However, now I am so thrilled to be able to articulate WHY.  I took a class (a couple, actually), in investing – how it works, what numbers to crunch, etc.

Let’s do a scenario that shows how you can experience a 15% return on investment, aka ROI, when investing in Tri-Cities real estate.

The property is purchased for $130,000, with 20% down.  On a 30-year fixed rate mortgage with an interest rate of 5%, the monthly mortgage payment is $558.29.  Add taxes and insurance and HOA  fees, the owner pays out an additional $180.00 per month.

The property rents out for $1200/mo.  This is actually a real possibility, since our rental market is so tight, and our subject property is in south Richland, located literally minutes away from stores, houses of worship, freeway interchanges, and school with high test scores.

One thing we need to figure out for our equation, is the vacancy rate.  In our market, vacancy is highly unlikely, but we’ll pretend one month of the year no one will be in the property.  So, income ($14,400 – twelve months of rent) minus vacancy ($1200 that one month no one is there)  minus expenses ($180.00 x 12, those monthly expenses for a full year) equals Net Operating Income (NOI).

Expressed another way…

$14,400 (Income)

- $1,200 (Vacancy)

-$2160 (Expenses)

____________

$11,040 (NOI)

Now, NOI minus Annual Debt Service, which is the monthly payment multiplied by twelve, ($6700 in this case) equals $4,340, which is the Pre-Tax Cash Flow.

OR -

$11.040 (NOI)

-$6700 (Annual Debt Service 558.33 x 12)

____________

$4,340  (Pre-Tax Cash Flow)

Finally, to get the ROI, we divide the Pre-Tax Cash Flow by the Down Payment pus Other Costs of Acquisition (($26,000 down payment, $3,000 in closing costs =$29,000) and we get 15%

4,340 ÷ 29,000 = .15…15%

A 15% return on investment is FANTASTIC!  With savings accounts, stocks, bonds, etc.  you are lucky to get a single digit rate of return.  So 15% is enormously profitable!

Any questions about investing in real estate??  Give me a call.  I love using my financial calculator now!

(Stock image via Shutterstock. Used with permission.)

The Walk Score is supposed to indicate the desirability of a city or a neighborhood.  The higher a walk score, the less likely a person is to use his or her car to run errands, which helps the environment.  More walking equals a trimmer you (they claim that people who live in more walkable neighborhoods weigh seven pounds less than those who live amidst suburban sprawl). In addition, if you’re out walking around your community, the more apt you are to be involved IN that community, making it a place where you have a vested interest in keeping it clean and wholesome.

The scores in each of the major cities of the Tri-Cities, are pretty poor, I’m sorry to report; with 100 being the top score …Kennewick – 45, Richland – 43, and Pasco – 45.  Richland is the only one which really surprises me because the city was originally designed to BE eminently walkable.  When the U.S. government took over ownership of the city and designed the streets and built the homes and created the commercial areas, the city was laid out so any person without a car could easily run their daily errands.  However, the city has long outgrown its original “downtown” area and now stretches throughout almost thirty-eight square miles!

Kennewick and Pasco both began as small towns, begun as most American small towns are – with a railroad serving as the city’s commercial center, and shops and residences lining a nearby main street (and a 1st, and a 2nd, etc.).  If both of those cities had spiraled out from that center location and continued on a grid pattern with shops and houses scattered throughout, they’d both have higher Walk Scores.  But Kennewick now covers 24.3 square miles, and Pasco covers 30.2 square miles.  It’s pretty difficult to keep up a grid pattern over that amount of space, over years of construction and trends in demographics.

All the cities have neighborhoods within each city, which will boast a higher or lower score.  My personal residence rates a 17 (is THAT why I’m still overweight??), but the office here in Kennewick is rated as “Somewhat Walkable” at 68.  You can type in the address you’re curious about and get a very specific rating.

This map is fascinating. You click on a county and you find where the people moved to when they left, or where the people moved from when they came to live there. For example, 462 people left King County, WA to move to Benton County, but 392 people moved from here to there. We netted a gain of 70 people from the west side. Woo-hoo! Maybe one of them won’t be able to live without a Krispy Kreme and will open one up here…

So, locally, we made the list at #1058 (Kamiakin High School in Kennewick) and #1094 (Hanford High School in Richland). Kennewick and Southridge (in Kennewick) , Pasco and Chiawana (in Pasco) and Richland High did not make the list. Chiawana may be too new, as it’s first school year has just ended.

I was disturbed to see that my old high school in California ranks 14 schools below our rival high school. Ridiculous, I say. Everyone knows that Glen A. Wilson High School not only turned out the smartest grads, but also the best looking . Los Altos was for losers.

Check out where your school sits on the list.

We’ll be holding open over 250 houses, which is more than half our inventory. Our closest competitive agency doesn’t even have that many houses listed to hold open.

