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.

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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 Real Estate


Tax Time – Do you understand your tax return?

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Whoa – I was amazed to see that my husband and I were getting a giant tax refund this year.  Good as it feels to get that nice check from the government, mathematically it doesn’t make a lot of sense to try to get a lot of money back.  You’ve just loaned that money, interest free to the government for a year.

This year, though, that rate of return definitely beats out the performance of my portfolio in the stock market… wonder if I should think of it as diversification?

Part of the reason our refund was so big is that we had a baby this year and my husband didn’t adjust his withholding at work.  Also, we have a number of real estate investments in our portfolio, and we have the ability to write off the “depreciation” on these because I am a full time real estate professional.  That’s a special tax status that lets you have unlimited depreciation loss, rather than capping the loss at $25,000 each year.

The more involved in real estate and business you get, the more opportunities you have to save money on your taxes.  However, you’ll also be getting more and more complicated tax returns to fill out.

I discovered a few years ago that I could not efficiently and accurately complete my own tax returns and I started using a CPA which was a great decision for me.  They do it much faster and cheaper than I could do it myself.  That’s another form of leverage, freeing up my time to focus on revenue generating activities.

If you’ve started using a tax preparation software or other tax professional to prepare your taxes, it’s still important to review your return.  It would have been easy for me to skip to the bottom line, see I wasn’t going to have to write a check for my taxes, and sign and mail my returns after my accountant sent them back to me.


Instead, I decided to sit down and review them and I found several items I had questions about.  Whether you find errors and inaccuracies, or just notice items that show you’re saving money or have the opportunity to pay less tax, it’s important to know what you’re doing with your finances, and your annual tax filing is a good time to sit down and review things when the numbers are all in one place.

Look at how much you’re spending on taxes, medical insurance, interest on your home mortgage, and your retirement savings.  These are some of our biggest expenses and it’s good to know where the money’s going.

Financial reviews more often are even better, but at tax time, they are a must!

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Are You Getting Out of The Market?

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I promised I’d keep you up to date on the stock market insights passed along from my Father who spend a good deal of his time immersed in the financial news of the day.  And there is some heated political commentary here which I don’t apologize for since I think the misguided “fairness” policies of the Obama regime are in large part responsible for a lot of the pessimism in the stock market now.

My parents are so upset that my Dad really shocked me when he told me last night that he was stabilizing his financial position by getting SIGNIFICANTLY out of the stock market, selling shares at a loss, and going into secure assets like cash and treasury bonds.


He suggested that he is concerned that the stock market will continue to do badly for the next 2-5 years or more and that the recession that we’re currently in will turn to a depression shortly.

This might be a good time for you to review one of my most popular posts – What to invest in during a recession.

Given that Ben and I are much earlier in our investing careers and not approaching a retirement horizon as my baby-boomer parents are, he admitted that it might make more sense for Ben and me to not SELL in order to increase our cash position, but to continue to stock pile cash, rather than dollar-cost-averaging into the market as it continues the Obama-fueled free fall.

Assuming the market has another few bad years ahead of it, we don’t need to be in a rush to continue buying in.

Take away lesson – look for security in cash, government bonds, and precious metals.

Inflation and Deflation

Also, he mentioned that we face both inflationary and deflationary risk.

Deflation will come in the short term – this is caused by economic contractions in which people lose their jobs and can not afford to pay as much for things like houses, cars, food, recreation, etc.  Deflation will cause the cost of goods to go down.  This is bad for businesses and people who hold real estate, as the prices they can charge for goods and services will decrease.

Inflation will come over a longer period and Dad thinks it is somewhat inevitable at this point.  Inflation means that the currency loses it’s value and spending power.  Milk used to cost $3 a gallon and now it costs $4.  This erosion of the dollar will massacre baby boomers’ retirement funds.  (This is unfortunate for Obama’s so-called “Investor Class” since it punishes the people who have worked hard and saved and done the responsible thing all their lives…)  Anyway, inflation will be one of the few “tools” that the government has to dig us out of this mess with.

When inflation strikes, leverage can be your friend (the opposite is true during Deflationary economies).

Bottom Line: Cash Now, Buy Later

It’s an ugly time in the US economy right now.  The smart money is on storing up cash until “the bottom” – whenever that might be – and keeping an eye out for a turn around, both in stocks and real estate.

For the stock market, the news today said that we’d know we were close to the bottom when the market didn’t keep having these giant downward slides like it has for the last couple days, and we started to see stronger interest in buying into the market.

The real estate market is a little slower moving and even easier to time the bottoms on.  There’s some great information about knowing when to buy, sell and hold real estate here.


Family Budget Best Bets:  Keep your job, look for extra ways to earn income – such as babysitting, lawn mowing, delivering pizza, starting a business, etc.  Then sock it away!  According to my friends in MLMs, network marketing or “direct selling” as it’s called now, does well during a recession because people are willing to put the time and energy into making a second stream of income during lean times.


