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Sensationalism is everywhere and it's hard to know what's real, anymore. The economy is tanking, the marketing noise is deafening, and you just don't know what tomorrow will hold. This site is dedicated to a no-hype retelling of what's working for me in real estate, business, and life. Welcome.

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Emily is available for speaking appearances and flat-rate consulting on the topics of personal finance and real estate. Please fill in the Contact Form for more information.

Archive for July, 2008


Getting out while the getting’s good

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Today my realtor is sending me an offer on a home I have for sale in Winston-Salem, North Carolina.  This is a property that I bought subject to the existing financing and have owned for several years and run several tenants through.chipfront2

It just came vacant in May, after a friendly eviction, and fortunately for me, the tenant left it in great shape.  However, the neighbors told us it seemed like the tenant was coming back to visit a few times (and removing some of the trees he had planted in the yard…?) so we decided it was important to change the locks right away. :) “Crazy tenant, tricks are for kids!”

I decided to sell this property rather than continuing to hold it for a number of reasons.

Why I’m Selling This Rental Property Now:

  1. It’s hard to manage since I live far away and it doesn’t have a strong cash flow to pay for a manager… we could do it, but we’d probably have negative cash flow after factoring in the vacancy and repairs.
  2. The home doesn’t have much equity and when I bought it Subject To the existing financing, I told the owners I’d try to have it paid off within 8 years’ time.   So, I’ll have to sell it at some point soon.
  3. The property doesn’t have much appreciation potential.  What I realize now, which I didn’t at the time – being inexperienced when I bought the home, is that there isn’t a lot of demand for that type of property in that location.  It’s a double-wide mobile home on a permanent foundation on a nice acre of land, but double-wides, even attached to land, don’t have the same appreciation rates as other types of property, AND, Winston-Salem, NC has had a very FLAT housing market and it will probably remain flat for the foreseeable future.

So, I’m going to unload it and put my attention onto properties that are in stronger markets with better cash flow and equity positions.  I asked my realtor in Winston-Salem to stage the home, and after about 3 months of showing, it sounds like she has a buyer who can get financed and is eager to close.

It’s always exciting to see someone achieve the dream of home ownership for the first time, even if I’m helping it happen by not making much money on the sale.  I learned some great lessons as a landlord and I am now more particular about what houses I buy.

What I Learned From Owning This Rental Property:

  1. Buy WITH Equity – ideally buy with 20-30% equity. I bought this house on great terms, Subject To owner financing, but it had no equity on Day 1, and due to low appreciation rates, still has no equity.
  2. Have a management plan in place.  I was doing well managing this property until I left town to move to Seattle.  It can be expensive to manage your real estate, whether you pay someone else, or invest your time to do it yourself.  Make sure that you have a solid management plan in place, whether the property is local or not.
  3. Don’t finance your tenants. I’ve had 3 tenants through this property in a short period of time.  Many of my tenants have to leave because they got in over their heads and/or had an interruption in their income.With 70% of American families living paycheck to paycheck, it can be hard for people to keep up on their bills when the proverbial rainy day comes and they have a glitch in their income or encounter extra expenses.

    I have found it’s NOT WORTH IT to let people get behind on the rent, they never catch up and are even less reliable about paying on time in the future.  NO PAY – NO STAY.  It’s a tough policy to stick to, but it’s part of being a landlord.

  4. Know why you’re buying the property – show me the money!  In this case, I was “buying on the come” as my father would say – hoping that in the 8 years before I had to refinance the property, it would have gone up in value.  However, due to the property type and location, this was not the case.  The good news, from my perspective, is that it didn’t go DOWN in value either, as so many investment properties have across the country today.The important thing about these more “speculative” investments that don’t come with equity, is that you have to be able to afford to stick with the property (cash flow-wise) until you’re ready to sell.

    If the market has a downturn when you planned to sell it, you might find you need to hang on an extra 5-10 years in order to sell it at a profit.  The problem so many investors are having now is that they’ve bought homes with negative cash flow that now have negative equity as well.  That’s a tough combination to ride through the storm.

Real estate is still a great investment.  (I’ve also got a property with potentially a $50,000 profit going on the market this week, too.  I’ll tell you about that one soon.)  The key to making it work is taking the long view, not over-extending yourself and having a firm strategy in place.

Post your comments below and let me know how your properties are doing!

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Working at Home as a New Mom!

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Hi there,

I apologize for being out of touch for a few weeks – you’ll have to forgive me, I just had a baby! Happy Baby Over the Shoulder

Baby Blake is very healthy and happy… he hardly cries and all and really makes things easy on his parents – we are very grateful!

