July 22, 2022

There are several different types of real estate investment projects, from rehabilitation to building new, each have their own potential risks as well as financial returns. For example, a rehab project has less risk because the structure already exists; therefore, overall the planning and workload are much less than with building a brand new property, however, the potential financial payoffs may ultimately be less.

There are many components to building new real estate that are unpredictable, which can greatly increase the risk factors. While every new real estate build is different, there are some consistent areas to consider in order to properly evaluate the investment potential when deciding whether or not to build a new real estate project.

Project Location

The physical location of a brand new project plays a significant role in determining the overall risk factors. Building new real estate in areas with higher prices and demand present far fewer risks than building in lower populated rural areas. Building in an area where there are buyers before a project is even finished further reduces the risk. You should look at data that indicates real estate demand, such as high employment levels, large-brand expansion in the area and the rate of adult population growth. While there is no perfect or foolproof formula, all of this data can be reviewed to help assess the overall risk level in a particular location.

Common Weather Patterns

Weather is one of the most important factors to consider when planning and budgeting a brand new construction project. Severe rain, snow and temperatures are just some weather factors that can lead to delays and add to additional costs and headaches.  If the project is located in an area that experiences extreme seasonal changes then you should factor into consideration when the project is suppose to start and how long it’s expected to take to finish. Coordinate this estimated timeline with the local weather and see if there are any potential concerns that you should account for before it’s too late.

Increased Material Costs

When first budgeting for a construction project, it’s important to accept that the cost estimates will often increase. A brand new project can take several months to over a year, depending on the project size, leaving plenty of time to see price increases on building materials.  It would be unwise to not expect increased material-related costs over the course of a build.  It is critical to have enough of a contingency built in to the project budget to absorb these increases with out killing the bottom line.  Thin margin deals can easily end up in the red at the end due simply to an increase in the cost of building materials.

Logistics and Management

Anytime you are dealing with contractors, you need to account for delays. Delays are going to happen; from getting tied up at a previous location and arriving late or simply not showing up at all.  It’s not a matter of if the project will experience contractor problems but whether or not they will be a minor or major problem that leads to a domino effect of delays.  Brand new real estate projects have many moving pieces that all need to work together in order to stay on schedule. A scheduling mistake or a logistical disaster can not only cause delays but possibly result in a complete shutdown of the project while things are being sorted out.

Overall Costs

A brand new real estate project involves every aspect of construction from foundation to final finishes.  This reality provides ample opportunities to change the plans which can ultimately increase the time it takes to finish the project as well as the total costs.  While minor pivots and changes are expected, major changes and multiple occurrences can put the project far behind schedule and over budget, which are the two concerns investors dread above all else.

At the end of the day, when evaluating the risks of building a new real estate project, you should look closely at who you have available to manage the project and perform all of the required work to completion. Someone with lots of experience and a proven track record will greatly reduce the amount of pitfalls that claim so many construction projects. The exact same deal with different contractors can have drastically different outcomes and will ultimately make the difference of whether or not a new building project is a good investment opportunity overall.

June 8, 2022

How is it that some people are profitable investing in real estate and others are not, exactly? Put simply, profitable real estate is property that investors purchase as a way to make money through rent and market appreciation.  Real estate investments are a good opportunity because income-producing real estate can offer many benefits, including reliable monthly income to live off of and income that takes minimal effort to earn. Income-producing real estate can help you reach financial independence, which means you’ll have enough money to live off of without having to depend on anyone else for income.  Below we will look at a few key areas that set those who are profitable with real estate investment from those who are not.

They Understand Their Finances

Those who are successful with real estate understand what they can afford. They are able to take a hard look at their own financial situation, such as the amount of debt they have, how much of a down payment they may need to put down, determine the closing costs and rental income and expenses. By doing so they are able to get a sense of whether a particular real estate investment makes sense for their financial situation and long term goals.

They Conduct Analysis

They evaluate potential properties for their investment potential. They want to know current value and possible future performance potential of their investments. They also want to know absolutely everything about the market where they plan to buy property or invest. They check the neighborhood, property tax costs, schools, crime, job opportunities, amenities and listings and vacancies. Perhaps most importantly, they don’t forget to take any location depreciation into account as well.

