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So far James has created 49 blog entries.

6 Steps to Real Estate Investment: Finding the Right Agent (Part 6)

The challenging thing about find the right agent is that you can't do a police line up and compare them.  Much of real estate is done behind closed doors and so it's hard to follow a track record for analysis. While a lot could be said about finding the right listing agent, I will just focus on the ones I think are most important. Integrity - a must have when you're doing business with anyone.  You need to make sure the agent has your best interest at heart.  There are many ways an agent can undermine your interests [...]

By |2018-11-10T22:33:52+00:00February 2nd, 2010|Uncategorized|

Six Steps to Real Estate Investment: Fixup (Part 5)

As mentioned in the previous post in the series purchase price is 70% of the battle.  Next in line would be fixup.  The general rule is: Do not go "over the top". During my time at an investment fund, of the ten or so homes we've went over the top we never recouped the costs.  We put in radiant heating, box beam, double crown molding, Viking appliances and the works.  In some neighborhoods it might be needed to sell the property, but you will likely not get back 1-for-1 on your money.  There are exceptions and if you [...]

By |2018-12-13T08:32:27+00:00February 1st, 2010|Uncategorized|

Why Firing Clients Improves Customer Service

Sometimes firing clients is the only way to improve customer service. My partner had been working with a buyer for months now and has probably showed the client more than 40 homes.  40 homes!  That's a lot even in this market.  After putting in a few unrealistic offers, the client decided to use another agent to get a "second opinion."  In my opinion, that the client needs a reality check and makeup his/her mind.  Incidentally, my partner Harold is a great guy and is by the miracle of God still single.  You can email Harold here. Ladies only. [...]

By |2018-11-10T22:33:52+00:00January 29th, 2010|Uncategorized|

Six Steps to Real Estate Investment: Financing (Part 4)

This next section discusses financing.  What's discussed below is what I believe to be correct and to the best of my knowledge.  However, I'm not a mortgage officer and you should consult a loan officer should you have specific questions. Should I Get an Interest Only or Principal & Interest Loan? I made the mistake of going with interest only (IO) for my primary residence.  I closed on my home in January 2008 with a 5.625% rate for the first five years and then floats with the prime plus 2%.  The 2% margin over prime is essentially the [...]

By |2018-12-13T23:54:44+00:00January 28th, 2010|Uncategorized|

6 Steps to Real Estate Investment: Cash Flow (Part 3)

Many people think they can be an investor real estate, but they don't realize how capital intensive it is.  I always suggest putting down 20% to serve as an equity cushion.  Some people put down less because they don't have the money.  My response to that, then you should wait until you do have enough. Using the same verbiage in Price (Part 2) we will continue to talk in terms of cents on the dollar (again, the dollar being the projected valued).  We will also use the same investment example. Flips For flips, the biggest challenge you face: [...]

By |2018-11-10T22:33:52+00:00January 27th, 2010|Uncategorized|

A Chat with Professor Jack Clark Francis

I recently did an interview with Jack Clark Francis the co-author of Contrasting Real Estate with Comparable Investments, 1978 to 2008.  He's a distinguished professor at Bernard M. Baruch College, served on the Federal Reserve, taught at Wharton School and the University of Washington, and authored publications about real estate, investments, derivatives, and finance. Tell me a little bit about your background. Grew up in Indianapolis and got my BA and MBA at Indiana University.  I was a paratrooper and company commander of 300 men.  I left after two years during GI bill, went to UW to study [...]

By |2018-12-13T08:29:01+00:00January 26th, 2010|Uncategorized|

Six Steps to Real Estate Investment: Price (Part 2)

As you've heard before, "Money is made when you buy, not when you sell."  Much of that truth has to do with buying something at the right price.  When it comes to flipping a property, I'd argue buying is 70% of the battle. After you comp a neighborhood to determine it's value you should back out 5%.  This is the a price where you can get rid of the property.  This "effective value" value approach will also give you a margin of safety. Comps should be predominantly based on closed sales.  These are homes that have actually sold [...]

By |2018-11-10T22:33:53+00:00January 25th, 2010|Uncategorized|

Six Steps to Real Estate Investment: Location (Part 1)

You've heard it before, Location, Location, Location! As an investment program, I'm going to emphasize more on knowledge of the location as opposed to preference. Most people invest in the area they live which generally is good because you're buying in a familiar neighborhood.   However, don't restrict yourself just to areas in which you live. A home in the Bellevue School District does not necessarily make it a better investment.  In many cases, popular neighborhoods make it harder to find investment-worthy deals for that very reason. Ben Graham wrote something along the lines of, "95% of stocks [...]

By |2018-12-13T23:53:44+00:00January 21st, 2010|Uncategorized|

Six Steps to Real Estate Investment

Six Steps to Real Estate Investment There are many variables to look at when determining suitable investments.  I've worked closely with an investment fund that purchased over fifty distressed homes in King County that ranged from development projects to turnkey deals.  I've summarized what I believe are the most important elements. Location Price Cash flow Financing Fixup Finding the Right Agent While my posts will focus on real estate investment in Seattle and King County, it likely applies for investment in other areas as well.  When you look at real estate investment there are two primary ways to [...]

By |2018-11-10T22:33:54+00:00January 20th, 2010|Uncategorized|

Expected Return on Residential Real Estate – What the Past 31 Years Tells Us

In of my previous posts I wanted to know reference the expected annualized return of real estate.  If I had to make a guess, I'd say real estate will return 5% based on conversations I’ve had with real estate agents, but I didn’t have any proof or statistical data to back it up. I did some research and found a great scholarly article Contrasting Real Estate with Comparable Investments 1978 to 2008 by Jack Clark Francis and Roger G. Ibbotson.  Francis is a professor of economics and finance at Bernard Baruch College (NY) and Ibbotson is a professor [...]

By |2018-11-10T22:33:54+00:00January 19th, 2010|Uncategorized|
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