotiated "CONTROL"  OF both homes that results in PROFIT FOR YOU!

As small pieces of profit begin to add up, AND WITH SMALL amounts invested by you, it opens the door to additional Investment Tools that benefit from having more of a financial capability. We'll cover a couple of those ADDITIONAL TOOLS in our next post here.

In the mean time, get ready for a great Independence Day week ahead of us and thanks for checking out our blog!

Real Estate Investment 101- It's Not as Complicated as You May Think!

by Dan Jensen
Relocation Services Director - Equity Northwest Properties Group

This is a follow up to the May 30th post on Real Estate Investment.

I thought it might be useful to debunk some of the myths out there in the market place about complexity issues, need for huge financial reserves, "but the market is saturated with investors" issues, etc. By providing a short and simple overview of some of the investing strategies and processes within Real Estate, I'm hoping to stir your thinking and perhaps open doors of possibility as well! (Check back over the coming 3 Fridays)

When someone says, "real estate investor", what comes to your mind? Are you thinking Daddy Big Bucks finding great deals on huge commercial office buildings (are you thinking 'The Donald' about now?), or are you thinking about that little 87 year old lady you met last month who methodically purchased small rentable houses over 40 years of her lifetime and has been very comfortable financially for the last 20+ years living on the rents her tenants pay her every month?

Or maybe your thinking went right to the tanned fellow in jeans and work shirt who just finished remodeling that "fixer" he bought a month ago and who is about to 'flip' that property for a nice profit as a reward for his work?

There's no question that each of the above represents real estate investment. These and many other scenarios begin to describe the variety of paths you could choose to follow if you ever decided you'd like to invest in real estate. This is an especially important time to be thinking about such things, as we are highly likely to see a return to higher inflation rates in the USA, and real estate has traditionally been one of the most powerful protections against general economy inflationary cycles.

But most who think about investing in real estate don't ever put their thoughts into action. Lack of money is one concern. Not knowing a good deal from a "great" one is another concern. Carving out the time to do any kind of research and investing is another barrier for many.

Let's break it down in the days ahead and see if we can move beyond these "barriers" to RE investing.

Here's 3 pieces I'll be detailing in the weeks ahead...

1.) You CAN invest in real estate with VERY LITTLE MONEY in your bank account

2.) You CAN accumulate a strong RE portfolio, increasing your net worth steadily, over time.

3.) You CAN "Buy Low & Sell Higher", turning fixer properties into nicely remodeled properties. It helps if you're handy, but even if you're not, you can still invest in this way and make it pay.

Next Friday, I'll describe 2 tools that allow you to invest in real estate with VERY LITTLE MONEY.

Check back then, and as always... give us a call if you have questions. We love to help!

Have a great Father's Day weekend!

Have You Considered Becoming a Real Estate "Investor"?

by Dan Jensen
Relocation Services Director - Equity Northwest Properties Group


Certain words will often produce specific responses in each of us. "Good", "Bad", "Tall", "Short"... We each have our own understanding of what those words are describing, and there are some pretty dramatic differences in each description.

It's the same with the word "Investor".  What do you think of when you read the question, "Have You Considered Becoming a Real Estate Investor"?

     * Having a million dollars cash sitting in a strong box at home and looking for great real estate deals

     * Having ZERO dollars, but still being able to make stunning RE deals with "no money down"

     * Gradually buying one rental house after another over a period of years until exceptionally wealthy

     * Buying a great home at a great price, living in it, and watching the value grow into a retirement fund

The fact is, all 4 of these can easily qualify as "Real Estate Investments", and a dozen more descriptions in addition to these.

Investing in real estate is much more about your objectives in purchasing a property, and not so much about which path you decide to take in order to reach your objectives. Any of the four paths listed above can move you steadily toward the investment objective of building wealth and/or income. (two very different results, by the way!!!)

Most homeowners in the USA bought their home with no real thought of that purchase being a part of their wealth/income investment strategy. You want a great home for you and your family, and "yes", you're counting on your home to increase in value over the years that you own it, but it isn't really about investing in that house at all.

Then careers grow more rewarding, and the idea of a second home, a "vacation" home might begin to percolate in your thinking, and sure enough, you find a great beach house within a sensible drive from the family home, and you buy that it. Once again, not really thinking real estate investing, just expanding the enjoyment you're experiencing through your dwelling arrangements.

However, the moment you look toward that little starter home two blocks over that you drive by on your way to work...

or...

You investigate that cute little 2 bedroom beach house just down the sand a couple of houses from your vacation home...

with the idea that you can buy it for a great price and either resell it for more soon, or rent it on-going for a nice additional stream of income,
you've clearly crossed over! to the "Investment" side of the house!

