Thinking Outside the Box: Vacation Home Options for Real Estate Investors

Thinking outside the box can help real estate investors make the most profitable use of their available capital. The National Association of Realtors (NAR) recently released its Investment and Vacation Home Buyers Survey for 2015, which revealed some surprising information about the current residential real estate market and the opportunities available for investors. While primary residence purchases continue to dominate the market and comprise 60 percent of all sales, vacation home sales are on the rise. In 2013, vacation homes accounted for 13 percent of sales in the national real estate marketplace; by 2014, that figure rose to 21 percent. Understanding the factors that influence buyers of second homes can ensure that investors achieve their fair share of profits in this niche market.

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Dynamics of Vacation Home Buying
According to the NAR survey, vacation homebuyers had five primary reasons for purchasing these properties:

  1. Roughly one third were actively looking for a property to use as a vacation retreat.
  2. An estimated 19 percent purchased with the intent to use the vacation home as their primary residence at some point in the future.
  3. Projected appreciation played a role in the decision to purchase for 13 percent of buyers.
  4. Another 13 percent indicated that they had bought a vacation home because they had located a bargain in the local marketplace.
  5. 11% purchased a vacation home to generate income through renting out the property

The latter three reasons bear a striking similarity to the objectives of those looking to optimize their revenues in the real estate marketplace. By taking a more inclusive approach to the types of properties considered, investors can often expand their portfolios while achieving higher returns on their financial investments.

Resale a Better Bet than Renting
While investing in a vacation home as a rental property may seem an attractive option for real estate investors, the greatest profits may be available for those willing to earn a bit of sweat equity and to resell these properties in the current marketplace. Financial experts from CNBC, U.S. News & World Report and other reputable sites are touting the financial and tax advantages of purchasing a second home. By entering this sector of the real estate market now, investors can take advantage of this buzz to ensure the greatest possible returns on their financial investment.

Rental Profits Possible for Cautious Investors
Depending on the location and the initial and ongoing costs of the investment, vacation homes can also provide ongoing rental revenues for savvy buyers. TripAdvisor notes that the Southeast region of the U.S. is the most popular area for vacation rentals, attracting 39 percent of all business in this real estate sector. By choosing a location carefully and looking for bargains in high-demand areas, investors may be able to achieve high occupancy rates and competitive revenues in current market conditions.

As demand for vacation rentals increases from sites like Airbnb, HomeAway (just purchased by Expedia for $3.9 billion) and Rent Like a Champion more investors will become hosts and purchase vacation homes to generate income.

By expanding their portfolios to include select vacation properties, real estate investors can potentially enjoy added revenue streams and increased diversification. This can result in greater long-term returns on investment and improved performance in the next few years.

Sources:
http://www.cnbc.com/2015/04/17/the-time-to-invest-in-a-second-home-is-now.html
http://money.usnews.com/money/personal-finance/articles/2015/04/30/does-it-make-sense-to-buy-a-second-home
http://ir.tripadvisor.com/releasedetail.cfm?ReleaseID=902400

Six Real Estate Investment Practices You Should Stop Now.

Managing your real estate investment business effectively is the key to continued profitability in this fast-paced industry. Knowing what not to do is just as important as understanding the positive principles of successful property investments. Here are six practices you need to think about when buying, selling or brokering real estate transactions in the modern marketplace.

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#1. Failing to Perform Due Diligence

Doing your homework on the local real estate market is critical to your success as a real estate investor. Some of the most important things to consider before making a move in real estate include the following:

  • Current number of homes on the market in your area
  • Average sale prices & Average time on the market
  • Number of distressed properties available for purchase
  • Rental occupancy rates and average monthly revenues collected on rental units
  • Purchase prices for comparable properties
  • Neighborhood details to include demographics, crime stats, walkability, school district information and public transportation options
  • Zoning restrictions applicable to the property

Intangibles can be as important as these practical factors. Determining whether a particular neighborhood is in decline or in demand, for instance, can help you decide on the likely value of a property now and into the future.

#2. Failing to Consider All Expenses

When calculating the likely return on investment for a property, remember to include maintenance costs, property taxes and homeowners’ association fees into your figures. According to the experts at Zillow, typical operating expenses can add up to between 35 and 80 percent of the revenues generated. Aiming for between 40 and 50 percent can provide you with a healthy profit on your ongoing investment.

