ReportWire

Tag: Real Estate Investment

  • How to Utilize Real Estate in Your Retirement Portfolio | Entrepreneur

    How to Utilize Real Estate in Your Retirement Portfolio | Entrepreneur

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    Owning investment real estate to generate income during retirement can be a valuable addition to your portfolio. There are several ways to utilize real estate in your retirement portfolio. In this article, we explore several ways owning real estate could be incorporated into your current balance sheet and become a major part of your retirement plans.

    We will break down the different options you have and list a few pros and cons as well:

    Related: 5 Reasons Why Real Estate Is a Great Investment

    Supplemental income stream

    The most common way to make real estate a contributing factor in your retirement portfolio is owning rental real estate as a supplemental income stream. Let’s break down the pros and cons of such an endeavor:

    The pros:

    • A stable, potentially rising stream of income

    • An activity to keep you busy in retirement

    • Potential additional tax advantages and deductions

    • Great diversification from stocks and bonds

    The cons:

    • People rarely factor in all the costs such as insurance, taxes, maintenance, bad tenants, etc.

    • A large down payment or cash offer is often required to generate positive monthly cash flow.

    • Mortgage rates are high now compared to recent history, which makes positive cash flow a bit harder to achieve.

    • Potential liability from an unforeseen accident

    Short-term rentals

    There are a lot of great opportunities in the short-term rental space. This does bring on the added responsibility of marketing, generating positive reviews and buzz, as well as an increased need for maintenance and attentiveness. Like any small business where some extra work is required — if done well, it will pay off in the end. We have several clients who have had a lot of success with short-term rentals. There are even websites dedicated to helping you generate supplemental income from your properties.

    Related: 9 Ways to Invest in Real Estate for Retirement

    Publicly traded real estate investments

    Physically owning and maintaining real estate is not the only way to go about benefiting from real estate as an investment. You might want to consider publicly traded real estate investments (REITs or Real Estate Investment Trusts).

    These also come with their own sets of pros and cons:

    The pros:

    • Higher stream of income vs. similar credit quality stocks and bonds

    • An easy way to access specific niches (i.e., targeting warehouses and data centers, housing, offices, medical communities, etc.)

    • Decent diversification from other types of stocks and bonds

    The cons:

    My personal recommendation is, if you own publicly traded real estate, make sure you own it primarily for the income, not for the principal appreciation. Yes, you could potentially make money over time, but you should think of this transaction as an income play.

    Real estate investment trusts (REIT)

    Another option to consider is the private REIT space. A private REIT will give you an investing experience somewhere between owning real estate and owning a publicly traded real estate fund. If you’re interested in the private REIT space, you should work with your advisor to do some due diligence and keep in mind the following:

    • How does the fund’s liquidity work? What is your time commitment?

    • You’re paying fees to a sponsor and a property manager — not entirely different than you would pay when owning other properties.

    • Understand what these costs and fees look like.

    • What do they own, and what do they plan to buy?

    • Have they successfully gone “full cycle” before?

    • How did their funds do during prior periods of real estate distress?

    • Accept the fact that you’re giving up control over these decisions but mitigating the risk of bad decision-making by relying on professionals.

    Related: What You Should Consider Including in Your Retirement Portfolio

    Owning rental real estate can be a rewarding and wealth-building experience. If you’ve never owned rental real estate before, the idea could be daunting. But many experienced real estate investors will tell you that while the first investment property may be the hardest, it will only get easier from there.

    Once you begin, you may experience a bad tenant. It’s bound to happen, and every rental owner should be prepared for the occasional bad apple. Don’t let one or two bad experiences scare you from being a landlord.

    The more you’re willing to roll up your sleeves and get involved, the more likely you’ll succeed — just like with anything else in life. Any type of success in real estate does not happen by accident. Make sure you’re working with your financial planner and your property and casualty specialist to account for potential worst-case scenarios.

    Whether you’re physically owning it with after-tax dollars or diversifying a portion of your retirement accounts into publicly traded real to increase your existing portfolio’s level of income — there are certainly a lot of potential benefits that at least merit a conversation about how you can utilize real estate in your retirement portfolio.

    [ad_2]

    Chris Kampitsis

    Source link

  • Do You Know How to Make Your Real Estate Investment Last? | Entrepreneur

    Do You Know How to Make Your Real Estate Investment Last? | Entrepreneur

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    Everyone knows that location is a critical factor when it comes to investing in real estate. Purchasing any property requires a litany of considerations and due diligence before any assets or resources can change hands, but the location is paramount.

    Neighborhoods with low crime rates, excellent school systems and up-and-coming communities are the regions where property values tend to increase at the highest rates. When you make an investment into a hot new part of town or a city that offers stability and growth, these neighborhoods are far more appealing and the price tags for both sales and rentals tend to reflect the high desirability of these locations.

    Location isn’t just about the dwelling itself, it’s about the positive growth of the surrounding areas in which your real estate is located and the trends that demonstrate an upswing in the contributions of the community at large that make the area more desirable. Hopefully, those trends continue on an upward trajectory to make your investment a profitable one.

    Related: 5 Proven Steps to Become a Real Estate Millionaire, According to an Investor

    Improving value

    Whether it’s the purchase of a standalone home or buying a rental property, you want the value to increase over time. When that happens, you can sell the home for more than you initially paid for it and rental prices can rise as residences in the area become more valuable. That return on investment is the goal for homebuyers and property owners who are looking to develop some passive income channels.

    But the important thing to remember is that your value is not determined by the physical dwelling in which you or your tenants reside. Buildings depreciate over time and renovations require more investment of capital. The greater impact on improving the value of real estate is the cost of the land and the community surrounding it.

    That’s right, the lot upon which you’ve built that house or apartment complex is where the value really lies. A gorgeous home or brand new building in a community that is otherwise depressed or rundown tends to suffer in a resale or setting the price for rent. Why is that?

    It’s due to the very simple and obvious fact that people don’t want to live in a neighborhood that doesn’t have a lot to offer in terms of a safe, functional and welcoming community. In big cities, there are so-called “good” blocks and “bad” blocks. One area may be safe, while another just a few blocks away may be infamous due to a higher crime rate and a slew of empty storefronts with “For Lease” signs in the windows. It makes you wonder why those businesses have left the area and buyers and renters alike may also decide it’s time to look elsewhere when choosing a place to call home.

    Related: Market Knowledge Is Vital In Making Efficient Real Estate Investment Decisions

    The importance of community

    When a region becomes more attractive to homeowners and prospective tenants, the value of your real estate increases. Some locations offer stability in terms of increased value because they are situated in a community that isn’t likely to see any major shifts in the future.

    A good example of this is a college town. The institution around which these neighborhoods are situated is highly unlikely to move, shut down or suffer any real significant, negative changes any time soon. This is particularly true in towns where the college or university has been in existence since the 1700s. We know that the school isn’t going to suddenly relocate, we know that the school will offer admission to a limited number of applicants and the students, faculty and administrators will need a place to live, eat, work and play when classes are not in session. Therefore, these communities are going to be bustling and popular, safety will be a priority and homes and apartments will be in demand.

    The only thing to consider that might be a negative is the seasonal aspect of buying real estate in or near a college town. Students and faculty may leave for the summer. But it’s just a three-month shift and when everyone returns in the fall, the community returns.

    Real estate and renovations

    Don’t get me wrong, it’s important to maintain the asset that sits on the plot of land you own. A shoddy apartment building or a home that’s falling apart are depreciating assets that can also bring down the value of the neighborhood as a whole. Buyers and renters know they can find somewhere else to go. If enough homes and buildings start to look dilapidated or neglected and desperately in need of repair, people tend to migrate away from these areas.

    One vital way to keep the value of your investment from falling is to make the repairs you need to make as soon as you can make them. A highly desired location can make some potential buyers or renters overlook the less-than-perfect condition of the dwelling because they can live, work and play in a hot neighborhood. But location is key for getting them to make the deal. Depressed areas will drive them away. It’s tougher to move a tract of land than to demolish a dilapidated home or dwelling.

    So you can do your part by keeping your property values up and helping the neighborhood thrive by maintaining what you own. New homes and businesses move into the area and the cost of your home and the land on which it stands goes up.

    Related: 7 Tips for Managing Your Real Estate Business Like a Pro

    Wrapping up

    Land can become a premium commodity when there isn’t enough of it to go around. Choosing a location that is desirable and fully developed means that space is at a premium, with prices to match when people want to live in that area. This is true in the big metropolitan cities and even smaller, more rural towns. When there is room to expand, prices tend to be lower. Location matters and when there is less of it to go around, people are willing to pay for what’s available because it may not be available for very long.

    [ad_2]

    Ari Chazanas

    Source link

  • The Pros and Cons of Hosting on Airbnb, VRBO and The Landing | Entrepreneur

    The Pros and Cons of Hosting on Airbnb, VRBO and The Landing | Entrepreneur

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    Investing in real estate is a great way to create passive income, but it also comes with a number of challenges. One of the biggest challenges I have faced as a rental property owner is finding the right hosting platform for my Palms Springs rental property.

    There are many options available — from traditional leasing to Airbnb-style short-term rentals — and more have become increasingly popular among real estate investors, like VRBO and The Landing. Each of these options offers different benefits and drawbacks, so it’s important to carefully consider each one before making a decision. Let’s take a look at the pros and cons of these options.

    Related: Tips for Making Real Money on Airbnb

    Pros of hosting on Airbnb

    The most obvious pro of hosting a property on Airbnb is that it provides an opportunity to make money quickly and easily. Airbnb offers a variety of services, from basic rental units to more luxurious accommodations like resorts and private villas. Additionally, the platform provides a simple way for hosts to get their properties listed, and Airbnb even has an automated system for handling payments.

    By renting out your property using these short-term tenants, you can profit more from your rental property as you’re not tied down to long-term leases, which can often be difficult to fill.

    Cons of hosting on Airbnb

    The main downside of using Airbnb for short-term rentals is that the platform charges its hosts a commission for each booking. This can eat into your profits, depending on the length and scale of your rental offerings. Many hosts, including myself, have tried to counter the fees by charging more and adding higher fees for cleaning.

    Additionally, Airbnb is known to attract younger travelers who may not be as respectful of the property or its amenities as traditional tenants — hence the launch of Airbnb Cover.

    The lack of proper filtering and background checks can leave you vulnerable to seasoned scammers on the platform. I’ve personally experienced this and have had to complain and make a claim with Airbnb Cover. In the end, I was taken care of, learned a great lesson and was invited to the Airbnb community.

    In conclusion, while hosting through Airbnb has many advantages such as being able to make money and meeting new people from around the world, there are also some drawbacks such as high commissions and liability risks associated with damages caused by guests during their stay at your property.

