Jeff Brown writes a good article today on his real estate investing blog on appreciation vs. capital growth in real estate investing.  His point is that too many investors are chasing appreciation in high value markets which require large down payments to generate breakeven economics - and that by doing this they sacrifice leverage, which is the key to capital growth. 

His example, in my opinon, actually understates his case.  He compares a investor who puts $100k down (40%) on an expensive $250k property in a high value region to an investor who puts $100k (10%) down on $1 million worth of rental properties in a cheap region.  If the first market goes up by 10% then the investor makes $25k in appreciation.  But if the second market just goes up by 5%, on the other hand, then that investor makes $50k. 

The thing that jumps out at me here is that a one year 10% rise in property prices is huge.  Yeah, it's happened a lot in recent years in CA, FL, etc - but an investor who jumps in with the expectation that this will happen might as well take his down payemnt to Vegas and put it on red.  This isn't investing, it's speculating. 

Which is to say: I agree with Jeff's argument even more strongly than the example he puts out there. 

Google.com tends to be my first stop when I'm considering working with a new person.  A new website called pipl takes the idea a step further.  Unlike traditional crawlers like Yahoo and Google, the pipl search engines can access various public databases - from e-commerce to social networking to government records - and therefore generates a lot more hits. 

Look yourself up - you might find that there is more info on you out there on the web than you thought.  One drawback: search for a generic name (like, say, Chris Smith) and you'll get a whole boatload of info on all the other Chris Smith's out there.   [19 June] Ironic postscript:  As of today this page that you're reading right now comes up on page 1 of a Google search for "Chris Smith"

When you're screening tenants you'll still need to pay for a real background check, but I think this site might be useful for the quick preliminary screens I used to do on Google. 

Real estate investors looking for a realtor in Houston should check out Eurika Coleman, a real estate professional that I've been working with for the past few years. 

It's not my custom to shill for realtors, but I've often written in the past about building business relationships and how this is a key to successful investing - so I figure it's time to give a some credit where credit is due.  Eurika is an agent that has helped me to maintain my sanity over the past few years. 

Unfortunately she works for a high-end firm with zero tolerance for reduced commissions - which means she doesn't represent me when I'm making a sale - but I do work with her when I'm on the buy-side of the transaction, and she does a great job of pre-screening tenants when I'm filling vacancies. 

If you're an investor in Houston (or just buying or selling a home) then give her a call.  Tell her I sent you. 

Related Link ::

• Eurika Coleman, REALTOR®

I’ve been away from Houston for the last couple of months in what has turned out to be sort of an experiment in long distance landlording. A couple of days ago I got an alarming phone call from the neighbor of a property I own in the suburbs informing me that the large tree that was in the front yard of the house had blown over in a storm and was lying across the street.

The tree, it turns out, was dead. Last time I’d driven past the property was early spring, and I noted that the tree seemed a little late in sprouting leaves. I made a mental note to follow up on this, but never got around to it. That was a mistake, and one that could have been costly had the tree fallen on the house, on someone’s car – or worse of all had hurt someone. As it turns out a gusty windstorm blew it over into the road where it caused a minor inconvenience but no real damage.

The neighbor has a chain saw and a truck so I paid him to haul it away. I don’t know what killed the tree – it was fine last year but for some reason didn’t bounce back this year. But I’m happy that I’m writing about a close call and minor annoyance instead of a major incident.