At SIFF Investment Services we like to analyze Real Estate just like any other asset class and look at the fundamentals.  We like to invest in areas of long-term job growth, restricted or limited land, realistic gross rental multipliers, and inventory levels that are reasonable.  Key indicators for our market including days on the market, appreciation, and inventory have all moved in directions that indicate the market has slowed down and prices will not go up as fast as they had in the past. 

The rental market continues to be strong and is even getting stronger with housing prices still appreciating and out-of-reach for potential buyers.  Also, many rental properties have been converted to condominiums. 

High housing prices with a decrease in rental properties are a perfect mix for low vacancies and future rent increases.

Client: Mary, Mid-40's, Single

Occupation: Small Business Owner

Investment Style: Conservative

Retirement Goals: To retire in 10 - 15 years

Assets: Owns a home. 10% of net worth invested in stock/cash. Owns no investment property.

Situation

Mary makes a very good income, but has little time to think about where to invest her money.  She has 70% of her net worth in her home and the other 30% in the stock market and in cash.  Mary needs to diversify her investments and increase her net worth outside of her home.

Solution

Through diversification in real estate, Mary can increase her projected net worth (over and above a stock-only portfolio) by $34K (14%) in year 10 of her investment, $173K (37%) in year 20 and $347K (53%) after 25 years offering her an earlier retirement or better lifestyle than if she stayed course with a stock-only portfolio.

We devised an investment plan for Mary which included the acquisition of a fairly new duplex in SE Portland in February 2005 for $270,000. With income being high, cash flow not as crucial, and low interest rates, we suggested Mary place 10% down to maximize her return on investment. Over the course of 2 years, the property has appreciated to a value of approximately $350,000 with an approximate net Return on Investment of 62%.

Mary intends to diversify her Real Estate Holding by acquiring another investment property in 2007. 

Our Search Continues...

As many of you are aware, we are continuing the hunt for qualified Investment Property Advisors to expand our team. We have interviewed many and are very close to having a solid sales force. We'll keep you posted. In the interim, please feel free to send along referrals...