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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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Archive for Single Family Homes


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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Real Estate Networking 2.0

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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!


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Balancing a Portfolio with Real Estate in it

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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!

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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.