I was having a conversation last night with an interior designer. We talked about how the flow of the room was great, the placement of the furniture and the decorations really helped to “open things up.” My mind began to wonder. They went on to say how this was the perfect set up and not much else could have been done to the home to maximize it’s layout.

         “Open concept” or floor plan is something we hear a lot in the real estate world – but is it here to last? Working with many house flippers/clients-who-just-want-their-touch on renovating homes, I wondered if this fad would fade and someday not play out in our favor. After all, the taste of the public in general tends to be cycling trends that come as they go.

         Before World War II the open concept was but a lost concept. Rooms were segmented into distinctly different areas, including cutting off the kitchen from the rest of the house.

         It wasn’t until the traditional ranch of the 60’s and 70’s that we started to see an abundance of open floor plans. This had more to do with structural advances that landed way to more options.

         Today, we see this frequently and it is highly coveted among older construction houses.

         Change of the American family, lifestyle, and household show us that the home life has a lot more social interaction among not only the families that dwell in the house themselves, but also friends that like to be entertained. A house is no longer a place to just eat and sleep, but a thoughtfully built box that houses life.

         Knowing this and the direction we are going with our culture, it is safe to say that the open concept layout is here to stay.

In most major real estate markets of Alaska, it is considered a seller’s market. Does this mean that buyers should sit quietly in a room and not contemplate the thought of purchasing a home in Alaska due to fear of over-paying, competition or frustration? Not at all! Today we will discuss this very issue.

            Typically speaking, the busiest times of the year for real estate transactions tend to be February through August, peaking sometime in March, with intermittent bursts thrown in there. There are many different factors that make this so.

            Firstly, financial decisions play a huge role in the real estate process. This includes taxes. Whether homebuyers could not qualify the prior year, or were waiting until they could file another year of taxes, this coincides very closely with the timing of taxes.

            Secondly, as a collective, we Alaskans tend to not want to move in the winter months. March (unless we have a crazy year like this one) is our break up where winter slows down and gives way to seeing the ground again.

            Lastly, home owners looking to sell their houses don’t get as good of marketing in the winter months (so they think) due to snowy yards, deferred maintenance that cannot be done and a general lack of wanting to move in the cold and snow!

Now then, why is it a seller’s market out there? As we move from winter into summer (talking about Alaska here) sellers are more inclined to list their homes. In the early months of the transition, spring, there is a shortage of inventory from the winter months. At this point, buyers will be out in full force with our inventory just starting to pick back up.

This basic demonstration of supply and demand leaves the power in the hands of the seller. However, as we go later into the summer months, inventory of homes for sale are high once again, generally making a surplus and creating a buyer’s market again.

Does this mean you should wait as a buyer? Absolutely not. Unless you’re an investor, you’re looking for that one house. That one house can and will pop up at any time. Also, if you have a solid Realtor working for you, you should be able to snag about any property you want (as long as you’re qualified). Your agent (licensee) should have plenty of tricks up their sleeves for solid verbiage of your contract to secure the home you want.

Think of it like this. If you realize that you need to get on a solid workout regiment to help reduce the risk of heart disease, you should start today, even if it is the dead of winter. Sure you could wait until summer, and that might help. But, if there is a big need to get healthy, you should start today. If you have a big need for something, start working towards it today!

In most major real estate markets of Alaska, it is considered a seller’s market. Does this mean that buyers should sit quietly in a room and not contemplate the thought of purchasing a home in Alaska due to fear of over-paying, competition or frustration? Not at all! Today we will discuss this very issue.

            Typically speaking, the busiest times of the year for real estate transactions tend to be February through August, peaking sometime in March, with intermittent bursts thrown in there. There are many different factors that make this so.

            Firstly, financial decisions play a huge role in the real estate process. This includes taxes. Whether homebuyers could not qualify the prior year, or were waiting until they could file another year of taxes, this coincides very closely with the timing of taxes.

            Secondly, as a collective, we Alaskans tend to not want to move in the winter months. March (unless we have a crazy year like this one) is our break up where winter slows down and gives way to seeing the ground again.

