Hello, my name is Deepak Malhotra, and I am an Associate Broker at Cheney Realty, Inc. in Cheney, Washington (home of Eastern Washington University and 15 miles from Spokane). My phone number is (509) 235-6191. I am also an ePro, RSPS, and TRC. I am also a lawyer and an Electrical Engineer. A passion of mine for many years has been real estate investing. I have been a real estate investor since 1988 and have bought and sold several million dollars of residential rental income units.  I want to encourage others to invest in real estate. I truly believe that it is an excellent way to build up your net worth using the magic of leverage. Please contact me if you are ready to  buy or sell and put my experience to work for you.  Click on any of the price ranges under the Categories heading on the left to see listings.

Anyone who says stocks appreciate more than real estate is ignoring the possibility of earning rental income, and is ignoring the benefit of leverage using long term relatively inexpensive fixed rate loans. Just ask your parents if they made more profit from stocks or from real estate. And consider the following:

Present Value of each $100,000 invested 10 Years Ago:

In the Dow Jones Industrials——————————————–$102,357

In the NASDAQ—————————————————————–$91,501

As a downpayment on Spokane rental property—————$464,889

This includes real estate transaction fees, assumes that you put 20% down, had an 8% interest rate, a loan amortized over 30 years, had breakeven (zero) cash flow on average over the 10 years, and that you sold the real estate after 10 years.  You can see my calculations here.  Break even cash flow on average over 10 years on rental property would have been quite possible with 20% down and careful selection.  Note that I am assuming breakeven on average over 10 years. That means you could have been negative cash flow for the first five years, had a rent increase, then been positive for the last five years. With rent increases over the 10 years, you may well have had positive cash flow with 20% down for a property purchased 10 years ago, meaning an even higher rate of return on the rental property.  The real estate rate of return would have been even higher still if you had found a 10% down loan and a property that would have averaged break even cash flow with 10% down.  Of course, past performance is no guarantee of future performance.  You will have to make your own educated guess as to whether prices and rents are likely to increase over the next 10 years.

The links on the right to OFHEO, PMI, and WSU lead to excellent research that may help you reach your own conclusions about the direction of the market.  I also like localmarketmonitor.com for predictions.  But  I personally believe that slow and steady, coupled with a focus on rental income potential versus purchase price, is a better strategy than trying to time the market.  Over a long time period, like 10 years, the price of materials tend to go up with inflation, which puts upward pressure on real estate values.  Values may not always go up in a straight line.  There may be periods of stagnating values (often accompanied by high cash flow from rental income), followed by periods of rapid appreciation (often accompanied by zero or negative cash flow).  And, yes, values can and do sometimes go down.  But by holding long term, one can increase the possibility of capturing at least part of an appreciation cycle.  And with leverage, a small amount of appreciation means an incredible rate of return.  I am convinced that real estate is the best way a regular person can rapidly increase net worth using low cost leverage.  As with stocks, market timing is extremely difficult and is probably best avoided and replaced with a long term buy and hold strategy, coupled with a focus on rental yield.

My belief is that the best way to initially screen properties is to look at the monthly rent it would generate on the open market versus purchase price. That will give you an idea of the sort of rental yield or cap rate that it will provide, which you can then compare with other properties of similar age, condition, and location.  You can read more about this concept at www.duplexGEG.com.

Interest rates are now still close to historically low values and it may be a good time to lock in a low rate for 30 years.  Who knows where interest rates will be in a year or two.   Some of us remember the 14% interest rates during the stagflation years of the 70s which started with middle east conflict and high prices of oil.  It is getting increasingly difficult to find financing.  For example, Freddie Mac now has a four loan limit for investment properties.  Who knows how the rules will change now that the government has taken over Fannie Mae and Freddie Mac.

If you are curious about real estate but not quite yet ready to make offers and get your feet wet, I suggest that you buy and read “The Millionaire Real Estate Investor” by Gary Keller.  It is an excellent book that I recommend to everyone who is interested in real estate investing.  Anyone can make money in rental real estate using a long term buy and hold strategy.  Will you be one of them?  You have to be willing to tune out the naysayers and take responsibility for your own future.