    Related: 15 Property Management Tips for Entrepreneurs Seeking Passive Income From Real Estate

    Is VRBO the right choice for real estate investors?

    Vacation Rental By Owner (VRBO) is a popular way for real estate investors to generate income from their properties.

    One of the biggest advantages of hosting on VRBO like Airbnb is that it offers a lot of flexibility in terms of when and how often you rent your property. This means that you can take advantage of peak tourism seasons or special events like music festivals to maximize your earnings potential.

    Another benefit of hosting on VRBO is that it can be lucrative because many travelers prefer to use VRBO rather than traditional hotels. This provides an opportunity for savvy investors to capitalize on this trend.

    VRBO cons: Protection offer and fees

    While there are plenty of benefits associated with hosting on VRBO, there are some drawbacks as well. For one thing, since you have limited control over who rents your property and when they stay there, this can make it difficult to predict how much money you will make each month — which is a problem if you rely heavily on rental income to cover your mortgage payments or other expenses related to the property.

    Additionally, since renters only stay for short periods of time (usually 1-2 weeks), this means that turnover costs like cleaning fees can quickly add up if not managed properly.

    VRBO also has set fees, and there is also a fee for protection starting at $59. This is a separate charge that you can add to a guest booking. While the booking fees are typically less than those charged by Airbnb, you may find that they still take a significant chunk out of your earnings.

    While you can encounter scammers on any site, I personally noticed an increase in people wanting to speak outside of the site as well as inboxes filled with more inquiries than people ready to book. Most of my inbox has questions about the fees and how to get around them.

    Related: 10 Hosting Options Besides Airbnb #TravelHosting

    Pros of hosting on The Landing

    The main benefit of hosting on The Landing is its flexibility as well as being able to charge for utilities separately. Unlike traditional leases, guests can choose how long they want to stay with the option to extend their stay using The Landing APP. This makes it ideal for investors who want to test different rental strategies without being locked into a single approach. Additionally, The Landings offers access to an array of features such as automated payments and tenant screening services that make managing your property easier than ever before.

    Another advantage of hosting on The Landings is its convenience and attention to quality. They have a standard that must be met for each listing such as high-quality photos, designated work spaces, reliable appliances and other things like white linens. Their standards lean more towards corporate housing. They target digital nomads, travel nurses and young professionals.

    Cons of hosting on The Landing

    One potential downside of hosting on The Landing is its application process. Unlike the other platforms, you go through an approval process. The platform is also membership based and offers housing that could potentially compete with the individual investment property owner.

    As a current membership holder, I love the platform — but as a rental property owner, I would not rely on that site alone. I would suggest using all sites while being aware and prepared for issues that may arise mentioned in the cons for each platform.

    [ad_2]

    Saba Tekle

    Source link

  • 5 Ways Self-Managing Rental Properties Can Save You Money | Entrepreneur

    5 Ways Self-Managing Rental Properties Can Save You Money | Entrepreneur

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    Many small to mid-sized landlords want to self-manage their rental properties, and for good reason.

    Above all, self-managing your properties means more take-home revenue — you won’t have to say goodbye to a large portion of your rental income each month to pay a property manager or company.

    Another benefit is that you’ll be closer to your renters and rental operations. When you’re the one screening the tenants and hiring maintenance contractors, you always know exactly who is in and around your properties, and you’ll be the first to know of a problem.

    However, there are also some cons. You’ll need to invest considerable time, energy and effort into your properties, which not all landlords — especially those with other responsibilities like W-2 jobs or families — can do. You might also find yourself at a loss if you don’t have the knowledge required for a specific task. You’ll need to rely on yourself much more.

    With the right tools and technology, self-management is a profitable and very doable choice for many. In this article, we break down how you can limit expenses with five self-management tips.

    Related: How to Manage Your Real Estate Business Like a Pro

    Listing syndication

    Listing syndication is one of the best tools for landlords. Why? Using listing syndication can make rental advertising a one-man job.

    Listing syndication allows you to write one listing and post it to multiple popular listing sites in one click. Instead of spending time re-writing or typing your listings for sites across the internet, you can use a listing syndication service to post them simultaneously.

    Listing syndication makes self-management possible because it limits the amount of time you spend on listing and advertising tasks. Posting online in general is a good idea because it allows prospective renters to contact you more easily with questions or general interest. However, syndicating your online listings is the best choice — you can optimize your advertisements without having to pay a realtor to do this for you.

    Applicant pipeline

    Similarly, automating your applicant pipeline is another way to make self-management feasible.

    Setting up an applicant pipeline is relatively simple on a particular listing platform. For instance, if you post on sites like Zillow or Apartments.com, you can opt to send introductory emails to renters who “save” your properties or opt to receive more information. Additionally, if a renter doesn’t respond to your initial message, you can designate a follow-up email to be sent after a certain number of days.

    Ultimately, your goal is a signed lease, so you need to stay in contact with interested renters and keep communication regular. If you don’t have time to respond to a message for several days or even a week, it’s likely the renter has already moved on. That’s why it’s important to automate the process: You don’t have to respond to each renter personally in order to make sure they get a personal reply. And you can always choose to answer specific questions yourself or receive phone calls from renters who are serious about renting your properties.

    Related: 5 Property Management Tasks to Automate in 2023

    Property management software

    Perhaps the biggest way to limit expenses through self-management is to use software. Property manager fees can be steep — most charge a percentage of your monthly rent collection, meaning the more successful your business is, the more you’ll have to pay for management.

    This doesn’t have to be the case with property management software. Many software platforms offer cheap plans with all the basic management features you need. Others, like Innago, are entirely free to use. You’ll gain access to key features like online rent collection, tenant screening, rental advertising and maintenance management, and you can automate many of these tools as well.

    If you’re looking to cut management expenses, software is undoubtedly the best place to start.

    Online rent collection

    As mentioned, online rent collection is one tool you’ll find on property management software that can save you much time and money. Instead of collecting paper checks or cash every month and driving everything to the bank, your tenants can simply submit their payments online. You’ll get them much faster and won’t have to manually track down late payments yourself — your software will apply and enforce late fees automatically. With more time on your hands, you can focus on generating more revenue, not tracking down revenue you should already have.

    Related: 4 Smart Ways to Reduce Your Property Management Costs

    Seek guidance when necessary

    Although there are many ways to cut costs by doing tasks yourself, don’t let your desire to save money cloud your good judgment. If there’s a task that needs to be done and you don’t have the knowledge or experience to complete it, you shouldn’t attempt it yourself at the risk of causing further damage.

    For example, if there’s a serious plumbing problem that needs to be addressed immediately, you most likely won’t have time to watch a YouTube video and teach yourself the fix. Instead, you should call a trusted contractor to ensure no further damage is done to your properties.

    Likewise, if you’re facing what’s likely to be a complex eviction and you’ve never attended an eviction court hearing, you should not hesitate to call a lawyer. An experienced eviction lawyer can offer you expertise that is well worth your money when it comes to something as expensive and challenging as an eviction.

    Self-managing your properties is an ambitious, but plausible, goal for most small to mid-sized landlords. There are a variety of resources and tools available for exactly this purpose. Many are based on automation, which is absolutely critical if you plan to manage your properties on your own. It won’t always be easy, but there’s much you can do to become a successful manager of your own investments and save money while you’re at it.

    [ad_2]

    Dave Spooner

    Source link

  • Free Webinar | April 20: Success Secrets of an Eight-Figure Real Estate Agent and Broker | Entrepreneur

    Free Webinar | April 20: Success Secrets of an Eight-Figure Real Estate Agent and Broker | Entrepreneur

    [ad_1]

    Join our upcoming webinar with real estate entrepreneur, Aaron Kirman, as he shares his 20+ years of expertise and insights on how to master the art of selling properties.

    Aaron will cover the essential daily strategies and success habits you need to thrive.

    You will learn how to:

    • Find great listings
    • Gain client trust and respect
    • Manage your time effectively
    • Maximize your profits
    • Control operating expenses
    • Calculate startup costs

    Register now and join us on April 12th at 2:00 PM ET to discover the strategies and tactics you need to master for success in real estate.

    About the Speaker:

    Aaron Kirman, Founder and CEO of AKG | Christie’s International Real Estate, is one of the leading real estate agents in the U.S. He has repeatedly been named as a top agent in Los Angeles, and most recently, AKG was ranked as the #1 Luxury Team in L.A. As an expert in the luxury real estate industry, Aaron has received international acclaim from the architectural and estate communities, and represented some of the most exclusive properties in the world.

    [ad_2]

    Entrepreneur Staff

    Source link

  • 5 Items in Your FDD That Can Make or Break a Real Estate Deal | Entrepreneur

    5 Items in Your FDD That Can Make or Break a Real Estate Deal | Entrepreneur

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    A Franchise Disclosure Document (FDD) provides information about the franchisor, the franchise system and the franchise agreement terms. This legal document must be provided to potential franchisees by the franchisor and read back and forth by potential franchisees — it is recommended that a potential franchisee have a franchise attorney review.

    The FDD helps potential franchisees make informed decisions about investing in the franchise. Therefore, all items in the FDD are essential. That said, here’s my list of the sections in the FDD that can make or break getting to lease your desired real estate space.

    Related: 7 Things Not to Miss in the FDD

    Item 1: Business experience

    This section provides information about the franchisor’s key executives, including their business experience and any bankruptcy or litigation history litigation. Most landlords will ask you for details on not only your background but the franchisors as well. So make sure the franchise you purchase has a good story.

    Also, ask to see the franchisor’s marketing materials prepared for landlords. These materials should contain the company’s success stories, details on the current state of the brand, and information on the growth plans of the brand.

    Additional information should include the following:

    • Specifics on existing locations.
    • High-quality images of existing locations.
    • High-quality images of product or food photography

    Related: ‘My Brain Is Literally Going To Explode’: Viral Video Sparks Debate Over Whether or Not Renters Should Tip Landlords

    Item 7: Estimate initial investment

    Item 7 covers what the franchisor believes will be your estimated initial investment. This item will be relevant to a landlord since they want to know how much money you will spend on your build-out. Once you share that number, the landlord will want proof of funds.

    If the money comes from your savings, your bank account statements will be proof of funds. If the money comes from a loan, you must show at least a pre-approval letter from your bank.

    Item 12: Territory

    This section provides information about the territory where the franchisee will be allowed to operate the franchise. Some franchisees are particular on territory, while others are not. Having a defined territory is excellent since you have protection and the right to open where others can’t.

    If you don’t have a defined territory, it can be advantageous since you have a larger pool of real estate to search for your location. However, this often means you might compete with other franchisees for the same sites.