            Lastly, home owners looking to sell their houses don’t get as good of marketing in the winter months (so they think) due to snowy yards, deferred maintenance that cannot be done and a general lack of wanting to move in the cold and snow!

Now then, why is it a seller’s market out there? As we move from winter into summer (talking about Alaska here) sellers are more inclined to list their homes. In the early months of the transition, spring, there is a shortage of inventory from the winter months. At this point, buyers will be out in full force with our inventory just starting to pick back up.

This basic demonstration of supply and demand leaves the power in the hands of the seller. However, as we go later into the summer months, inventory of homes for sale are high once again, generally making a surplus and creating a buyer’s market again.

Does this mean you should wait as a buyer? Absolutely not. Unless you’re an investor, you’re looking for that one house. That one house can and will pop up at any time. Also, if you have a solid Realtor working for you, you should be able to snag about any property you want (as long as you’re qualified). Your agent (licensee) should have plenty of tricks up their sleeves for solid verbiage of your contract to secure the home you want.

Think of it like this. If you realize that you need to get on a solid workout regiment to help reduce the risk of heart disease, you should start today, even if it is the dead of winter. Sure you could wait until summer, and that might help. But, if there is a big need to get healthy, you should start today. If you have a big need for something, start working towards it today!

First, let’s get something out of the way and talk about Alaska semantics. Not all real estate licensees are Realtors even though the term “Realtor” is synonymous with real estate agent. Also, “real estate agents” in Alaska are technically called licensees. Let me explain!

Realtor is a term used to describe real estate licensees who are members of the National Association of Realtors. A Realtor and you’re a-typical licensee can both sell real estate in their designated state, but the biggest difference is that the Realtor subscribes to the ideologies of the NAR and also takes their code of ethics.

In most states, professionals who carry a license to sell real estate are called, “agents.” Due to some less than becoming activities by former licensees, people who are licensed professionals in Alaska to sell real estate are not technically able to call themselves agents. Small semantics, but it’s important to know so we can make a clear distinction when talking about your future dream licensee! (P.S. even though I went through that long introduction, for the remainder of this blog I will in fact call licensees agents!)

What does a real estate agent provide you in the great state of Alaska? Here are some things to name a few:

·      Identify your best financial real estate solution

·      Identify and show you potential properties

·      Contractually and legally represent you in a huge financial transaction

·      Protect your best interests by upholding great moral standards

·      Creatively overcome obstacles that may prevent you from closing

·      Non-Licensed therapist

Ok, that last one may be a bit far-fetched, but it is true. Now that we know a little bit about who an agent is and what they do, what’s the most important thing we should look for?

            I may upset a few people about what I’m about to say to determine your agent, but bear with me as I explain it! I believe the following is most important in the correct order:

·      Likability

·      Honesty and Integrity

·      Education

·      Experience

It may be a little different depending on the situation (business sales, commercial, high dollar transactions, transactions with unique circumstances requiring deep understanding of real estate law). Let’s just say this is for your typical first time homebuyer.

            First time home buying is not, technically speaking, a very hard transaction for any agent to complete. That said, this is why I have formulated my chart this way. You have to LIKE your agent. You will be married to them for 2-4 months during the process. Talking to some one every day, dealing with emotional and stressful situations with them…you want to like that person.

            Next, you have to know they will deal fairly and honestly. Please note this is a personal preference, but I believe all business transactions should be done fairly and honestly as part of their civic duty of being a public servant (much like a doctor). Also, this helps you stay out of law-suites and jail—that’s a good thing!

            Education…I implore all agents and Realtors to become highly, highly educated. However, in a simple transaction, or a complex one, most agents have access to many, many professionals who have been there before, including but not limited to their broker (the main guy who is in charge of their companies dealings). That is why this ranks lower than the later two. Like I said, education is VASTLY important, just not the most important thing.

            Lastly, experience not only extends to real estate, but in life. I like to know if my agent will give me undying follow through, attention to detail, meet and attack timelines and has a great track record throughout all professional endeavors in their life. I’m not saying an agent who came from flipping burgers can’t make the worlds best Realtor…in fact many have! What I am pointing out is that you have to make sure they are an A-class agent who pulls out all the stops to get the job done for you. You need to make sure they are not lazy, slothful or dismissive.