We've heard it a thousand times before... "More wealth has been created and/or maintained through Real Estate Investment that by any other method"! It's true, and we know it's true, but the financial numbers are significant, and we don't have all THAT MUCH extra to work with, so we dismiss the idea as a possibility for us, and never find out more.

There are some very powerful and AFFORDABLE ways to move safely and productively into real estate investing.and we'll be covering a few of those over the coming weeks. Check back for more.

Also, if you are intrigued a bit and would like to compress the information timeframe, give us a call. We would love to do some strategizing with you about ways to invest that you might find useful.

Thanks for checking in with us. We love to help!

The Value of a View

by Rod Sager
originally posted on Real Estate with Realtor Rod 5/16/2014

Norwood Street, Camas, WA

A view is perhaps the most subjective part of evaluating real estate. What is it worth? In high end real estate a view is not just appreciated, it is often expected. View lots can easily command premiums in the 200% range. The problem with a view is that it may not be a 'forever' view. If one were to pay a handsome price for a property based on a wonderful view; they would be most displeased if that view were eroded years later. Trees can grow up and block a view. A neighbor can build in front of the view.

359th Avenue, Washougal, WA

The value in the view is subject to the person buying the property. I happen to value views very high. I like a good view. Other buyers may not be so inclined. If a view is something highly valued by a buyer, then that buyer should exercise caution to be certain the view will last.

Homes that are perched out on a cliff or bluff are likely to have a lasting view. Homes set on large parcels with allot of space in front of the view will also likely be able to control the fate of the view. Waterfront properties tend to keep the view indefinitely as well.

Ammeter Road, Washougal, WA

Buyers should not pay a large premium for a view that is easily corrupted. If a neighboring property owner has the authority to plant big trees or build a large structure that will block the view, then that view's arbitrary value is greatly reduced.

A view is also subject to its own 'greatness'. Is the view a peek-a-boo view? Is it seasonal only? Is the view out a obscure bathroom window? Or is it a grand panorama placed conveniently in front of a large living room picture window? All of these factor into the value an appraiser might place on the 'view' a property offers. An appraisers opinion of the view's value may not align with the buyer's idea. If the buyer is borrowing money for that home; the appraiser's opinion becomes a Gospel truth.

500 Broadway, Vancouver, WA

Urban views in high rise condos are often fleeting. The city may approve a taller high-rise right in front of an existing high-rise. The view shown here on the relatively low, 5th floor of 500 Broadway, Offers a straight shot right up Broadway. Since it is unlikely the city will ever approve a building in the middle of the street, this view is at least partially protected.

There are many views here in Clark County, Washington that are suspect at best. Yes they offer a beautiful vista across the river into that other state...Oregon. But often there are young trees that will soon grow mature or another subdivision that may go in soon. Buyers willing to pony up big bucks for a view need to be sure the view is going to endure.

Buyers should understand that short of deeded protections in the land in front of a properties "view". There are no guarantees that any view will always be there. Buyers should consider the likelihood that the particular view they are buying is going to be a 'forever' view. The view below looks across four acres that is owned by the view holder. This is a fairly protected view.

Bear Prairie, Washougal, WA

"Must Haves" in Your Real Estate Professional - Part II

by Dan Jensen
Relocation Services Director - Equity Northwest Properties Group

When You're Buying Your Home...

Last Friday, we talked about the skills necessary in your Real Estate Professional when you're wanting to market, promote, and find a Buyer for your home.

This week, we'll move to the other side of the table and talk about the skills you "Must Have" in your Agent when you're searching for a home to purchase.

1.)  A significant knowledge about and awareness of the real estate market where you want find your home

Every community has both "highly" visible and "hardly" visible houses that are For Sale. Just about any Agent will have the ability to check the area Multiple Listing Service to see what homes are being offered for sale, just as you have that ability with numerous online search sites. Where YOUR RE Pro should step things up a notch is to also have a significant awareness of those available homes that are Hardly Visible and that require an on-going working knowledge of the search resources and networks where more and better information about homes that are for sale might be found.

For Sale By Owner, recent Expired listings that haven't yet come back onto the market, "pocket" listings that fellow professionals know about, but that are not yet listed on any MLS, and so on.

Your professional should also have their finger on the pulse of the real estate market trends in order to know which of the neighborhoods are showing the most activity, where finding for a seller that No One Knows about may well be considering making a move and will, therefore, be putting their home up for sale soon.

Area market alertness and constant vigilance on your behalf will increase the number of houses that are available to you during your hunt for that next GREAT home!

