What Kind Of Investor Are You? Part 3 of 3

If you’ve been wondering what happened to our blog as of late, fret not. We simply took August to focus our efforts on development. As we approach the finish line with these features it’s time to get back to blogging. If you’re reading this post for the first time, let me catch you up. At Revestor we’re rolling out changes to our application that will allow you, the user, to run investment calculations three different ways over live listings. Nationwide! FOR FREE!!!

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The three different ways are….

Long Term – Buy & Hold

Short Term – Vacation Rentals

Fix & Flip – Rehab & Resell

 

This week we’re here to talk about rehabbing and reselling properties. Reality TV has made the fix & flip approach to real estate investing look fairly painless and almost fun. Real estate investing is a business, not a made for TV show so we want to give you our basic 5 step overview to better understanding this approach.

 

Step #1 – Establish a team

You’re starting a business. One thing I’ve learned over the years is that the smartest people hire smarter people. That said, you’re going to need an attorney to set up an LLC to hold the property. You’re also going to need a good CPA and insurance agent to further protect this venture. Once you have these folks in place you’re going to need the second part of your team which is the Realtor, lender and contractor. Once you have this network you’re ready for step 2.

 

Step #2 – Get familiar with your market

And by get familiar with your market I mean know your numbers! If there is one thing and one thing only that you take from this blog post, please let it be this. Your resale price is completely hypothetical at this point but all of your other costs are very real. It’s important that you know your market, comparable listings, recent sales, rehab costs, carrying costs, etc.

 

Step #3 – Acquiring property

Once your team is in place and you have a firm grasp on the market conditions you’re ready to acquire property.


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Knowing your numbers will help you and your Realtor make the most of your time when it comes to writing offers. A lot of agents prefer not to work with investors because they don’t want to write dozens of low ball offers. Be the educated investor that not only knows the market but knows the costs of rehab and potential profit.

 

Step #4 – Rehabbing the property

Once your offer has been accepted and you have possession of the property it’s time to start the rehab process. Here’s where you need to put on your project manager hat to make sure that your contractor is staying on time and on budget.

 

Step #5 – Selling the property

Take stock of how the market has changed during your rehab period. Pricing the property correctly is imperative to a successful flip. A couple items to take note of here. First, don’t overprice the property. Overpricing a property may result in few (if any) offers. This may lead to a reduced listing price and increased carrying costs (time). The fee (typically 5-6%) you’ll pay to the listing agent and buyer’s agent is also negotiable.

 

Was this helpful? Let us know in the comments below what topics you’d like to see discussed in upcoming blog posts!

As always, 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.

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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/

 

 

Top Fix and Flip Markets of 2015

This year’s best Fix and Flip markets have been announced according to the Q2 2015 U.S. Home Flipping Report.

Among markets with at least 50 completed single family home flips in the second quarter, those with the highest average gross ROI were Chicago, Illinois (61.2 percent), Dayton, Ohio (60.6 percent), Harrisburg, Pennsylvania (60.6 percent), Ocala, Florida (56.8 percent) and Baltimore, Maryland (56.7 percent).

biggest flipping returns

Metro areas with the highest average gross profits in dollars on completed single family home flips in the second quarter were San Jose ($261,946), Los Angeles ($171,954), San Diego ($141,483), Washington, DC ($139, 927) and Seattle ($131,028).

Check out more details of the report here.