They Pick The Right Type Of Investment

When decision time comes and they have decided on the right type of investment for their needs, they are at a comfortable place where they can move forward with a preapproval. They keep in mind that they don’t have to invest in just one investment. By doing so they can consider investing in both REITs and short-term investments at the same time.

They Get Preapproved

A preapproval is a document that shows how much a lender will offer someone for a mortgage and includes the amount they may be able to get at a particular interest rate. In order to get preapproved, they are able to submit information about their income, assets and debts by offering pay stubs, W-2s, proof of income, account statements, other loan information and a valid ID. A lender will share what all they will require you to submit at the beginning of the preapproval process.

They Make An Offer

They find a good real estate agent to help them decide on the amount of money they might want to offer for the investment they’re after. An agent is also able to draft an offer letter as well. This can include the amount of money an investor wishes to offer. This allows them and the seller to negotiate the price and terms of the potential sale.

When looking into the types of income producing properties, they can invest in real estate in several different ways. These include real estate investment trusts (REITs), crowdfunding, single-family rentals, owner-occupied rentals, multifamily rentals, short-term rentals, turnkey properties and wholesaling.

Once they understood their finances, conduct the necessary market and investment analysis and decide on the right type of investment for their needs. They are able to move forward, get preapproved through a lender and make an offer on the property they want in order to be successful.

July 1, 2022

Having the skills necessary to become and maintain being a successful property owner does not simply happen by chance.  It requires consistent work and does not come about because of luck or a superior intelligence. Below we will look at a few of the essential skills every property owner should develop if they wish to be successful long term.

Strong Financial Management

Most successful property investors are good at managing their funds. They are able to put aside the necessary money required in order to invest. Once they are in a position to generate money, they continue to put money aside to increase their wealth little by little. You must keep in mind that wealth is not created from one day to the next but rather it is built over time. This process can take more or less time, depending on your unique financial situation. If you want to become a successful real estate investor, you need to develop this skill.

Analytical Skills

You need to be able to properly analyze the property in question if you wish to be successful. Successful investors are able to recognize a good deal when they see one, because they have developed this skill. Great property investors do not base their decisions on emotions, which are often misleading. On the contrary, their decisions are always well thought out. The ability to analyze is acquired with time and experience, but a real estate coach can teach you the basics so that you don’t start from scratch.

Focus

Following a clear strategy and a precise plan for your investments helps to avoid getting lost. You should know exactly what you wish to achieve out of a property investment in order to move in the right direction. On the contrary, if you do not have a clear objective, you take the risk of investing in properties which may not suit your financial needs and moving away from your initial goals. Being clear on your objectives allow you to be focused on your goals. It is this particular skill set, developed over time, which is the key to many property investors success.

Long Term Planning

In this field, it is necessary to use long-term planning. Real estate investment typically requires a commitment for several years. Therefore, it is necessary to analyze the situation carefully before committing to any purchase. In order to be successful, you should ask some basic questions. Does this property really meet my financial objectives? Will you be able to collect enough monthly rent to make a profit? Have you budgeted enough to make any necessary repairs and enhancements to the property? Answering these types of questions will help you narrow in on a specific property that is right for you.

Patience

Finding a good deal can often take longer than anticipated. Patience and perseverance are essential qualities if you wish to be a successful property owner. Real estate investment is not for people who give up easily. Most of the new comers in real estate investing set a goal with a specific time, and they give up after a few months when they haven’t found a property that is profitable for them. Or worse, they jump on the first property they see, fearing that they will never find another. Great property investors know how to temper these natural urges. They are able to act at the right time, and make calculated decisions to turn away from investments that are not right for them.

If you do not have these skills currently, being honest with where you are is a big first step in the right direction.  There are many skills that you can acquire through training, such as analytical, negotiation and management skills. On the other hand, the qualities that come under the heading of “soft skills” can be developed with expertise. You have the ability to partner with people who possess these qualities and can help you achieve your investment goals.

