December 17, 2021

Managing a property can take a lot more time than many people may realize. Successful property investment also demands money, and dedication in order to be profitable. Luckily, you don’t need to do everything on your own.  For example, property managers, online platforms, and virtual assistants can take some of the stress out of the experience.  Investors looking to turn their properties into a more hands off investment can outsource any number of responsibilities, from screening residents, to collecting rent, to answering emails. Below we will look at a few key areas where it may be worth considering to outsource certain responsibilities related to your investment property in order to provide your life with more balance overall.

Securing Tenants

Once you have found potential prospects for tenants, you still need to make sure they will be a good fit for your property.  Traditionally, it has fallen on the landlord of a property to conduct a thorough background check.  That said, discovering the full truth about an applicant’s prior rental history can be quite the scavenger hunt.  Luckily, there are many online platforms which allow owners to quickly put in an applicant’s name and email to generate their full rental application, credit report, criminal background check, and any previous evictions they may have had.

Rent Collection

Accepting checks by mail has largely become a thing of the past. Renters expect easier options to complete their payments online.  Whether you decide to go with an app or some other an online solution, it’s important to find a way to eliminate the need to write a physical check.  With online payments, renters can securely link their bank account and send in rent through an electronic funds transfer. This is not only convenient for your tenants but also gets payments collected in a much timelier and more seamless manner.  Tenants can also schedule payments based on their other monthly expenses, so they don’t have to worry about being late or missing a payment.

Marketing

Marketing your rental and finding tenants is one of the most time-consuming aspects of being a property owner. Coming up with a compelling listing, taking pictures of the space, and managing inquiries all at once can at times feel completely overwhelming.  Luckily, there are many realtor services that can help lighten the load for you. Digital marketing experts can also help you create your brand identity as well as content that is attractive to the eye. It is important not to overlook what a well-done website, blog, or social media presence can accomplish.

Maintenance/Repairs

When something goes wrong with an investment property, the landlord is generally the first person a tenant will reach out to. That said, it doesn’t mean you need to physically repair whatever is going on yourself. Whether it’s an air conditioner that’s not working properly, a water heater that’s past its life span or trees that need to be trimmed back from the roof line, there are lots of qualified professionals who are more than happy to take care of it for you for a reasonable rate. It is a good idea to have a handyman on speed dial if you do own an investment property.  Some landlords allow their tenants to reach out to an approved handyman directly, but it is important to have a clear understanding and communicate with both parties ahead of any repairs to clearly outline what constitutes a “necessary” repair.

Cleaning

Cleaning is especially important if you own a short-term rental. It’s best practice to clean the unit after each guest completes their stay, and most online platforms will require it if you post your property on their sites.  Instead of spending all your time with laundry and dishes, consider hiring a maid to come in and help out. Truth be told, most maid services take great pride in their work and will likely do a better job cleaning and provide higher quality of service to your tenants than you can offer day in and out when it’s all on your shoulders.  Best of all, The maid can be scheduled in advance and at any frequency you need depending on your budget and how often guests are coming and going.

Bookkeeping

Owning an investment property requires money, and as we all know, money can often times become mismanaged. A bookkeeper can help you develop systems to manage all of your properties expenses and revenue, saving you many headaches down the road. They will also know about certain tax breaks and write-offs to help you save money.

While some investors prefer to be more hands-on, an active approach is not for everyone. It’s understandable and completely acceptable to outsource certain responsibilities your investment property may require as long as you are managing the people and areas you have outsourced effectively. Hopefully the above guide will help you determine what areas you may be able to find help in managing your investment properties in the new year.

December 10, 2021

As the holidays rapidly approach, you may have been working on achieving one of life’s biggest goals; purchasing a new home. During this time of year, continuing to save for a down payment and closing costs for a new home, can seem like a never-ending uphill battle. Instead of putting off your home-buying plans for yet another year, try making these few adjustments to your holiday spending and save more for a home or other important investments with these smart tips.

Set Spending Limit’s In Advance

It’s vital in order to meet your financial goals that you define and set your budgets spending limits before you begin making holiday purchases.  The average American plans to spend around a thousand dollars on holiday purchases in 2021.  Just because that is the “norm”, if those numbers are not in line with your financial goals, you do not need to feel pressure to spend more than you can afford.

