Home Investment Shifts

Several noteworthy articles in Sunday's Seattle Times. Front page news that Millennials are not buying houses. I reported on this trend in my recent blog on homeownership, and the reasons for the decline. The fact that young Millennials ages 25-34 are not buying houses is a big part of this decline.

Since 2007, homeownership for young adults in King County has dropped nearly 13 percent. The rate of decline here has been more than twice as fast as the national average. A big reason may be that real estate here is so expensive.

The delay in marriage age and the record high level of student debt exacerbate the difficulties for Millennials to look at purchasing rather than renting. Whether Millenials are renting because they have to or because they want to is causing a major demographic shift in the rental market here, where competition for apartments and rent prices keep going up.

The long term forecast is very good for landlords and investors who hold rental property here.

The second article I found fascinating had to do with EB5 Visa program. EB5 allows immigrant investors and their families to get permanent residency visas, in exchange for investing at least $500,000 in US projects that create at least ten full-time jobs. The program was originally intended to target low income and rural communities.But at least 2 Billion dollars in current projects in the prosperous Seattle metro area are being bankrolled by EB5 monies.

The US Senate just passed a bill to reform the program weaknesses and "restore the program to its original intent, by ensuring that  much of the capital generated and jobs created occur in rural areas and areas with high unemployment."

Why would I care about that, you ask?

Because a revised EB5 would allow small developers like me to take on riskier projects - like my Van Gogh Studio Lofts project at the Rainier Beach Light Rail station - in communities that really need development. As it stands now, it is impossible to lure foreign investors to a market that cannot demonstrate nor promise the kinds of investment returns that can be achieved in more prosperous parts of Seattle.

Lots of implications in both articles for Seattle real estate investors....

Happy Investing!

Seattle Zip Codes

Find out which zip code is right for you! If you are looking for the best fit for you in a location that matches your personality, check out this Seattle Magazine article. Still one of my favorite summaries of the best zip codes in the Seattle area, and what each has to offer:


http://www.seattlemag.com/article/seattle-neighborhoods-what-does-your-zip-code-say-about-you

Happy Investing!

Buying Fixer-Uppers

Looking for bargain properties? Here is another great piece of investor information from my website www.homelandinvesting.com:

Fixer-uppers
The oft heard phrase "Buyer Beware" is never more appropriate than when considering the purchase of a fixer-upper.You really need to know exactly what you’re getting into before buying.

It’s commonly believed that fixer-upper properties represent easy money that is ripe for the taking - that you can buy it, do a little work on it in your spare time, and then resell quickly for a large profit. Usually, this simply isn't the case. Although, with proper planning and foresight, good profits can be made by buying "distressed" properties at less than market value, making appropriate improvements and repairs, and then reselling. And for many first time buyers who intend to live in the house while working on it, buying a fixer-upper can be the very best option. It’s less risky buying a fixer-upper when you can live in the house while fixing it. And of course, by living in the house for at least 24 months you should be able to avoid paying regular income taxes on the profits.

The most important thing to know before making a decision on such a purchase is what needs to be fixed. Any time you are spending money on improving a home with the notion of selling it later, strive to spend your money on things that buyers can easily see. Things like new paint and removing trash from the property cost little but have instant impact on curb appeal. Houses that have only cosmetic problems like peeling paint, a trashy yard, bad carpet or wallpaper are the best bet. This is especially true for the first time buyer looking to live in the house for a while before reselling. Fixing and cleaning cosmetic issues is fairly easy and inexpensive. It virtually always gives gives a good return on investment, particularly when you can do the work yourself. Kitchen and bathroom remodeling usually pays a nice return. Don’t be afraid of buying a fixer-upper in need of this kind of repair. Properties with structural damage, or a floor plan that requires major work to remedy, usually can’t be "fixed up" at a profit.

Always have an inspection for hidden damage performed by a home inspector or construction professional before buying a fixer-upper. Make sure that satisfactory completion of such inspections are a condition of purchase in any contract you sign. Then be sure to negotiate to try and get the seller to pay for all or part of the cost of needed repairs uncovered by the inspection. Often, sellers will be willing to lower the sales price to sell the home "as is" instead of paying for the repairs.

Be careful that you don’t over pay. Especially if you plan to resell quickly, paying too much up front can doom your plans for quick profit. Research the market for reselling and have an exit plan for selling the house in place before making an offer.

If you are looking for fixer-uppers, please go to my website at www.HomeLandSeattle.com to sign up for a free list with photos of bargain properties.