#3. Misunderstanding the Element of Time

Especially when purchasing distressed properties, timing can be critical to your own success and to the financial well being of the seller. Rushing into a deal, however, can be counterproductive. Missing out on potential revenues is never as damaging as taking a loss on a real estate investment. By taking your time and analyzing the pros and cons of each potential transaction, you can avoid making a costly mistake when time is a critical element. You need to learn how to say “no” when it matters most (i.e. investing in anything.)

#4. Utilizing Outdated Technology

Do you rely on an outdated, mobile-UNfriendly site that takes forever to load? Clients today are tech-savvy and finicky. If they’re unimpressed with the ease-of-use ways you communicate, advertise, and respond to them, they’ll likely not give you a second chance. A recent survey showed that 45% of consumers say a bad website is WORSE than no site at all. Everything from applications, to rental payments, to advertising should be online and easily accessible for every party involved. If you’re not managing the properties make sure your property manager is up to speed.

#5. Overextending Yourself Financially

Adding properties to your portfolio can increase your potential revenues to help you build wealth. However, failing to maintain adequate cash in reserve can leave you in real financial trouble if unexpected setbacks occur. The loss of one or more tenants, unexpected repair costs or legal entanglements can drain your available cash on hand. By ensuring that you have sufficient monetary reserves to manage these expenses, you can maintain an even keel even when unexpected financial storms arise.

#6. Going against Your Gut

Intuition is a valuable tool for investors in any field of endeavor. In the real estate field, going against your gut instincts can saddle you with a bad investment that can drain away potential revenues. In general, always listen to that internal voice and walk away when a property deal doesn’t seem quite right. The reverse is not always true, however; if a questionable investment appeals to you, it may be the wisest course of action to move on and examine other options — when all else fails, fall back on tip #1 and do your due diligence.

By avoiding these six pitfalls, you can increase your chances of long-term profitability in the field of real estate investment.

To Fix & Flip Or to Buy & Hold – That Is the Question: Statistics to Help You Decide

As another fiscal year draws to a close, many investors are trying to decide whether they should hold on to their real estate properties or sell them for immediate profits. Some say the glory days of “flipping” are over, but we’re not so convinced that’s true. Read on for all the info you need to make an informed, right-for-your-situation decision.

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Here are some of the most important stats and trends you need to know to make the right choice about your investment properties.

 

Existing Home Sales in Decline

The National Association of Realtors (NAR) compiles statistics on a monthly basis regarding new and existing home sales and trends in the real estate marketplace. Here are some of the most important stats from their August 2015 report.[i]

  • 8% — percentage that existing home sales fell by month-over-month between July and August 2015. However, home prices were on the rise thanks to limited inventories and relatively low new home construction in the single-family residential marketplace.
  • 2% — percentage that year-over-year home sales improved by as of August 2015.
  • 7% — percentage of foreclosures and short sales that comprised the market in August 2015, holding steady from the previous month.
  • 18% — percentage below market value that foreclosed homes sold for in August 2015.
  • 12% — percentage of market value that short sales typically when sold.
  • 12% — percentage of real estate investors that accounted for sales in August 2015.
  • 60% — percentage of investors who paid cash.
  • 7% — percentage of gain over the $228,700 median price for all existing housing in August 2015.
  • 32% – percentage of first-time homebuyers.

Depending on your target audience and your expected return on investment, it may be worthwhile to research your local real estate market to determine the current value of your investment properties.

 

Rents Continue to Rise

On the other side of the equation, property owners and managers continue to enjoy high occupancy rates and increasing rental revenues in almost all areas of the country.

  • A joint report by Axiometrics and MPF Research indicates that the single-family rental market may have finally reached a tipping point. After months of low vacancy rates and high rents, builders and property owners are seeing a slight rise in the number of vacant units. This is attributable in part to the increased construction of apartment complexes and rental units across the U.S.[ii]
  • The 2015 Rental Market Report from Rent.com paints a rosier picture of the overall outlook for rental property owners in the current economic environment. Based on information from property managers across the country, this report indicates that high occupancy rates and demand for rental properties are driving current favorable conditions for real estate investors nationwide.[iii]

These statistics make a good case for holding on to high-performing rental properties in the current economy.

