Nancy Braam

One Real Estate Investment Plan: Never Sell

This works best with 1st time home buyers, but can work for most people until you get into high-priced homes.

To start: Buy your first house and immediately start saving your next down payment. It will most likely take a few years to save it so this gives you time to enjoy your home and lay down some roots.

When you have your next down payment saved, buy your new home, but don’t sell your old house. Keep it for a rental. Most likely it will more than cover the monthly payments, so what you are really doing is letting the renters finish paying the house off for you. If there is excess money over the payments you can either apply it toward the principal and get it paid off faster or you can put the extra in the next down payment savings account.

If you buy into this plan, you will pick your first couple of homes with an eye toward rentability. Go for 2 baths if at all possible – you can get as much or more rent for a 2 bedroom, 2 bath than you can for a 3 bedroom, 1 bath. And there are less people to wear out the house. 3 bdrm, 2 bath is ideal though.

For other real estate investment ideas, click here.

French Flea Market Meets Driftwood Salvage – Design Trends For 2012

It means that most anything goes in 2012. With the housing market still in the dumps, many people are choosing to update their current home. Here are some tips from top designers.

Emphasis on contrasts… in textures, patterns and colors.

“The basics get bolder: Over the last year, we’ve seen wood finishes getting lighter, rougher and unfinished. As a result, upholstered furniture is fighting back from beige! We are seeing a slow trend towards bright, colorful and bold patterned sofas and chairs. It’s not “grandma’s floral,” but rather rich velvets, silks and chintz with bold patterns and contrast.”  Kelli Ellis Interiors, Orange County, CA

“Layers of silky fabrics and luxurious wool, the combination of velvet and brick, stainless steel and wood design ideas create attractive contrasts.  Mixing decor accessories, made of natural stone and shiny plastic, metal, wood and fabrics are interesting home decorating ideas that add charm and unique character to contemporary interior design.”  Accord Staging – see their blog.

What’s happening on the color front? We continue with deep and bold colors.

“The dominant color is Grey. Warm Grey, Light Grey, Charcoal Grey. On walls, furnishings, window treatments, artwork, grey will be everywhere. Also coming on strong will be Yellow! In addition, know that Orange will still be hanging around; Purple is on its way out and Brown, which had a very long run, is gone.” Stephanie Henley (Stephanie coined the title phrase.)

Remember: Paint is still the cheapest improvement with the most impact. Fresh paint makes everything look new. Pick a  modern color scheme to make your home current.

Supersizing is still in…giant mirrors, large wall art, over-sized graphic scale. On a budget? Try stencils, framed posters or enlarged photographs.

If moving isn’t in the cards for you this year, remodeling and updating can make your current home your dream home.

HUD Foreclosures In Bellingham and Whatcom County – Week of 12/26/11

There are more HUD homes for sale this week than normal. 9 total. Only 2 are new.

This new one is at 3625 W. Rusley and they are asking $205,000. It’s a 3 bdrm, 2 bath, built in 1968.  West Rusley is a little close to the freeway as you can see on the map, but not a bad area or neighborhood. It looks like a pretty good deal.

Click here to see the others available this week. Prices are as low as $73,800! The highest is $225,000.

If you’d like to make an offer, see inside or get more information, contact me.

If you don’t know about buying HUD homes, here’s what you need to know.

A Word About Hiring Contractors Your Friends Recommend

Ellen trusts Rudy. In fact, they go to the same church. Ellen needs some work done on her house before she puts it on the market. Rudy recommends Mike. Mike has been a contractor for years.

First Ellen hires Mike do to some odds and ends inside the house and he does a fine job. When they discover the roof needs replacing, she hires Mike to do that also.

I met Mike. He talks the talk. He knows a bunch of the local builders and developers and we swap stories. He completes the work and Ellen pays him. All said and done, about $7500.

The house sells in the next couple of months and the purchaser prudently has a professional inspection. Much to our surprise, the inspector says the roof was “unprofessionally installed”. There were a lot of nails showing and the shingles weren’t even fully overlapped. The valleys were tarred. We had it inspected by a professional roofer and they said that basically it was a hack job done by someone who didn’t know what they were doing.