Along with setting holiday spending limits, it is wise to not use credit cards but instead utilize cash or debit cards when making holiday purchases. The process of spending real money and watching it immediately leave your banking account instead of paying it off down the road over a prolonged period can seriously reduce your desire to spend more than you can afford. If you do decide to pay with catch this year, using physical envelopes to allocate spending can help you split up your money into categories before you make any major purchases, you’ll regret come January.

Disabling push notifications and location-tracking from retail apps on your phone, is another great way to help you avoid advertisements about sales that could tempt you to spend more than you had planned.

Set Expectations

If you are feeling pressure during the holidays for how you’ve historically given gifts to loved ones, get ahead of those seasonal expectations by sharing your financial plans with everyone on your list. Along with helping your loved ones recognize why this year might be different, you’ll help them understand what’s on your own list: cash for a down payment!  It is also smart, in all of your social circles, to consider imposing a maximum price on gifts this year. If setting spending limits makes you feel uncomfortable, know you’re likely not the only one who wants to save money.  Whether or not the spending limits hold long term, you can save even more by hosting a Secret Santa exchange, which limits the need to buy for multiple recipients, and delivers a bonus benefit of mystery and fun to the holiday season.

Enjoy Free Or Cheap Fun

Consider sharing experiences with your loved ones instead of just buying gifts for everyone. In many cases, these experiences are more memorable, and much more affordable.  To start, look for fun activities in your local community. Many chamber of commerce websites around the country feature an events calendar detailing free or cheap seasonal outings, such as tree lighting ceremonies, holiday markets and pop-up ice skating.

Another smart money-saving idea is to skip on the high cost of going out for dinner and instead invite your loved ones over for a holiday potluck. When everyone brings a dish, everyone shares the expense.  Likewise, there’s no shortage of holiday-themed movies to ring in the season, especially on streaming services. Instead of going out to a seasonal performance or a movie, invite everyone to your place to watch a classic holiday movie.

Develop Spending Habits Year Around

The benefits of developing healthy spending habits now can extend well beyond the holiday season.  By learning to follow a budget, you’ll be able to refine it after the holidays and continue to hold yourself accountable every week of the year, a skill that will come in handy when you do become a homeowner. By not increasing credit card debt during the holidays, you can more easily lower your credit to debt ratio, which will help increase your credit score, giving you an advantage when it comes time to find a mortgage and get the lowest possible rate.

The holidays happen every year, but what makes them special doesn’t involve Black Friday discounts or spending above your means. Reframe your budget to focus less on buying gifts and more on saving money. When your savings add up to enough to cover your down payment, you’ll be able to host next year’s holiday dinner in your brand-new home.

December 3, 2021

Are you in the market for a new real estate investment property? While buying real estate can be one of the best decisions you could make in terms of investments, it often comes with a high price tag and potentially a lot of risks. Like all investments, a good rule of thumb is to always have a solid understanding before jumping in heads first. Below is a list of a few important things you should consider before buying a real estate investment property.

Property Location

Location is still the primary attraction when it comes to real estate property investments. Buying the right property in the wrong location will not likely be the most profitable choice. It might seem counter intuitive to think about it this way. After all, it’s the building that you’re going to buy. However, people love convenience. The closer your property is to all of the amenities, green spaces, scenic views, market places, free-ways, and warehouses they utilize, the more attractive it will be to prospective buyers. The location of your investment property also plays a massive role in future property valuations.

Property Valuation

If you haven’t heard of property valuation before, it’s basically a report summing up your property’s current market price. It helps real estate investors find out the real worth of their investment properties based on their current condition, location, and other key factors. Knowing the property valuation of an investment real estate can help you determine whether it’s the right buy for you or if it’s best to look for another option. It also helps you come up with a fair and competitive rental price for your property if you were to rent it out to tenants. Property valuation can also help you determine mortgage prices, transfer fees, tax prices, and many other important metrics for performance potential.

