Category Archives: real estate investors

4 Tips for Flipping Houses Successfully

Here’s how to find the right house to flip — and know what sort of renovations will help you command top dollar.

One effective way to make money through real estate investing is to know how to buy and flip houses. Often, this involves buying homes that are priced under-market, such as foreclosures or short sales, renovating them, and then selling them shortly after the fact at a higher price.

But flipping houses isn’t for the faint of heart, and if you don’t know what you’re doing, you could wind up losing money. With that in mind, here are a few tips for flipping houses that will increase your chances of coming out ahead financially.

1. Find a house to flip in the right location

The purpose of flipping a house is to find a buyer who’s willing to pay a handsome price for your hard work. As such, there’s no sense in buying a home in a stagnant market, because that property is likely to sit for a while once your renovations are done. A better bet? Do your research to find areas where housing is in high demand. Some generally good bets include suburbs of major cities with highly-rated school districts, areas in close proximity to major attractions, or metro areas where housing inventory is generally limited.

2. Make sure you’re buying well below market value

Flipping a home often means sinking thousands upon thousands of dollars into renovations. Even if you’re handy enough to do that work yourself, and have the time for it, supplies and materials cost money. Therefore, make certain the price you’re paying for a home to flip is reasonable, given the amount you’ll need to put into it. This means you may not want to buy a foreclosure at auction, when you’ll often be unable to perform an inspection. A better bet could be a short sale or REO property, where you have a chance to see what you’re getting into.

3. Focus on improvements with the best return on investment

If the home you buy to flip has damaged plumbing and out-of-code electrical work, you’ll clearly need to address those issues if you want to be able to sell it. But once you tackle your “must do” repairs, set priorities on cosmetic enhancements. Typically, you’ll get more bang for your buck if you sink money into kitchens and bathrooms — these are high-profile areas that tend to be important to buyers. At the same time, focus on low-cost improvements that offer a lot of value. For example, paint and carpet are fairly inexpensive but make a huge impact. Refreshing a home’s walls and floors could be a better bet to drive up its purchase price and attract potential buyers than putting in high-end lighting features.

4. Don’t over-improve that property

When you buy a home in disarray, it’s easy to go overboard on renovations to the point where it becomes the nicest property in town. That’s not necessarily what you want. If most homes in the area don’t have marble flooring or ultra-high-end kitchen appliances, follow that trend. You don’t want to improve a home to the point where you have to price it at the very top of its market. Often, buyers will balk at buying the most expensive home on the block because it’s a sign that they may not recoup their investment once the time comes to sell the house .

Flipping a home is a great way to be successful as a real estate investor. Just make sure you know what you’re getting into so you don’t lose money. If you’re not confident, talk to people who have been through the process before. Enlisting the help of a local real estate agent could also help you not only identify the right home to flip, but also invest just the right amount of money into making it marketable.

Better Returns – half the volatility. Join Mogul Today

Whether over the 21st century, the past 50 years… Or all the way back to more than 100 years… Real estate returns exceed stocks with SIGNIFICANTLY less volatility! In fact, since the early 1970’s real estate has beat the stock market nearly 2:1.

Source: MillionAcres.com – By: , Contributor
Published on: Oct 27, 2019
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Hunting for your first home? Here are 5 tips from the pros

Fuchs gives a tour of his new duplex  which he bought for $292,000.

But first-timers may encounter a number of obstacles, from financial to psychological. Eliot Fuchs, 31, describes buying his first home in Newark, New Jersey, a two-bedroom, two-bath condo, as “a learning experience.”

One of his early lessons came when he lost out to a higher bid after his first offer. That sparked a realization, says Fuchs, who works in corporate strategy for Prudential.

“You’re not going to necessarily get it just because you put down the asking price,” he notes. “So if you want a competitive unit, like one in this building, you’re probably going to have to pay more than the asking price.”

Real estate investing:Is buying a property right for you? Here are six tips

Brian Nielson, right, helped Eliot Fuchs land a condo in Newark, New Jersey, after seven months of searching and placing bids on various homes.

When he eventually found a condo that ticked off all his boxes, he and his real estate agent, Brian Nielson, developed a bidding strategy.

“Once I saw the apartment, I knew that people were gonna want it,” Fuchs recalls. He says he and Nielson developed a plan for making second- and third-round bids, which prepared him for going above the asking price.

The condo, originally listed at $263,000, sold to Fuchs for $292,000.

“Having done it all, I’m happy that I did it,” Fuchs says.