Never the less, working from home with a new baby is not as easy as I first thought it would be.  There are feedings, fussy periods (that always surprise me when I’m trying to talk business on the phone), sleep deprivation, diaper changes and more!  Lots of little interruptions throughout the day, not to mention the times when he is awake, smiling and wants to be interactive!  (I try to squeeze in the work without being distracted by gazing at the little faces he makes while he’s asleep!)

I was lucky that my husband was able to take 3 weeks off work to help take care of me and the baby right after he was born.  Now he’s back at work, and my biggest complaint is that it’s hard to get out for networking meetings with a baby in tow – I still haven’t figured out a good daycare/babysitter solution, yet.

Anyway, that’s the update, I hope to be back posting regularly now that Blake is 6 weeks old and I’m falling into a routine a little more.  Here are a few pictures of Blake, and for real fans, you can tune in to his blog: for more pictures, videos and updates!

IMG_36572008 06 29 012

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Advice to a 29-Year-Old Wealth Builder

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One great way to get free advice is to ask for it!

Last month, we got an email from one of our newsletter subscribers who had been in touch off-and-on and following our work for a while.  Both my partner Rob Powell and I took the time to respond to his very polite questions.  (Of course, it helped that he had been on our teleseminar and bought one of our products recently!)

I found the exercise fun and inspirational.  Read along with "Mr. J" and see if you can relate to what he is going through.


Hey Emily and Rob,

You mentioned a few things on the call that may or may not be covered in Steve’s Book (I did purchase this, but obviously have not read through it yet!), but I was wondering if you can point me in the right direction or maybe even give some advise on a few things?

A little background on me real quick since I trust you guys – I’m 29 yrs old and married for 3 years and have a 7 month old baby.  My wife does not work and I bring in about $64,000 per year right now. We don’t have any credit card debt at the time (we pay it off at the end of the month) and just paid off one of our cars (our other car will be paid off in 4.5 months, but I am making double payments to do this now that we finished our other car note), we have purchased a fixer upper house, but more on that below. We also have student loan debt.

Robert Powell Says:   This is great.  Good position to be in.  That student loan is something you may want to pay off once you pay off the car.   Your goal now should be getting out of the rat race. (Have you read Rich Dad, Poor Dad?)

Emily Cressey Says: Congrats on your lovely wife and your baby – this sounds very similar to my situation!  How much is the student loan debt and what is the interest rate on it?  I agree that it probably makes sense to address (pay off) your student loan debt next as fast as possible, but you may or may not want to delay your savings/retirement investing to do this, depending on your interest rates and how long it would take.



I have about $16,000- $17,000 in a 401(k) from my previous job and am looking at moving it into a self directed fund – Same question as the gentleman on the call, but maybe less money! :) You have to start somewhere right!?

I was getting my money matched while I was working so investing in this was a no-brainer for me, but at this point I am not investing anything into the account. I have to figure out my cash flow, but should I continue putting money in this? Should I move it? Should I look at investing it into a higher yielding investment? I’m trying to turn myself into a learner, so education is a big one I know! Right now I know just about ZERO :)

Robert Powell: Good question.  Moving to a self directed IRA is important and a good move.  Should you continue putting money in? This all depends on you and the timing.  If you are just going to spend the money on things that are not going to get you to your goal/dream…. then yes…continue to save it.  Putting it in your IRA is a good way to do that.  But…if you are going to invest that money ….then start using the money that you would be stashing away and invest in yourself by educating yourself.  If your ultimate goal is to have your own business, build asset wealth, etc…then invest in yourself and get educated.  If you can do both…at the same time then do so.

Emily Cressey: I would roll over the 401K into something that you can control more directly (where you aren’t limited to employers investment options).  When my husband left his last job we decided to roll his 401K into an IRA.  We have ours at Vanguard which is a low-cost mutual fund company.  I like mutual funds and the long-term return on these is usually 11% a year.  They also have stocks, money market funds, etc. 

My concern with the self-directed accounts that allow you to invest in real estate, notes and other non-traditional asset classes, is that when you have a relatively small amount of money to invest, they have higher administrative fees (I think it’s like $200/year) that can eat up your savings.  Also, if you don’t have an investment to place the funds with, you’d be holding the cash in a low-interest account while you are waiting to find an investment.  So, depending on when and how you plan to invest this money, it may or may not make sense to use a "non-traditional" self-directed custodian.   You can look at Pensco and Equity Trust for more information on those types of investment options.