Property Purpose

One of the most common mistakes that new real estate investors make is not thinking about the purpose of their real estate investment property. Not knowing what you want to do with your investment property can lead to unexpected negative results, such as financial hardships. This is especially true if your property is mortgaged. A few common examples of a properties purpose would be to buy for your own self-use, buy and then lease the property to someone, or to buy the property with the sole intention to sell it afterwards. It is important to the success of your investment that you try to identify your purpose before finalizing any transactions.

Existing Debt

Plenty of investors carry debt as part of their portfolio investment strategy. Your credit score affects the way mortgage lenders view you, and it also affects the terms your lenders are willing to offer you. This is why having a high credit score is important, especially if you’re planning to invest in real estate. People with higher credit scores are more likely to get smaller interest rates on their mortgages, not to mention rebates from their lenders for being good mortgagors.

Increase Your Credit Score

Always pay your bills on time. If possible, set up automatic payments so you never miss a date. Pay down debt before taking on larger debt. Aim to spend no more than 30% of the amount you plan to loan. As long as there are no annual fees, don’t close unused credit cards. Make time to review your credit reports and dispute inaccuracies. Following these steps will help make sure your credit score is where it needs to be before you go through the tedious process of submitting all of your financial information for a new investment opportunity.

Personal Readiness

Investment properties should be treated and run like any other business. Whether you’re renting or selling, the responsibility of getting a substantial return on your investment lies in your hands and your ability to manage it effectively. This can be an overwhelming responsibility, especially for new investors. Before finalizing any purchases, ask yourself if you are ready to take on the role of being a landlord or landowner. If you find that you’re not quite ready for the responsibility, we suggest you find ways to slowly ease yourself into the mindset of being a real estate investor.

Buying investment properties can be intimidating, to say the least. But as long as you have the right strategy in place, you can usually expect high returns on your investment. Keep in mind the important factors mentioned above. As always, seek additional advise from experts in your area as well before deciding what is the best decision for you to make when it comes to purchasing a new investment property.

November 11, 2021

When looking for areas to buy an investment property, it’s critical to look at a variety of different factors when making such a big decision. Picking a community and home you want to live in long term is quite different from choosing a house for someone else to live in. While many investors look only at the property, the most successful investors consider the type of person who would want to live in the neighborhood where the home is located. Smart investors look for homes that will give their renters a certain quality of life. When looking for your next fix and flip opportunity, consider the below location issues before moving forward with a new investment project.

Consider HOA Restrictions

While most HOA’s allow most any qualified renter, sometimes they may require additional interviews or steps to approve people for a particular neighborhood. Unfortunately, some HOA’s policies can go to extremes in an effort to create a more appealing and safer environment for the community. These policies can lead to unnecessarily strict rules that must be followed or fines can be issued for even the most minor offenses, such as putting the trash cans out a few minutes too early on trash day. It’s important to understand all the fine print of any HOA restrictions a neighborhood may have before agreeing to purchase a new investment property in the area. Not understanding these rules is one quick way to ensure a lot of headaches and complaint calls from your future tenants down the line.

Appealing Location

Is it in a location where tenants would want to live? Renting out a property in a desirable neighborhood with beautiful things around it helps possible renters say yes. Additionally, when you’re looking at short-term/nightly rental options, an appealing location where people would normally travel to for vacation is also a good investment. Just because you find a good deal on a property doesn’t really mean it’s a good deal if no one would ever move there.

Local Attractions

Are there attractions nearby that lots of people what to see? Are there amusement parks, nature trails, or other live music venues? Your rental property should be near things that someone would enjoy experiencing. This is especially true for short-term rentals. When people are planning a vacation, they want to go somewhere with different attractions close by so they can take in the highlights of whatever location they are visiting.

Home Amenities

What amenities does the house itself feature? Is there a pool, hot tub or firepit with outdoor spaces with plenty of seating to entertain friends and family? Are there smart home features available? Does the home feel cluttered or does it create a natural flowing environment? Is the backyard fenced and private or is it open? These are just some of the home amenities to consider as you think about the kind of property to buy.

Rate of Turnover

When looking for a new long tern rental property, you should look for a location where there is likely to be a good amount of turnover each year. This means that there are always new people coming and going who would be qualified to rent your home for a 12-month lease or more. In areas near colleges, universities, and military bases, you’ll be more likely to find the most possible renters as compared to a small town too far from employers and amenities. The turnover rate should be due to relocations or college students graduating and not because crime rates have skyrocketed in the area.