    Related: The 23 Items Your Franchise Disclosure Document Must Include

    Item 17: Initial franchise term, renewal, termination, transfer and dispute resolution.

    Many essential elements can be found in Item 17, but I will focus on franchise length and renewal. Regarding the length of your initial franchise, you must pay close attention to ensure your lease mirrors the time you have confirmed rights to the franchise. Signing a lease longer than you control the franchise will be precarious. Remember that your initial franchise period needs to be considered when factoring in your total investment costs. For example, if your total build-out costs are $750,000 and the franchise will only give you the rights for five years, purchasing the franchise may not make sense. You will also want to ensure you have renewal options for the franchise and are comfortable with the renewal options.

    Related: How Your Business Can Be Its Own Landlord

    Item 19: Financial performance representation

    This section is optional, meaning franchisors are not required to provide financial performance information in the FDD. However, if a franchisor chooses to provide financial performance information, they must follow specific guidelines set forth by the Federal Trade Commission (FTC).

    The purpose of Item 19 is to help potential franchisees evaluate the potential financial benefits and risks of investing in the franchise system. Suppose a franchisor chooses to include financial performance information in Item 19. In that case, it must provide specific details about the performance of its franchisees, including any average or median sales figures, expenses, profits, or other financial metrics. It’s important to note that the financial performance information provided under Item 19 must be based on actual data from the franchisor’s franchisees. The franchisor must also clearly explain how the data was collected and any assumptions or limitations that may apply to the data.

    Related: 23 Questions to Ask a Franchisor When You Meet Face to Face

    Because Item 19 is optional, it’s not included in every FDD. However, if financial performance information is provided, it can be a valuable tool for potential franchisees in evaluating the possible return on investment and profitability of the franchise system. Many landlords will ask you to provide details on the average sales of the franchise.

    These sales help the landlord decide to lease to your franchise brand. On a side note, it is also important to understand that these sales also help the landlord know what type of rent you could pay. Thus I recommend you keep this information to yourself unless you feel it will help the landlord’s decision on picking your brand.

    When purchasing a franchise, remember that once you buy the franchise, you must sell the franchise concept to potential landlords. Most landlords think about a use for their center just as much as they factor in terms of the deal. Therefore, if your franchise has a use that landlords do not favor, or it is a brand actively closing stores, it might be difficult for you to secure a real estate location of your choosing.

    [ad_2]

    Roxanne Klein

    Source link

  • 5 Proven Steps to Get Rich by Investing in Real Estate | Entrepreneur

    5 Proven Steps to Get Rich by Investing in Real Estate | Entrepreneur

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    Instead of spending all of your time to earn money, you have to start making your money work for you. If you don’t start making strategic investments, you will never generate passive income. Passive income means that you can invest your money from savings into assets that will generate a risk adjusted return, without spending your time to earn it.

    Real estate is one of the best investments you can make because you can earn double-digit returns with the right deal. Once you find the right deal, you’ll have a superior asset compared to stocks and other alternative investments. There are many segments of real estate you can invest in, but one popular segment that has seen a massive shift in popularity is multifamily real estate.

    Times have changed with fewer people wanting to purchase homes and take care of maintenance, especially with the rising interest rates. Seniors are also opting for apartments and senior housing to have less to worry about.

    I took advantage of real estate investing by strategically finding deals that I could purchase below market value. This enabled me to make money on day one of purchasing the property. When I look for real estate deals, I search for apartment buildings and vacant land for development. These assets are low-risk investments that can be recession resistant if you choose the right locations.

    Your investment goal in real estate should be to replace all of your earned income from the job that you work with passive income from your real estate investments. Real estate is a powerful tool to multiply your money.

    Related: 5 Reasons Every Entrepreneur Should Invest in Real Estate

    1. Finding assets below market value

    When I look at new real estate deals, I focus on purchasing them below market value. This means you should find deals off-market with less competition bidding on the property, or it could mean that the current owner of the property is charging lower rents than the market. You can achieve this by reaching out to property owners and real estate brokers within your market.

    Relationships are a massive key to achieving success in real estate. Research what companies own real estate in your market, drive around the areas in your hometown with the most traffic and see what opportunities are available. There are dozens of opportunities available to place your money into real estate.

    The assets you purchase should be well located. The location of the property will determine the value. If you go under contract to acquire a building, make sure you do a thorough due diligence. Make sure the property’s capital expenditures (sidewalks, roofs, exterior) have not been neglected or delayed in replacement.

    2. Increase the value of the property

    Once you acquire the property, the first thing you need to do is implement your investment strategy. If you purchased a piece of land, determine how you will add value to it. Will you rezone it, construct a building on it, flip it or all three? Maybe you’re purchasing an existing building and your goal should be to increase rents or spend money on the property to increase its value.

    Before you purchase a property you have to see an opportunity and have a gut instinct on what you’re going to do very quickly. Search for ways to add value to your investment that will return your money with a profit. Determine how much money you have to spend to improve the value and what the return on investment looks like.

    Related: 5 Amazing Tips on Turning Real Estate Into a Real Fortune

    3. Optimize expenses to increase profit

    One trick to quickly increasing the value of your property is reviewing third-party contracts for vendors that service the property. Depending on who the prior owner used, you could find a better-priced vendor that produces the same value for your property. When you take over a property quote other people so you can compare pricing.

    Find other options that can do the work for a better price. If you can shave down your expenses and make them more efficient, while still achieving the same value, you will increase your return on investment.

    Look at your maintenance costs and determine what the largest repair costs are. When you have the right information, you can use it to your advantage and improve the performance of your investments. Find out what is costing the most money to maintain the property and try to value-engineer it.

    4. Review the upside potential

    This is my favorite part about investing in real estate. After you purchase an asset, you have to put together an investment plan for how much money you will spend to improve it. You have to carefully review the costs and compare them to the upside.

    Say, for example, you are renovating an apartment complex. Your renovation plan can include new kitchen cabinets, granite countertops, modern paint colors, new appliances and new flooring. This may cost you anywhere between $10,000 to $20,000 per unit, but you could potentially increase rent by $400 per month. If you can do this at scale, you will generate massive returns.

    Before you start this process, you should develop a budget to determine how much your improvements will cost. Your rent or increase in property value should pay back your costs within a three- to four-year timeline or generate at least $80,000 if you spent $20,000.

    Related: How to Start Investing in Rental Properties — Your Step-by-Step Guide

    5. Maintain the property

    Once you have assets under management, make sure you take care of your tenants to increase your retention rates. After you create an attractive place to rent, keeping your tenants happy is your final priority for long-term success. The less turnover you have the fewer new tenants you have to find to occupy your property each year.

    Make sure capital improvements are kept up to date including roofs, sidewalks, parking lots and common areas. Property maintenance is often an overlooked aspect of investing. If you don’t keep up with the maintenance, you may take a price cut when you decide to sell in the future.

    Conclusion

    Maximizing your earning potential by investing in real estate is one of the best paths to take. Your money will be useless if you spend it on things that don’t generate a return or if you don’t let it work for you. When you focus on these five steps I’ve outlined and stay on track, it will only be a matter of time until you see success!

    [ad_2]

    Matt Green

    Source link

  • Entrepreneur | 10 Steps to Leasing a Commercial Space

    Entrepreneur | 10 Steps to Leasing a Commercial Space

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    If you are new to commercial leasing and will be leasing a commercial space for the first time, here’s an overview of the commercial leasing process.

    1. Find a location

    Determine the demographic you want to reach and find an area that caters to that demographic. You will then want to research the market by considering the competition in the area and how your business will differentiate itself.

    In analyzing your potential locations, you need to look at costs: I recommend creating a spreadsheet where you put all your costs associated with each place you are considering. You can now make a side-by-side comparison of different sites with a cost spreadsheet.

    Related: How Your Business Can Be Its Own Landlord

    2. Tour with your general commercial contractor

    Once you have visited all locations and analyzed the costs, you will tour the locations with your general commercial contractor. You will want your general contractor to assess the condition of the walls, floors, roof and foundation to ensure they are in good shape. In addition, check the availability and condition of electrical, plumbing and HVAC systems to ensure they are adequate for the intended use. Finally, if you need gas, you will want to ensure that gas is currently at the premises.

    Make sure you have your general contractor evaluate the accessibility of the space. Ask your general contractor whether the property meets American With Disabilities (ADA) requirements.

    After you tour with your general contractor, if you want to submit an offer, ask your general contractor to provide you with a quote. This quote will allow you to evaluate the cost of any necessary repairs or renovations.

    Related: How to Start an Airbnb Business Without Owning Property

    3. Draft and submit a lease offer

    If you are working with a real estate broker, they will be able to assist you in drafting your lease offer. You will want to ask your real estate broker for comps before you let them know the lease rate you want to offer. Remember, when reviewing comps, you need to know the big picture. Landlords often give tenants a cash allowance and free rent to get a higher rent.

    After reviewing comps, determine your budget. Decide how much you will pay for rent, security deposit and other fees. Also, decide on the length of the lease you are comfortable with. At this time, you or your real estate broker are in a better position to prepare a letter of intent, often referred to as a LOI. Your LOI should outline your proposed terms, including the length of the lease, rent amount, security deposit and other relevant details.

    4. Wait for a response

    This part is the hardest for many of my clients since once the ball is out of our court, it can be challenging to know when it will come back in. If you seem too anxious, it will affect your ability to negotiate.

    5. Review and negotiate

    Once you receive the response from the landlord, you will either continue your negotiations or move on to another property. Please note that it is scarce for a landlord to accept an original offer from a tenant. Therefore, if you continue the negotiation process, you will engage in further negotiations until you reach a mutually acceptable agreement. This process can be as quick as a few weeks, but complex deals can last over a year.

    Related: Cultivate Your Negotiation Skills For Entrepreneurial Success

    6. Lease draft

    If you agree with the landlord on the LOI, you will wait for the lease draft to review. I recommend you interview and decide on a commercial real estate attorney skilled in lease review and tenant representation during this time.

    7. Attorney lease review

    Once you receive the lease draft, send the lease along with the agreed-upon LOI for your attorney to review. Additionally, it is essential that you carefully read the lease agreement to ensure you understand the terms and conditions. You, along with your attorney, will want to verify the terms. Make sure that the lease agreement accurately reflects the terms that were negotiated.

    Related: 8 Essential Real Estate Questions To Ask Potential Franchisors

    8. Final inspection

    Before you sign the lease, I recommend you do a final inspection. Typically the general contractor will do an initial review at no cost before this point. To get an in-depth inspection, they will require a fee. Considering the financial costs involved in the lease, it is a good business practice to pay for this final inspection.