Good luck!

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Seattle Real Estate Update From Redfin

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I just got a monthly update on the state of the Seattle real estate market from my real estate brokerage, Redfin.

Showings are up… More buyers are looking but not buying yet.
Redfin’s traffic is through the roof: up 43% in January, and probably another 30% in February. Other websites have reported similar gains.

Seattle Real Estate Market Down 13%
Year over year in 2008, the Seattle real estate market is down over 13% and down 16% from the peak. Read more Seattle real estate stats.

More Distressed Sales
According to Redfin stats man Mose Andre, 11% of the listings in Redfin’s major markets (Seattle, California, Chicago, D.C., etc.) are being sold by banks, up from 3% in April 2008.

Check out Redfin’s blog for more fun real estate statistics and a way to buy real estate without paying your realtor an arm an a leg.

Or register for a webinar on how you can take advantage of today’s distressed housing market.

Time to put out the rain buckets!


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Status Report – Short Sales Abound, Even in Seattle

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Wow, in the last month, I have been surprised by the number of short sale homes in the Seattle area.  I have recently started showing homes for Redfin, a low-cost, full-service real estate brokerage started by some local entrepreneurs here in Seattle. (The super-cool connection is that it was started by two guys in my high school class that I ran into last summer.)

How Does Redfin Real Estate Work?

The way it works is that clients do MLS-style neighborhood searches to find the homes they want to tour, then they sign up for a tour for free with a local neighborhood realtor.  Once they identify a home they want to put an offer on, they call the “lead agent” who negotiates the deal and handles the paperwork for them.

None of the agents work on commission, so they are free from any sales pressure.  It’s all about customer service at Redfin.  As a result of doing their own neighborhood research and using the firm, they can save about 1/3 of the commission.  Also, statistics are showing that Redfin agents negotiate better (they don’t get paid more if the buyer pays more for the house) so our buyers are getting better prices on the homes they buy, too.  All-in-all clients are saving about $10,000 when they buy a home in the $500,000 price range.

Why Real Estate Agents Don’t Like Their Buyers To Pursue Short Sales

Anyway, one thing Redfin DOESN’T support is showing or supporting transactions on short sale property.  Short sales don’t make a lot of sense to buy for the individual home owner because they take so long to negotiate.  It can take 3-6 months in many cases to pursue a short sale, and even then, you have no assurances that the bank will say yes to your offer. 

Although this long turn around time isn’t necessarily a big deal for a real estate investor, it can really slow down the average home buyer who might be looking for a personal residence sooner rather than later.   Also, most realtors don’t want their clients to be tied up waiting that long (they’d rather sell them something and make a commission sooner) especially since short sale attempts frequently don’t work out.

Realtor’s don’t like the back-and-forth of the negotiating with the bank – it’s a lot of work – and they don’t like the extended time table to close.  The hassle factor keeps many realtors and their clients AWAY from the short sale negotiations table.


How That Makes Short Sales A Great Opportunity For Real Estate Investors

So, what that means to us as real estate investors, is that we really don’t have as much competition for the short sale properties as we might on a regular home.  Sure, we’ll have MORE competition from other investors, like us, trying to get a good deal on the home… but that’s an opportunity, too.

If the primary buyer pool for short sale homes is investors, the home owners and the banks will have to settle for working with the lower-priced offers investors are inclined to make.

Plus, in today’s economy, there are really a lot of short sales to go around.  Many more than there have been in the past.  I was amazed when I was out showing homes this weekend, to see how many of the homes we had to scratch off our tour list because they were involved in short sales.

And THIS in SEATTLE which has historically been a very stable market.  It is still one of the strongest real estate markets in the country, so the fact that we have an abundance of short sales here, indicates to me that there are many more available elsewhere in the country.

In fact, my buddy Phil Pustejovsky has been investing in short sales for the better part of a decade and he says he’s never seen anything like this in terms of an abundance of short sales available now.  In fact, he’s got the corner on the market on his state, and is partnering up with investors from out of state so he can participate in short sale deals all across the country.

If you’re interested in partnering up with Phil, you can learn more about him and the success of the people he’s started working with here.  This is not some seminar salesman mumbo-jumbo… that’s HYPE.  Phil is not about Hype, he’s focused on HUD-1’s. 😉

How Long With The Opportunity Last?

I’ve started working with Phil to help him market his short sale business.  It’s going very well, as there is a lot of interest amongst active investors and promoters in short sales right now.

A lot of the techniques, like buying on terms that were big a few years ago have fallen by the wayside now… you can’t do a short sale or lease/option deal on an upside down property and still be conservative and make money, it’s just not a good idea.

