Investment Strategies – Page 6

My 401-k Is Now A 201-k!!

: After the shock of reading his 401-K statement subsided…this investor switched to an Equity Advantage self directed IRA!

It’s great to see the market trending upward again…well, at least for now. Though I am not prescient, I am lucky…so I pulled all of my 401-k funds out days before the plunge. A few months later and I would have seen over a third…and possibly half of my savings gone. Many of my dear friends were not so lucky. One is un-retiring. I know that many people rely on the stock market in general (and mutual funds specifically) to make long term gains. For my sensibilities…I’d rather own real estate than stock in a company that owns real estate.

It used to be that the stock market was the only game in town for 401-k’s, IRA’s, and Roth Plans.

Now, with the Direct Checkbook Controlled IRA you can move in and out of investments with ease, including my favorite: real estate. This is huge. It permits investors to play a far more direct and active role in their financial destiny. You need to use specialists to set up the account and to recieve some background on the requirements, rights and risks. When you’re playing pennies and nickles poker and the jackpot hits $5, it’s OK to play fast and loose. When its your retirement at stake, lower your risks and always go with the pros.

Enter IRA Advantage

IRA Advantage, is the new sister company of the highly regarded 1031 Exchange Accomodator, Equity Advantage. IRA-A sets up accounts that help investors reach their goals through direct checkbook control investment IRA’s. Investments are made through an LLC. I’ll describe the process in greater depth in a post next week. If you can’t wait…call IRA Advantage now: 503.619.0223, and say the folks at Rose City Commercial Real Estate sent you!

Let Rick Bean and Rose City Commercial Real Estate be your advantage. Contact us at 503.577.1034 or rick@rosecitycre.com.

Note: This site is primarily dedicated to commercial real estate, with a focus on the multifamily component. We believe that good service should be standard, but great services and products need to be acknowledged. We reserve the right to promote unaffiliated individuals and companies that in our opinion, demonstrate excellence on an ongoing basis. We neither solicit nor accept compensation for doing this.

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Investment Strategies / April 29, 2009

Focusing On Niches To Serve Clients Better

At their best real estate brokers are true professionals. 50 to 80 hour weeks, always looking for additional training, and a new way to provide clients better service. Their quest for excellence often takes them away from their families more than it should…but nobody ever became the best in 40 hours a week. There are a few that miss the mark…but that’s true in every field. Working hard isn’t enough though.

A Success Story: John Adams and Logo-Products.com

A lot of Realtors® could learn from watching my friend, John Adams. Several years ago John went shopping…and came away disappointed. He wanted to show his support for his beloved U of O Ducks and protect his trailer hitch…but none of the stores had any product that fit the “bill.” That told my friend that there was an unfilled need. John learned all about the trailer hitch cover niche…from manufacturing, to licensing, who the clients might be, packaging and all of the facets of the industry. He focused his efforts on a very narrow field..trailer hitch covers…and now he is the King of them. His own proprietary designs have been approved the by collegiate licensing authorities…and as his success has grown, others have offered him their lines for distribution. (Check it out at www.Logo-Products.com.)

Like John, by focusing on a niche and becoming highly proficient at it we can maximize our results. In coming posts I will demonstrate this further by highlighting real estate professionals that have created great success by dominating their niche. They have leveraged a narrow focus…into great abundance! Check back for the first in the series: Short Sales.

Call Rick Bean at 503.577.1034 or: e-mail me at: Rick@rosecitycre.comtoday! Shouldn’t you invest in Real Estate with a professional that focuses soley on your success?

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Investment Strategies / April 20, 2009

Another Reason To Be Bullish On Portland Multifamily Investments

Portland, rose city, Rick Bean, affordable housing — Beautiful, Affordable Portland

One of the metrics to look at when picking an area for a long term investment is the affordability index. And by that I don’t mean looking soley at how much the median income is in an area…I mean:

Average Rent/Median Household Income = Affordability Index. (What portion of your pay goes to rent?)

It’s great that some investment counselors track Median Household Income (MHI), but without the context of average rent for that area we really don’t have a way to evaluate areas that have long-term rent expansion capability. An obvious example is New York City. Clearly the MHI is higher there, but so are average rents. New York has an affordabilty Index of 57.2%. That means that between half and two thirds of the household income goes for rent. I suggest that while NYC has posted impressive rent gains for all property types, that the pace of those increase is likely to wane…how much more than 57% of your income could you afford to pay for rent? Years ago I had an employee that considered himself to be a real tout, a master horse race handicapper. Mark would always tell me: “Rick, there are horses that run fast, and horses that run long…but aint no horse that runs fast and long.”

Highly Ranked Portland

With Average Rents at $825 and Median Household Incomes at $57,757, Portland’s Affordability Index is 16.8%. That’s fifth in the nation. Portland-Beaverton-Vancouver “Asking Rents” jumped an average of of 3.1% in the fourth quarter of last year compared to a year earlier. Full disclosure: Oklahoma City had the nations best ratio at 12.3%…but the catch is that if you move there …every morning you wake up in Oklahoma.

With room for long term rents to expand and a great area to live in, isn’t this a great time to invest in Portland area multifamily properties?

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Investment Strategies / April 15, 2009

The Best Deal In Portland?

