At our weekly training workshop last week, our broker taught us how to set up relationships with banks now so that we'll be prepared in the event that we start to see bank repo's and foreclosures rising like they did in the early 1990's. A trend that might have previously been unthinkable in Seattle's HOT-HOT-HOT real estate market of the last 20 years.
Our firm has already begun working on short sales with a few commercial deals that went south as a result of the declining markets in the last year or so. One distressed seller owned a retail center East of the mountains, and we also have two condo conversions where the developer hasn't been able to sell the condo's, so we are listing the properties for sale and the deal will involve buying out the owners of the few units that have sold.
He's anticipating future opportunties with
Although I don't expect a lot of foreclosure activity in Seattle's commercial property marketplace, I do see opportunities lining up for buyers with the fortitude to invest during the tumult. What do they say? It's time to invest when there's blood in the streets? If there ever was such a time, that sounds like now!
According to Marcus & Millichap's research, the retail and office sectors are likely to be the hardest hit by the economic downturn the nation is experiencing. With less capital available, businesses are not expanding, and consumers are spending less, leading to falling business revenues. Combined with all the building that has been going on in the last few years (leading to new inventory available to lease), we are expecting to see:
For those with cash, this represents a great buying opportunity. For those without cash, lenders are still lending money if you have a big enough down payment and clean credit. Loans are still going through and deals are getting done every day. However, cash creates additional negotiating leverage in this time of financial uncertainty.
We Call it an "Opportunistic" Market
This may very well be the buying opportunity that many investors have been waiting for in the white-hot Seattle market that has seen cap rates in the 3- to 4- cap range in recent years. 5- and 6- cap properties are now widely available and buyers are working off of ACTUAL property performance figures, rather than pro-formas, meaning there is less speculation driving up the prices.
We are projecting soft prices in the Seattle commercial market for the next several years. If you have been thinking about buying an apartment building, office or retail space, this may be your perfect opportunity.
Call me to find out what we have available!
Emily Cressey
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As real estate agent and investor, I understand the needs of all parties involved in the transaction. Call me if you need help, buying or selling a commercial property in Queen Anne, Magnolia, Capitol Hill, Beacon Hill, or the greater Seattle/Tacoma area.
If you need help sorting through the current financial market turmoil to determine your next investment move, give me a call - 206-826-5700.
Are you Earning What You Thought On Your Seattle Investment Property?
I was stunned earlier this week to find that the average "Return On Equity" after taxes for the clients whose apartment buildings we have the opportuntiy to evaluate, was only 4% .
We probably all agree that 4% is a pretty low rate of return to be earning on an asset as challenging to invest in as real estate. When we look at the projected rate of return for vehicles much safer (savings accounts, CD's, money market accounts) and easier to invest in (stocks, bonds, REITs, and mutual funds), earning a 4% rate of return could really make you wonder if you were doing something wrong by holding real property. Especially if you started seeing your property values began to fall, as they are now doing, even in Seattle.
Seattle Apartment Buildings are Starting To Lose Value
Even historically sterling neighborhoods like Queen Anne, Magnolia, Beacon Hill, Capitol Hill, Greenlake, and other close-to-the-city areas are starting to see cap rates creeping up and properties becoming harder to sell as brokers have to drop listing prices to keep up with the falling market.
Is My Real Estate Investment A Big Mistake?
When you remember that real estate is illiquid, cyclical, can take time and money to manage, and doesn't provide an easy way to keep track of your investment returns, you may began to ask yourself if it wouldn't all be a little easier to just cash in the building and buy a nice easy municipal bond.
Well, be careful at what you're looking at. ROE only tells you part of the story.
Make Sure You Are Tracking Your Results and Looking at the Right Financial Indicators
The way we calculate it at my firm, the "ROE" or "Return On Equity" figure gives us only the CASH return the owner is earning on his equity. It includes cash flow from rents, laundry, vending and other income sources, but, importantly, this figure does not include a number of other important indicators such as debt paydown, tax savings, and most importantly, appreciation. When we evaluate property for clients, we include projections which incorporate these numbers as well.
You see, appreciation is the real wealth building powerhouse when it comes to investing in real estate. Especially in Seattle, where we've enjoyed rates of return on our real estate in the 10-20% range in more than our fair share of years.
