Sick of the Hype?

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.

Search The Site

Find what you're looking for ... enter keywords below:

Holla’ At Me

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 August, 2008


Marcus & Millichap, Here I Come!

Posted by: | Comments (3)

So, the news of the week is that I have decided to hang my commercial real estate broker’s license with Marcus & Millichap.  I have had good experiences working with brokers from this firm in the past and I believe they have an excellent training program for getting new agents up and running quickly and with best practices.

Why This Real Estate Agency?

After interviewing several other commercial real estate brokerages in Seattle and Bellevue, I liked Marcus & Millichap because I believe their platform creates a lot of data that will support the property sellers’ ability to price their properties well, optimize income and minimize expenses, and anticipate changes in the market places, all so that they sell quickly and for maximum profit.  Basically – by working there, I will be able to provide a lot of value to my clients.

The company has a niche in working with primarily sellers (rather than representing buyers, tenants, landlords, etc.) and specializes in properties worth $1 – $10 Million.  In the Seattle real estate market, most buildings that fit this classification are owned by individual investors (like me!) rather than corporations, REITs, full time real estate professionals, or  institutional investors.

Since I really enjoy *connecting* with people, and being able to relate to their needs, I am looking forward to working with this type of client and being able to provide them services that *I* as an investor myself, would also appreciate.  I think that is exactly what I’ll be in the position to do with this firm.

Getting Started as A Commercial Real Estate Agent!

I start working at Marcus and Millichap at the beginning of September and my understanding is that my first task will be to choose a market area and become very familiar with it.  I’ll be driving the properties, taking pictures of them, finding out what rents are, talking to tenants, chatting with neighbors, and generally putting on my detective hat to get the lay of the land.  It should be a lot of fun and I am pretty excited.

At this point, I’m thinking I might specialize in apartment buildings in the north end of Seattle.   Why? Residential rentals are the property class I have the most experience with and the north end being where I live. :)  I’m open to changing that, though, based on where the opportunities lie.  Maybe I’ll end up working in mobile home parks, self-storage, retail strip centers, or something I haven’t even thought of yet.

The Biggest Challenge of All:

IMG_2858 The hardest part of the whole thing, I think, will be not being home with Blake all day.  Now, working from home, I get to watch him smile when he wakes up from a nap, sing to him, make funny faces at him while we eat lunch together, and smell his sweet baby scent.  I will miss that while I am working, but I know when he is older (his talking, walking toddler years seem like they’re approaching all too fast!), he won’t find it fun to idle away his afternoons sitting in his bouncy seat and watching me work from home the whole time. 

I think he will come to enjoy preschool, learn from the other kids and teachers there, and we can all treasure our time together in the evenings and on weekends when we have time to focus on each other exclusively.  Perhaps by the time that baby number two comes around, we’ll end up having Ben stay home to be with the kids and work on his writing career.  There are lots of possibilities!

So, off I go, embarking on my new career as a real estate agent.  I’m moving quickly and am ready to learn!


Real Estate Networking 2.0

Posted by: | Comments Comments Off on Real Estate Networking 2.0

Lately I have been exploring new ways to network with people… first there was which my college roommate had joined.  Then there was where all the professionals seem to meet.  After my high school reunion, I joined to see what all my old classmates were up to.

But now I have found the ultimate in online networking for real estate professionals.  This is a place where realtors are helping each other (no nasty back-stabbing competitiveness), leads are being exchanged (and money made!), and realtors are moving to the top of the search engines for local search – building their credibility and exposure, all for free!

Commercial Real Estate - Seattle, WA Emily J. Cressey: Commercial Real Estate Agent in Seattle, King County, Washington

It’s called Active Rain and after much (hours) of poking around there yesterday, I decided to create an account there.  I have started an industry-specific blog on commercial real estate investing in Seattle, WA, joined several networking groups (they have groups for realtors, investors, short sale gurus, mortgage brokers, appraisers, real estate trainers, escrow agents – virtually everyone involved in real estate!), and set up my profile.

In less than 24 hours, I’ve already had over 15 people welcome me to the community.  It’s an amazing place.

If you are a real estate professional and have been interested in building your business online, I encourage you to check out Active Rain.  One of the big agents there is getting 2 listing leads per week off her online presence there.  She is an agent and she also works a lot of short sales, so it’s clear that there is value here no matter which side of the fence you’re working the business from!

Hope to see you there!