 

Future Predictions

The financial experts at Fortune are predicting increases in average rental costs of 8 percent or more in 2016.[iv] This will constitute a real windfall for real estate investors who stay the course and rent their properties for ongoing profit. These rent increases are attributable to high demand and low inventories that are expected to continue throughout the upcoming year.

At Revestor, we specialize in giving real estate investors the tools they need to succeed. Whether you are investing and and/or flipping your first house or your thirty-first, we’re here to help you make the most of your investments no matter what the housing market has in store.

 

[i] http://www.realtor.org/news-releases/2015/09/existing-home-sales-stall-in-august-prices-moderate

[ii] http://www.multifamilyexecutive.com/property-management/reis-vacancies-rise-in-3q_o

[iii] http://www.rent.com/blog/2015-rental-market-report/

[iv] http://fortune.com/2015/10/07/rents-rise-housing/

 

 

Real Estate Crowdfunding: The Future of Real Estate Financing is Here {Guest Post}

In the past few years, crowdfunding has become one of the most effective and popular ways for companies and individuals to raise capital over the Internet.  In fact, since Congress passed Title II of the JOBS Act in September 2013, one of the industries that’s benefited the most from crowdfunding has been the real estate industry.  These provisions, which allowed for debt and equity crowdfunding to become a legal and viable option, have spawned a new method for real estate investors and sponsors to raise capital for their projects, without having to rely on their local banks and hard money lenders for financing.

The genius of the real estate crowdfunding model is in its simplicity.  Typically, in a real estate crowdfunding scenario, a developer of a property brings a deal to the table by submitting the details of their project to a platform.  The project is then vetted by the platform to make sure the investment is a sound and lucrative venture.  After the platform has conducted their due diligence they will then host the project on their site, giving investors the opportunity to contribute funds towards that particular loan.  As the project moves towards completion, the Borrower pays down their loan with interest while the contributors receive dividend distributions as a return on their principal investment.  The exit strategy for the Borrower depends on what type of project they’re working on.  Regardless, the peer to peer lending process is fairly simple for all parties involved and everyone is able to benefit from the experience if all goes as planned.

Ultimately, Patch of Land’s real estate crowdfunding platform bridges the gap between traditional and hard money lenders by combining the best elements from each.  This concept provides a fast and reliable solution for real estate investors looking to borrow funds and raise capital for their projects in an easy and repeatable way.  Here are just some of the benefits of getting a peer to peer loan through Patch of Land:

  • Access to Capital – Our large network (or “crowd”) of accredited investors provides you with a source of capital that never runs dry.
  • Speed to Close – Our tech-enabled platform helps us work with a sense of urgency to approve and fund your loan in as little as 7 days.
  • Prefunded Loans – After we’ve approved your loan, we will fund you at closing first, then offer your deal to the “crowd” second. This is opposed to traditional real estate crowdfunding platforms that make you wait until the “crowd” fully funds your loan before moving forward with your financing.
  • Nationwide Reach – We operate in every state throughout the nation with exception to a select few.
  • Brand Your Business – The projects hosted on our industry-leading platform are listed on CNBC’s Crowdfinance 50 Real Estate Average which means investors throughout the world will take notice and recognize your business.
  • Easy to Repeat – Once we’ve worked with you in the past we’re able to close your loans even faster in the future.

pol - logo - 2014-02-27 TAGLINE REV VERT HIGH RES

For more information on how you can use real estate crowdfunding to finance your next project, visit Patch of Land.  Our Lending Parameters, FREE Borrower Handbook, and Application Center will provide you with the educational resources you need to get started on financing your next short-term residential or commercial real estate loan today.

 

Guest Post by:
Marco Rivera with Patch of Land
marco@patchofland.com

How Rising Interest Rates Will Affect Real Estate Investors

Homebuyers rejoice when interest rates drop, but rising interest rates can actually be a good thing for investors. Because high rates make homes less affordable, the rental market improves, giving real estate investors a chance to improve cash flow and increase their return on investment.