Since we told the buyer that we just installed a new roof, this made them understandably uneasy, and they were ready to walk.

Luckily, Ellen is a smart woman and knew that if the problem wasn’t remedied with this buyer, it would have to be remedied with the next, or any buyer. Besides, she paid for a new roof and a new roof she would get.

We had a new roof installed by a professional roofing company that warranties their work and saved the sale. In checking on Mike, we found that his contractor license expired in 2002 and naturally he isn’t bonded.

Mike’s story is that the roof was installed okay, although now he is not returning phone calls or emails, and he didn’t bother to talk to the inspector or the roofer. Maybe he thinks the problem has gone away. What do you think?

We are prepared to go to small claims court if he refuses to pay for the new roof. I think it’s a slam dunk win. I love small claim’s court.  I’ll keep you updated.

Moral: Don’t hire people to do expensive repairs who have no way to guarantee their work.

How Many Stinking Offers Do I Have To Make?

Let’s call her Leslie. She’s a first time home buyer getting an FHA loan with 3.5% down payment and hoping for a little help with closing costs from the seller. Her credit is good. She is a professional with a good job and a bright future. Her price range is $200,000 or less. It sounds doable, right?

So why is she is making offer after offer and not getting a house?

1. It’s tough to compete with cash. In her price range there are some good bargains. This is also the price range in which investors are looking. Leslie feels justifiably slighted when the seller counter-offers a cash buyer who made a lower offer than she did. She’s the one that stepped up on the price. Her offer was even the first one written.
2. She’s making offers on houses out of her price range – hoping the sellers may be some of the really motivated one’s we’ve heard about. Is that a bad strategy? No, but it’s a long shot to start with, so most won’t work.
3. She’s making offers on short sales. This is a complete wild card. Even if you offer the list price there is no guarantee the bank will approve. More on short sales.
4. She doesn’t make a quick enough “buy” decision. There are a lot of folks looking for bargains right now. When one comes on the market, there is no time to do research or anything else. We have plenty of time for that after they accept. If you wait until there is another offer, almost anyone with a bigger down payment will take it away from you.

Under $200,000 in Bellingham is very competitive. If you are a low down payment buyer, just expect to stay in the game and keep looking and making offers. Keep your spirits up. Try not to take it personally. If you just keep going, I guarantee it will all work out.

The 5 Most Important Tips To Negotiating Real Estate Deals

Are Americans Wimpy Negotiators?

In the international arena of negotiation, Americans are considered wimps because we believe in fairness, so we tend to “split the difference” a lot. In many cultures, fairness is not in play at all…which is another whole story. Splitting the difference is not negotiating and the only time you should do that is when the price difference has been whittled down to a puny amount and negotiations have faltered.

This is straight from the top negotiators. Some of it is common sense.

1. Know the strength of your Plan B option. That means, what will you do if you don’t make this deal work? You’ve heard it said that the person most willing to walk away has the most power.

• If you are a buyer and have three other houses you like, you have a strong Plan B and therefore can negotiate from a position of strength. If you have 3 days to find a house or you will be in the street, your Plan B is not so strong.
• If you are a seller and you’ve already made an offer on another house – not much strength. If you have multiple offers – you are in a strong position to negotiate.

2. Inventory your bargaining chips.

• People tend to think only in terms of price, but there is a lot more. For buyers – maybe the seller would like 3 weeks to move out or they really love their refrigerator. Think about giving them that to get the price you want.
• Sellers can negotiate appliances, lawn mowers, extended closings or the deck furniture.
• Earnest money, title company, closing date, performance dates are all negotiating points you can use. Read the rest of this entry »

Buying HUD Foreclosures In Bellingham and Whatcom County

HUD Website

If you are like many buyers right now, you are looking for good deals.  Some of the best deals I’ve seen are HUD homes. These were government guaranteed loans, like FHA, that have been foreclosed and now the government owns them.