Comments Comments Off on Real Estate Networking 2.0

Balancing a Portfolio with Real Estate in it

Posted by: | Comments Comments Off on Balancing a Portfolio with Real Estate in it

A recent caller I heard on The Dave Ramsey radio show had an interesting question about balancing her portfolio when she was investing in both stocks and mutual funds.  Her husband loved investing in real estate and liked to be very hands-on with their properties.  She was more comfortable with owning stocks and mutual funds because they offered liquidity – she knew she could get her hands on the funds quickly if something terrible happened and she had to cash out her stocks in a day or two.

The call caught my attention because it’s a topic my husband and I have discussed extensively as well.

Here’s What Dave Ramsey Says About How Much Real Estate to Own:

For the record, the "expert" Dave Ramsey said he would recommend somewhere between a 50/50 portfolio split and a 75/25 portfolio split (that’s 75% real estate and 25% stocks).  Dave is a big real estate fan and he said his personal portfolio is weighted 75% toward real estate because he doesn’t mind the hassle factor that real estate presents and he thinks it’s worth it to get superior rates of return.

The big BUT here is that Dave Ramsey only buys real estate free and clear.  After going bankrupt himself, he does not believe in taking on debt, so he buys properties all cash at a discount, with no loans at any time.  Therefore, when he owns $100,000 in real estate, that means one property worth $100,000; not 4 properties with $25,000 equity each and $300,000 in debt in total.

This is an important distinction because debt (also known as leverage) can improve your rate of return on a property, but it can also increase the risk.  If you are buying real estate WITH DEBT, as most of us are, I think it makes sense to be a little more cautious. 

If You Leverage Your Properties, Grow Your Portfolio Prudently

I’ve talked before about the importance of being able to pay for your properties long term.  With a mutual fund investment strategy, if you go through a rough patch – like a job loss – you can stop making contributions to your funds for a few months while you get back on your feet.

With real estate, you don’t have that flexibility.  If the property has negative cash flow, goes vacant, or needs repair, you have to keep writing checks to take care of your property, whether it’s convenient or not.  (And face it, when is it EVER convenient to feed a property?)

My partners and I own an apartment building that suffered roof damage in a recent storm.  It’s needed over $200,000 in repairs which we’ve had to pull together from our personal accounts.  It’s been important to have the liquidity to handle that type of emergency to avoid the property being further damaged due to the problem going unresolved.

As You Buy More Real Estate, Stockpile More Cash

So, how much of a cash reserve do you need if you own real estate that’s leveraged?  It’s hard to create a specific formula in the abstract, but here are some issues to take into account:

  1. How much equity do you have in the property?  If you needed to liquidate quickly (within 6 months) would you be able to do so?  Would you walk away with cash or would you have to pay out at closing?
  2. Does the property have negative cash flow or positive cash flow on a regular basis?
  3. How well diversified are you?  (The more different properties you have in different areas of the country, the less likely you would suffer from a "catastrophic" down turn in the market in terms of falling rents or property values.)
  4. What is the sales and rental market like?  If you have a waiting list of buyers or renters there is less risk than if there are relatively few people shopping for what you have to offer.

Personally, I keep a "real estate cash account" separate from my other mutual fund investment accounts or personal funds.  In this cash account, I keep about a 3-month reserve to pay for each property’s mortgage if it were to go vacant.  (If you have a smaller number of units, this is an appropriate sized reserve, if you have a lot of units, you probably don’t need to keep that much cash on hand.  You’re well diversified and chances are not EVERY unit is going to go vacant at the same time.)  I also keep funds available for major upcoming repairs and capital expenses. 

This account is just good safety/housekeeping for my real estate portfolio, I don’t include this balance in my "investable assets" column.  I would not spend these reserve funds on a down payment for a new property, for example.  I keep them liquid (and therefore, not "invested") so I can always safely manage the properties I have.  Kind of like a trust account or operating account that you might keep with your property manager


Deciding Where To Invest Your Next $25,000

In terms of portfolio balance, right now I would say my net worth is balanced at about 80% equity in real estate and 20% in mutual funds.  That’s mostly because I’ve been working full time as a real estate investor for the past several years and acquiring property at a rapid rate, much of it purchased with private funding.  So, my real estate portfolio has grown very quickly through my efforts.  However, I haven’t been generating lots of CASH to invest in mutual funds.  (You still can’t build value in your stock portfolio through sweat-equity work, as far as I know… :) )

At this point, my husband and I still want to continue acquiring real estate, but we are focusing our CASH INVESTMENT efforts into building up our mutual fund portfolio, so that our investments are balanced closer to a 50/50 mix.