Mortgage Rates

For investors participating in all-cash deals, higher interest rates don’t have much of an impact on the cost of acquiring new investment properties. Investors who rely on financing will pay more for residential and commercial buildings, but the positive effects of rising rates should cancel out most slight increases in costs. Any investor with an existing variable-rate mortgage should expect to pay slightly more each month. For example, a 0.25 percent increase in the Fed rate could increase mortgage interest rates and the cost of borrowing for an investor.

Rental Rates

When interest rates increase, buyers have several options. Making a large down payment or buying a less expensive home are both good ways to reduce the amount of financing needed, but these options just are not feasible for all buyers. It’s also possible to take a variable-rate loan with a low starting rate, but many buyers are more comfortable with fixed-rate mortgages.

When rates increase, some buyers stop shopping for homes and decide to rent until rates decrease. This is great news for investors. As the demand for rental units increases, investors are able to raise rental rates, increasing their monthly cash flow. If an investor owns a 4-unit property with a 100 percent occupancy rate, raising the rent by just $100 per month results in an extra $400 of income per month. The extra money can more than make up for the slight increase in mortgage costs related to rising rates.

Occupancy Rates

Rising rates can also have a positive effect on occupancy rates in the rental market. When rates are low, it’s more affordable for renters to finance home purchases. As a result, some renters decide to buy their own homes, leaving investors with vacant units. When interest rates increase, renters are more likely to stay in their units, keeping occupancy rates steady.

Cap Rates

In addition to influencing the amount of mortgage capital available, interest rates also influence property values and net operating income (NOI). If an investor is able to raise rental rates without incurring additional expenses, NOI increases. Provided the property’s value stays the same, an increase in NOI results in an increased cap rate. Increased occupancy rates also have a positive effect on NOI. Rising interest rates often lead to decreased demand, lowering the value of some properties. However, the increase in NOI is often enough to offset a small decrease in property value when calculating cap rates.

The Fed rate heavily influences much of the activity in the real estate market, but rising rates are not always a bad thing for investors. Higher rates do increase the cost of purchasing an investment property, but they also have a positive effect on rental rates, occupancy rates and cap rates.

Sources

Bankrate: Do Rising Rates Trigger Lower House Prices?

CNN Money: Why Your Rent Check Just Keeps Going Up

Investopedia: Capitalization Rate

Forbes: Raising Rates Can Be Good For The Housing Market

What’s your Exit Strategy?

When investing in real estate one of the key things you need to consider is whether you are going to Buy and Hold the property or Fix and Flip it. Each option has it’s pros and cons. We give you the calculations to see what your outcome would be either way.

Initially, on each detail page the calculations will be set to Buy and Hold. To calculate Net Profit (before taxes and inflation) and Return On Investment (ROI) we initially assume that you’ll hold the property for 5 years at an estimated appreciation rate of 4% per year. We also take into account 8% in closing costs when you sell the property.

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You can also change your exit strategy to Fix and Flip. We initially assume that you’ll sell the property for 143% of what you bought it for, that you’ll spend 10% in improvements and 8% in closing costs. We even calculate how much it will cost you in mortgage payments and expenses between the time you acquire the property until you sell it.

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Check it out for yourself at Revestor.com!

Why it’s Smart to Invest in College Towns

College towns should be the first place you should look for investment properties when starting out or as a seasoned investor. They will continue to be busy markets with a consistent demand for housing from students looking to rent since most schools do not have enough on-campus housing. With students are only looking for temporary housing, it gives you the opportunity to add value to the house in-between tenants. Meaning you can increase your rental income.

We searched Revestor.com and found these 11 cash flowing housing markets based around college towns.

University of South Carolina

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University of Southern California // University of California, Los Angeles

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Chico State

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University of Michigan

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Yale

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Duke

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New York University

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University of Florida

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Arizona State University

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Georgetown University

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Ohio State University

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As you can see prices vary from town to town but overall there are a lot of profitable opportunities for investment. Search your favorite college town and let us know what you find! Share your screen shots with us for a chance to be featured on our Facebook page.