Crime Rates

Crime rates are perhaps the most important. You’ll want to not only look at the overall rate but the types of crimes being committed in the area. Some areas have domestic disputes and not very many crimes from outside the home. Other areas have much higher rates of theft and vandalism, while still others might have an issue with burglary and more violent crimes or gang activity. For this reason, it is very important to look at not only the crime rates, but where the crime is happening, how frequently it occurs, and if the issues have been resolved in recent months.

Neighborhood quality is one of the most important criteria for prospective renters and unfortunately is often over looked by investors looking to do a quick fix and flip and make a fast buck.  Using the above guide will hopefully be useful in considering other important factors to consider in order to be successful long term with your future investment portfolios.

November 5, 2021

One of the first decisions you will need to make, once you decide to take on a new rental property, is whether to use a property management company.  Unfortunately, no two property management companies are exactly the same. Some focus primarily on residential properties, while others specialize in more commercial rentals such as retail and office spaces. Inevitably, all of the different companies management policies, experience and size will vary as a result.  That said, how do you find the right property management firm to manage your investments?

The first step is to make sure you do your homework. Online searches for property management firms in your area will show several results. While it’s only one metric to go by, a company’s online presence does typically give you some clues into its size, experience, policies and overall professionalism.  The second step is to keep in mind that you are hiring a property management company to work for you. Treat the shopping process like you would any other hiring/purchasing situation. It’s wise to interview several different companies and ask the right questions until you feel comfortable that you have found the best property management company for you.  To help you in the process, here are a few questions to ask potential property management companies before committing them to manage your next rental property.

How Much Experience Do They Have?

We all must to start somewhere, but you’re probably better off not picking an inexperienced property manager to manage your new property or investment portfolio at large. A solid property management company will usually have several years of experience and will have had adequate time to address all of the unique aspects of the property management world, like vacancies, maintenance issues, evictions, changes to laws and regulations, just to name a few.

How Many Employees Do They Have?

It’s not uncommon for a property management company to outgrow their capabilities as they take on more properties to manage too quickly. The quantity and expertise of people employed by a property management company should allow each property manager to have a reasonable number of properties they are responsible for. Depending on the size of the organization, a company may need to employ full-time maintenance and accounting staff. Ask these questions of companies you consider managing your properties to gauge whether they are appropriately staffed to meet your property’s needs.

What Types And How Many Properties Do They Manage?

Property management companies come in all different sizes and shapes. Some manage only a small number of properties, while others have diverse portfolios that include all types of single-family, multi-family, as well as commercial properties. You will want to confirm that a property management company specializes in your specific type of property and then consider multiple property management companies to help you decide what size firm best suits your particular needs. You may feel more comfortable with a smaller operation, or may conclude that a larger outfit with a more diverse portfolio will better fits your unique needs.

How Do They Handle Maintenance Issues?

Whether a firm has maintenance staff in house or out sources independent contractors, maintenance costs can greatly affect your bottom line. Some property managers charge mark-up fees for their work in arranging property maintenance. Make sure you know how the company you are hiring handles maintenance issues before signing any agreement.

What Are Their Terms?

As with with any legal agreement, it is critical that you know the terms of the agreement you will need to sign with a property management company before doing so. Some agreements may seem overly binding, while others may not seem like they cover enough. Remember, ultimately the property management company works for you.  If you are uncomfortable or not totally clear with any of the terms in the agreement, do not hesitate to ask questions, get clarification and make any necessary changes before agreeing to move forward with a long term commitment.

What Fees Do They Have?

You should always know ahead of time if your property management company charges fees during, for example, times of vacancy. Make sure you know whether any fees you may pay are preset or based on the percentage of time the property is rented. This way you will have a more accurate idea of what to expect during times of vacancy and can plan accordingly.

What Is Their Retention Rate?

If a property management company does a good job they will have a high retention rate which they will gladly share as a key indicator of their overall success. A companies retention rate shows its capability to grow effectively as well as its ability to keep their current customers happy.

Do They Have Positive Reviews?