That high anticipated appreciation is, in fact, the reason that people are willing to buy apartment buildings here with 4-5 cap rates (they're rising now, as property values fall...) for which they have to make a 50% down payment to qualify for a mortgage.
A Good Return After All
When taken together, these four real estate profit centers (cash flow, appreciation, tax savings, and debt pay down) comprise the real reason we invest in real estate. According to Lisa Vander, author of "The Real Guide To Making Millions Through Real Estate," these four sources combined should give us a 20-30% annual return on our investment portfolio.
And THAT, my friends, is the real reason we invest in real estate.
Seattle Area Real Estate Valuation - How to Get Yours!
Now, for a shameless plug. One of the most important services we offer for our clients at Marcus and Millichap is a real estate analysis. We offer these consultations free of charge, kind of like an "annual check-up" for your property, to help you better understand your property's performance and whether you are meeting your investment goals.
There is no cost to our clients for these services and, since it takes about 30-40 hours of work to analyze one building, the reports and data we provide are very comprehensive and useful.
Since on average it makes sense to sell a property after about 7 years of ownership, it can make sense to review your apartment building's performance regularly, even if you've bought it relatively recently.
If you would like us to take a look at your books and records to compare your property's performance to your investment goals, we would be pleased to do so. Give me a call and I will put you in touch with our best experts, whether your building is an apartment building, commercial building, office building, mini-storage or warehouse! Each of our agents specializes in a geographic area and property type. Talking to someone who knows the market will help you get the best numbers.
I hope you'll call and make sure your investment property is in good health in these turbulent times!
Emily
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Sell your house in Lake Forest Park or Shoreline Washington! I am a real estate agent who specializes in listing homes in the North Seattle neighborhoods of Lake Forest Park and Shoreline.
Studies show that most home owners (70%) list their property for sale with the first real estate agent they talk to. That's good if you find a competent agent right off the bat, but it tells me that a lot of those folks may not know what to look for when they interview an agent. They want someone who seems nice and sounds smart - most agents have that down in their listing presentations - but they don't know how to evaluate the skills that smiling face brings to the table when it comes time to sell a property.
Studies also show that only 16% of people who have used a real estate agent to buy or sell a property decide to use that person again in their next transaction. OUCH! That means a lot of agents aren't living up to the seller's expectations when it comes to delivering results.
I recommend that if you're considering selling your Lake Forest Park or Shoreline Washington house or condominium that you take the following steps before making a decision:
When you're selling your house in Shoreline or Lake Forest Park, interview several agents and find one who offers:
When I sell your home I will offer you:
As a real estate agent, home owner, and landlord, I have worked with many different agents in acquiring and disposing of property. Some realtors were better than others. As an agent, my goal is to maximize your profits when you're ready to sell, with an absolute minimum of hassle and overhead on your end. Fussing with paperwork, negotiations, and other parties is MY job, not yours!
I want to boost your bottom line! Contact me today for a free review of your home's value.
A good agent will:
Bad agents will cost you money and waste your time by mis-pricing the property, marketing it poorly, not positioning it properly to potential buyers, and being transaction-oriented rather than relationship-oriented.
I have been investing in real estate personally since 2002. Since then I've owned single family rental homes, bank owned REO's, homes going into foreclosure and lease/option property. I also co-founded Grassland Investments, LLC which has gone on to buy over $30 Million in commercial property in the last 3 years, including office space, raw land, apartment buildings, and a strip mall.
A Realtor Who Can See The Transaction Through the Client's Eyes
As a Shoreline real estate agent, I can offer my clients the best of both worlds. As their agent, I am someone who will represent them honestly, support their case with great market research, and negotiate like a bull dog on their behalf.
As someone with investment experience, I can see things from the client's side of the table, where getting the most for your home, minimizing your dollars out of pocket, and knowing what your property is worth really matters a lot!
Please call me today to discuss what you are looking for in a real estate agent and find out whether we are a good match.
Accomplishments and Associations
Local Highlights - Fun things to do and see in Lake Forest Park and Shoreline, WA
I love sports and the outdoors, so my list of fun things to do in the area probably reflects that - but this is what I can speak from the heart on.
Sometimes real estate agents can be so frustrating. Before becoming an agent myself, I worked with lots of agents as an investor and I often thought to myself: "Boy, they get paid well for the amount of work they do. That looks like an easy job." The truth is, there are a lot of agents out there who just don't deliver any value. You hire them because you have to - to get your property on the MLS or to get access to the homes for sale - not because you want to.
