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Tag: Real Estate Business

  • 5 Ways Real Estate Investors Can Thrive in the Current Economy | Entrepreneur

    5 Ways Real Estate Investors Can Thrive in the Current Economy | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    In only six months, the average interest rate on a 30-year fixed mortgage has surged significantly, climbing from 2.65% to 3.17%. This substantial increase of 0.52% has undoubtedly caused concern for real estate investors. However, amidst the changing landscape, it is important to remain optimistic as there are still viable opportunities within the market waiting to be explored.

    The sudden spike in interest rates has undoubtedly created a challenging environment for those involved in real estate investment. Nevertheless, it is crucial not to succumb to worry as the market presents avenues for potential gains. Despite the rising borrowing costs, strategic and astute investors can adapt to these changes and uncover untapped prospects that align with their investment goals.

    Related: How to Invest In Real Estate Amid High Interest Rates and Inflation

    1. Keep your eye on the long-term prize

    The rising interest rates may make it more difficult to purchase property in the short term, but remember the long game. Real estate is an investment that can appreciate over time, and the key is to make smart purchases that will hold their value.

    Instead of buying a fixer-upper that may require expensive repairs, consider investing in a property already in good condition and with growth potential.

    2. Consider alternative financing options

    With the rise in interest rates, traditional mortgages seem less appealing to some. However, it is worthwhile to consider alternative financing options. One such option is hard money loans, short-term loans secured by the purchased property. While these loans usually have higher interest rates, they offer greater flexibility and are often easier to obtain.

    Hard money loans can benefit those looking to make a quick purchase or who need help meeting traditional lending requirements. By using the property as collateral, the lender takes on less risk, making the loan easier to obtain. Additionally, hard money loans can allow for more flexibility in purchasing, making them a valuable tool for real estate investors looking to act quickly on a good opportunity. Though they come with a higher price tag, hard money loans can be an attractive financing option in certain situations.

    Related: How Does Inflation Affect Real Estate? Here’s What You Need to Know.

    3. Focus on up-and-coming neighborhoods

    The adage “location, location, location” still holds regarding real estate. Although some parts might be unaffordable due to increasing interest rates, several good neighborhoods still need to be explored. As a prospective homebuyer, focusing on areas experiencing renovation projects with excellent educational institutions conveniently located near public transportation is crucial.

    When searching for a neighborhood, keep in mind that revitalization efforts can have a significant impact on property values. These areas often attract new businesses, increased foot traffic and community events. Furthermore, families with children should prioritize areas with reputable schools, as education quality can affect property prices. Lastly, being close to public transportation is ideal for those who rely on it for work or leisure activities. This not only saves time and money but can also increase the accessibility of the area to potential buyers.

    4. Diversify your portfolio

    Diversification is a vital aspect of achieving success in real estate investing. Although investing in a single property can be alluring, spreading investments across various properties and neighborhoods can help reduce the risk of loss. It’s crucial to explore different types of real estate investments, such as commercial or multifamily properties, and not limit oneself to only one variety.

    Investors should be bold in taking risks in exploring alternative types of real estate investments. Rather than relying on a single property, investors should consider diversifying their portfolio to include a range of assets. Commercial or multifamily properties, for instance, are excellent options for those looking to diversify their investments.

    Related: The Real-Estate Game Is Changing Fast. Are You Ready to Win?

    5. Take advantage of low inventory

    Rising interest rates can affect confident prospective homebuyers, leading to a decline in the number of available properties. However, this situation can present an advantage for real estate investors. With decreased market competition, investors may uncover valuable opportunities to acquire previously acquired properties beyond their financial reach. The reduced buyer demand creates a favorable environment for investors to find lucrative deals and expand their portfolios.

    The increase in interest rates has the potential to deter potential homebuyers, resulting in a limited supply of homes for sale. Nonetheless, this circumstance can benefit those involved in real estate investment. The decreased market competition opens avenues for investors to secure properties at favorable prices, which were previously unattainable. As buyers become scarce, investors

    In conclusion, while rising interest rates may pose challenges for real estate investors, there are still opportunities in the market. You can adapt and thrive in a changing market by keeping a long-term perspective, exploring alternative financing options, focusing on up-and-coming neighborhoods, diversifying your portfolio, taking advantage of low inventory and maintaining a sense of humor. Remember, real estate investing is a journey, and with the right strategies and mindset, you can navigate the challenges and continue to find success. So stay proactive, stay informed and keep investing with confidence.

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    Chris D. Bentley

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  • Show Potential Buyers What’s on the Market With These Real Estate Friendly Quadcopters, Only $150 | Entrepreneur

    Show Potential Buyers What’s on the Market With These Real Estate Friendly Quadcopters, Only $150 | Entrepreneur

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    Disclosure: Our goal is to feature products and services that we think you’ll find interesting and useful. If you purchase them, Entrepreneur may get a small share of the revenue from the sale from our commerce partners.

    By recent estimates from Grand View Research, the real estate industry is expected to grow 5.2% annually between 2022 and 2030. That growth does not come without competition vying for lucrative clients and high value properties.

    If you want your real estate business to distinguish itself, try taking to the sky to show off your properties. For 149.99, you can get the Ninja Dragon Phantom K Pro drone and a Free Blade X Pro quadcopter, both equipped with high-resolution cameras you can use to get a full view of the houses you have on the market.

    Use drones to show potential buyers every facet of your properties.