A good property management company that is competent in their area of expertise will also have satisfied clients. There is a good chance that if you think about it long enough, you already know someone who has investment properties as part of their portfolios.  Asking people, you already know for who they recommend is a great solution when shopping around for a new company to use. Online ratings and reviews as well as the company’s online website presence will all give you a better indication of whether a property management firm is ultimately the right pick for you.

October 29, 2021

Generally, there have been some recent gains in the real estate market which are common indicators of a profitable housing market.  That said, there are several signs which can further help real estate investors determine key areas ready for new growth.  It’s more important now more than ever for investors to understand the factors which can help foreshadow the future performance of certain geographical areas.  Prospective buyers should always perform an in depth due diligence before finalizing a purchase regardless of the location.  Below we will look at a few of the top market indicators every investor should know before taking on a new property.

Rates Of Vacancy

Vacancy rates are also known as the percentage of rental properties which remain empty in a given area during a particular time frame.  As property investors, vacancy rates can provide good indication of the overall health of a rental market.  Typically, a vacancy rate of around 3 percent is usually considered a good market. Less than 3 percent vacancies means there are not enough rental homes available in the area. This likely means that monthly rental incomes are likely on the way upwards.  To the contrary, vacancy rates above 3 percent could be a warning sign for new investors that they may have to contend with watching their rental properties sit empty for longer than planned.

Available Inventory

The overall total of available listed properties in a given market indicate the level of demand a location is currently experiencing under the current housing market conditions. In turn, these two things indicate where prices are likely to go.  Available inventory is often expressed in months and takes into consideration the average monthly demand for property. While there is not a perfect number, it’s generally accepted that six months of inventory equals a healthy real estate market.  To the contrary, if there is less than six months housing supply in a particular market, buyers will generally experience upward pricing.  If there is more than six months housing supply in a market, buyers will typically experience a downturn in real estate pricing.

Prior Capital Gains

Simply looking at up to date average prices in a particular area wont necessarily indicate much about the future of a certain market.  It’s important to also look at historical data like the prior capital gains rates in order to help investors more accurately predict where housing markets may be headed.  If an established area has past data available and it shows an average annual growth rate of 3 percent, an investor should not expect it to suddenly perform at over 12%, right? While anything is possible, with no meaningful changes to the data, there’s probably no reasonable not to mention statistical reason for such a large increase in returns to be expected..

Rental Yield

It is critical to have a firm understanding of the average rental yields of a particular location if you are considering purchasing real estate in the area.  Rental yield is a measure that expresses annual rent as a percentage of the property’s purchase price.  So, for example, let’s say a half a million-dollar property rents for 500 dollars a week.  That would mean it would earn 26 thousand dollars annually. So in this example the rental yield of the property is a little over 5 percent.  Rental yields are typically at their lowest when an area is at the top of the property cycle, and yields are often at their highest just prior to an area moving back into its peaking market.

Days-On-The-Market

Days-on-market is another measure of supply and demand. As its name says, this measures how long it takes for a property to sell.  This, combined with inventory level, could be a powerful tool to evaluate the activity in a particular area.  Generally speaking, 2 months on the market is average in a healthy climate.

While there is no one key metric to look to when evaluating the overall health of a particular market, using the above indicators can help investors make a more informed decision when evaluating the overall health of a particular area.

October 22, 2021

The pandemic has hit the rental property industry hard, and some features of a rental property that might have previously been nice upgrades have turned into necessities. Now that the worse of the pandemic is hopefully behind us, real estate investors should shift their objectives from reactive to proactive solutions that will keep unoccupied units down and profits up. One of the best places to focus your attention is on adding green features to your property that will hopefully provide significant cost savings while appealing to younger renters with a newer interest on climate issues.

Adding smart devices to your property is a smart solution to instantly make your rental properties more environmentally friendly. What’s more, there is strong indications that millennials are willing to pay more for rental properties equipped with smart technology.  By upgrading certain systems, real estate investors can make some positive impacts on the environment while attracting more renters. Additionally, they can likely boost their ROI by investing in properties with the following energy and money saving features:

Keyless Resident Locks

Keys are expensive and replacing them can cost a few hundred dollars and result in more time, energy, and physical waste.  They’re also not as secure as most people would like to believe. You may initially give your tenants two keys, but there’s really no way of telling how many copies renters will end up making on their own.  When a new tenant moves in, it’s a good idea to rekey the locks, but that expense is easily avoided with keyless smart locks which allow you to give renters unique codes to gain access. Keyless entry also allows prospective tenants to look at your properties on their own, saving valuable time when you are seeking new tenants.