    9. Execute the lease

    After you are comfortable with the lease and the final inspection, you will then be executing the lease. It is important to note that typically your time will start ticking when the lease is mutually executed. This time is most importantly specific to the free rent period.

    Related: Why Real Estate Agents Should Take Advantage of BPOs Right Now

    10. Hire an architect, if applicable

    You may need to hire an architect to draw plans if you make significant modifications. If the landlord has existing plans, it will save you money and time. I recommend you ask for these plans during your LOI negotiations.

    If you need to have plans drawn, your architect will submit them to the city once they are complete. Each municipality has different speeds at they operate. You need to understand that you can only start your build-out once the plans are approved.

    The process of leasing commercial real estate can be complicated and time-consuming. Therefore, I recommend you work with a commercial real estate broker, a general commercial contractor and a commercial real estate attorney to assist you in your journey.

    [ad_2]

    Roxanne Klein

    Source link

  • 3 Things To Automate In Your Airbnb To Achieve Passive Income

    3 Things To Automate In Your Airbnb To Achieve Passive Income

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    Automating your Airbnb listing means being hands-free with the business. And this is the first step towards the location freedom you’ve always wanted. Location freedom is having the ability to go anywhere in the world and still earn money despite not being physically present. So when it comes to managing your Airbnb, how do you automate the process, and what strategies do you need to implement?

    Ask any Airbnb host about their goals in the business, and you’ll probably get a standard answer in return, “We all want passive income and location freedom.” And who wouldn’t want to continue earning money wherever they are, right?

    However, operating an Airbnb business is like any other full-time job — you’ll feel excitement and exhaustion during your run. But there’s a bunch of smart hosts who know how to manage their Airbnbs, remove the stress from the equation, and continue enjoying the fruits of their labor. You can be one of them. You can use their strategies and automate these three essential things in your Airbnb listing so you can work ON your business and not in it.

    Related: How To Create 7 Streams of Income for Passive Wealth

    1. Cleaning

    This is probably the most important aspect of running a short-term rental business. However, as vital as it is, you also shouldn’t try to save money by cleaning your property. If your goal is to be truly independent with your business, you need to automate it.

    For this, you can hire a professional cleaning company, or you can hire people you know. And there should be a system for your crew because for your business to be truly automated, it needs a process to follow. For example, your crew needs to be there right after the guests leave at a specific time window (for example, from 10 AM to 3 PM).

    When you put this on autopilot, your team will automatically pick up where the guests left off, clean during the window, and you don’t have to clean the place yourself.

    2. Maintenance

    The next thing you need to automate is maintenance. Hiring a maintenance person will ensure that anything broken will be fixed as soon as possible. This person ideally will work on call, and you should let them know that you have a window and that if there’s ever any handy work that needs to be done, they should do it during that window.

    As for the compensation, it is recommended you pay both your maintenance person and cleaners on a case-by-case or per-project basis.

    3. Communications

    And last but not least, the communications.

    This part of the operations is vital because it will make sure that you’re streamlining the tasks needed to be done and that you’re not doing all the work yourself. For this, you can use Slack, a communication platform that’s easier to manage.

    With proper communication, you must add the owner, the cleaners, the maintenance person and everyone involved in maintaining that property. For example, you can ask your cleaning crew to post pictures of the property after each cleaning. They can also visually inspect the property to see if anything’s missing or needs repairs.

    If there is, you can then tag your maintenance person so they can come over and handle it during the cleaning window. This will make everything easier for you.

    We recommend you do the communications for the first three properties you launch so you can experience it first-hand. Plus, it’s also difficult to delegate communication when you haven’t done it and don’t understand it yourself.

    The most important thing to remember during these operations is that you don’t do the cleaning or the maintenance yourself. Delegate those things or hire somebody else. This way, you’ll be able to start working on the business and not in the business.

    Related: 4 Powerful Tips To Create A Successful Airbnb Business

    Passive income through Airbnb short-term rentals

    As you know, Airbnb is a home-sharing platform where you can list your property so that guests worldwide can book your place for a brief time. But this is more than just a place made for visitors who like comfortable stays. It’s also a good business venture for people looking for passive income.

    So if you own a property, you can launch your listing and use the automation strategies we just shared with you. If you’re a newbie just looking around for tips for getting your Airbnb business started, then you tuck these tricks away for future use.

    Related: How to Start an Airbnb Business Without Owning Property

    [ad_2]

    Jorge Contreras

    Source link

  • 6 Steps To Follow When Choosing a Real Estate Agent

    6 Steps To Follow When Choosing a Real Estate Agent

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    Due to higher home mortgage loan interest rates, many homebuyers are sitting on the sidelines, waiting to purchase a home. The high-interest rates have also reduced the homebuyer’s purchasing power making a once manageable monthly mortgage payment an unaffordable expense.

    However, homes that show well, are priced well and are in a highly desirable part of town will sell very quickly with multiple offers. If not, your home may be on the market for 30-plus days before you receive an offer.

    If you’re thinking of calling an agent, like me, to purchase or sell a home, here are a few ways to prepare yourself for the journey ahead; have all of the money matters taken care of. What I mean by that is to be pre-approved for a mortgage loan if you’re purchasing a home and know how much you’re going to net off the sale of your current home if you’re planning to sell it. Assuming the home is presentable, we’ll be ready to show it within a few days.

    You already know buying or selling is not an overnight task, but how much time it takes depends on the layout of your home and your budget. Don’t take the chance of making a bad first impression in real estate.

    Related: 7 Secrets Luxury Home Buyers Need to Know

    To decide on an agent, first complete the following:

    1. Get a mortgage pre-approval

    To begin, research your mortgage choices before signing a contract with a real estate agent. The mortgage you can afford depends on several factors, including the length, price and interest rate of the mortgage you choose.

    Getting pre-qualified for a mortgage is not the same as getting pre-approved. Both pre-qualification and pre-approval need a thorough examination of your financial situation, but only the latter requires a formal mortgage application.

    Related: The Property Line: What’s With the Surge in Mortgage Rates?

    2. Research the market

    Your search for a new home should be limited to properties within the price range established by the mortgage for which you have been pre-approved. However, if you plan on selling simultaneously, you should research comparable homes in the neighborhood. Remember that the asking prices listed in real estate ads, whether online or in print, are all you will learn. A real estate agent can provide information on how long a home has been on the market, if there have been any price reductions and, most crucially, how much you may expect to pay at closing.

    While studying the real estate market is crucial, avoiding falling in love with any particular property is essential. If you need to sell your current house before buying a new one, there’s a good possibility the property won’t still be available when you’re ready to purchase. Offers contingent on selling another property, known in the real estate market as “yes, but…” offers, have a lower likelihood of being accepted by the seller than those with a stable financial background.

    Related: Single Home Purchase Error Gives Woman Entire Neighborhood

    3. Remove clutter

    Many of us have seen “Trading Spaces” and feel confident in our home-staging abilities. You probably already know that making a good impression on your real estate agent is crucial. If you want your real estate agent to see the full potential in your home, you should have an open house before they come over.

    • Extra shoes and coats should be stored. Keeping these items in plain sight indicates a closet or storage area deficiency.
    • Take off your belongings. Potential buyers want to envision themselves living in your home, and seeing photos of your family reunion can soon dash any hopes.
    • Empty the fridge. The home’s appearance of order and tranquility is ruined by the accumulation of alphabet magnets, postcards, and receipts.
    • Clear out the clutter. Larger homes with more open floor plans give visitors more room to move about and think creatively about how they may use the property.

    Related: 5 Essential Tips for Networking in Real Estate

    4. Clean

    If you’re trying to sell your property, a spotless look will get you far further than you think. A neat dwelling indicates a sense of ownership and pride. The entrance, for example, should be given as much care and attention as the rest of the building. Clean up the area around your entrance, mailbox, mat and trim. While you might not give much thought to dust and insects living in your light fixtures and shades daily, prospective purchasers who do their due diligence might be put off by such slovenly maintenance.

    Window cleanliness is directly proportional to the amount of natural light let in and the degree to which one can take in the scenery outside. It’s a good idea to change out the furnace filter once a month to keep the air flowing freely and to keep the air quality high in your home. Finally, make sure the restroom is spotless. The ancient rule of bathroom etiquette that states you shouldn’t touch anything other than the toilet, the bathtub and the tiles suddenly becomes extremely important. Do not stand on the toilet seat.

    Related: 5 Ways to Sell Your House Fast

    5. Replace, restore or resurface

    Many long-term residents have come to accept the need for constant maintenance and the presence of outdated or broken fixtures. Walls, for instance, need to be patched and painted. Neutral paint colors make it easier for potential buyers to picture themselves in your home (like a blank canvas), and a fresh coat of paint on an undamaged wall shows that you take pride in maintaining the property.

    Consider the home’s street charm as well. Are the weeds pulled and the grass cut? Most potential buyers will form their first impression of your home based on its outside, so give it its best face forward.

    A pre-sale home inspection might be helpful if your property is older or you suspect there may be surprises that would cause potential buyers to back out of their offer. An estimate of the repairs needed will let potential purchasers know what they’re getting into.

    6. Search for prospective brokers

    Try not to settle for the first agent that pops up in a web search. Find an agent who is a good fit for your needs by doing some research. Referrals from recent movers are an excellent place to begin, and there are also many online resources for researching and evaluating real estate agents. Also, it’s important to find a real estate agent who has experience selling properties in your area since they will know how to set a fair price for your property.

    A real estate agent with years of expertise will know how to market your home effectively and where to look for a new one. Remember that real estate brokers can take as much as 7% of your home’s sale price at closing, so choose carefully.

    Related: Signs You are in a Bad Relationship With Your Real Estate Broker

    In conclusion

    The first things to do when selling or purchasing a home are the same as they would be for any other large purchase: research and planning. Before you call in a real estate agent, you must make your house look desirable. Keep in mind that if you don’t get an offer, your real estate agent can’t help you sell, and if your home isn’t in good shape, it won’t be in high demand.

    [ad_2]

    Chris D. Bentley

    Source link

  • This Non-Traditional Financing Solution Lends Money to People Rejected By Banks

    This Non-Traditional Financing Solution Lends Money to People Rejected By Banks

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    Real estate investing is big money, but not everyone qualifies for loans from big banks and other traditional sources. Yet there are private lenders willing to lend money.

    Private money is a way for entrepreneurs with bad personal credit to become small business owners and flip houses. This makes small business ownership more accessible to traditionally underserved communities, such as minorities, immigrants and refugees.

