A Tool For Real Estate Investors

The process of purchasing an investment property can at times seem overwhelming. Especially if it is something you've not done before or only once or twice a year. On the face of it, isn't it just like buying any other house?............No!

You actually use a different side of the brain to process the purchase of an investment property than you do when buying your own home. The motivations, concerns and thought processes are different. In fact there is a whole new language involved. Annual Operating income, Cap Rate, Gross Operating Income, and Cash on Cash are some of the words and concepts that you need to understand to make a sound investment decision. After all you could put your money in a CD, Stocks, Bonds or Mutual Funds. When considering a real estate investment you are asking yourself "Why should I put my money here? Will I do better than if I invest it in something else?"

One way to answer this question is to sit down with a potential investment and break out a piece of paper and a pencil. The upside to this method is that it takes no batteries, electricity or computer (though a calculator would be handy).

A much easier way in my opinion, is to use a software program that you load onto your computer, especially helpful if you are going to compare several properties or investments to each other.

I've come across an excellent program that does just that. It is called Star Analyzer from a company by the name of Wondering Star http://www.wanderingstar.com/

Just like any new program it does takes a few minutes to get used to the layout and the information it needs. However once you input your first potential investment it quickly becomes apparent how useful this tool is. It will allow you to input multiple potential real estate investments. It will then compare these to each other, as well as to other financial investments. It is wonderful to input once then use often. You can also play "what if" scenarios. What if I put more down. What if I charge more rent. It will also carry your investment and its returns out into the future so that you can see how much you are making in lets say ten years.

Star Analysis even comes with its own mini investment course as well as a trial period to get you settled in. I highly recommend that you check it out at http://www.wanderintstar.com/. I use it as I help investors as well as for myself.

See a demenstration: http://www.wanderingstar.com

California Home Prices May Be Moderating (October 6, 2005)

If the CALIFORNIA ASSOCIATION OF REALTORS ®' 2006 forecast proves accurate, home prices in the state will rise at less than half the rate they've gone up during each of the past four years. And that would be good news for homebuyers struggling to attain ownership there.

Only 16 percent of households could afford the median-priced home, which was $540,900 in July, according to CAR. A year ago, the median price was $461,740. In nearly a half dozen regions, only one in 10 households or fewer can afford the median-priced home, CAR says.

But based on the forecast, not all areas of the state will continue to experience the unprecedented double-digit median price increases of the past five years, says CAR Vice President and Chief Economist Leslie Appleton-Young. Some high-cost areas, especially those in the more costly coastal regions, face a potential leveling off of median price gains compared with the 10 percent gain we expect for the state as a whole."

That predicted 10 percent gain caps out at $575,500.The Golden State's perpetual supply-demand imbalance pushed home prices up 25.16 percent in the year ending in the second quarter of 2005, and 109.7 percent in the last five years, according to the Office of Federal Housing Enterprise Oversight.

In California, each year ends with an approximate 50,000 shortfall in housing units, based on the number of new households (250,000) and the number of new housing units constructed (an estimated 200,000 this year), CAR says. CAR economists say the supply-demand imbalance will continue to drive the market, but at a much moderated pace next year.

The association's annual forecast also calls for sales to fall by 2 percent. That's a switch, too. In July, sales were up 1.3 percent compared with July 2004.California's high-cost areas, including the Los Angeles, San Diego, and San Francisco Bay Area markets, could see even higher rates of constrained sales, and home price appreciation less than 10 percent, says Appleton-Young.

By Broderick Perkins for REALTOR Magazine Online

I receive this type of information from The National Association of Realtors about real estate all over the United States. I'll pass it on to you as appropriate.

Housing Stats 10/2/2005

Watching stats like these will help you determine what kind of a market you are in.
For Kitsap County Washington as of 10/02/2005

893 Active Listings
64 Homes went Pending last week
50 Average Days on Market

$271,363 Average List Price
$270,973Average Sale Price

100+% List price to sale price ratio

13.4 weeks of inventory

Learn more about Defining Your Market.