            To recap, if you like your agent, you trust them, they have some solid education with a proven track record, hold them tight and never let them go! A great person with an awesome attitude is hard to find in any industry and goes a long, long way.

If I have a first time home-buyer that mentions the word, “investment,” I immediately want to have the conversation of going multi-family. Multi-family is a term us in the biz use to describe a residential property with multiple dwelling units.

Sure, you can rent out a single-family home on a conventional loan and perhaps cash flow a little (there are better ways to get into single family homes by the way, we’ll save that for a later date), but would you want to do that? The cash-on-cash return is horrible and most of the numbers don’t make sense for investment purposes.

If you are going to invest in real estate in Alaska, you can bet your bottom dollar the buy and hold strategy works immensely better with multi-family units. Not to mention the re-sell value on a duplex up to a fourplex is insane, and the market audience is huge! Duplexes on the West and South side of town are insanely high right now. I can attest that I just saw a duplex near Turnagain, no garage, not that big, go for $500k. What?!

            There are some downsides to this though. You have to be comfortable being a landlord, you should have some extra money in your pocket (incase you wake up in the middle of January and notice it’s -20 below in your house) and think about whether or not you want to give up 10% of your rental income to a property manager when you move out so you don’t have to deal with the headaches.

            Below is something I wrote for a client a while back that just lets you know a few items of discussion for multi-family homes, going down to a single-family home for future investment.

Fourplex  (Triplex)– Number one option

            Note: A triplex can fit in this category, they MAY cash flow, probably not, but it will be a very property dependent thing. Typically speaking, they are MUCH better cash flow wise than a duplex.

1.     Generally, you will live for FREE and/or cash flow $100-$300 a month. Sometimes you may cash flow even more, but on a good deal that is generally the norm. I would typically not put any of my owner-occupy clients in something that does not allow them to live for free (unless there are other factors that permit such). P.S. when you rent out your last unit after a year, you will generally be cash flowing upwards of $1,000 per month.

2.     You build more equity. If you are leaving in a short amount of time, use a VA or FHA loan; you typically will not build much equity in a couple of years. However, if you are purchasing a bigger property, with a bigger mortgage, that cash flows, you can pay down the loan fast and/or receive more equity in the same amount of time. For example, if you get a $200,000 house, in two years you might walk away with $7,500 with a VA or FHA loan in two year’s time. If you get into a $400,000 multi-family, you might walk away with around $20,000 in two year’s time, or more if you’re aggressive.

3.     They allow for more leverage. If you upgrade in a year, you could fully rent it out and cash flow, making you money. You could use the equity you build in it for other endeavors in the future, including getting into another property in another place, taking out a HELOC (Home Equity Line of Credit) to help with other endeavors….the list goes on.

Duplex – Option number two

1.     You won’t have to pay such a big mortgage. You could get into a home you feel comfortable in with in an area you like. Having some one help build your equity in your home is awesome.

2.     Less upkeep. Generally, your tenants are going to be responsible for their lawn, snow removal and general maintenance.

3.     You build better equity than a single family home. Just like the four-plex analogy earlier, you put more money towards your purchase price, giving you more equity of time.

4.     More bang for your buck. Sharing walls, city electricity and plumbing, you can get more for your money. A single family home has nothing shared and you will be paying for it! I always tell people single family homes are forever homes.

Single Family Home – Option number three

1.     It’s more comfortable for a family. A single family home has its upside on personal preference, and comfort. Although it might not make you a bunch of money, it will improve the quality of your life and give you the privacy that you are looking for. There is no dollar amount that can be put on quality of life.

This is a quick little snippet into the multi-verse as I call it. Of course there’s a lot more to it than this, but it should get your gears spinning. If you read this and it makes you smirk with the thought of living for free, multi-family is for you. If just received a pair of clammy hands and cold-chills from the thoughts of being a landlord, single family might be the way to go.

            Like I said, being a landlord isn’t for everyone, and investing in real estate in Alaska isn’t for everyone. There are many ways to build your wealth and your future.