    [ad_2]

    Janet Gershen-Siegel

    Source link

  • 4 Changes Every Landlord Should Consider

    4 Changes Every Landlord Should Consider

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    As we swiftly turn the corner into 2023, there are many considerations on the minds of those in the real estate industry, including landlords. The past year has been one of change, and experts predict more challenges in the general real estate market and the rental landscape. If you’ve been in the game for a while, you probably realize that what is happening right now is part of a cycle, and things will eventually even out and stabilize once again. But if you’re like me, you want to experience more short-term success as a landlord today. Here are a few suggestions on resolutions to consider to make 2023 a successful year.

    Related: The 5 Types of Landlords Businesses Will Encounter

    Invest in technology to advance your business and properties

    As a business founder and owner, I am acutely aware of just how crucial it is to make investments to experience ongoing success. As an investment property owner, upgrading technological devices within your rental properties is a great place to begin. Whether it is upgrading kitchen appliances, installing security systems such as a Ring doorbell, upgrading in-unit laundry machines, offering fiber optic internet connection (if available) or installing AI technology that can ease the life of your tenants, current and future tenants will appreciate the investments in the property and will likely choose to stay put with these upgraded amenities.

    Also consider investing in a technology platform to help you manage your rental properties. This investment can make your life and job easier as a landlord or property manager and allow you to have all documents on file electronically.

    Depending on the technology platform you decide to invest in, additional benefits could include accepting online rent payments, scheduling maintenance and property inspections, marketing vacant properties with a single click and streamlining security deposit or surcharge features.

    Your time is valuable — invest in a platform that will make your life and your tenants’ lives easy and headache-free. Do your research and find the best platform that fits your unique needs.

    Related: 6 Tech Challenges Facing Remote Real Estate Companies

    Offer tenants easily accessible information

    Whether you are considering investing in technology and upgrading your rental management system, having information readily available for your tenants is a goodwill gesture. If the technology route is not for you, having a good filing system for important documents regarding each tenant is important in general. If a tenant has questions about their lease or a simple question, you will have easy access to that information.

    Better yet, some systems offer tenant portals so that they can access their own information at will. Over my years as a landlord and rental property owner, I’ve found that the easier you can make things for your tenants, the more likely they will continue to rent from you. And turnover is one of the most significant expenses for rental properties, so it is worth the investment.

    Related: 5 Major Deal Points to Know Before Signing a Lease

    Prep for continued increases in rental and property prices

    This past year taught us that the housing market could be volatile. Due to the increasing cost of rent, mortgage rates and inflated housing prices, many landlords and property managers across the country have struggled to keep properties filled and struggled to collect rent payments. As inflation increases, a plan must be implemented to avoid struggles, such as late or unpaid rent payments.

    Seek advice from veterans in the industry and research ways you can improve your proactive business plan to avoid hardships to the best of your ability. Creating a plan or improving on a preexisting one can be done over time and learned and improved upon through personal experiences or others’ experiences in the industry.

    Retain employees in current economic conditions

    At Rentec, we’ve been fortunate to have a high employee retention rate, even after 13 years of growth. I can’t emphasize enough how important it is to retain talent, especially in the current economic climate. Make sure to create a plan to keep employees and ensure they are happy with their job for the next year. Small gestures go a long way. A simple thank you card after a long week or hard project is appreciated and valued by many.

    If possible and on budget, set aside funds to treat your employees. Providing a meal or small work retreat at a local park strengthens the bond between employees and is one good way to have an environment encouraging people to work hard. Combining gestures like this with fair compensation, including competitive salaries and benefits packages, can contribute to higher retention and overall satisfaction rates. I’ve found that one of the most vital actions on this front is to create open, two-way communication channels among leadership and staff, creating an environment of collaboration and teamwork.

    Related: 10 Strategies for Hiring and Retaining New Employees

    While none of us can know what the coming year will bring, there are a few steps you can take to reach all your goals as a landlord or property manager or any other business owner. Investing in technology, creating efficient processes, watching market trends and focusing on employee satisfaction can help.

    Remember, resolutions do not always have to be immediate; instead they can be implemented over time, on your best schedule. Even small improvements can go a long way in any business. I encourage you to begin creating a plan and consider options best suited for your business and investment properties to make the best of 2023.

    [ad_2]

    Nathan Miller

    Source link

  • Is Real Estate Investment Trusts a Good Career Path in 2023?

    Is Real Estate Investment Trusts a Good Career Path in 2023?

    [ad_1]

    Getting into real estate is often considered to be a lucrative career path. But you don’t have to buy and sell properties to join this industry as a professional. You can enter a real estate investment trust (REIT) company or become a REIT investor.

    Keep reading for the info you need to consider to decide if real estate investment trusts are good career paths for professionals like you.

    Real estate investment trusts explained

    A real estate investment trust or REIT is a group of funds or securities for real estate. REIT management companies oversee real estate acquisitions, sales and diversification.

    Think of a REIT similarly to a mutual or exchange-traded fund (ETF). With a mutual fund, several stocks or securities are gathered together into a group. Investors can then purchase mutual fund shares rather than individual shares in the fund itself.

    Similarly, with a real estate investment trust, investors can purchase partial ownership or shares of the trust, thus gaining the financial benefits of simultaneously investing in multiple pieces of real estate or other securities.

    Through REITs, investors can invest in portions of real estate projects or properties and generate profits. Most real estate investment trusts are collections of properties such as hospitals, shopping malls, apartments and other large properties rather than single-family homes, though this is only sometimes true.

    Related: The Most Stable REIT to Buy for a Recession

    Real estate investment trusts are often attractive to investors because they don’t require those investors to finance, purchase or manage any properties by themselves. Instead, REIT companies and their employees handle all the details.

    What does a REIT company do?

    A REIT company acquires real estate properties and securities for its clients. It monitors the market, sells properties when necessary and continues to grow the collected trust and portfolios under its control for the financial prosperity of its clients.

    A REIT company is similar to a mutual fund manager. They take care of the day-to-day monitoring of properties of investments for their clients, plus give out dividends to those clients every month.

    REITs in more detail

    Only some companies that invest in real estate qualify as REITs.

    For a company to be a legitimate REIT, it must:

    • Invest 75% or more of its total assets in real estate and U.S. treasuries for cash.
    • Derive 75% or more of its gross income from interest on mortgages, real estate sales or rent payments.
    • Pay at least 90%of its taxable income as shareholder dividends each fiscal year.
    • Be a taxable corporation.
    • Be managed by a board of trustees or directors.
    • Have at least 100 shareholders or more after the first year of operations.
    • Have no more than 50% of its shares owned by five or fewer people.

    Related: 3 REITs That Could Be the Backbone of Your Portfolio

    Do REITs pay investors dividends?

    Yes, which is part of what makes them so desirable for investors. Both residential and diversified REITs pay monthly dividends to their shareholders and investors. This monthly income comes from rent and mortgage payments from the people who own the properties in the REIT.

    Most REITs have an average rate of return of about 10.5%, similar to the rental rate of return landlords can expect in their first years of operation. Unlike landlords, however, REIT investors don’t need to spend much time and money maintaining or managing properties.

    Note that REIT managers or companies collect a small commission from accrued mortgage and rent payments as the cost of their services. This is what pays the workers of real estate investment trusts, their managers and other professionals.

    So, should you get involved with real estate investment trusts?

    That depends on your career ambitions and prospects. REIT management is a complex and even potentially risky field for many.

    If you get into REIT, you’ll often need to start at the bottom and work your way to the top, so your salary may not be exceptional in the first years of your career. However, the potential rewards of sticking with this career for several years could be pretty enticing.

    You should consider getting into real estate investment trusts as a career path if:

    • You are already interested in investing in real estate. Joining a REIT company could be the best way to learn about this unique investment field and how best to operate within it.
    • You are interested in acquiring real estate and learning more about the real estate market.
    • You have strong management skills.
    • You are comfortable with a certain level of risk — not for yourself, of course, but for your clients.

    What will you do in a REIT company?

    That depends on your exact job title and responsibilities.

    For most in the REIT industry, career paths begin by obtaining a position at a REIT company’s headquarters. You may start with essential maintenance or secretarial work, but gradually learn more about how a REIT company chooses its assets, communicates with its clients, and advertises its services to acquire new clients.

    Real estate investment trusts career paths

    There are multiple potential career paths you can pursue in any REIT industry. Here are just a few examples.

    Related: The Best Careers for Your Personality Type (Infographic)

    Property manager

    You might work as a property manager. Many REIT companies work with third-party property management companies. In a nutshell, property managers maintain rental properties, like apartment complexes or multiple homes throughout the same neighborhood.

    If you work for a property management company, you might eventually be able to work for a REIT. Alternatively, if you work for a REIT, you might work as a property manager for that trust. In this case, the trust takes care of various rental properties, which it maintains and oversees on behalf of its clients.

    Asset manager

    You could also pursue a career as an asset manager. REIT asset managers decide which properties they should purchase and how much debt they need to take out in terms of loans or other financing arrangements to purchase those properties.

    Asset managers also oversee all the aspects of owning and operating properties and ensure property expenses align with projections. This mid-level management job requires a lot of experience in real estate, investing and similar areas.

    Development executive

    Development executives are chief executives for these funds. Thus, they have a lot of sway regarding what properties the REIT purchases, its profit and debt targets, and how the fund evolves.

    Development executives identify opportunities to purchase new properties for the fund’s clients to improve financial prosperity for everyone involved.

    This position pays well and is an excellent stepping stone to senior management positions in other real estate investment industry companies. However, expect to acquire lots of experience in the REIT arena before qualifying for this position.

    Acquisition analyst

    Acquisition analysts are closer to the entry-level or middle manager position than development executives. That said, they are critical.

    REIT acquisition analysts plan, implement, coordinate and identify properties that the fund they work for should acquire. For instance, they may find an attractive apartment complex that needs new investors, then recommend that the REIT company purchase it to diversify the portfolio further.

    Related: 3 REITs to Buy and Hold for the Long Term

    Because of this, acquisition analysts need skills and experience in the real estate investment industry. They need to know how to recognize and understand market trends, spot available properties and know what properties are worth.

    It is also beneficial to have contacts in the real estate or investment industries before applying for these positions in a REIT. For instance, if you are friends with local realtors, you can get an early scoop about up-and-coming properties or new listings from your friends, allowing you to recommend properties to your REIT company or more quickly than other analysts.

    Summary

    Ultimately, you might enjoy working for a REIT company if you like investing, real estate, analysis and similar topics. If you’re successful in this field, you’ll also make a pretty fair salary.

    Check out Entrepreneur’s other resources and guides today to learn more about real estate, investments, and related topics.

    [ad_2]

    Entrepreneur Staff

    Source link

  • 6 Overlooked Investment Opportunities in Commercial Real Estate

    6 Overlooked Investment Opportunities in Commercial Real Estate

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    In commercial real estate, smart owners exploit every available opportunity to maximize their net operating income (NOI) and create new, leverageable equity. Over time, small changes can generate millions of dollars in cash flow and added value, which will be critically beneficial as you grow your CRE portfolio.