June 3, 2022

Many people believe investing in real estate is the key to obtaining their financial goals. Seasoned investors will be the first to warn, however, that investing in real estate comes with some big risks that need to be weighed before an individual is financially ready to begin investing in real estate. If you’re considering investing in real estate, there’s a lot to know before you make your first purchase. It’s unlike any other type of investment you’ve owned so far, and requires a different approach from how you manage it to how you earn from it.  For anyone who’s wondering if becoming a landlord is the right move for them, below are a few signs that you have reached a point where investing in real estate is the right move for you.

You have savings for retirement

Before anyone starts working towards investing in real estate, they should already be saving for retirement and have enough cash left over. Make sure to consider your retirement needs by allocating the appropriate contributions to a 401(k) plan and/or Roth IRA.  You may also want to consider having a brokerage account before taking on the additional risk of a real estate portfolio.  Anyone considering investing in real estate should build up these areas before becoming a landlord if they plan on being successful.

You have free time to manage your investment

Time is of the essence in real estate investing and you may need a lot more of it than expected to tend to all that a real estate portfolio will require. Ideally, real estate investing is best pursued once you’ve freed up your work schedule or are nearing retirement to allow you the proper time necessary. It can sometimes feel like another full-time job so you should have the extra time to manage the property.  Most of the time you will need to focus on more than just managing the properties and will also need to deal with areas like marketing and legal requirements in the area.  Real estate investing also requires a lot of customer service if you’re planning on renting a property out for additional income. All that management takes time and energy you’ll need to have before investing.

You have cash for a down payment

The process of buying an investment property is a lot like buying a home, but in some ways, it’s more difficult. There’s typically a little bit more upfront capital requirements for investing in real estate. Lenders see rental properties as a higher risk, and charge more for them in interest and require larger down payments. At minimum, you’ll likely need a full 20% down payment to be able to start investing in real estate.  If you have the cash on hand to start investing in real estate, it’s likely a sign that you’re financially ready to start if your other goals are met. However, keep in mind that you’ll also need other cash to keep and maintain that building. It is wise to set aside money for unexpected repairs and still being responsible to pay the mortgage if the property sits unoccupied for a period of time.

Like any investment, profit from real estate isn’t a given. Anyone who’s considering investing in real estate should do so with that understanding that real estate isn’t necessarily a better investment than stocks, or vice versa. There are many variables at play and success in real estate can come down to simply the location or any number of other things that may or may not be within your control.  While the same can be said for the stock market, it’s worth noting that real estate is unique in some of its risks. Hopefully the above areas will help guide you to make an informed decision on whether or not you are ready to invest in real estate.

May 27, 2022

Many people are unable to afford the cost to invest in rental properties in the same area where they live. In much of the country, the cost of housing currently is so high that it can be challenging to grow your real estate portfolio with properties in the same geographic location. Luckily, investing in out-of-state properties is one easy way around these current geographic challenges. Below we will discuss a few advantages and disadvantages of investing in out-of-state real estate.

Advantages Of Investing In Out-Of-State Properties

It may seem unusual to some to even consider investing outside of your city or state. It is worth taking a closer look at a few of the benefits and reasons behind why many investors consider this strategy to be a profitable and wise financial approach.

Saving Money

If you currently reside in a part of the country where properties and maintenance are skyrocketing, you may find more reasonable options in other geographical locations which can directly impact your ability to grow long term profits in an investment property.  Lots of investors weigh their options and decide investing outside their area is the smartest financial decision they can make to meet their long-term financial goals.

Higher ROI Opportunities

If you spend the time to do the proper research and get into an area where the population and job growth are still in the development phase, you may find a dream scenario that simply does not exist near your home. Lowering the cost you have to spend to secure a property in an area with rising rents can often generate more cash flow and build equity more quickly for when it comes time to sell.  Even if you only hold the property for a few years before you decide to sell, you may receive a higher ROI than if you invested in an area with high costs and low growth.

Investment Diversity

Putting all your eggs in one basket is never a good idea with any investment. Deciding to place all of your money in the wrong market could leave you in financial ruin if that market ever crashes while you are holding real estate investments in the area.  To the contrary, if you put some of your investment funds in your local market and other funds in other parts of the country, you can help offset the risk of one market falling apart.

