What Kind Of Investor Are You? Part 1 of 3

Over the next several weeks I’ll be diving deeper into each of the three strategies for real estate investing. I’ll uncover some of the advantages and disadvantages within each path to help you make more informed decisions as you continue to develop your business and grow your portfolio.

Last week I wrote a post on the 4 basic steps to getting started with real estate investing. The framework for your future business. You can read that complete post here but for those of you already familiar with the article, we’re going to focus on the first strategy I referred to in step #1.

  • Long term rental (buy & hold)

This week I polled a handful of experienced investors, all of whom have used Revestor to find buy & hold deals and asked them a series of questions. The information presented in this post is a collection of that feedback and my hope is that it helps you make well informed decisions.

When is the right time to invest in real estate?

When it comes to buy and hold real estate investing you need to think “get rich quick slow”. The benefits to buy and hold real estate investing do not come in the form of a quick buck but rather in the form of appreciation and passive income. Not to say you can’t make quick money by walking into a property with built in equity but you need to adopt the marathon vs. sprint mentality. I also received a lot of responses about “being in the know”. Simply put, decide when to get in based on the numbers, market trends and as much factual data that you can gather. Knowing the numbers is the key to mitigating risk in any real estate investment. One of the main benefits to using Revestor is that we allow you to run the numbers over actual listed properties. Be sure to get familiar with these key indicators to help you make more informed decisions.  

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Just a reminder for those not familiar with some of this terminology, you can find the definitions on our site here.

What should I look for in a potential property?

Doing your due diligence goes beyond knowing the market trends and numbers; especially when it comes to acquiring real property. A savvy investor always wants to acquire property with built in equity. This doesn’t mean getting your agent to write countless lowball offers until someone accepts but rather have a vision of what your property can be. For example, can you add a bedroom or bathroom? Can you update a kitchen or the exterior? These changes don’t require a lot of money or major renovations but they can fetch you higher rents and increase the overall value of your property. It’s also important to be thorough with your inspections. A cracked foundation, faulty plumbing or a deteriorating roof can cause crippling expenses to inexperienced investors. Make sure the property you’re purchasing is in sound shape to help minimize future surprises.  

One of the most common buy and hold strategies for new real estate investors is with multi-family properties. In this case, you the owner, occupy one of the units while renting out the other units to help offset / cover the cost of the mortgage. One of my good friends and one of the most successful real estate investors I know has used this method to build a small empire. He acquired properties by coming in with all cash (hard money loan), giving him the advantage over other buyers. Once he had possession and rented all but one of the units he would take out a mortgage, pay back his hard money loan and begin rehabbing the unit he occupied. He was creating equity and instant cash flow this way.

Next steps

Create a FREE account on Revestor, get familiar with the terminology and start gaining knowledge. By creating an account you will be able to…..

  • Search nationwide
  • Set your own investment criteria
  • Save searches
  • Save properties
  • And more

Creating an account with Revestor allows you to filter and find properties that work for you saving you time and money. You can create your account here and clicking “Sign Up” in the top right corner.

Next week I’ll be going over the basics of short term buy & hold for you vacation rental owners.

Happy hunting,

Teevan

 

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.

fix flip buy hold

 

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/