The Top 5 Key Benefits of Purchasing and Owning Investment Real Estate

So… You may ask yourself, why should you buy or invest in real estate in the First Place? Because it’s the IDEAL investment! Let’s take a moment to address the reasons why people should have investment real estate in the first place. The easiest answer is a well-known acronym that addresses the key benefits for all investment real estate. Put simply, Investment Real Estate is an IDEAL investment. The IDEAL stands for:

    • I – Income
    • D – Depreciation
    • E – Expenses
    • A – Appreciation
    • L – Leverage

Real estate is the IDEAL investment compared to all others. I’ll explain each benefit in depth.

The “I” in IDEAL stands for Income. (a.k.a. positive cash flow) Does it even generate income? Your investment property should be generating income from rents received each month. Of course, there will be months where you may experience a vacancy, but for the most part your investment will be producing an income. Be careful because many times beginning investors exaggerate their assumptions and don’t take into account all potential costs. The investor should know going into the purchase that the property will COST money each month (otherwise known as negative cash flow). This scenario, although not ideal, may be OK, only in specific instances that we will discuss later. It boils down to the risk tolerance and ability for the owner to fund and pay for a negative producing asset. In the boom years of real estate, prices were sky high and the rents didn’t increase proportionately with many residential real estate investment properties. Many naïve investors purchased properties with the assumption that the appreciation in prices would more than compensate for the fact that the high balance mortgage would be a significant negative impact on the funds each month. Be aware of this and do your best to forecast a positive cash flow scenario, so that you can actually realize the INCOME part of the IDEAL equation.

Often times, it may require a higher down payment (therefore lesser amount being mortgaged) so that your cash flow is acceptable each month. Ideally, you eventually pay off the mortgage so there is no question that cash flow will be coming in each month, and substantially so. This ought to be a vital component to one’s retirement plan. Do this a few times and you won’t have to worry about money later on down the road, which is the main goal as well as the reward for taking the risk in purchasing investment property in the first place.

The “D” in IDEAL Stands for Depreciation. With investment real estate, you are able to utilize its depreciation for your own tax benefit. What is depreciation anyway? It’s a non-cost accounting method to take into account the overall financial burden incurred through real estate investment. Look at this another way, when you buy a brand new car, the minute you drive off the lot, that car has depreciated in value. When it comes to your investment real estate property, the IRS allows you to deduct this amount yearly against your taxes. Please note: I am not a tax professional, so this is not meant to be a lesson in taxation policy or to be construed as tax advice.

With that said, the depreciation of a real estate investment property is determined by the overall value of the structure of the property and the length of time (recovery period based on the property type-either residential or commercial). If you have ever gotten a property tax bill, they usually break your property’s assessed value into two categories: one for the value of the land, and the other for the value of the structure. Both of these values added up equals your total “basis” for property taxation. When it comes to depreciation, you can deduct against your taxes on the original base value of the structure only; the IRS doesn’t allow you to depreciate land value (because land is typically only APPRECIATING). Just like your new car driving off the lot, it’s the structure on the property that is getting less and less valuable every year as its effective age gets older and older. And you can use this to your tax advantage.

The best example of the benefit regarding this concept is through depreciation, you can actually turn a property that creates a positive cash flow into one that shows a loss (on paper) when dealing with taxes and the IRS. And by doing so, that (paper) loss is deductible against your income for tax purposes. Therefore, it’s a great benefit for people that are specifically looking for a “tax-shelter” of sorts for their real estate investments.

For example, and without getting too technical, assume that you are able to depreciate $15,000 a year from a $500,000 residential investment property that you own. Let’s say that you are cash-flowing $1,000 a month (meaning that after all expenses, you are net-positive $1000 each month), so you have $12,000 total annual income for the year from this property’s rental income. Although you took in $12,000, you can show through your accountancy with the depreciation of the investment real estate that you actually lost $3,000 on paper, which is used against any income taxes that you may owe. From the standpoint of IRS, this property realized a loss of $3,000 after the “expense” of the $15,000 depreciation amount was taken into account. Not only are there no taxes due on that rental income, you can utilize the paper loss of $3,000 against your other regular taxable income from your day-job. Investment property at higher price points will have proportionally higher tax-shelter qualities. Investors use this to their benefit in being able to deduct as much against their taxable amount owed each year through the benefit of depreciation with their underlying real estate investment.