    Since transacting my first deal at age 18, I’ve built an 18-year track record of success as a professional CRE investor with the help and guidance of mentors who are legends in our business. Here are some of my favorite and most effective insider tips to help boost your numbers.

    Related: Tap Into the Wealth Potential of Commercial Real Estate With These 5 Tips

    1. ATMs

    Nearly every type of property has an area of 24 square feet that can be carved out with minor modifications. If you own property that has any commercial frontage or is located in a heavily trafficked pedestrian area, consider creating space for an ATM.

    In most markets in the U.S., average ATM space will typically lease for $500-$1,400 per month (as of the date of this publication) and requires an area of approximately 4’x6′. That is at least $6,000 in annual income for 24 square feet (or $250 per square foot).

    In areas with heavy pedestrian traffic, an ATM lease could bring $1,200-$1,400 per month, translating to an equity increase of up to $420,000. Talk to your local bank about placing an ATM in your location. Property owners may also choose to install an ATM machine of their own and collect fees on cash withdrawals, but such an operation requires hands-on management.

    2. Vending machines

    While the cash flow may seem negligible, vending machines can add a surprising equity boost to a property’s bottom line. Newer, more automated machines with card readers are more desirable. It’s easier to track income and profit with credit-debit purchases than with cash.

    You can either purchase machines or lease them. Monthly leases can begin at around $50 per month. For most products, profit is around 50%. With two machines, one for snacks and one for soft drinks, you could expect to sell approximately 300 items per month at an average profit of $0.75 per item. That’s a gross income of $225 per month and a net income of $125 per month (minus the $100 lease). While a net annual income of $1,500 seems hardly worth the effort, that’s a potential net equity gain of $20,000 for the property.

    There are many manufacturers that will either sell, finance or lease the equipment. If you choose to purchase or lease, there are reputable vendors offering state-of-the-art machines with favorable terms. Third-party vendors will also lease space in your property and handle all the stocking and maintenance for you.

    Related: How to Start Investing in Rental Properties — Your Step-by-Step Guide

    3. Coin-operated laundry

    In older apartment buildings without washer and dryer connections in each unit, property owners can potentially convert ancillary or otherwise unutilized space in the building (like a basement) into a coin-operated laundry facility.

    During the renovation of an old student apartment building close to NC State University, we converted an empty crawl space into a laundry room with four coin-operated washing machines and four dryers. I had 24 units in the building, most of which were two bedrooms, so approximately 48 residents. This simple amenity generated more than $1,000 per month. The extra $12,000 per year meant an instant equity gain of over $200,000.

    Most suppliers will offer financing or lease options for laundry equipment so you can get started with little capital out of pocket. Coin-operated washers and dryers can also be purchased from major home supply retailers, through Amazon or directly from equipment manufacturers.

    4. Parking

    I’ll give you a personal example: I purchased a church building a few years ago for $860,000. The building is 6,000 square feet and sits on a busy corner near lots of retail and where parking is scarce. I purchased it for the land value with the intent to demolish the building and develop a five-story mixed-use property. The existing building came with something unusual for the neighborhood: an underground parking garage with 21 spaces.

    Knowing the new development would take years, we rented out the parking spaces to pay the property taxes and carrying costs. With 21 spaces rented to nearby businesses at $100 per month per space, we generated $2,100 in monthly revenue, covering nearly half of the $4,500 mortgage.

    If we were to keep the building as a rental property, the extra $25,200 per year translates into $560,000 of additional equity in the building (at a 4.5% cap rate) — making up two-thirds of the $860,000 I paid for the entire property. While it may be difficult to purchase a standalone parking lot due to the demand for land, you can look for properties in infill locations that come with extra off-street parking. This additional revenue source can provide a welcome boost to your bottom line.

    Related: 6 Key Questions You Should Always Ask Before Investing in a Commercial Real-Estate Property

    5. Rooftop cell towers

    A cell tower requires as little as 50 square feet for installation. One rooftop tower can support as many as five carriers and 15 other digital antennas, generating up to $12,000-$15,000 in gross monthly revenue. That’s $6,000-$7,000 in monthly income on a 50/50 split with the supplier. The extra $72,000-$84,000 per year would result in an equity increase for the property of $1.4 million to $2.1 million, often with no out-of-pocket cost.

    Start by contacting American Tower, SBA and Crown Castle — the largest tower suppliers in the U.S. — to gauge demand for a tower on your property and try to get competitive offers. Most will structure their lease payments as a revenue split on the income from AT&T, T-Mobile, Verizon and other carriers.

    6. Freestanding cell towers

    Nearly all suburban developed properties have a 100’x100′ space where a freestanding cell tower can be placed. I’ve even seen some on footprints as small as 50’x50′. Dimensions, location and zoning are dictated by local ordinances, but if you can carve out a 5,000 to 10,000-square-foot section, a cell tower can potentially generate more monthly income than the property itself.

    Rental income or profit sharing on a traditional cell tower can range between $3,000-$8,000 per month based on population density. Even nominal income from a cell tower lease can have a major impact on your equity position and recapitalize in the event of a sale. As with rooftop antennas, cell tower installers and operators can tell you if there is a need for additional coverage where your property is located.

    This is the beauty of real estate: Small changes to cash flow create huge differences in property valuations, asset equity and the owner’s net worth.

    [ad_2]

    Nikita Zhitov

    Source link

  • 8 Real Estate Questions To Ask Potential Franchisors

    8 Real Estate Questions To Ask Potential Franchisors

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    There are many reasons why entrepreneurs may want to buy a franchise. Making a brand successful is a tremendous amount of work in today’s world. Competition for consumer dollars is fierce. It can be challenging to elevate a brand and achieve profits. These profits will stem from a well-thought-out and strategic business plan.

    The beauty of buying into a franchise is that the brand is already proven. Also, franchisees can benefit from the franchisor’s assistance in navigating the business’s challenges. As for specific profits, each franchisor should disclose sales and estimated earnings in their Franchisor Disclosure Document, often referred to as an FDD.

    Before buying a franchise, here are eight essential questions to ask.

    Related: Thinking of Buying a Franchise? These Four Industries Are Flaming Hot Right Now

    Does the franchisor have a dedicated in-house real estate department?

    If a franchisor has paid corporate staff whose sole purpose is to assist their franchisees with the real estate process, then the franchisor gets a star in my book. The franchisee will typically have a real estate broker represent them in selecting a site and negotiating the deal. However, the in-house real estate manager is vital to assisting the franchisee’s broker. The in-house real estate manager will provide the franchisee’s broker with detailed site criteria tailored to the franchised branding requirements.

    How do the real estate department and support staff size compare to the franchise sales department?

    Of course, franchisors need a sales department to sell franchises and grow their brand. Nevertheless, it is a good idea for a potential franchisee to know the size of the franchisor’s sales department. It might be a red flag if a company has an extensive sales department and little support staff for the franchisees.

    Related: Looking to Buy a Franchise? Here’s How to Start

    Does the franchisor have a real estate approval process?

    The majority of franchisors will need to approve a franchisee’s location. The approval process always needs to happen before a franchisee signs a lease. If the franchisor does not have a method of approving the site where the franchisee’s business will be, then the franchisee should be concerned. Not having an approval process could mean that the franchisor is in a hurry to open locations and does not have the quality of the sites as a top priority.

    Does the franchisor have a letter of intent template?

    The letter of intent is the framework for the lease. Most of the main deal points for the lease are in the letter of intent. These include base rent, additional charges, rent increases, lease length, options, tenant improvement allowance, landlord delivery, free rent and the rent commencement date. Additionally, in the letter of intent are the tenant’s use clause and the franchisor’s recommendation on necessary exclusives. The tenant must let the landlord know what use they will lease the space for, and the franchisor should provide this use language. The franchisor should also spell out exactly what they want regarding an exclusive. Exclusives protect the tenant from a landlord leasing to a competing tenant of the same use.

    Does the franchisor have a landlord’s work letter?

    The landlord’s work letter defines the conditions for delivery of the premises. Specifics to utility requirements (electric, water, & gas), heating, ventilation, and air conditioning (HVAC ), number of restrooms, flooring, and ceiling are just a few of the items covered in the landlord’s work letter. If the franchisor provides their franchisee with a landlord’s work letter, it will show experience.

    Related: The 5 Types of People You Need To Start a Business

    Could the franchisor provide a map outlining the franchisee’s territory?

    When buying a franchise territory, the franchisee will want to know specifics of where they will be able to open their business. If the franchisor does not provide a map showing this exact area, I recommend asking for one.

    Additionally, ask the franchisor how many other franchisees have purchased territories in the area. It would help if the franchisee also asked the franchisor what protection is offered to prevent another franchisee from opening adjacent to their territory. Finally, ask specifically how close another franchisee can open to an existing store. Sometimes I see franchises expand too quickly, which can hurt profitability.

    Once a franchise agreement is signed, how long does the franchisee have to find a location?

    There are two viewpoints to this question. The franchisor wants people to refrain from buying up territories and not opening stores. The franchisee only wants to open a store if the desired real estate is available in their territory. The franchisee needs to understand if there are consequences and what those consequences are if they purchase a region and do not open the store(s) they agreed to in their franchise agreement.

    Related: 5 Major Deal Points to Know Before Signing a Lease

    After purchasing a territory, can a franchisee trade territory?

    This one depends on how many franchisees the franchisor has. Most of the time, I see franchisors work with their franchisees if the franchise wants to trade territories. For example, the franchisee could wish to change territories due to a lack of quality real estate, or they may need to move their residence. It is advantageous for a franchisee to find out before signing a franchisee agreement about the possibility of changing territories.

    Purchasing a franchise is a decision that should require much thought. I also recommend potential franchisees speak to many existing and ex-franchise owners of the brand in question. The more questions asked in advance, the better-equipped one will be to run a successful business.

    [ad_2]

    Roxanne Klein

    Source link

  • How to Use Virtual Tours To Elevate Real Estate Sales

    How to Use Virtual Tours To Elevate Real Estate Sales

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    We’re in the last month of 2022, and not only are we entering a new year, but we’re entering a recession that’s hurting real estate sales across the country. As many other authors and I discussed in previous articles, virtual tours help real estate agents sell more properties, but that’s not up for debate.

    But we’ve found a neat little hack you can do with your real estate content to get free exposure and more eyeballs on your listings to get more sales. It’s all through a process called “geotagging.”

    Never heard of this term before? Don’t worry; let’s learn about how to implement it into your content.

    What is geotagging?