Smart Thermostats

HVAC units are one of the largest consumers of electricity in a typical home. Smart thermostats have shown themselves to be an effective way to lower the overall electrical pull, providing energy savings upwards of over 30% monthly.  Additionally, adding sensors that shut off the HVAC when a door or window is left open, can further increase the potential energy savings.  Smart thermostats are valuable for your property when it is left unoccupied because they make it easier to manage HVAC costs and humidity levels in vacant properties. They also reduce vacancies by making properties more attractive to potential renters who are interested in lower heating and cooling bills.

Water Leak Sensors

The typical household will leak as much as 10,000 gallons of water each year, amounting to almost 1 trillion gallons wasted nationwide. Water leak detectors, flow valves, and shut-off valves reduce this waste, but they also help protect major property investments. Water damage emergencies can cost tens of thousands of dollars, and they impact thousands of Americans every day. A few inexpensive smart devices are money well-spent when it comes to protecting both your properties and the environment.

Solar Power

The IRS currently offers a 26 percent residential solar tax credit that applies to both the purchase and installation costs of solar power solutions, and some utilities will buy back unused electricity generated by solar power. As consumers prioritize measures designed to protect the environment, solar panels are an attractive proposition.  They’ll likely become even more important as electric vehicles grow in popularity and increase household energy consumption.

It should come as no surprise that waste hurts wallets in addition to the environment but that makes an even stronger case for real estate investors to go green. The categories above highlight smart rental property investments, both because they’ll save money and energy and because they attract a growing group of environmentally conscious renters.

September 24, 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.

September 17, 2021

Investing in real estate can be quite profitable, but like any investment it requires capital in advance in order to enjoy the benefits it offers. This capital is essential to keep your real estate business moving in the right direction. From purchasing your first duplex to paying for the upgrades on your previous fix-and-flip, without the proper funding, you can not call yourself a real estate investor. Luckily, there are many options for investors to raise the capital they need to fund their real estate projects. Below are three smart ways for raising the funds you need in order to be successful.

Secure Funding With A Private Lender

Know someone who is interested in investing money and wants to receive I higher return than simply having their money sit in a standard bank saving account? Getting a loan from a family member, colleague, or friend is one smart option before going to a bank to fund your latest real estate project. While you will need to pay the loan back with interest and guarantee a certain return on their investment most of the time; you can typically get the funds you need much faster, and with less red tape than going through a financial institution.

Find A Highly Rated Hard Money Lender

There are many hard money lenders nationwide who are happy to fund a loan if the terms are right. It is important that you do your research ahead of time on any hard money lender you go with and select a reputable company to do business with prior to signing on any dotted line. Directories such as hardmoneyhome.com are great resources because consumers are able to leave reviews of their experiences with different lenders, making it much easier for you to research and find the best company to meet your needs. While higher interest rates are usually standard with most hard money loans, there is less red tape and it is easier to qualify for these loans. Hard money loans are best suited for quick projects such as fix and flips or bridge loans to float you in-between real estate projects.

Find A Trusted Partner

Partnering with someone you can trust is a great way to share the responsibilities and workload of investing in real estate. It is important that each partner is clear on the expectations of each deal and any potential profit or loss on an investment prior to moving forward with a partnership. While partnering with someone is not without its own obstacles, it can be a great way to share the risk and reward on investments. Dividing and conquering your responsibilities is also a great way to gain a competitive edge on your competition.

Regardless of which method best fit for your needs when securing funds for real estate investment, few investors have all of the capital needed to fund their investment projects. Researching all financing options and picking which option is best for you is critical to you being successful within the real estate industry. Hopefully, using one or all three of the above options will benefit you in all of your future investment endeavors and help you to grow a diverse and profitable portfolio.

September 10, 2021

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.