Basically, we do this: 

  1. When we get cash – from the sale of a property, from contract or employment income, or as a gift, we first make sure we have enough money on hand to fund our day-to-day expenses and we check to make sure our reserve accounts are topped up.  (Outside the real estate reserve fund, we also keep 3-6 months of living expenses available to us in a money market fund.  We tend to go for a big "emergency fund" because we consider our investments illiquid.  We don’t want to be forced to pull money out of our mutual funds, retirement accounts or real estate.)
  2. Our second step is to make sure we’re getting the employer match on Ben’s 401(k), fully funding our Roth IRA’s, and then we put additional budgeted amounts into the 401(k).  (The tax-exempt annual contribution limit is $15,500 for a 401(k), I believe.)
  3. Any savings after that get divided up into our investments.  Right now we are working on building up our mutual fund account balances so we’ll be closer to a 50/50 split with our net worth divided between real estate and mutual funds. 

    (Unlike Dave Ramsey, we DO believe in good debt, so we’re just counting property equity, not property value, in that figure.)  One conservative way to estimate the value of your real estate’s equity is something my friend Steve Maxwell taught me.  Rather than using the "appraised value" to determine your real estate equity, use the "liquidation value."  For example, if I had to sell a property and anticipated paying a 6% realtor commission plus 2% in other costs (repair, vacancy, etc.) and I thought I would get about 4% less than appraised value because the market was slow, I would subtract those costs from my appraisal of the property’s value, to estimate how much I would really net if I were to sell the home.  In this example, that would mean taking 88% of the appraised value and then subtracting the loan balance to determine my equity.
  4. Each year my husband and I review our holdings, we re-calculate how much we have in real estate and how much we have in stocks and what our goal is for that year.  We might want to acquire one house at 70 cents on the dollar, one commercial property through Grassland Investments, LLC with 100% financing, and put a certain amount into stocks each year.  Then we set up an automatic purchase plan to buy the mutual funds at Vanguard and get to work looking at the types of properties we are interested in buying. 


You’ve Heard It Before: Slow and Steady Wins The Race

One thing that I learned from acquiring a lot of houses in quick succession earlier in my career is that you don’t want to just buy as many houses as possible.  You want to buy the best houses, and make sure that for each one you buy, you’re keeping a certain amount of money liquid, too, so that you can afford to take care of the house after you’ve purchased it.  A big mistake that a lot of investors make is buying a ton of houses with leverage, only to have the house of cards come tumbling down once they hit a down swing in the economy had have several extended vacancies, lowered rents, or expensive repairs.   It’s much better to grow your portfolio in a sustainable way.

Holla’ Back

So, now you know what I do, and what Dave Ramsey recommends.  I’m curious to hear how you handle this issue.  How much of your portfolio is in real estate versus the stock market?  Do you have any other investment categories that you allocate a significant portion of your investable assets to?  Comment below!

Comments Comments Off on Balancing a Portfolio with Real Estate in it

Going for the Realtor’s License

Posted by: | Comments Comments Off on Going for the Realtor’s License

After long debate with my husband and myself, I have decided to pursue getting my real estate license.  The goal is to put my skills as a real estate professional and financial planner wanna-be into use as a commercial real estate agent.  I feel that from this vantage point, I will be well positioned to help other people close deals (and net out some cash when I do!) in between working deals in which I am an investor.


The big advantages of becoming a commercial real estate agent are:

  1. More cash flow for me… this is the biggest one.  I have lots of great "INVESTMENT" real estate, but not a lot of cash flow from my current properties.  One of our goals is to let my husband, Ben, be a stay-at-home dad and writer, and that means I need to bring home more bacon, more often.
  2. The potential to "passively" invest in some of my clients deals – thus diversifying my real estate portfolio and letting someone else do the heavy lifting when it comes to putting the deal in place and managing it.  (The question is – will I feel comfortable that they are going to make the deal profitable?)
  3. Access to more research and data about the different marketplaces across the country.
  4. Better contacts with real estate professionals working at a higher level.
  5. The ability to get on the MLS if I want to do more deals for my own account.


The disadvantage is that this will be a lot of work! 

To be successful in the commercial brokering world, my understanding is that you have to work hard and be diligent day in and day out, even when you’re not earning much up front.  I’ve been told to expect a 2-3 year ramp-up to get the business running on its feet, and get my income up to six figures. 

Also, since the financing markets are a little dicey now, it could be harder to get deals closed after finding a ready and willing buyer.  Fewer people might consider this a good time to sell, thus I will be entering the field at a competitive time.

We will see what happens, though! I’m excited.  I’ve been interviewing with a lot of different firms to find out where I might like to work most.  I will keep you posted on this venture to become a commercial real estate agent! 

If anyone has tips on what firm to join (or not join!) or how to be successful in this field, I would love to hear it.  My google searches have not yielded many answers to these questions! 



Comments Comments Off on Going for the Realtor’s License

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.