Although this is a vastly important benefit to owning investment real estate, the subject is not well understood. Because depreciation is a somewhat complicated tax subject, the above explanation was meant to be cursory in nature. When it comes to issues involving taxes and depreciation, make sure you have a tax professional that can advise you appropriately so you know where you stand.

The “E” in IDEAL is for Expenses – Generally, all expenses incurred relating to the property are deductible when it comes to your investment property. The cost for utilities, the cost for insurance, the mortgage, and the interest and property taxes you pay. If you use a property manager or if you’re repairing or improving the property itself, all of this is deductible. Real estate investment comes with a lot of expenses, duties, and responsibilities to ensure the investment property itself performs to its highest capability. Because of this, contemporary tax law generally allows that all of these related expenses are deductible to the benefit of the investment real estate landowner. If you were to ever take a loss, or purposefully took a loss on a business investment or investment property, that loss (expense) can carry over for multiple years against your income taxes. For some people, this is an aggressive and technical strategy. Yet it’s another potential benefit of investment real estate.

The “A” in IDEAL is for Appreciation – Appreciation means the growth of value of the underlying investment. It’s one of the main reasons that we invest in the first place, and it’s a powerful way to grow your net worth. Many homes in the city of San Francisco are several million dollars in today’s market, but back in the 1960s, the same property was worth about the cost of the car you are currently driving (probably even less!). Throughout the years, the area became more popular and the demand that ensued caused the real estate prices in the city to grow exponentially compared to where they were a few decades ago. People that were lucky enough to recognize this, or who were just in the right place at the right time and continued to live in their home have realized an investment return in the 1000’s of percent. Now that’s what appreciation is all about. What other investment can make you this kind of return without drastically increased risk? The best part about investment real estate is that someone is paying you to live in your property, paying off your mortgage, and creating an income (positive cash flow) to you each month along the way throughout your course of ownership.

The “L” in IDEAL stands for Leverage – A lot of people refer to this as “OPM” (other people’s money). This is when you are using a small amount of your money to control a much more expensive asset. You are essentially leveraging your down payment and gaining control of an asset that you would normally not be able to purchase without the loan itself. Leverage is much more acceptable in the real estate world and inherently less risky than leverage in the stock world (where this is done through means of options or buying “on Margin”). Leverage is common in real estate. Otherwise, people would only buy property when they had 100% of the cash to do so. Over a third of all purchase transactions are all-cash transactions as our recovery continues. Still, about 2/3 of all purchases are done with some level of financing, so the majority of buyers in the market enjoy the power that leverage can offer when it comes to investment real estate.

For example, if a real estate investor was to buy a house that costs $100,000 with 10% down payment, they are leveraging the remaining 90% through the use of the associated mortgage. Let’s say the local market improves by 20% over the next year, and therefore the actual property is now worth $120,000. When it comes to leverage, from the standpoint of this property, its value increased by 20%. But compared to the investor’s actual down payment (the “skin in the game”) of $10,000- this increase in property value of 20% really means the investor doubled their return on the investment actually made-also known as the “cash on cash” return. In this case, that is 200%-because the $10,000 is now responsible and entitled to a $20,000 increase in overall value and the overall potential profit.

Although leverage is considered a benefit, like everything else, there can always be too much of a good thing. In 2007, when the real estate market took a turn for the worst, many investors were over-leveraged and fared the worst. They could not weather the storm of a correcting economy. Exercising caution with every investment made will help to ensure that you can purchase, retain, pay-off debt, and grow your wealth from the investment decisions made as opposed to being at the mercy and whim of the overall market fluctuations. Surely there will be future booms and busts as the past would dictate as we continue to move forward. More planning and preparing while building net worth will help prevent getting bruised and battered by the side effects of whatever market we find ourselves in.

Many people think that investment real estate is only about cash flow and appreciation, but it’s so much more than that. As mentioned above, you can realize several benefits through each real estate investment property you purchase. The challenge is to maximize the benefits through every investment.

Furthermore, the IDEAL acronym is not just a reminder of the benefits of investment real estate; it’s also here to serve as a guide for every investment property you will consider purchasing in the future. Any property you purchase should conform to all of the letters that represent the IDEAL acronym. The underlying property should have a good reason for not fitting all the guidelines. And in almost every case, if there is an investment you are considering that doesn’t hit all the guidelines, by most accounts you should probably PASS on it!