    Geotagging is a technical search engine optimization term used to help rank local content higher on search engines through the exact coordinates of a real estate listing and the type of real estate property. Many business owners implement this strategy to get them to rank higher on local searches; let’s walk through an example.

    John Smith owns a bakery in Philadelphia, and while he has a great virtual tour, video and photos, he’s looking for that extra edge against his competition. He finds the process of geotagging, goes to a free site such as geoimgr.com, finds the coordinates (longitude and latitude) of Philadelphia, adds it to Geo Imgr and then adds in his niche keyphrase for what people search for his type of business, such as “bakeries near me” or “bakeries in Philadelphia.”

    So you’re essentially telling Google what you do “niche” in your area’s coordinates, so Google positions you as such because you’ve organized your content and tagged it as such; it’s a brilliant way to get higher rankings on local searches. In 2023, you’ll need to think outside the box — this is a great example of doing just that.

    Related: How Real Estate Investors Can Prepare for 2023 in 4 Easy Steps

    How does this apply to real estate listings?

    What do brick-and-mortar businesses and real estate listings have in common? They’re both pieces of real estate, so this process works just as well with real estate listings, just like how it does with small businesses such as John Smith’s bakery.

    No one is doing this as a real estate agent. They’re only focused on having great content, although essential to get to the next level; they also need to geotag all of their photos and videos! This is what hotshot realtors do to increase exposure on their listings.

    So how do I optimize my content as a real estate agent?

    It’s easier than you think, so don’t overthink it! Here’s a quick step-by-step guide on how to geotag your real estate content.

    1. Go to Geoimgr.com
    2. Take your current listing content (photos, videos, renderings, 360 tours) and plug them into the groomer.
    3. Google your location coordinates, ex: Philadelphia’s coordinates are (39.9526° N and 75.1652° W).
    4. Enter the coordinates into Geoimgr.
    5. Enter your type of real estate into Geoimgr “single-family home in Rittenhouse (insert your neighborhood)” or “multifamily home south Philadelphia.”
    6. Hit the “EXIF Tag” button, and you’ve optimized your real estate listing content!

    Related: How Virtual Reality is Impacting Real Estate?

    Where do I post my optimized content once I have it?

    Like you would normally do, you’ll post to the multiple listing service, which posts to all the big-name listings such as Zillow, Realtor, Loopnet, Redfin, etc. Since most people search on Google anyway, Google will still give you the benefits of geotagging. The best part about using geoimgr is that you can upgrade your account to get more content optimized for more listings as you become more successful as time goes on.

    Don’t have the time? Fortunately, this process takes less than 10-15 minutes to complete. Learn how to do this process first, then give it to one of your teammates or interns to geotag your content for the foreseeable future.

    Virtual tours are the best marketing tool for your listing, but geotagging is the secret sauce that allows your listings to sell faster and for more money.

    Use this strategy to kickstart your 2023 and find success in your real estate endeavors.

    [ad_2]

    Sean Boyle

    Source link

  • 6 Effective Real Estate Investment Strategies

    6 Effective Real Estate Investment Strategies

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    As a real estate investor, you might encounter varying advice about investing on the internet, social media and from other investors. Some of these sources may claim they know best, but there are many effective strategies for investing in real estate. There isn’t a single strategy that is the best approach for every landlord. In fact, your real estate investing strategy should reflect your personal long-term goals, available resources and current circumstances.

    Plus, your investing strategy can — and should — change as your needs change. The success of your rentals isn’t tied to one investing strategy, but rather the skills you’ve built, the tactics you’ve learned and your ability to shift between different strategies when needed.

    Below are six great real estate investing strategies you may use at various points in your investing career:

    Related: Master These 6 Skills to Succeed as a Real Estate Investor

    1. House hacking

    House hacking is a popular investing strategy wherein you buy a property, live in half and rent the other half out. The rental income you receive helps reduce your monthly mortgage payments on the property.

    This strategy works well with duplexes and other multiplexes because you can maintain a clear division between your and your tenant’s spaces. However, some investors also rent out a basement or bedroom from their single-family home (SFH).

    House hacking is a trendy and widely used investing strategy for several reasons. For one, it’s an excellent way to transition to real estate investing for new landlords. This is especially true if you learn to manage your rented unit or bedroom with property management software. Software helps you carefully track your income and expenses while you establish your business. Another benefit of house hacking is that it allows you to get a residential mortgage because you’ll be living on the property as well.

    In the long run, this strategy’s aim is to make it possible for you to move out and transition the property into a full-blown rental.

    2. BRRRR deal

    BRRRR investing is another effective strategy made popular by Brandon Turner on Bigger Pockets. BRRRR stands for buy, rehab, rent, refinance and repeat:

    • Buy: Buy a property at below-market value.

    • Rehab: Renovate and improve the property by adding value.

    • Rent: Rent out the property to cover the mortgage.

    • Refinance: Get the property reappraised, then use cash-out refinancing to secure an advantageous mortgage.

    • Repeat: Use the capital you recovered from the deal to invest in more properties.

    With BRRRR, the idea is to capitalize on a property others may have overlooked due to its low face value or apparent lack of potential.

    To use the BRRRR strategy, target properties that are sound investments despite needing some work. Focus on improvements that increase value: installing hardwood flooring, adding extra bedrooms or remodeling kitchens and bathrooms. The value added from these improvements will improve your property appraisal and help you secure more funds to invest elsewhere.

    Related: 5 Tips for New Investors Who Want to Make Money With Real Estate

    3. Wholesaling/driving for dollars

    Wholesaling is a strategy many investors use to capitalize on great deals. In this strategy, you find a property that will make a good deal, facilitate a sale between a buyer and seller, and then collect the difference between the seller’s price and the amount the buyer pays.

    To succeed with this strategy, you need to be informed about which properties are currently on the market. You can use popular listing sites, the Multiple Listing Service (MLS) or a strategy known as “driving for dollars.” This involves manually searching neighborhoods for properties that look promising.

    One downside of wholesaling is that you need strong marketing and sales skills. If you don’t have this skill set and don’t want to work to acquire it, wholesaling might not be for you.

    4. Flipping properties

    Flipping properties is like BRRRR in that you buy, renovate and improve a property. However, with house flipping, the end goal is to sell the property, not rent it out.

    House flipping works best when you renovate and flip as quickly as possible. The longer you wait to sell, the more mortgage payments you must make. Like BRRRR, house flipping works best with properties listed at below-market value or those that are easy to improve at low costs. This way, improvements can significantly increase the property’s value and lead to quick turnovers.

    One downside to this strategy is that you’ll have higher capital gains taxes because you sold the property so quickly. You’ll also need help to successfully pull off house flipping — specifically, you’ll need a team of builders and renovators and access to high-quality materials at a relatively low cost.

    5. Syndications

    Syndication is often considered a more passive real estate investing strategy. However, with careful decision-making and an active eye on the process, syndication can lead to great gains. The main idea with the syndication strategy is to pool your funds with other accredited investors to buy real estate.

    Here’s how it works: You pay syndicators to locate and manage most deals, then benefit from the profit. Syndication can be public or private. Public syndication is usually operationalized through a syndication marketplace, while private syndication is managed manually by investors.

    Crowdfunding is a specific type of syndication investing that involves accredited and non-accredited investors alike who contribute and profit from deals. If you choose the crowdfunding path, you’ll work with a broader range of investors. You also won’t be expected to contribute as much entry capital as you would with traditional syndication (typically only around $50-$1,000 is required).

    If you choose the syndication route, be picky about who you work with. You want to ensure your investments are in good hands, even if you didn’t contribute as much initially.

    Related: 7 Common Mistakes Made By New Real Estate Investors

    6. Live-in-then-rent

    The live-in-then-rent strategy is a modified house-flipping scenario. Essentially, your property is a SFH (usually) that you live in initially and then turn into a rental after you move out. The main difference between live-in-then-rent and house hacking is that you don’t live in the property and rent it at the same time. Instead, these are two separate phases.

    Live-in-then-rent is a great strategy for people who don’t want to live closely with their renters but still want to participate in real estate investing on their budget.

    With so many ways to invest in real estate, it may seem challenging to devise a strategy that meets all your needs. However, by catering your investing strategy to your particular goals, you can successfully cultivate your real estate business.

    [ad_2]

    Dave Spooner

    Source link

  • 7 Common Mistakes Made By New Real Estate Investors

    7 Common Mistakes Made By New Real Estate Investors

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    Real estate is one of the safest ways to create lasting wealth, and it is attracting more and more people each year. Investing in real estate is an exciting and lucrative adventure, provided that you don’t fall into the pitfalls of the sector. The lack of experience of beginner investors can cause them to fall for many tricks. So, here are seven common mistakes to avoid at all costs if you’re a beginner who wants to succeed in the real estate industry:

    1. Thinking that you will get rich quickly

    One of the major mistakes beginner real estate investors make is that they often think that the results will be tangible quickly. That is the outcome of the internet phenomenon: The public wants everything right away and without making any effort. Many industry gurus focus their communication in this direction, and they do not show that in order to succeed, it is necessary to have a spirit of self-sacrifice and also to work hard. In reality, patience and perseverance are required in this type of investment. Just searching for a profitable property can take several months if you don’t have a keen eye. Moreover, rushing into an investment without checking the property in question is often a bad omen.

    Related: A Beginner’s Guide to the 5 Easiest Ways to Become a Real Estate Investor

    2. Not having a strategy

    Some real estate investors prefer to take projects one day at a time, without having a precise plan of action. In this case, the risk is to end up with several properties which do not correspond to their profile. These investors embark on all sorts of projects without measuring the consequences, and they often find themselves ruined because of their poor investment choices. Having a well-defined strategy allows you to go in a precise direction. Following a strategy means ensuring that you don’t venture out in all directions and that you move in the right direction.

    3. Focusing your research on a specific city

    Another major mistake often made by beginner investors is focusing on a specific city — often close to their home or in a particular city because they have been told that its profitability is good. In reality, this way of searching drastically reduces the opportunities since these investors will feel obliged to buy a property in that city, even if the profitability is not there. On the contrary, it is necessary to expand the search in order to not miss any opportunities. It is easy to optimize the profitability of a property that is already profitable beforehand. On the other hand, a property that is not profitable will harm your project, even if you set up some optimization strategies.

    4. Omitting the negotiation stage

    In real estate, negotiation is a key step that takes place at different levels. In particular, it intervenes at the time of purchase of the property. Many real estate investors forget that a good deal is made at the time of purchase. If they buy at a too high price, that will impact the profitability of their project, whether it is a rental or a resale project. The purchase price constitutes an important variable in a real estate investment project. Keep in mind that if you don’t get a good deal at the time of the purchase, it is very likely that you won’t get a good deal on the resale.