2.)  Availability to provide help within your timetable

Life happens to us all! No way around it, just when we most need to be available to accomplish an important task or service, life will dish up 17 distractions, challenges, or outright roadblocks. Your real estate professional faces "Life" too, but every professional should have a solid, well-oiled Back Up Plan to be sure that if Life happens when YOU need their help, there will ALWAYS be a team mate available to jump in if life prevents them from personally serving you.

Every solid professional in real estate has seen to a Plan B back up plan to be sure their Clients will always have exceptional service available. Many professionals have developed Teams specifically for the purpose of great depth of knowledge and availability than any one RE Broker can provide you.

3.)  No surprise here... YOUR Broker Should NOT disappear after the home has been purchased!!!

Is your Agent available to answer questions TODAY, even though you're not buying, selling, or investing in real estate?

Has it been months since you moved into your new home, and you haven't heard a word from your Agent?

Did your Agent update you each year since you purchased your home to let you know what your current market value is?

Are there periodic reports made available to you about your community real estate trends, opportunities, and community "Big Events" that might have an impact on you, your family, and your real estate plans?

Have there been any offers from your Broker to discuss ways for you to reduce your monthly mortgage expense, payoff your home early, add value to your home, and protect the value of your home?

These are all benefits your chosen professional can and will make available to you, not only when you're in the midst of a real estate transaction, but ON GOING!

Next week, "Have you ever considered becoming a Real Estate Investor?"

"Must Haves" in Your Real Estate Professional

by Dan Jensen
Relocation Services Director - Equity Northwest Properties Group

When You're Selling Your Home...

There is a distinct and dramatic difference in the skill set needed to help you market, promote, and effectively find a home buyer as compared to the skill set necessary when you're searching for a home to buy.

Three "Must Haves" to be sure YOUR real estate professional will bring the right tools to the job of helping you SELL your home are:

1.) A sound & effective Marketing Plan

Your real estate agent should have a simple, but powerful marketing plan showing you what marketing and promotion will be done in order to attract the most qualified home buyers. The Plan should certainly be more than simply putting your home into an MLS and a few flyers in the box on a sign.

If you are considering any agent's help in selling, be sure to ask if they have a marketing plan or system that they use. If the answer is 'Not really', find another agent. However, few agents would admit that they don't have a marketing/promotion plan to a prospective home Seller, so be sure you also ask your agent to discuss in detail, each of the steps of their marketing system when you meet. It won't be long before you have a very clear sense of whether the Plan is new to them, or if they are experienced in it's use.

2.) Regular Updates & Communication

You should ABSOLUTELY! expect to hear from your agent regularly throughout the process of marketing your home, through the escrow, and beyond. Information about what other agents who have shown the home had to say, what has been done to promote your home each week, what options you have in making your home more attractive to potential buyers, and more.

If you are not hearing from your agent, call them and ask them to call you at least weekly with an update. If they don't, consider finding a new agent.

3.) Doesn't disappear after your home has been sold

This is a very important MUST HAVE!

Too many times, agents disappear after the transaction has closed. It's unlikely that the agent who helps you sell your home will disappear before they have also helped you find and buy your next home, but why should you have to settle for an agent who pulls a disappearing act on you EVER? You shouldn't have to settle.

Your real estate professional should consistently be available to answer whatever questions about real estate you may have, whenever you have them. There should be regular market updates, and an annual valuation report for your home... are your gaining in value, stagnant, or losing ground.  There should also be communication when special opportunities or area special events, workshops, and Q & A's to keep you alert to trends and those changes that may be effecting your real estate holdings (even if it's only the family home!)

These three are core to every real estate professional's services to their Clients. If you haven't experienced this kind of care, you may not be working with a true professional!

Next Friday, the 3 Must Haves when you're buying real estate.

Things are heating up...The kettle is starting to boil.

by Rod Sager

The market is moving into full 'Spring Fever' mode. Buyers are out in force and well priced listings are gone in two days. This kind of frantic buyer behavior is tempered a bit by the tighter lending practices of today versus the wild and crazy mid 2000's.

It seems like the buyers are sensing a shift in the wind. They are not as hesitant as they were in 2010-2013 to jump into this market. Mortgage rates remain very low and prices are starting to move upward at a fairly quick pace.

Buyers looking for a less frantic experience may want to seek properties that are either a little over priced or not quite move-in ready. These properties tend to hang around a little longer and sellers will get "real" and come to terms at a good price.

My concern for my buyers is that they are in danger of being priced out of the market. Everyone wants that turn key property that doesn't need any work but the value is that light fixer or that clean but dated house. Perimeter areas like Yacolt, Amboy and La Center are now seeing activity as well. Areas further out often enjoy a spike in popularity as people get priced out of the market in close.

The market is heating up and the kettle is starting to boil...