Like most times when you work with the government, the process has been “simplified” into the most convoluted and pain-staking way possible.Working through the process is worth it, though.

To make it easier to understand, let’s break it down into steps.

1. Finding HUD homes. Go to the HUD website by clicking here.  Click on the state, then on the county in which you want to look for homes or fill in the address or city in the Search Properties section below. If you use that option, keep it as general as possible, like just the city. There might be only a couple in your area at any given time but check back often because they turn over quickly and new ones are added daily. Read the rest of this entry »

Lummi Island Living at it’s best!

Beside being a gorgeous 2800 square foot custom home with a killer view, this home has the most ingenuous boat launch you’ve ever seen. Start with automatically pulling the boat out of the garage, load it up conveniently, jump in and ride it down the ramp to launch. No one else has a boat launch on this whole area of the island. If you fish, it just couldn’t be more convenient. When you come back with your catch of the day, don’t mess up the inside kitchen – clean, cook and serve in the outdoor kitchen.

• 3 bedrooms, 2.5 baths
• 100″ of waterfront, 1/2 ac lot with gardens & fruit trees
• Large two car garage plus boat garage.
• Views from Chuckanut Mountain to Point Roberts.
• Offered at $695,000

What Are Valid Expenses For Investment Real Estate?

When you are looking to buy real estate as an investment, one of the most important numbers you need to know is the Net Operating Income or NOI. That is the actual income after expenses (not including the mortgage payment).

Here are the some common expenses:

• Property Taxes
• Insurance
• Management Fees
• Utilities paid by the owner
• Repairs
• Maintenance
• Advertising
• Supplies
• Lawn care
• Cleaning & Janitorial
• Legal and accounting
• Licensing
• Vacancy

Sellers love to leave out Management Fees, repairs, maintenance and especially vacancy rates.  In fact, it is quite common when you look at an investment property listing, the only fees the sellers include are Taxes, Insurance and Utilities. Then they work the Cap Rate or Cash on Cash return based on the NOI that is not realistic. They argue that you might do your own management or yard care. I say, if you do, you should be paid for it by a larger bottom line. These are valid and standard expenses and should be included to determine a realistic value.

It’s important for you to work your own numbers and determine your own Cap Rate and Cash on Cash return. Ask for the seller’s last couple years of his or her Schedule E. This is what expenses they deduct on their taxes. Granted, there are some write-offs for taxes that you aren’t going to use to determine an offer price, like travel expenses if the seller lives out of the area or depreciation. The most important item on the Schedule E is the true Gross Income. Don’t just take the seller at their word when they say, “It’s always rented.” The Schedule E will also show you what they are spending on repairs, lawn care, cleaning, etc.

There is no substitute for doing your own investigation! If you need help, contact me.

How To Make The Most Of A Scouting Trip To Bellingham

Take the harbor walk

Thinking of moving to Bellingham, WA, but have never even been here? Lots of people want to check out the area to determine if its a place they actually want to live. Here’s a plan to make the most of a short trip to Bellingham.

Before You Get Here

1. Make a list of what’s important to you. Like to hike?  Want a hospital close by? Are you a big shopper? Like quality entertainment? Ride horses? Weave or knit? Hunt?  Take classes?

It doesn’t matter what it is, but if it’s important to you, it goes on the list. Hobbies and interests give you great opportunities to meet people and get connected in your new community.

2. Make a housing needs list. What kind of environment do you like? Quiet and wooded? Urban and bustling? You’ll want to check out the housing possibilities while you’re in town.

3. Call or email me to schedule a time to meet. Talking to a local is invaluable and will save you tons of time! If you share the above lists with me, I’ll have mega information ready, tailored to your needs.

When You Arrive

1. Get an overview of the area

We’ll get out a good map and circle all the areas and neighborhoods you should drive while in town. Talking with a local will insure that you don’t miss the gems. I’ll fill you in on the best restaurants, shopping and things to do. Read the rest of this entry »