Take for example a story of my own, regarding a property that I purchased early on in my real estate career. To this day, it’s the biggest investment mistake that I’ve made, and it’s precisely because I didn’t follow the IDEAL guidelines that you are reading and learning about now. I was naïve and my experience was not yet fully developed. The property I purchased was a vacant lot in a gated community development. The property already had an HOA (a monthly maintenance fee) because of the nice amenity facilities that were built for it, and in anticipation of would-be-built homes. There were high expectations for the future appreciation potential-but then the market turned for the worse as we headed into the great recession that lasted from 2007-2012. Can you see what parts of the IDEAL guidelines I missed on completely?

Let’s start with “I”. The vacant lot made no income! Sometimes this can be acceptable, if the deal is something that cannot be missed. But for the most part this deal was nothing special. In all honesty, I’ve considered selling the trees that are currently on the vacant lot to the local wood mill for some actual income, or putting up a camping spot ad on the local Craigslist; but unfortunately the lumber isn’t worth enough and there are better spots to camp! My expectations and desire for price appreciation blocked the rational and logical questions that needed to be asked. So, when it came to the income aspect of the IDEAL guidelines for a real estate investment, I paid no attention to it. And I paid the price for my hubris. Furthermore, this investment failed to realize the benefit of depreciation as you cannot depreciate land! So, we are zero for two so far, with the IDEAL guideline to real estate investing. All I can do is hope the land appreciates to a point where it can be sold one day. Let’s call it an expensive learning lesson. You too will have these “learning lessons”; just try to have as few of them as possible and you will be better off.

When it comes to making the most of your real estate investments, ALWAYS keep the IDEAL guideline in mind to make certain you are making a good decision and a solid investment.

 

 

MichaelBook2014SmallcolorGuest Blogger:
Michael Wolf, GRI & Author

858-722-6847

www.mikeandjessica.net

Rents Continue to Soar

 

Annual-Change-In-Rent-_chartbuilder

Rents have been soaring across the country, even outpacing home values, according to a recent Zillow report. And it’s not just a big city problem. “Places that were more traditionally affordable are growing more quickly,” said Skylar Olsen, senior economist at Zillow. The reason is the current shortage of available rentals. “Vacancy rates are at very low levels, which continues to push rents higher,” said Andrew Jakabovics, senior director, Policy Development & Research at Enterprise Community Partners.

There is in-turn a lot of pressure on the rental market: Millennials are renting longer, housing inventory is tight and Baby Boomers are downsizing. There’s also been a shift in people wanting to live in more urban areas, where renting is more common. But there just aren’t enough “For Rent” signs to keep up with the demand. Rental construction also slowed in the aftermath of the housing crisis as confidence shrank. “We weren’t building enough so when the economy recovered, vacancy rates got very tight,” said Hans Nordby, a managing director with real estate research firm CoStar Group. “If you don’t build apartments, it pushes rents up.”

Adding more supply will eventually ease some price pressure, she said. “It just takes time to creep down the distribution. People living in the older units now that aren’t as luxurious migrate over to the new luxury units, and that opens up more units.” But it takes about two years for rental buildings to become available in many markets so the relief won’t be immediate.

If you have been wanting to get into real estate investing now is the time. Rentals are going to continue to rise as they are in high demand. Use Revestor.com to see what properties are the best investments for you.

If you have bought a property using Revestor to calculate your investment, we would love to hear about it! Comment below or email us your story: info@revestor.com.

Source: CNN/Money and Forbes

How to Make Smart Decisions in HOT Markets

There’s no doubt that in certain areas of the country the Market is HOT again. It’s all too easy to get caught up in the HYPE and overlook the true value and the real numbers that make the Property a good overall investment. THAT is where Revestor comes in.

Finding the Right Investment

  • Don’t get caught up in the HYPE like everyone did in 2005
  • Don’t make the same mistakes that everyone did back then
  • Never invest based on potential Appreciation alone
  • ONLY invest if you can add VALUE through repairs/rehab OR if the Property Cash Flows.

Before you acquire your next Property run the numbers through Revestor so you can make a better decision for you and your family’s future.