    Related: How to Avoid the Common Pitfalls of Real Estate Investing

    5. Underestimating the cost and the scope of the work

    It is important to seek the help of professionals when you are tackling work related to real estate because costs can quickly become overwhelming. Often, beginner investors have no idea of the scope of the work to be done, and therefore they underestimate their costs. They only have a global or a partial vision of what they want to achieve, and they do not realize that the work can be much more consequent.

    6. Not checking the condition of the property

    Even if virtual visits are at the present time facilitated by technology, seeing the condition of a property in person allows you to check if it corresponds to your expectations. There is no point that can be neglected at this stage. It is particularly necessary to check the state of the common parts as well as the state of the roof, for example, with the help of a drone in order to be more precise. While visiting a property, it is also important to check the condition of the neighborhood. All this is done in order to avoid very high costs of work.

    7. Thinking that you can handle everything yourself

    In the real estate field, beginner investors tend to think that they can handle everything, either to make a bigger profit or simply because they find it difficult to delegate some of their work. This is a common mistake, as the time spent in the management of a property is valuable time that they can allocate to tasks that are more within their reach, such as searching for other properties or finding some solutions to optimize the profitability of a property they possess. In some cases, delegating this responsibility to professionals is a better solution. But be careful, delegating does not mean not controlling. It is necessary to think of always monitoring the state of the work.

    Related: Master These 6 Skills to Succeed as a Real Estate Investor

    If you’re just getting started in real estate investing, use these tips to avoid common mistakes. Remember this: It takes time to see results, don’t go in without a strategy, don’t limit your search, don’t skip the negotiation stage, don’t underestimate the cost or the work, thoroughly check the condition of the property, and don’t hesitate to delegate the work.

    [ad_2]

    Xavier PRETERIT

    Source link

  • How to Make Money on Airbnb

    How to Make Money on Airbnb

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    Investing in real estate is good for people who want to make money work for them. And this is because, with real estate investments, you can buy a property and use it to earn more. Now there are many ways to use an acquired property for profit. But perhaps the ones that are gaining more traction are short-term rentals on Airbnb.

    But what is Airbnb?

    If you’re an avid vacationer, you’ve probably heard of the app that can connect you with people who will let you stay on their property for a period of time. This app, called “Air Bed and Breakfast” or Airbnb, was launched by two industrial designers who moved to San Francisco in 2008.

    They couldn’t afford to pay rent for their apartment during this time, so they decided to earn extra by letting people who couldn’t find hotels rent their space temporarily. And long story short, their strategy became a massive hit because it expanded into a vast network of 4 million hosts worldwide. And up until today, their platform continues to create more opportunities for hosts and real estate investors in general.

    Related: Airbnb CEO: It Took Us 12 Years to Build, and We Lost Almost Everything in 6 Weeks

    Long-term vs. short-term rentals

    Real estate investments include property rentals, and there are two main ways to earn from them: Long-Term Rentals and Short-Term Rentals. When I started as a real estate investor in 2012, all my properties were long-term rentals. But in 2017, I transitioned all of them to short-term ones, most of them through Airbnb.

    Why? There were a lot of factors that made me decide to go all-in with Airbnb:

    1. You make less money on long-term rentals.

    Did you know that when done correctly, you can make a $2,000 average monthly profit on Airbnb? Of course, many things must be considered to get to this number. Plus, you can make less or more than this amount every month.

    But the point is, with Airbnb short-term rentals, you can determine your price, and no other person has a say. You can’t do this with traditional long-term rentals. With long-term rentals, you can only set a fixed amount and increase your rent by 3% to 5% a year.

    2. You are under bigger obligations as the landlord.

    There are several things to consider when hosting a long-term rental, and one of those is that your tenants may never deep clean or take care of repairs on your property. The reason is simple: they won’t be staying there forever. Ultimately, the obligation still falls on your shoulders.

    Another fact worth mentioning is that you won’t be able to evict your tenants easily. Now, the stipulations change from city to city and state to state, but typically after 30 days of staying, your guests acquire certain rights.

    Case in point: In 2020, the government passed an Eviction Moratorium where landlords are not allowed to evict their tenants on the grounds of non-payment. This was, of course, helpful for a lot of tenants all over the country. But now, some landlords are still owed thousands of dollars in back rent, and they may never get the chance to go after them again.

    3. With Airbnb short-term rentals, you don’t have to work like an employee.

    Short-term rentals are passive in nature, which means that if you have a property, you can still earn even if you’re not around. Add this to Airbnb’s online platform, and your market potential gets wider.

    But here’s the thing: you may still be trapped by working around the clock to manage your listing. Thankfully, there is a way to build a system and create a team that operates the business on your behalf. We use this innovative business model with Airbnb, which has since accelerated our cash flow and offered tremendous growth.

    4. You don’t have to buy properties to get started.

    If you’re familiar with cash flow goals for long-term rentals, you’ve probably heard that the aim is to earn $200 per unit per month. This is all well and good, but if you’re trying to replace a job that gives you $5,000/month, this income won’t give you much. You still need to own at least 25 units to get there.

    So what you can do instead is to buy a couple of units, give them a nightly rate, and launch them on the platform to start getting bookings and recover your returns faster.

    But what if you don’t own properties and still want to do Airbnb? Well then, all you need to do is apply the Arbitrage Model.

    The Arbitrage Model, also called subleasing, is where you rent properties from other landlords, get their permission in writing, and then launch their property as your short-term rental on Airbnb. Yes, this strategy is perfectly legal and lets you start a business without buying properties.

    Related: How to Make Money Online: The Basics

    Are there other ways to start an Airbnb, even if you don’t own properties?

    Yes. Aside from subleasing, there are two more ways to launch an Airbnb business without much capital.

    1. Co-hosting

    With the co-hosting strategy, you don’t have to buy or own properties because all you have to do is to manage and help hosts manage their listings. This method allows you to learn more about the business and earn.

    2. Using O.P.M (Other People’s Money)

    A balance transfer is when you transfer the money available on your credit card into your checking account. You can then use this money to sublease a property and start your own Airbnb business without using any of your money.

    Airbnb is a great platform for real estate investors. Its innovative business model will allow you to create positive cash flow, get started even if you don’t own properties yet, and enjoy the time, location, and financial freedom that most people only dream about.

    Related: How to Start a Business with Only $1,000

    [ad_2]

    Jorge Contreras

    Source link

  • How Shared Equity Can Help Fight the Homeownership Crisis

    How Shared Equity Can Help Fight the Homeownership Crisis

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    Homeownership, for many people, symbolizes the epitome of success that comes from years of hard work and dedication. Homeownership is an aspirational status even amongst those who would rationalize it isn’t for them when believing it is beyond their grasp.

    When only the most “successful” individuals own their homes, we create a gap of disparity within the overall population. As many of us have seen in the last few years, this gap has grown dramatically and created an ever-widening moat around the fortress of affordability, deterring many families from the prospect of homeownership. It would be a rare individual who wouldn’t want to own a mortgage-free home and never have to make a mortgage payment or monthly rent payment again.

    Related: How to Save the Dying American Dream of Homeownership

    How do we as a society overcome this barrier to ownership?

    When looking for ways to introduce accessible and effective homeownership models, the shared equity housing model (SEH) stands out as a solution. Shared equity housing works because it accelerates the saving of a down payment while still offering affordable monthly payments. Through the SEH model, home buyers can plan a realistic route to ownership that allows them to believe they are contributing to their future investment. Even if the initial investment is a relatively small amount, it still contributes to the overall equity of the individual.

    The three key components of the shared equity approach are: 1) an affordable monthly savings program, 2) a share in the growth in the equity in the home, which creates pride of ownership that leads to 3) the home being well looked after. Having the home cared for like an owner would reduce annual operating costs for the housing fund by more than the cost of the equity share given up.

    How does shared equity housing work?

    There are several factors that make shared equity housing a financially and socially attractive concept. A few of these concepts are as follows:

    • The home buyer starts with a small deposit or down payment, ideally 1%.

    • The home buyer does not need to qualify for a mortgage upfront.

    • The buyer is matched with a home where the monthly payment is comfortable for their family’s income level.

    • The buyer shares in the equity growth in the home from the price appreciation.

    • The exact % share of the home equity growth is dependent on the deposit size. 20% is a good range because it accelerates the home buyer towards a 20% down payment.

    • The home buyer keeps their share of the equity even if they don’t end up buying the home.

    These factors are all significant in the process, but the share of equity is crucial when it comes to implementing a change in the industry. Most rent-to-own programs that currently exist do not secure the home buyer’s equity and instead require the home buyer to either close on the home purchase or forfeit their equity.

    Related: Accessibility (or Lack Thereof) in Today’s Housing Market

    How can shared equity housing help buyers?

    Due to the ongoing housing crisis, many families are struggling to even consider the prospect of homeownership. Rather than rely on the adaptive measures we see in the market today, shared equity housing could help alleviate the stresses facing homeowners by providing alternative investment opportunities. SEH models offer prospective buyers the realistic potential to achieve a position of ownership position and make strategic steps toward a more traditional purchase.

    SEH allows smaller, more achievable investments that contribute to a healthier society, market and individuals, with buyers eventually building reputable equity. As a result of SEH models, research has found that the number of foreclosed properties drops drastically in markets where SEH is introduced. Shared equity housing benefits home buyers by creating an environment that increases care for the investment. When multiple individuals are invested in the well-being of one unit or housing community, we see increased pride and commitment to savings and even going above and beyond by adding even more value to the home through improvements.

    Not only does this benefit the buyers, but it builds a stronger community as a result. For buyers, the shared equity housing model is a beneficial solution that opens the door to opportunity in an otherwise exclusive market.

    Key takeaways:

    • Shared equity housing accelerates the ability to buy property by removing barriers.

    • The shared equity housing model creates the potential for buyers who are unable to contribute a substantial down payment.

    • The shared equity housing model is affordable and allows incremental investment opportunities.

    • Shared equity housing implies shared interest in a home and increases stewardship.

    • The model promotes community through a shared interest in one investment.

    • Pursuing SEH would allow the reduction of annual operating costs for the housing fund.

    • There is less instability in the housing market with a shared equity investment than when compared to a high loan-to-value mortgage financing approach.

    Related: What Is a Housing Market Recession?

    Many individuals are skeptical of a large institutional system’s ability to change, but it’s been done before. Developers and real estate professionals need to begin examining the future of the industry and the various ways they can create a more sustainable, families-focused housing market. Shared equity housing is one financial solution to an accessible future in housing for all, and it’s time we begin taking those next steps on both an individual and national scale.

    [ad_2]

    Adam Gant

    Source link