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!!!

pexels-photo-111962-large

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.


TIP! Create a free account with Revestor so you can receive alerts when properties matching your investment criteria come on the market or change in price.


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

Revestor Tip: Don’t Forget to Do Your Research

Although it might seem like common sense, many investors get caught up in the hype of an investment and forget to do their due diligence.

Before even looking into an investment property, you need to figure out where you would like to own an investment property, what kind of property you want, how much you can afford to put down, and how much you are willing to spend to fix it up (if necessary).

Once you have your list of investment criteria, you can begin to look for properties matching your needs. That’s where Revestor comes in. You are able to create a search for your exact criteria and you will be notified when new properties match your search.

Once you are in the process of purchasing a home, you need to make sure to ask every question possible. You not only need to know everything about the house itself but about the surrounding area as well. Some key questions are:

  • Why is the homeowner selling?
  • What is the current mortgage and expenses on the property?
  • What was the last sale price and when was it purchased?
  • Has anything been renovated or does it need to be?
  • Will there be any zoning restrictions if you want to expand?
  • What is the average income of the surrounding neighborhood?
  • What is the average price of the other houses in the neighborhood?
  • Are there any liens on the property?
  • What is the crime rate in the area?

As an investor or real estate agent, do you have any other key questions you ask before moving forward with a property? Share them below!

Should You Invest In Property? The Rise in Rental Prices Indicate Yes!

According to leading CNN Money experts, homeownership rates are currently at all time lows. Rental prices, however, are increasing steadily and are driven in part by increased demand and lower turnover among current renters. Forbes Magazine recently noted that San Francisco, California, is experiencing the greatest annual increase in rental rates at 14.9 percent; however, other cities across the U.S. are also seeing significant upward movement in the rents charged for residential properties.

With potential rental revenues on the rise and real estate prices remaining largely stable, now is a great time for investors to realize greater profits by diversifying their portfolios to include residential rental properties. Making the move to property management can be a financially rewarding step. Still not sure if investing in income property is the right fit for you? Here are three reasons why you may want to consider becoming a landlord in 2015.

Reason #1: Affordable Investment Properties Are Available

Although the Federal Housing Finance Agency reports continuing increases in the cost of residential properties in the U.S., this overall trend has not yet reached critical mass. Affordable homes and rehab properties are still widely available throughout the country and can provide real options for aspiring landlords. By performing the necessary due diligence on properties under consideration, investors can often achieve higher revenues from their rentals and increased value at the time of eventual resale. Online real estate platforms are available to project likely appreciation and cash flow for properties, allowing even new-to-the-game investors to make the right moves in the real estate marketplace.

Reason #2: Timing is Everything

With residential rents continuing to rise, the potential for profitability is, as expected, also increasing. Recent data released by Zillow indicates that renters should expect to allocate approximately 30 percent of their monthly income to housing costs. This is in sharp contrast to the 15 percent paid on average by homebuyers across the country. For investors, this 15 percent differential represents solid profit and increased revenues that can be used to leverage further purchases and rehab costs. Most real estate analysts are in agreement that now is the time for investors to make their move in the residential real estate market.

Reason #3: You Have the Right Tools for the Job

The innovative and unparalleled algorithms used by the Revestor online search service are designed specifically to help real estate investors determine which properties are best suited to their financial situations and management plans. This cutting-edge tool incorporates a number of key indicators to provide the most accurate predictions of profitability. Some of the factors considered by the Revestor system include:

  • Current and projected rental incomes and cashflows
  • Expenses commonly incurred by landlords
  • Home owners association fees, where applicable
  • Projected property taxes
  • Insurance premiums
  • Property management fees
  • Financing and acquisition costs
  • Appreciation rates
  • Rehab costs
  • Return on investment
  • Net profits

These essential elements can make or break a real estate investment strategy. By taking advantage of the information and predictive data available through the Revestor suite of tools, investors can ensure that they are making the right moves in the residential real estate marketplace.

Even with the highly advantageous conditions in play for investors, a fair amount of research and due diligence is still required to ensure the highest degree of profitability from each real estate holding. Tools like Revestor can deliver accurate information to help ensure that aspiring landlords can achieve higher profitability and enhanced revenue streams in the residential rental environment.

===
SOURCES:
http://money.cnn.com/2015/05/21/real_estate/rent-prices-rising/
http://www.forbes.com/sites/laurengensler/2015/02/24/rising-rent-smaller-cities/
http://www.fhfa.gov/Media/PublicAffairs/Pages/US-House-Prices-Rise-1pt2-Percent-in-Second-Quarter-2015.aspx