How can buyers have first shot at the good deals?  Reality is that 99.9% of real estate transactions happen through Realtors.  Hook up with a good one.  Agents working with investment property buyers need to stay on top of new listings and do market research immediately as houses become available.

What’s a good deal for investors?  Take a look at Portland’s west side for example.  Beaverton homes and Hillsboro neighborhoods often offer better cash flow than those found elsewhere.  When looking at the home purchase consider what sort of expenses are attached directly to PITI (principle, interest, taxes and insurance) and what neighborhood rents are.  Entry level homes offer much more bang for the buck than higher end, rental wise.  Rents on a 1200′ 3 bedroom 2 bath detached Beaverton home are running around $1100/mo at the moment.  Figure a good price for such a property might be $175k.  Compare that with cash flow on a $350k home where rents may be $1600/mo.  You do the math.

Competitive nature of investors.  Being first to the table with an offer is key.  It’s almost better to shoot first then aim in this market, you’ll have opportunity to bail out later.  I’m referring to red hot bank dumped properties here and not average run-of-the-mill real estate.  Hot properties like ones priced at $90 sq. ft. vs. the neighboring ones selling around $150.  These will be bank-owned foreclosures in Portland and surrounding areas, and they’re marketed through agents just the same as any other property.  I’ve seen several in the last few months around Beaverton and Hillsboro, they do exist.  Jump on them the same day they hit the market.

Sitting on the fence. At any given time there are a ton of buyers who say “wow, that was a good deal.  I’d have bought that one… if I’d known about it.”  The only reason buyers don’t know about it is because they (and their Realtor) are not paying attention.  Countless would-be investors sit on the fence analyzing a particular property while another savvy investor snatches it up.  That way the little kid mentality can kick in; That guy wants it, now I really want it.  Not all properties listed in RMLS are still available, some are awaiting bank paperwork before listing a property as “pending” in the system.  Dilly dallying doesn’t pay!

This blog focuses on Portland real estate and as luck would have it so will this article.  Surprise, surprise.  Coming from out of town has it’s difficulties so much research often takes place long distance before finding a suitable neighborhood to buy a home.  Here are 6 big tools to help with neighborhood research:

School ratings.  Whether or not you have kids is not the point.  Schools are one of the easiest ways to determine whether neighborhoods are going to be a good match.  There’s a fantastic website (www.greatschools.net) that rates schools on a scale of 1-10, 10 being the best.  Elementary schools pull from a small radius.  RMLS lists elementary schools as a required field.  Even the laziest agent has to fill in this information before a home listing goes public, therefore, house searches can be centered around specific schools.  While a home’s elementary school rating is not everything, it is a reflection of community.  Better school rating, nicer neighborhood.  Check it out if you’re familiar with a particular school location in the country and see for yourself, this is a national tool.

Very few neighborhoods in Portland actually feed into “10″ rated elementary schools.  Bethany, Cedar Mill and Laurelhurst are the only ones, last time I checked anyway.  Lake Oswego/West Linn ranks top in Oregon too, but it’s a suburb-type city.  Some of Beaverton’s schools are rated well too.  It’s amazing that within only a few blocks school ratings can vary significantly, so do the neighborhoods.

Food Shopping – QFC, Whole Foods, New Seasons, and other high-end grocery storesare an indication of neighborhood quality.  Also, check out Starbucks.  They put alot of research into store locations and won’t plant one in a sketchy area.  Stores mentioned above can only thrive in certain areas, areas of higher income mainly.  Money isn’t everything.  Check out crime stats, income levels and other census information at www.portlandmaps.com but look at grocery shopping more than just shopping.

Pictures – Every Realtor is now required to upload at least one front shot of the listed house within a few days of input into RMLS.  Searching Portland homes for sale from a distance has it’s hurdles, especially when not familiar with the city or surrounding locations.  Want to know what a neighborhood really looks like?  www.maps.google.comwill put you right in front of the house you’re looking at online.  It’a a tour right from your desk.  Pan around, look at surrounding homes, see how many cars are parked on the neighbor’s lawn, how many washing machines are on their porch?  www.earth.google.comhas similar aerial shots.  Many times, there’s waaay more to the story than what RMLS pictures stratigically leave out.  How close is the subject property to commercial buildings, apartments or a freeway?  Value is affected by such.  This is a great tool!