Disadvantages Of Investing In Out-Of-State Real Estate

Time Consuming Research

Not living in a particular area probably means you won’t know all the specifics about another potential market you may want to invest in. Even if the market looks good from the outside there may be indicators you are not able to easily see without seeing the area. If you prefer to be more of a hands on investor who likes to periodically visit your investment, you may feel uneasy about being far away from your investment, and be forced to rely on a third party to tell you how things are going which can make some feel uneasy.

Different Laws

Even if you are familiar with all of the specific laws pertaining to real estate in your area, laws may very well differ in other states or cities. If you do not know about all of the local laws ahead of time, you could unintentionally break one of them and be subject to added liability and/or fines. This is a solid reason why it is recommended that investors only work with qualified property management companies who will understand the rules in the area and help ensure all legal obligations are properly met.

Purchasing A Property Blind

Nowadays, most real estate markets throughout the country are particularly hot and properties are selling at record speeds. If you don’t move fast or are financially able to offer above asking price, you could lose the deal. This unfortunately may require the need to purchase a property without seeing it.

Should you invest in out-of-state real estate? It all depends on your financial situation and your risk tolerance threshold. That said, with the proper research you may have the potential to save money when buying a home and earn more money monthly as well as when the time comes to sell of the property.  Investing in areas with high demand and rising appreciation will help ensure you get the most out of your investment. Diversifying your real estate investments across multiple geographic locations is one solid way to manage your risk while increasing your chances of gaining significant profits in the future.

May 19, 2022

Buying your first home has long been thought of as a fundamental part to achieving the American dream, and in our grandparent’s generation it was one of the best investments you could ever make to secure your future. Unfortunately, nowadays this is becoming more and more one of the most common and concerning falsehoods pertaining to modern day real estate investment.  While it is accurate to say that homeowners generally have a higher net worth than those who rent, this does not mean purchasing a property is a good investment in all scenarios.  Below we will look at a few examples of when purchasing a first home is not always the best financial decision one can make.

Don’t Buy Before You’re Ready

If you’re too excited to purchase a property because you believe it’s always a great investment, you may be tempted to purchase a property at the wrong time in the market. This is often the case when you purchase a home but you do not plan to stay put for at least the first few years, or worse yet, if you purchase a home before you have the necessary money to make a proper down payment and cover all of the closing costs. It is so important nowadays to make sure you have the proper credit score, a sufficient emergency fund, a five year financial plan at minimum, and have your financial affairs in order before you purchase your first home.

Don’t Spend Above Your Means

It is understandable to think that your home is an investment that will always pay off for you, but regardless you should not ever justify spending more than you can currently afford. You should avoid taking out too high of a first mortgage loan, and avoid adjustable-rate mortgages which may put your payments within your budget but balloon out of control in the near future. Without the proper financial planning ahead of time you could be left house- poor or worse yet, placed at a higher risk for foreclosure or bankruptcy.   Over spending on a first home could leave you lacking much needed funds to accomplish other financial goals like investing in other higher return on investment opportunities.

Don’t Create Unnecessary Losses

It is important you do not fall for the trap and assume that all properties will go up in value in all circumstances and that you’ll always be able to sell your first home for more than the original purchase amount. Most properties may appreciate over time but there is are no hard guarantees in every situation.

Smart Alternatives

Sometimes you may find the right deal and make money off the appreciation of your home but you shouldn’t count on your first home purchase to make you tons of money.  Instead, you should view your first home investment as an expense and not just a sound investment.  It’s smart to make sure you take into account all the costs that comes with owning a home, including upkeep, property taxes and insurance. You should make sure any first home you decide to purchase is affordable after all costs are calculated, and that you’re in a good financial position to close the deal.  You should also keep in mind that while buying a first home will give you a place to live, you won’t be able to access the profits of your properties investment until you sell it or refinance and pull out equity. You will still need other more liquid investments for your retirement and other life commitments.  Understanding the above scenarios can help go a long way in making the right calculations prior to purchasing your first home and help you to achieve your long-term goals of growing your overall net worth.  This will put you in a much better financial position in the end.

