I went to a seminar in 2004 and, along with the other few hundred attendees, answered this question: Who here is buying a house? A few of us put our hands up. The man said no, you should all have your hands up. Everyone is buying a house. The only question is: for whom? I’d never thought of it like that. I’d started investing in real estate and that really convinced me to keep on going.
When the Stock Market took that serious downturn a few years ago, I bailed out when I’d lost 38% of my original investment. At that time I promised myself I would not invest in anything else I couldn’t kick. As a real estate agent, in business since 1990, I then looked at this: if I’d bought just one property each year I’d been in business,….. you can finish that thought and probably understand what a dope I felt.
The following thought was that I’d better get started, and in December of 2002 I bought my first rental – a 1915 stucco triplex on North Steele Street in Tacoma – and have since added three more.
I manage them myself and, after a fairly steep learning curve, find I can be fair and firm and diligent, while also finding that 90% of tenants can be fair with me.
I work with investors who are buying and selling their own properties, big and small, and get a real kick out of passing along what I’ve learnt. I attended a class in 2002 given by a Seattle investor and remember well his saying to look for two main things in property: romance and expandability. Romance meaning a liking for the building and its location, leading to its rentability; expandability meaning there is something I can add to the building in maintenance/conversion/building a garage which would have it be worth more.
In our 2010 climate more is demanded of a buyer of investment property to obtain a mortgage, but that’s always the way it was, we just got away from best principles for a few years. That also means that fewer buildings are selling, prices are going/have gone down, putting capitalization rates up (net income divided by sales price). The higher the CAP rate, the better buyers like it!
I mentally thank my tenants frequently for buying my buildings for me and, if you’d like to know how it might work for you, call me and we’ll sit down and do the math.