This week, as sort of a teaser event, tonight, Wednesday and Thursday, we’ll be holding open a portion of our houses in each city – Pasco tonight, Richland tomorrow and Thursday is Kennewick‘s day in the spotlight.

If you’re in Pasco on Sunday, drop by and see 6210 Landsdowne Ct. If you can’t make it, drop by on the web -

http://6210landsdowne.com/

Think this is a great idea, but you’re not in the market for a new home yet? Fear not, there’s another one scheduled for the fall!

On Wednesday it was a treadmill day for me.  I hopped onto the treadmill a couple down from Mr. Formal and set a course and began walking (2.3 % incline, 2.5 mph).  I closed my eyes for a second to relax and get into the walking groove.  I opened my eyes a moment later to find myself at the edge of the treadmill, just about to fall off!  Which I promptly did.

I inadvertantly yelled and everyone turned to look at me.  Because everyone was looking at me and I wanted to affect a sort of ‘I-meant-to-do-that’ demeanor, I tried to get right back on the horse that threw me.  Except I forgot that it it was still on.

So, that’s right, I fell AGAIN.

Mr. Formal calls out in a helpful tone, “You need to turn it OFF first.”

My friends have asked me if I went ahead and worked out or if I slinked out in shame.  I am proud to report I didn’t let that incident deter me from my workout ( I have 60 pounds to lose, afterall).

But I awoke the next morning feeling as if I’d been in a boxing match.  And lost.  I was extremely sore and bruised on my arms and legs.

So the lesson here is as follows – great gym, good pricing, helpful people.  Whether you make an absolute idiot of yourself is up to you!

My son is a Husky fan, and for the past two years has actually talked me into buying additional food just for the canned food drive!  In the past, I had always just given what I had in the cupboard and stocked back up for the family next time I went to the store.  But for the past two years, I have specifically gone to the store just to buy food to donate!  He puts the food in the Husky box, but they have yet to win.

Last year, the William Wiley Elementary Canned Food Drive brought in over 2,664 pounds of donated food!  And, as I tell my son, when it helps other people out, it’s okay if your favorite team loses.

There are loads of the A’s, B’s, C’s and F’s still around.  They’re easy to spot.  If we ever turned into an area with a huge housing need and no more land upon which to build, these homes would be snapped up and completely remodeled.  Some people have done it already, but usually most look like a regular house that has been maintained.  Few houses have been torn down to the studs and then re-built maintaining the original floorplan.  Mostly because the original plans are smaller than what we’re used to today.  One bathroom?  Are you kidding me?  No garage?  What?

Have fun looking at the old Richland houses.  Remember, they were designed back when anyone over 40 probably remembered using outhouses, so this whole indoor plumbing thing was pretty cool.  Even if there was only one toilet for a family of six!

And it’s bringing some trepidation and uncertainty with it. I had a mom approach me the other day, “Cari! Are your kids going to White Bluffs or staying at Wiley next year?”

I told her we live squarely on top of what is called ‘bird hill’ (streets named Hummingbird, Seahawk, Eagle, etc) so it would be Wiley for us. I asked her about her situation. She lives in the White Bluffs area so her son, who has attended Wiley for the past few years, is expected to go to White Bluffs next year.

Parents are nervous about the change, as parents will be. The kids probably don’t care, as kids don’t usually compare and contrast schools and discuss them over dinner!

So, where is your child going next year?

Update: Richland is a by-choice district, and if a parent got their petition in before the deadline, their Wiley boundary child can attend White Bluffs, or the White Bluffs child could attend Wiley. In a stroke of sheer stupidity, apparently the children will not know what school they’re going to attend until after Labor Day. O-kay…school begins August 28th this year, so how exactly will this work?

Back in the days of sub-agency (everyone worked for the seller and no one represented the buyer’s interests in a real estate transaction), all real estate was very much a buyer beware proposition.  Now, however, the buyer has the right to representation by an agent who is working on that buyer’s behalf.

The buyer pays for this representation when they purchase the house.  Their money, which goes to the seller, is then used to pay the brokerage and its agent who listed the house and the brokerage and agent that brought the buyer.  The cost of representation is all part and parcel of the purchase price of the home.  Therefore, doesn’t it make sense that the buyer of the property….the person spending a HUGE chunk of money, should have someone representing them in that transaction, escpecially since they don’t have to pay extra to get it?

In today’s Tri-City Herald we learned about some people taken for a ride by a developer. This developer does not work with Realtors.  It kills me that these people didn’t seek the advice of a Realtor.  It kills me that they thought they were in good hands with someone who was clearly not acting in their best interest.

I’m not saying every single developer who doesn’t work with Realtors and licensed agents is out to take every penny a person owns.  I just want people to remember ol’ Mike Brady’s words of wisdom; caveat emptor…let the buyer beware.