If you are looking for Spokane’s Hottest Duplex Deals, please go to http://www.duplexGEG.com

On this blog, I post real estate foreclosures, fixer-uppers, and bargains for sale in the Spokane county area of Washington State. Click any of the price range links in the Categories box on the upper left of this page to see my summaries of foreclosure listings.   Be aware that some foreclosures in Spokane sell for more than they are worth. The banks try to get top dollar for them, just like any other seller.  On the other hand, they are more willing to sell at a loss than a typical homeower–but only if they can’t find a buyer willing to pay the price that their agent recommends.  There is a lot of interest in foreclosures and competition for them because everyone thinks a foreclosure should be a bargain. More competition means higher prices unless you are able to act very quickly, before the competition. Some buyers in Spokane tend to underestimate the amount of repairs needed and overpay on fixer-uppers.  Careful selection and fast action are required, and that’s where I can help.

I personally believe that some of the best bargains are non-foreclosures placed on the MLS either for less than they are really worth or much more than they are worth.  Properties that are priced lower than they are worth are snapped up quickly.  You need to know the market and be willing to act quickly when you spot a bargain.  Tune out your friends and follow your own instincts.  Properties that have been listed at too high a price and have been sitting for months can be good bargains, believe it or not, because sellers who have received no interest may become desperate enough to consider low offers. That’s why I encourage you to contact me and specify what sort of house and area you are interested in.  Also check the Archives links on the left to look through older listings that have not yet sold.

Please check back periodically as I update this blog fairly frequently. If you would like to have new foreclosures and/or fixers emailed to you as them come up, instead of having to check back, hire me (sign buyer’s broker agreement) and send me your preapproval letter and requirements–the area, price range, size (number of bedrooms and bathrooms), year built, and type of property of interest (foreclosure, fixer, any), or you can just request all Spokane foreclosure listings.  Foreclosure sellers usually require preapproval letters before they will consider offers, so getting one in advance puts you in a better position to act when a good deal comes up.  Those who are able to act quickly, without getting distracted by friends who are negative, are the ones who get the good deals.  There are always friends who will not like the area you are looking at, who are convinced that the sky is falling or will fall, or who have other reasons why you should not buy a particular property or anything at all.  You have to tune out those people to be successful in real estate.  I have to admit that I have, earlier in my investing career, been talked out of good deals by people around me and have kicked myself later.  I have learned to follow my own instincts.

Don’t be discouraged if a property you find interesting is contingent (under contract). Some deals unravel. Yet very few buyers make back-up offers. Making back-up offers is sort of like betting on a horse after it has won. You already know someone was willing to buy it. You can write up a back-up offer such that you can walk away at any time and have your earnest money refunded until you are put into first place.

Everything is negotiable, so don’t let a high price prevent you from making a reasonable offer.  I give clients comps so they can make sensible offers.

I don’t promise to post all foreclosures, don’t promise to post as soon as they come on the MLS, and don’t promise that you will make a profit. My best service goes to my actual clients who sign buyer broker agreements.

Please check the Status near the lower right hand corner of the picture after clicking on the link to a listing to make sure a property is still available. If the status is CTGI (contingent on inspection) or some other contingent status, an offer has been accepted by the seller but you can still make a back-up offer. If the status is Pending, this means that back-up offers are not being accepted, usually because the inspection period is over and the parties are just waiting for financing and paperwork to be completed.

It is my sincere hope that you will find this information to be useful. If you appreciate the work I’ve done for you, please hire me next time you are ready to buy or sell and please refer me, and this site, to your friends and family.

Click any of the links in the Categories box to get started searching for homes in certain price ranges (e.g., the 0-100k category includes foreclosures priced up to $100,000).

Please also check out the links under the word “Blogroll.” These are carefully selected external websites that I believe are very useful to real estate investors.

You can contact me by sending a message to malhotraspokane at gmail dot com.

Thanks for reading.

-Deepak Malhotra, Associate Broker, Cheney Realty Inc.

© Copyright 2007-2008, Deepak Malhotra

BuyGEG is a registered trademark of Deepak Malhotra.