As I was browsing through the Realtor magazine that comes each month, I came across an article discussing why and how to invest in real estate in today's declining market. Although the article was directed toward Realtors, I thought the information was to valuable not to share with you. These are tips are similar to what I have been sharing with my own clients all along, and now hope they will be of benefit  to you as well.

Tip 1-  Think cash on cash. Determine your return based on the equity you have in the deal, not the total price of the property.

Tip 2- Make your money on the buy, NOT the sale. Don't make the mistake of believing that the asking price represents the final price or value expect short term appreciation to bail you out. Do your analysis and negotiate. You make your money in real estate going in not going out!

Tip 3- Get preapproved for a loan. Find a loan that fits your long term goals. I believed fixed rates are the best way to go when it comes to investment properties in today's market.

Tip 4- Protect you assets from lawsuits. Always hold each investment property in a limited liability company or other legal entity to protect the rest of your assets in case you're sued. Consult you attorney for the best stragety for you.

Tip 5- Don't buy more than you can manage. With more than 10 or so properties, you'll probally need a professional manager or you'll take too much time away from what you want your time to go to. Plus, if you are not up to speed with the Landlord Tenant Law and each city's own statutes, you can get yourself in a heap of trouble.

Tip 6- Don't overlook deductions. Even if  property is generating income, tax deductions for depreciation and expenses (such as mileage) related to managing your investment can reduce your taxable obligation. It is always a good idea to have a CPA versed in investment properties on your team. WARNING- never go into debt for tax deductions!

For further sound advice in real estate investing, give me a call. Not only have I helped others invest in real estate, but I have personal invested and will continue to invest in real estate.

*Tips taken from "Realtor" magazine, December 2008.

Last year at this time November recorded 568 sales. Obviously this year is significantly different with only 241 sales! Snohomish county has just over 7 months of inventory, and that includes pending sales in the calculation. I do see this trend continuing into December and January. The beginning of 2009 could bring a change with the low interest rates, government bailouts taking affect, and inventory up. I believe the key factor will be the availability of loans to the everyday buyer. 

Interest rates have dropped to 5.50% with no points.