You may also want to consider rolling over the IRA into a ROTH IRA.  You’ll have to pay tax on it now, but you will be able to withdraw the profits tax free when you are 65.  It’s like this – you’ll pay tax on $17K of income now, and then not have to pay tax on your millions down the road.   Might want to run some numbers on that to see if it makes sense for you, but generally I think it does make sense for young people who will be growing their retirement fund nest egg and have a lot of wealth and high tax bracket down the road. 

Also, if you are looking to ADD to your retirement savings, I would open and fund a ROTH IRA right away, rather than a regular IRA.  You can put in up to $5K per year for you and I think $5K per year for your wife – if she’s not making any money outside the home, I think she can co-qualify with you if you file taxes jointly.  Not sure on the details, but I think you can both have one.


We purchased a home 1.5 years ago and got a pretty good deal and financed it 100% because of this (we also had no money at the time for a down payment our interest rate is 6.875). This is my primary residence, but also an investment in the fact that we are going to fix it up before we move. We are looking at moving in 1-2 years if everything lines up.

My question, with interest rates dropping, how is the best way to pull money out to finish fixing our house up?  Maybe the better question to ask is where to learn about this, because I don’t have a lot of knowledge about the difference between taking out an equity loan, or re-financing but taking out a larger line of credit to use for repairs or even other investments?

I purchase my house for $48,500 ($6,000 of that was for membership fees at the golf community we live in) and it has appraised for around $78,500 with the property value (I have just under $50,000 on my mortgage).

Robert Powell:  You are in a great position.  If you absolutely need to do the rehab and you are treating your home as an investment…then you can get great deals on a HELOC (Home Equity Line of Credit).  Right now…Compass bank is doing 4.25% HELOCs with no closing cost, no…nothing.  Having ready cash in a check book form is a great way.

Emily Cressey: What kind of repairs and what are the cost of the repairs?  If you can do the repairs yourself over time, I would consider that. If you have to hire them out, I would wait to do them until you are ready to sell the home.  Otherwise they will depreciate in value (the new floor will get scuffed, the paint will get dirty) as you live in the home, and you won’t realize the full return on your improvements.  Also, you will increase your house payment while you are living in the home.  This is a "lifestyle" expense rather than an "investment" expense because you pay more to live in the home if you take out a loan for the improvements. :)


So, with Rob’s comment on the phone call about this being a great time to be liquid I’m just wondering what to do in these two situations? At this point we do not have a substantial amount of money in savings either for a "just in case" fund.

Emily Cressey: It’s a great time to be liquid if you are looking to move into stocks or real estate in the next few years while the market is still low but starting to turn around.  I wouldn’t be in a rush to sell your house and increase your cost of living unless the house is really no longer acceptable.  Remember that paying more for your residence is more a cost of living item.  It’s great if you can make money on your home, but don’t fool yourself into thinking it’s a great investment and use that as an excuse to pay more than you can afford or stretch yourself too thin.

If you have a good cash reserve of 3-5 months of savings, and you feel like your employment income is stable (I would have a larger reserve than you might otherwise, given that only 1 spouse is employed) then I would consider starting to invest.  Remember, when you invest money in stocks or real estate, you should plan to have it tied up for at least 5 years.  If you think you’ll need it before then, find a more liquid place to hold your cash (e.g. Money Market fund making as high an interest rate as you can) or use it to pay down debt.

I would consider looking at short term/low cash demand investments (start a business, rehab houses, etc.) before getting into potentially more cash-intensive investments like real estate.  Based on your numbers, it sounds like you could hold and cash flow rental real estate in your area, but be careful that the cash flow can get eaten up by repairs, vacancy, etc. and you may have to feed your properties from time to time, which can be tough if you’re illiquid because all your cash is invested elsewhere.

Good luck to you and your family.  Keep us posted on your progress – Emily


I hope this has been a helpful "look over the shoulder" of our advice to someone who may be a little like you!  If you would like to have your questions answered, let us know and maybe we’ll be discussing your situation here soon!

About Emily Cressey

Emily Cressey is a real estate investor and licensed real estate agent living in Seattle, Washington. After graduating Phi Beta Kappa with an Economics degree from UNC-Chapel Hill (Go Tarheels!) her focus has been on building business for cash flow and investing in real estate for wealth. If you have questions about real estate investing, personal finance, or would like some flat-rate, affordable advice on one of these topics. Please fill in the Contact form.