May 13, 2021

Purchasing a property is likely the largest purchase you have or will ever make financially.  Owning your own place feels great, but you may not always be sure if your property is worth the monthly payments.  Given the current housing market, many people are considering whether or not to put their homes on the market. As nice as making a quick buck sounds, you should not base your decision to sell on that alone. There are several factors that should help guide your decision to either stay where you are or put your house up for on the market.  Here are a few tips to help you conclude whether or not you’re property is worth the monthly payments.

Rent Would Be Greater Than The Monthly Expenses

Diving deeper into the numbers can help you more clearly understand if the monthly payments  on a property ultimately make good financial sense. Look at whether or not the rent (after expenses) divided by the current market value is greater than the interest rate on the monthly payments. If the home can bring in more money than the cost of the monthly payments then it may be a worthwhile investment for you.  Anyone can use this formula regardless of whether or not they are actually planning to rent out a property.  Regardless of where you are in the decision making process, these findings can be very insightful on guiding you towards making a more educated decision whenever the time comes.

You Intend To Keep The Property Long Term

Even if your monthly payments are a little higher than you may ideally like, it does not necessarily mean your property is a bad investment.  Over time, with the more payments you make, less money will go to the interest and more goes to paying down principal.  This means the longer you hang onto a property, the more the monthly payments may become worth it in the long run.  One of the best questions you can ask yourself is ‘How long do I plan to keep this property?’ in determining if the monthly payments are worth it.

Property Taxes Aren’t Too Crazy

Regardless of where the property is located or who you are, ultimately, all property owners have to pay property taxes.   Property taxes in some areas are relatively reasonable but in other areas they make up a substantial part of a persons monthly mortgage, which could be a huge red flag.  Property taxes are known as a sunk cost, meaning it is money that cannot ever be recovered.  It’s important to be thorough and closely evaluate how much of your monthly payments are going to property taxes, how much to interest, and finally, how much is going to paying down your mortgage principal.

Great Location

It is not uncommon for many folks to purchase a home with the automatic assumption that the property value will always increase over time. However, this is only the case if the house is in an area people actually want to be in.  Some buy properties in the middle of nowhere hoping the value will increase but fail to consider that many may not wish to live in the middle of nowhere. More remote locations often make it harder to travel for work as well as provide fewer opportunities nearby to socialize.  These are just a couple of the reasons that could cause property values to climb much more slowly than in more densely populated areas.

You Can Afford It

No matter how much you love your home, it’s bound to be stressful if you can barely afford the monthly payments. Being house poor can make it hard to keep up with other essential expenses as well as enjoy even minor indulgences such as dining out or traveling periodically.  Perhaps your income has decreased since you bought the property or your expenses have increased. It could be that your budget is the same, but you’ve simply realized the monthly payment you signed up for are much too high.  No matter what the case, if a large monthly payment is causing a lot of stress in your life, it may not be sustainable long term.  On the other hand,  if the payments are within your monthly budget and not creating any financial strain than it could be worth the equity you will build to hang on to the property.

It’s Not the Most Expensive In The Neighborhood

There’s much more to life besides owning the one house on a street with the highest price tag. It can be tempting to envy the neighbor’s larger, more extravagant house, but the reality is, it’s probably not worth it.  Real estate agents use comparable local properties to gauge a home’s value. A house with a sale price notably higher than everyone else’s on the block was most likely valued too high.  Hopefully you’re not the neighbor with the overpriced house, but if you are, there’s likely a reason everyone else paid less to live in the area.

It may sound a little cheesy but home really is where the heart is. If you can easily afford your monthly payments and are truly happy with your property, then the monthly payments are probably worth it.  Whether the location is convenient to most everything in your life or it provides you peace from an otherwise hectic world, it’s not always so simple to put a price on your overall happiness.  If moving to save money on your mortgage payment would likely decrease your quality of life, it’s probably wise to simply stay put for the time being.

April 29, 2022

Most real estate investors spend a lot of time looking for creative ways to increase the income they receive on their rental properties.  While there are some obvious ways to increase the value of a property, like adding an extra room or upgrading the kitchen and bathrooms, there are also many ways to maximize your income on a rental investment without breaking the bank.  Below are just a couple of ways clever real estate investors can help ensure they are getting the most out of their rental property investments.