They all seem the same. A smiling picture, friendly and well-connected, they promise personal service and great communication.
Adding salt to the wound - may real estate agents are expensive. Although they say they don't "set" their commissions, it can feel like a big bite to go out and pay 6% of your home's value just to get it sold.
I know that burns, especially when you're afraid the house is going to sit and sit on the market if it's priced too high, or sell right away because it's priced too low.
As an investor, I worked with a lot of bad agents before I finally understood what it meant to be a good agent. A good agent is not getting paid for the time she spends with you. If she's doing her job right, you may not spend all that much time with your agent and her team, anyway. What you are really buying, when you hire an agent, is the expertise that she has developed and constantly maintains, about what's going on on the market place.
A good agent must be very well informed about the trends in the local marketplace. When you ask these questions, your agent should know the answer:
I think like a property owner, because I am one. As an investor, I've sold a lot of property, and I know just how expensive a bad agent can be. I've also found some good agents in my time, and man - I can tell you - they are worth their weight in gold!
I know that as a principle you need prompt and responsive service, an agressive marketing plan and regular updates on the status of your Lake Forest Park, WA or Shoreline, WA property for sale.
I'm all about transparency, I want you to know me, and trust me! I decided to become the number one listing agent in the Shoreline and Lake Forest Park area because I know it well, I am building a house here and my parents live nearby. I believe in good old-fashioned small-town values. It's hard to find a small town anywhere close to Seattle, WA - but I am working on creating that sense of community in Shoreline and Lake Forest Park for my family and my business.
Below are a few of my commercial properties so you can get a feel for my background.
9308 Dyer - Single Tenant Office Building
My partners and I bought this property with 95% owner financing. The remaining 5% was owner-financed, making it a no-money down commercial property purchase. The cashflow was $700/month on a NNN lease. The original tenant was an adult day care facility run by a credit tenant. Now their lease expired and we have released the property. It is going to be split between two tenants - a catering company, and an furniture company.
34501 East Quincy Avenue, Denver, CO - Currently FOR SALE
This property is the biggest one that I have an ownership in, to date. We acquired this 955-acre parcel from an international manufacturing company that was closing the facility.
It has all sorts of neat features like a gated 300-acre campus with 955,000 square feet of office and manufacturing buildings, explosion proof manufacturing space, an onsite electrical plant, and its own water source.
This would be a great facility for a server farm or another explosives manufacturer. (The previous user manufactured explosives for vehicle airbags and airplane ejection seats.) It is also being looked at by a number of sustainable energy companies.
It's zoned industrial but Arapahoe County has announced a new built-green residential development going in nearby.
Holly Hills and Forrest Ridge Apartments, Denton, TX
These two apartment buildings represent 166 plus-sized units in a college town outside of Dallas, TX. These apartment buildings are undergoing extensive capital improvements as we prepare them for sale. Beautiful grounds, great location, stable market.
Auto Repair Shop and 2 Acres of Land - 505 North Valley Road, El Paso, TX
We bought this property from an older gentleman who lived in the house on the site and leased the auto repair shop and equipment to a mechanic who ran the business there.
The auto repair shop, housed, and some of the land are under lease. We are holding this for future sale or development potential.
I grew up in Lake Forest Park, attending school in the Shoreline school district through 8th grade and then transferring to Lakeside School for high school.
After winning the Morehead-Cain Award, I attended UNC-Chapel Hill on a full-ride merit-based scholarship program. This was a wonderful opportunity to see a different part of the country and learn through international internships with micro-lending, attending school abroad in Sevilla, Spain for a semester, and working in investment banking for Morgan Stanley Dean Witter in Manhattan over the summer.
I met my husband, Ben, at college and we moved to Winston-Salem, NC after graduation where I began investing in single family rental homes in 2002.
In 2005, my partners and I formed Grassland Investments, LLC and began acquiring commercial real estate.
In 2008, my son Blake was born and I began working as a real estate agent. I'm ready to work for you!
Owning real estate has helped me build my net worth faster than anything else I have done. It has become a very important part of my portfolio and ensuring my family's freedom. Selling your home is an important decision. Doing it right is important to maintain your family's wealth you've worked hard to earn. I'm looking forward to helping you maximize your returns in real estate!
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