Nancy Braam

Bellingham Stats For Homes On Acreage

Have you ever thought about owning a home on acreage on the outskirts of Bellingham? The following chart shows the activity for the past 6 months and compares it to sales for the same 6 month period a year ago. If you have any questions, contact me.

Just to explain: The Original List price is the price they first came on the market with. The List Price At Time Of Sale takes into account that they reduced the price one or more times before they received an offer. Then there is the price they actually paid.

Not long ago, it was the dream of many buyers to own their own mini-farm. Grow food, have animals, have privacy and room to breathe. It seems that has changed. This segment of the market is sluggish at best. I believe many buyers are overlooking some real bargains. Many times you will pay as much for a house on a city lot, which means the extra land and, quite possibly out-buildings, are your’s for free.

Request a list of the very best deals.

How To Spot A Grow Operation

Have you noticed anything suspicious in your rental or listing? Abundant security? Extra power? Growing equipment or medium? Here’s some tips on spotting a grow operation.

How Can Canadians Live In The US?

There are a number of ways Canadian citizens can legally live in the United States, here are the most common.

The Peace Arch

1. Second Home. Canadians can maintain a second residence in the US. In order to be legal, they must a.) keep a primary residence in Canada – must own or lease, it can’t be a place in the kids basement, b.) they must show that they can support themselves. and c.) they must go home.

Many people think they can stay up to 6 months per year. This is a misunderstanding. The 6 month rule is a tax rule, not an immigration rule. You are considered a permanent resident for tax purposes if you live in the US over 6 months and you must file a tax return. There actually isn’t an established limit to the time you can spend at your second home. The border patrol can make a judgment call on this and if it is determined that you are spending too much time at your second home, you can be turned back at the border. You are not allowed to work.

2. Permanent Resident Visa or Green Cards. For immediate relatives, including spouses, children under 21 and unmarried, and parents of US citizens over 21. Visas are also available to siblings of US citizens and spouses of permanent residents but these can take a really long time. For instance, the Philipines has a 30 years waiting list.

A substantial number of permanent resident visas are set aside for aliens based on employment in the US.

3. Investor. These visas are available to citizens of countries that have an agreement with the US which includes Canada. You must make a substantial investment ($100,000 or more) into a viable company and you must own at lease 50%. These visas are complex and is is highly recommended that you consult with an immigration attorney. 

A good place to start to gather information in www.cascadiaimmigrationlaw.com. For a consultation, I recommend Greg Boos who can be reached at 360-671-5945 or gdboos@americanlaw.com.

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.

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.

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 »

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.

Common Real Estate Investment Analysis Formulas

Gross Rent Multiplier - the ratio of the price of a real estate investment to its annual rental income before expenses. The lower the GRM the better. This doesn’t take into account expenses, and should not be used to determine if a property is a good value.

Price: $450,000 / Annual gross rents: $36,000 = 12.5 GRM

Price: $450,000 / Annual gross rents: $46,000 = 9.8 GRM

Capitalization Rate (Cap Rate) - the ratio of the Net Operating Income (NOI) to the price. The higher the Cap Rate, the better. This is straight return on investment.

Net Income: $24,000 / Price $450,000 = 5.3% Cap Rate

Net Income: $34,000 / Price $450,000 = 7.6% Cap Rate

To work it backwards for pricing properties: i.e. You know the NOI, you think a 6% Cap Rate is a marketable rate.

Net Income $13,000 / 6% = Suggested Price $216,666

Cap Rate does not take condition of the property into consideration. If there is deferred maintenance, the Cap Rate should be higher. Brand new – lower.

Cash on Cash Return - the ratio of the Cash Flow (NOI minus debt payment) to the down payment . Determines the true return on actual investment. The less money down the higher the return will be:

Cash Flow:$2300 / Cash invested: $50,000 = 4.6% Cash on Cash

Cash Flow: $2300 / Cash invested: $36,000 = 7.6% Cash on Cash

None of these factor in depreciation, other tax advantages, mortgage rates, or appreciation. The Net Operating Income is the Gross Income minus the expenses. You have to be careful because Buyers and Sellers tend to determine expenses differently.

Amazing HomePath Financing Options For Bellingham Homes

What is HomePath?

It is a mortgage program offered by Fannie Mae when you purchase one of their forclosed properties. You can have a down payment as low as 3% and still pay no private mortgage insurance!

What are the benefits?

The mortgage can be fixed-rate, adjustable or interest only.

• The down payment can be a gift, a loan from a non-profit, state or local government, even a gift from your employer!
• The lender doesn’t require an appraisal.
• No Mortgage Insurance!
• Fannie Mae can pay a percentage of closing costs.
• Good on primary residence, second home or investment properties.
• Many condo requirements are waived.

HomePath for fixers

They offer a renovation mortgage where you can get 35% (up to $35,000) for repairs done after closing. The only difference from the regular HomePath mortgage is the repair amount is determined by an appraisal of the completed project.

Who’s Eligible?

Everyone! The reason they are offering this is to get rid of their foreclosure holdings. They aren’t property managers and they don’t want to own homes.

What’s the catch?

You can only get a HomePath mortgage through approved lenders. It’s not much of a catch because we have several local lenders that do them.

For a list of HomePath properties currently on the market in Bellingham and Whatcom County, fill out this form and I’ll keep you updated.

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New Listing – Ferndale Rambler

2510 Lakeridge Drive, Ferndale WA

I just listed a really nice home.

Built in 1998 by Turner Construction, this one level home really has a perfect floor plan. Big enough, but not too big with 1866 square feet. The master suite is at one end of the house and the 2 additional bedrooms are at the other end.

• The kitchen has unique granite counters, not the common granite I call “builder’s” granite. There’s lots of counterspace for working and plenty of cupboards and cabinets for storage.
• There’s a formal dining room and a large breakfast area. The owners used the formal dining room as a TV room and still had room for a large table in the breakfast area that looks out on the back yard.
• The master suite is large with a big walk-in closet and bath with jetted tub and separate shower. There are sliding doors to the patio.
• The living room has high, vaulted ceilings, designer colors and a cozy fireplace.
• The 2 car garage was an extra shop area and additional paved parking along side.
• The landscaped and sprinklered yard is really pretty. The back yard is lush with a waterfall. Very peaceful.

Here are some photos – click to enlarge and see as a slide show. To take a look, contact me.