This isn’t even my listing…but I’m making good on my commitment to find great deals for my investors. This NE duplex is a great value: for under $165k you get two residences for less than the normal price for one. My faithful readers know that I eschew residential multifamily in favor of commercial multifamily due to the usual lack of cashflow. On most plexes you have to put huge downs just to keep from having an alligator to feed monthly. As such, many entry level investor’s feel their sole option is to live in one side and rent out the other. As this is already approved for a short sale below $165K, someone else has already done the hard work of negotiating with the bank on the owner’s behalf. That means most investors can buy it, rent out both sides and still have it cash flow. One thing about buying distressed property…they are often older residences and trashed inside. On their way out some homeowners remove every light bulb switch cover, and even the toilets. The reason I am selecting this as a “best buy” is the condition of the units and their effective and actual age. (They were built in 1997.) Anyone who has entered an REO property will have a hard time believing that these pictures are really Short Sale Units.

Details: The large unit is 1,208 Sq. Ft. 2 bedroom/1.1 bath home with a fireplace. It rents for $795 per month. the smaller 1 bedroom/1 bath unit has 650 Sq. Ft. and rents for $625/month. Contact me at 503.577.1034 if this sounds attractive. Or e-mail me at rick@rosecitycre.com.

I will be describing cash flowing commercial deals soon!

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Investment Strategies / April 9, 2009

People Would Move To Hell If That’s Where the New Jobs Were

job growth, portland, Rose City, Rick Bean,multifamily, apartment — Portland, OR

Look at current and future job growth as key factors when evaluating a market for multifamily purchases. To research opportunities I have traveled to Reno, Albuquerque, Phoenix, Seattle, and Los Vegas. Without exception job creation/population growth seemed to be the common fundamentals that told the tale. It seems that folks would move to hell if they could get a job.

That’s why I’m so strong on Portland. We’ve seen good job growth on a consistent basis here for years and the promise of the future is for the pattern to continue or accelerate.

For those that are dour about the current multifamily market…remember that while Cap Rates are decompressing currently, there are many properties that were purchased at the average 8.3 Cap in 2002. They would now trade at a 6.50 Cap. Do the math: 8.3 divided by 6.5 equals a 28% increase in value even if NOI only stayed constant. The truth is that this market enjoyed significant increases over that period and many Portland multifamily investors have huge sums of redeployable equity, and this is the time to act.

Contact me for equity redeployment information now at: rick@rosecitycre.com

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Investment Strategies / February 25, 2009

Forget About Investing In Residential Real Estate!

Before a lynch mob is dispatched…let me clarify: I’m still a huge proponent of real estate investing! It’s just that residential investments rarely cash flow…you have to wait to make your money at sale from appreciation. And you can’t afford to have someone else manage the units for you in most cases. Banks limit you on how many residential investment loans you can have…but they don’t care how many commercial loans you have active.

Take Off Your Training Wheels-

Rumor on the street is that banks are again permitting a prospective borrower to have up to 10 residential loans. Legally you

portland investments, rick bean, Rose City Commercial Real estate, Investment, — Heather Joy, An 8-unit Investment

can have as many as you want of course…its just that lenders won’t underwrite loans past 10 residences. (This is a reversal from a year ago when Freddie Mac tightened up standards to permit only 4 loans. Fannie Mae adopted the stricter rules shortly thereafter.)

Will the banks change course again and tighten up standards anew? Rather than shout: “Hurray!” and buy more residential investment properties, I advocate a different strategy.

Convert your multiple residential property equities into a single commercial investment.

Here’s an example: I have a friend that has 10 single family homes, nine of which are investments. He holds many of them “free and clear” while others have small balances. He can sell off some of the homes and use a 1031 Exchange to defer taxes, converting the proceeds into equity for a commercial property downpayment. He can also put new loans on the remaining house to add still more. Banks are currently writing loans of up to 70 to 80% LTV on investment properties where cash is being taken out at refi. When this is done my friend will easily be able to acquire sufficient funds ($250-350,000) to buy a commercial property like Heather Joy, currently listed at $779,000. The advantage of Heather Joy is that he will be able to manage 8 units by going to a single address…a significant improvement in efficiency.

292067352 — South Towne, An 18 Unit Investment

The next step up would be to take an even greater portion of his existing portfolio equity and purchase a larger asset like the 18-Unit South Towne. That $1,150,00 property would require approximately $350-450,000 in equity to purchase. It has enough units that we could now afford MBO…Management By Others. That means that my friend would transition from running all over town to manage 9 single family homes to reviewing the results created by the management company.

Los Verdes, A 53 Unit property — Los Verdes, A 53-Unit Investment

To take this further…if my friend’s holdings were enough that he could combine equities to add up to $1,200,000…he could purchase Los Verdes, available for $3,200,000. That property is large enough to not only have management by others…but an on-site manager. Contrast owning 53 units in one spot that are managed by someone else vs. running all over town to manage and maintain 9 single family homes.

Summary: You will make more money, receive it earlier, and have fewer headaches…when you transition to Commercial Real Estate Investments.

Call Rick Bean at Rose City Commercial Real Estate for a no cost, no obligation assessment of your investment options.

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Investment Strategies / February 19, 2009