This is a short sale market – that’s where things are right now.  Phil doesn’t know how long this window will last, he thinks probably just 12-24 months, but for those who are working the short sale business NOW, there is a lot of money to be made.  Phil is out there making it, and it’s very exciting to see!  (He does about one $50K short sale deal per month since he’s cherry-picking them) and he’s making another $10K/month in realtor commissions on the short sale deals that don’t pan out with the bank.

If you want to know more about his methods, you can check out his website, Short Sale Teaching.

Hope this helps!



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Is Now The Time For Getting Started in Real Estate Investing?

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The bloom is off the rose.  The real estate market is in the tank.  Foreclosures are popping up all over, real estate values are down, and you can’t find a house that will cash flow.

So Real Estate Investing Sucks!  

Or does it?

If you bought property in the last few years (say 2005 – 2008), you might be thinking that real estate investing is no fun, you got sold a bill of goods by a guru, and you have no idea how you’re going to make money on your properties.

It’s easy to get impatient, especially if the current market downturn has treated your real estate portfolio to a royal trouncing.  This might be a good time to bear in mind the adage: Don’t wait to buy real estate, buy real estate and wait!

Of course, it’s no fun to get rolled by a downturn in the market.  If you want to avoid that happening again, and use the market to your advantage next time, I suggest you learn to take a look at market cycles and understand how they work.

However, even if you bought at the exact wrong time, don’t give up on real estate investing.

Look at the current disaster of a market as a great opportunity to get started in real estate investing (again!).

A lot of investors make money by being contrarian.

When people are fleeing the markets, they buy in.

That’s exactly what’s happening right now, so this might be a great time for getting started in real estate investing if that’s what’s going on in your neck of the woods.

Even if it’s not going on in your area, it’s going on SOMEWHERE – find out where and invest there!

However, you definitely want to make sure that you can afford to buy property before you invest.

What should you look for in your deals if you’re getting started in real estate investing right now?

1) Appreciation Potential.  image

Generally speaking, appreciation is your largest profit center when you buy property.  It beats out the other 3 profit centers (cash flow, debt reduction, and tax savings) pretty handily in markets where it is utilized.  The challenge is that generally speaking high-appreciation market places (like California, Florida, Manhattan, Seattle, etc.) tend to have expensive property and it’s hard to find cash flowing deals there.

However, there are some great markets in Texas and other southern states where property still cash flows and goes up in value all the time.  As you explore the markets you want to invest in, consider the potential for property appreciation over the next five years.  You don’t want to bank on this appreciation, since it’s not a sure thing, but markets do have cycles, and if you can buy and sell at the right time, you stand to drastically increase your profit.

2) Price or Terms.  A good price means 80% of the “market value” of the home or less.  The more volatile/flat/falling your market place is, the LOWER I would insist on getting the price in order for the investment to make sense.  Good terms are things like buying the property with a lease option or subject to the existing financing so you can get in with little/none of your own money and credit.  (For information about investing with your IRA or getting private investors who want to do so, check out my IRA Real Estate Investing Series at

3) Cash Flow.  What is cash flow?  In many markets around the country, this is an elusive beast.  It seems that here in Seattle you have to put 40-50% down on a property in order for it to cash flow.  In other areas of the country, you can break even month-to-month even when a building is 100% financed.

Personally, I like for a property to be able to cover all of its own expenses, including vacancies and repairs.  This is easier to say, than to actually find these deals, but here’s the situation:  What if you are doing well financially right now and want to make an investment?  That’s great, even if the property has negative cash flow, you earn enough that you can feed it, right?  So, no problem.  However, what happens if you lose your job, get sick, or become disabled?  You may no longer have the disposable income you need to feed your alligator (alligator is a nickname for property with negative cash flow) each month.  If you have equity you could sell your property, but you may not want to do that, especially if the market is depressed when your financially emergency hits, like it is right now.

For those reasons, I like to see a property make a good rate of return from its cash flow without my having to feed it each month.  If you live in an area where negative cash flow properties are the norm because property values are so high, you can consider your options.

  • Use a higher down payment to get your mortgage payments down.
  • Have a large emergency reserve fund to cover the negative cash flow on the property for several years, so you’ll be safe in the event of a loss of income.
  • Invest in another part of the country.  Personally, this is what I do…

If Your Personal Finances Allow It, Consider This A Great Time To Get Started In Real Estate Investing

Raw beginner or experienced pro, don’t let the current market conditions rattle you.  Interest rates are low, buyers are scarce and sellers are motivated.  Don’t worry about putting together a “power team” or spending too much time creating your perfect entity.  Now’s the time to go out and take action!

Talk to real estate agents (like me!), call FSBO’s and FRBO’s from the newspaper, get a mentor if you need one, and start taking action – a little bit every day – that will move you in the direction of your goals.


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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.