Allow Tenants to Have Pets

While many landlords have valid concerns and worry that allowing pets could damage their investment property, pet owners are becoming more and more frequent in this day and age. Pet owners are often limited in finding nice properties that allow pets and therefore will often settle for less desirable locations in order to live somewhere that will accommodate their fur babies.

Understanding this demand can easily add additional revenue to your monthly rental income if you are wise and know how to protect your asset accordingly.  Charging a nonrefundable pet deposit that will cover any deep cleaning and potential damages that a pet could cause is one smart way to create a win/win scenario for both you as a landlord as well as your prospective tenant.  Currently, a nonrefundable pet deposit of around $250 seems to be an industry standard in most real estate markets.  Additionally, many landlords will add on “pet rent” of around $25 to $50 per pet per month in order to offset any additional costs they may incur while increasing their overall rental income annually.

Consider Short Term Rentals

Considering lease terms shorter than 1 year can give you additional pricing power and a competitive edge over your competition.  Being flexible with tenants and offering them 6-month leases can easily add up to 10% additional monthly rental income compared to a 12-month annual lease.  Another often overlooked option is allowing for month to month leasing. Many renters who are in transition between housing or traveling for business are willing to pay top dollar for properties that do not tie them down to a long-term rental agreement.  Understanding the needs of your prospective tenants can help you secure the most out of your rental properties and set your place apart especially in a competitive market.

Supply Furniture

It is often the case, especially with short term rental agreements, that renters are looking for a place ready to go and set up with all of the furniture they need to move in and start living right away.  Whether a prospective tenant is needing to rent a place because they are traveling for business or they are a family in the process of building a new home, supplying furniture to your rental property is a need that many landlords overlook.  For those seeking furnished properties, the added convenience of a true turn key property adds a value that many are willing to pay top dollar for. Understanding the market you are in and being willing to offer a property furnished can set your property apart from the competition and secure you with happy renters for years to come.

Additional Amenities

There are plenty of creative ways you might be able to increase your property’s income potential if you are willing to think outside of the box.  For example, adding a doorbell or alarm system to a property in an urban setting can add additional security protection to your tenants and may significantly increase the amount a renter is willing to spend. Understanding exactly what your target audience is looking for and effectively delivering a desired amenity that other properties do not offer might leave you surprised as to how much additional rental income your property can bring in.

Understanding the growing demands of prospective tenants can be the difference of whether or not you are able to consistently rent out your investment property, especially in a competitive market. Allowing pets, agreeing to short term rentals, furnishing your rental property and adding additional security measures are only a few ways to set your property apart from the competition.  Regardless of what route you take to add additional value, researching the market you are in and being willing to step outside of the box will add the most potential income to your rental investment and leave your tenants happier and willing to spread the word to future prospects down the line.

April 22, 2022

One often utilized and effective strategy to secure a solid profit is to purchase a real estate property, repair and sell it as quickly as possible.  That said, one of the key factors to being successful is having proper access to the necessary capital. If you are looking to flip a property but lack the needed funds required to seal the deal, a hard money lender who provides fix and flip loans could be one smart financing option. These types of loans are generally structured in a way that allows the buyer to secure the property quickly and then have access to the necessary additional funds required for construction costs.  Below we will look at a few key benefits that fix and flip loans have to offer.

Making Upgrades Is Easy

When you purchase a fix and flip property, a large amount of your budget is often spent on construction and remodeling expenses. Fix and flip loan providers usually set up an allowance to cover necessary repair costs of the property as well as interest. This can take away a lot of stress and pressure for property developers without having to worry about spending their own money out of pocket for repairs or interest payments.

Fast Approval

Approval for a fix and flip loan is often a much faster process than securing a loan through the traditional banking system. Once you have submitted all of the required documentation, a private lender can often times approve and fund a fix and flip loan within a couple of days.  On the other hand, a traditional bank loan can often take at least a month to finalize and it is not uncommon for these loans to take much longer to be funded. Traditional bank loans commonly have much longer wait times and borrowers are required to submit numerous documents and jump through numerous hoops as part of the funding process.  These delays can often make or break an otherwise valuable fix and flip opportunity.

