I recently helped a client buy this 3 bed/1 bath home in SE Portland. If you’ve been thinking about buying or you need to sell your home give me a call at 503.901.8100. I’m here to help you with any of your real estate needs and I always appreciate your referrals.

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This week I talked about real estate investors in this challenging market. Skip to the middle for my segment.

Listen here!

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I recently helped some folks buy this 3 bed/2.1 bath home in Sandy. If you’ve been thinking about buying or you need to sell your home give me a call at 503.901.8100. I’m here to help you with any of your real estate needs and I always appreciate your referrals.

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With winter coming and investors flocking back into real estate I wanted to give you my short guide to investing in real estate.

Benefits of real estate:
1. Leverage: You can borrow most of the money needed to buy the asset
2. Insurable: Insurance protects your asset
3. Income and Appreciation: If done right you can make money every month and then more when you sell or trade
4. Taxes: Depending on your status you can write off some or all of the depreciation of buildings [check with your CPA]. You can also do a 1031 exchange and defer your capital gains if you re-invest in more investment real estate. [again, see your CPA or 1031 exchange facilatator]

How it works: Investing means making more money than you’re spending and here’s how you do it.
1. Rent: You rent the property for more than it costs you to own and maintain the property. This is called positive cash flow. Here’s how you figure it out.

Take the Rental income and subtract the following:
1. Vacancy
2. Property Taxes
3. Insurance
4. Management
5. Repairs/Maintenance
6. Utilities
7. Misc
The sum of these things gives you your NOI or Net Operating Income

Take your NOI and minus your mortgage payments
The sum gives you your cash flow

You can take this a step further and see your pre and post tax cash flow as well.

I can give you a detailed analysis that will give you many more metrics and fancy acronyms if you make certain assumptions about the future, like appreciation, vacancy, changes in cost of expenses, etc.

Basically – you just need to use the best info you can get, be realistic about costs and vacancies and make sure you have more money coming in than going out.

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677 homes were sold in Portland in September, down from 723 in August. I had predicted 750 and I’m starting to see the normal sales slow down that happens in the Fall and Winter.

Wild cards: FHA increases minimum down payment to 5% in 2010, First time buyer tax credit extended for service people, will it be extended for everyone? My bet is NO. Foreclosures are still going up nationally and in Oregon.

I’m predicting around 575 closed sales in Portland (areas 141, 142, 143 & 148) in October. This is a bit less than year’s numbers so pricing will likely fall through the Winter. Investors will begin to emerge as a major part of the market this Fall and Winter.

Sales volume is a leading indicator for price. To help predict where the market is going I publish this sales volume trend report. The wisdom is that price follows volume so when you see a market trending higher in sales, prices will soon follow up and when sales volume is low, prices will stay flat or fall. PORTLAND sales volume 101509 pdf

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