Visit the website for Portland relocation, Portland neighborhood information, and Portland homes for sale throughout the metro area.  www.maxwellsinclair.com

Let’s look at a recent example of a Tigard real estate listing in southwest Portland, a desirable area with convenience to everything.  Searching for hot deals in RMLS brought up this jewel:

Pre-approved Short Sale, can Close in Days!  3500 sq ft on 2 levels, 4 bedroom 2 bath, new windows, wheelchair accessible, etc, etc, etc…Sold AS-IS  $325,000.

Pictures didn’t look too bad.  Sure, it wasn’t pristine and may need a bit of sweat equity but the price was fantastic based upon description and comparable sales in the area.  Location was great, close to everything.  All factors point in the right direction.

So we arrive at the house and it looks a titch worse than in the pictures.  Beautiful kitchen shots had been taken before the owner decided to remove appliances and rip out the cabinets.  Blackberries had actually engulfed one entire side of the house as well as several trees on the property.  Garage doors were falling off and pretty much toast, but that was no biggie compared to all the soffit and window sill dry rot issues.  Oh well, still a good deal, she’s a fixer.  We’ll also have to overlook listing comments about being wheelchair accessible since there were about 4′ elevation differences all over the place and no ramps.  In the sales industry these little details are called “puffing.”  Works for the some people I guess…

People Promoting Win-Win Situations Are Often the Winners

A quick phone call to the listing agent reveals not only is this property a short sale but there’s another party involved who expects to be paid for her amazing negotiating skills.  Essentially what happened is that the seller was contacted by this win-win negotiator just prior to going into foreclosure.  Negotiator paid some of the overdue payments and/or fended off foreclosure proceedings temporarily while property was advertised for sale.  Through her incredible abilities she also convinced the seller to give her an assignable contract for sale of the house.  That contract needed to be bought out in order for any other buyer to proceed.  Cost to buyer was $15,000 (she would then assign her interest to the new buyer).  This buy-out money would not have gone towards the seller’s overdue payments/loan balance and would have essentially cost the buyer $15k more in purchase price.

What a great win-win situation!  Wait… I only count one winner, where’s the second?  Nothing like having a third party negotiator step in and take advantage of an already bad situation.  There are several of these “professional negotiators” out there now.  In fact, many are weaseled into RMLS listings.  The buyer is expected to pay for professional negotiation services of which they are not even receiving representation.

Another Avenue for Sellers in Trouble

One of the best solutions for sellers is to contact a reputable real estate broker well before foreclosure.  It’s their job to negotiate with banks, advertise, secure the best price and generally represent the client’s best interest.  No special win-win third party negotiators need to be paid!!!  Note that not all brokers deal with short sales and some that do have a special team (complete with weasel fees).  Hiring the right real estate broker will benefit sellers, banks and property buyers in the long run.

If you’re looking to buy Portland real estate, you can’t do better than to do it through us here at www.maxwellsinclair.com.

Here’s a fairly typical case study

Yesterday I went out with clients looking at an entry level project house for sale.  It came on the market that day and was listed at $169k.  Wow!  Houses in Beaverton listed for that price draw attention.  Very few properties for sale even come up under $200k (detached homes).

Looked like a decent deal at first glance.  Hey, you can practically break even on payments with 20% down using it as an income property.  Pretty interesting, on paper…  We arrived at the home and it did match the pictures a little too well.  Blue roof of several layers, single pane windows, cheapest sheet siding known to man, and best of all… trashed.  Rather bummed on this find.

After quick review of the surrounding homes and overall condition of the neighborhood it was estimated that resale in average to decent condition would fetch around $190k.  A rough guestimate of rehab costs was an easy $20k as long as sweat equity was involved and not 100% contractor labor. Question then is; At a list price of $169k is the home worth purchasing strickly for potential gain?  In my opinion there are more lucrative forms of real estate investment out there.

Taking a look at overall investment costs, just rough numbers:

Loan and closing fees: $6000

Carrying cost during rehab: $2000 (figure two months)

Material and labor costs: $20,000

Total investment: $28,000

From $169k add this $28k and we have a product that most likely isn’t going to sell for the money spent.  If a buyer is looking at keeping as a long term rental or primary residence it’s not too bad.  For $197k you’ve pretty much got a new house but for immediate resale… dream on, there’s no money in such.

My guess is that this particular piece of Portland Oregon real estate is not going to sell in it’s current condition for much over $160k and it’ll take a couple of low-ball offers to convince the seller of such.  Still, if you’re searching for fixer type houses for sale in Beaverton, Hillsboro, or any other Portland metro area you can do better.  Look for key words like “fixer”, “short sale”, and “foreclosure.” Check out the website and search all RMLS listings for free at www.maxwellsinclair.com.  Great investment opportunities are available with a little searching!