They Cover Most Property Types

Properties of all different conditions and locations can be funded with the use of a fix and flip loan.  Whether the property is in foreclosure, owned by a bank, or is old and run down with not a lot of public interest, a borrower can likely find a hard money lender willing to fund the right deal. Unlike with traditional loans where there are so many restrictions in place to prevent a borrower from funding these types of opportunities with a bank, as long as the deal makes sense, a hard money lender will often fund the project for you.

Prepayment Fees Are Uncommon

If you take out a traditional bank loan, it is possible you could be hit with penalties if you get the chance to pay off the loan before the date of maturation. Most fix and flip lenders do not impose these types of fees for replaying your loan early.  This is one of the main reasons why finding the right hard money lender is key to being successful with any flip and fix project you may wish to pursue.

It’s important that any hard money lender you choose to work with should have solid experience in the industry.  This alone can set you apart from the competition as efficiency, speed and quality are critical in the fix and flip world. The less time you have to spend vetting potential companies and contractors translates much of the time to simply more money in your pocket.

Last of all, you should check out what previous and current customers have to say about particular lenders. Hardmoneyhome.com is a great resource which provides more direct customer ratings and reviews than any other Hard Money Directory online. Using this resource along with other avenues when performing your due diligence will help you to ensure your success on your latest fix and flip project and hopefully many more to come.

April 8, 2022

Investing in real estate is often a solid strategy as it tends to be a consistent asset when it comes to delivering a higher return than many other investments. For seasoned investors looking to diversify their portfolios, they understand the need to be very cautious regarding pricing the markets, product under consideration in order to secure high returns consistently.  With that in mind, below we will discuss a few pro tips that will help yield higher returns from your investment long term, especially if you are considering adding one or more high end properties to your investment portfolio.

Clarify Your Purpose

Goal clarity is key prior to investing in a high-end property. It’s important to consider and have answers for all of the important investment questions. Are you investing for a strong ROI purpose or do you wish to require a dream property now to live in down the line?  Do you intend to rent out the property? Location becomes very important and you might need to invest in a more popular location if you plan on collecting the most amount of rent possible, quickly. If, on the other hand, your dream is to one day live in a high-end property, does the particular property you are considering have all the amenities suiting your future lifestyle?  Asking these types of questions ahead of time will help you identify the best property, at the most affordable price and in the best possible location.

Secure Funding

It is never wise to finance or spend more than you can comfortably afford. As tempting as it may be when searching for a higher end property to increase your spend to secure a place that has every possible amenity under the sun, it’s smart to have a clear understanding of where your finances stand and to not spend beyond your means. Your max spend needs to be clear in your mind before you begin seeking financing. If the purpose of your investment is to ultimately sale it down the line, you may be a good candidate for a short-term loan in order to fix up the property and then resell it. Short-term loans are typically easier to secure and repay than traditional financing. That said, the interest rates are generally higher and with the fed announcing recent increases are likely to continue to rise.

Location Is Key

The location of a property remains the single most important factor in the success of building equity in a property after you’ve squared away your financial road map. It is the location on which the ROI potential of the property depends. A high-end property without the necessary amenities or in the wrong part of town will almost always remain a liability and will not generate the necessary ROI needed to make the investment worth your while long term.  Any higher end property you choose should be as close to the city as possible and the neighborhood should match the class level of any future potential buyer. A high-end property in a poor location far from the cities center will in most all cases prove to be nothing more than a liability and a burden.

Do Your Research

The herd mentality can be very risky in cases of high-end property investment. Simply because your friends, family, or a co-worker have deep enough pockets or have decided investing in a location without do the appropriate research is a good idea, doesn’t mean you should do the same thing or are in the same financial situation as they are. Everyone regardless of circumstance should perform in-depth research about the properties history of appreciation and look at market trends to help predict the future expectations from the area. No matter how nice the property may be, at the end of the day it is simply an investment and you need to have a crystal-clear focus of everything that will ultimately be involved while it remains in your possession.

At the end of the day, high-end property investment is an expensive and serious investment decision and being confident of the location, pricing and amenities will help you go a long way in determining the ROI potential of the property before you get in to a deal that can quickly spiral out of control if you are not adequately prepared.