    Both of these drones are beginner-friendly with intuitive controls for moving forward, back, side to side, and ascending or descending. The Ninja Dragon even gives you the option to initiate a 360-degree roll, which could be an exciting view for a client as seen through the mobile app or VR glasses. Both drones give you a first-person view from above. Use that new angle to show off the intricate brickwork around the chimney or the delicate trim on a second-floor window.

    Fly for up to 15 minutes before you need to find a charger with each of these nimble drones. That means up to half an hour of air time that you can use to wow a potential buyer at an open house. You could even let the client take it out for a spin and see the home on their own terms. If their landing is a little rough, don’t worry, The Ninja Dragon Phantom comes with two spare blades and protection covers.

    Take your real estate business sky-high.

    The market may be competitive, but you could see more interest from potential buyers if you can show off a property from every possible angle.

    For a limited time, get the Ninja Dragon Phantom K Pro and a free Blade X Pro on sale for $149.99 (reg. $369).

    Prices subject to change.

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    Entrepreneur Store

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  • 5 Major Leasing Deal Points to Know Before Signing a Lease

    5 Major Leasing Deal Points to Know Before Signing a Lease

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    Opinions expressed by Entrepreneur contributors are their own.

    Are you thinking about leasing a space in a retail center? If so, there are many items a tenant needs to be aware of. Here’s a list of five major deal points to be mindful of.

    Related: Running a Business – How to Lease Space

    1. Guarantees

    Many landlords will not lease to a tenant without the tenant personally guaranteeing the lease. Keep in mind that there are techniques a tenant can endeavor to lessen the guarantee. These include offering a limited or rolling guarantee. The limited guarantee will not last for the entire lease term but for the number of years agreed on by the landlord and tenant. The rolling guarantee means that the total exposure the tenant is liable for is the number of months agreed to, regardless of the months remaining in the lease (unless the remaining months are less than the rolling months).

    If you decide to give any personal guarantee, I highly recommend you consult your real estate attorney to understand the guarantee’s implications fully.

    Related: 5 Keys in Negotiating an Office Lease

    2. Use

    When leasing space, it’s essential to be very clear on your use of the premises. Your use in your lease is the only one you have permission to use the premises for. If you decide to expand your business beyond that use, you would need authorization from the landlord for that other use. Also, if you do not have an exclusive in your lease, nothing stops the landlord from leasing to another tenant in your same center, with the same use.

    3. HVAC (heating, ventilation, and air conditioning)

    Not only is it imperative to know specific to the existing HVAC regarding capacity and age, but it is also significant to understand your lease if the HVAC breaks.

    Let’s start first with capacity and age. You need to know if the current HVAC needs to have the capacity you need to operate your business. Capacity is typically not an issue if the space has been leased to another tenant prior and you are opening a retail location where you are selling soft goods. Still, there are other uses where the capacity of HVAC plays a significant role. For example, if you are opening a restaurant, you must know what size HVAC you need to run your business successfully.

    Once you have identified if the existing HVAC will work for your use, you need to know the age. If the unit is older, you need to be aware of the age of the unit during your negotiations. Just so you know, it is the tenant’s responsibility to do their due diligence and find out this type of information as soon as possible when considering a space to lease.

    If you find out the unit is older, I recommend you negotiate with the landlord to have it be the landlord’s responsibility to replace the unit before your business opens. If the landlord is unwilling to replace the HVAC, you should negotiate a warranty lasting for a period that you are comfortable with. You also need to determine who is responsible for fixing the HVAC if it breaks during the lease and who’s responsible for replacing the unit if it is not salvageable. This information regarding who is responsible should be in your lease, and you must know and be comfortable with it before you sign your lease.

    Related: How Small Shops Economize by Sharing Space

    4. Options

    A lease option gives the tenant a choice to renew their lease. A tenant needs to recognize that if they do not have any options to renew their lease, then when their original term expires, the landlord is not obligated to renew their lease. Since options benefit tenants, landlords are not eager to give them. Although it is not required of the landlord, it is retail common industry practice for landlords to provide an option to match the initial term of the lease. For example, if a lease is five years for the initial term, considering the industry practice, the landlord would give one five-year option.

    In addition to knowing if you have options and what the term is, it is also important to discern your rent during your options. The rent for your options will probably be higher than the current term, and you must make sure your business plan can support the rent during your options.

    5. Additional charges

    Additional charges — known as NNN or triple net — are the extra charges that a tenant pays in a NNN lease on top of the base rent.

    There are different types of leases. In addition to NNN leases, other types you will hear about include modified gross leases and full-service gross leases. The majority of shopping center leases are triple net leases.

    There are three items that the NNN is composed of, which include the landlord’s property taxes and insurance and the CAM (common area maintenance). CAM typically includes parking lot maintenance, outside lighting and common landscaping. If each space in the building is not separately metered for water, your water will typically be included in the CAM. As a tenant, you should note that the NNN charges are estimated and could change. If the NNN charges adjust, then your rent will also alter.

    My experience reveals that with all negotiations, there is usually a compromise to be made on most deal points. It is critical that all tenants thoroughly read and understand their lease agreement and have a commercial real estate attorney advise before the tenant signs the lease. I also recommend using a commercial real estate broker specializing in retail to represent you during your offer negotiation process.

    Related: Save Money by Renegotiating Your Lease

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    Roxanne Klein

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