Read on to learn five tips shared by Fuchs and Nielson about the first-time home-buying experience.

Get your mortgage preapproved

A mortgage preapproval – when a bank determines how much you are qualified to borrow – will help buyers zero in on their price range, says Nielson, a Realtor with Keller Williams.

“You want to make sure that you get preapproved before you start looking,” Nielson says. “That paper tells you exactly how much you can afford per month.”

Having preapproval shows sellers that you’re serious about making an offer, Nielson adds. And it can help buyers move quickly once they find a home they love.

“So when you do find something – ‘Bang, I want this property, here’s my offer, here’s my preapproval’ – the bank already knows about it and we can hit the ground running,” he says.

Fuchs gives a tour of his new duplex  which he bought for $292,000.

Hunt for the right location

Fuchs knew he wanted to move from Manhattan to Newark, where his office is based, because it would mean a shorter commute and more affordable home prices.

Nielson showed him homes around Newark, a city of about 280,000 people close to New York City, helping Fuchs narrow his search to three neighborhoods that appealed to him for their amenities and locations.

“You don’t want to ever regret buying a place,” Fuchs advises. “Cast a very wide net in the beginning … and spend a lot of time just looking at different places.”

It’s also important to know what you want in a home – and what you might be willing to give up. A home-buyer with children, for instance, might not want to budge on good schools. For other buyers, home size may be more important.

“If you want to be in a better area with better schools, then we might have to switch around what it is you’re looking for,” Nielson says. “Sometimes you want a bigger house, but in the nice neighborhoods you might not get that.”

Prepare for a months-long process

Fuchs says he eventually found exactly what he wanted in his condo but cautions that finding the perfect home can require months of searching. “That’s probably why it took like seven months to get it to find this place and get it,” he notes.

Nielson notes that many of his clients find their dream homes within two months but adds that others take six months or longer.

“It has to do with more of them not getting the offers accepted,” he says of the longer searches. “The product is there. They just didn’t feel that the product is worth the price tag.”

Fuchs chose to buy in the business district of Newark because of its close proximity to his job.

Understand the closing process

Once a seller accepts your offer, the closing can occur in about 30 days, Nielson says – or even faster “depending on how fast your attorneys are, depending on how fast your bank is with everything else,” he adds.

Make sure to budget for closing costs, he says. “Closing costs are everything outside of the down payment,” such as attorneys, insurance and other expenses, he notes. Budget about 3% to 5% of the overall cost of the home on these expenses, he adds.

Lastly, Nielson says an agent will walk the buyer through the closing process, such as setting up an appointment with an inspector to examine the property.

“The agent doesn’t cost the buyer anything,” he notes. “It costs the seller’s agent. We help you negotiate the deals and we get the deals done quickly and as fast and as securely as possible.”

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How I Built a $1.3M Real Estate Portfolio for the Cost of a 1-Bedroom in NYC

  

Hand of Business people calculating interest, taxes and profits to invest in real estate and home buying

Is this crazy? I sat there with my 23-year-old head spinning—looking at the first $400,000 multifamily rehab project that I had just put under contract.

You’ve probably asked yourself (at least) a couple times if it’s crazy to get into real estate, too. If you asked your friends and family instead, they probably immediately answered, “Yes!”—followed by a spiel about whatever aspect of managing a real estate business that scares them most.

Maybe they mentioned the risk of a market crash, the challenge of dealing with tenants, or the pitfalls of negotiating with contractors. It’s only human. We fear risk.

We fear risk even when our fears are irrational.

Even if you drink the real estate Kool-Aid and know that real estate can be an amazing way to build wealth, the fear probably hits you each time you’re about to write an offer on a building. Do I really know what I’m getting myself into?

Right Before the Plunge

On that night in May 2017, I was on the verge of taking what—to many people—would look like the biggest risk of my young life. I was 23, had recently graduated from college, and had barely six months of real estate experience. This project would pit me and my business partner against countless situations we were not prepared for, faced with countless questions we didn’t know the answers to.

Luckily, as real estate investors, it’s not our job to know the answers. It’s our job to know the numbers.

The numbers on our first rehab deal told us that even in our worst-case scenario—even if everything that people warned us about went wrong—taking the plunge would get us closer to financial freedom than sitting “safely” on the sidelines ever could.

Why are we comfortable losing money, as long as we know how much we’re going to lose?

As a recent grad, most of my college friends ended up in big cities on the coasts.

Related: Mastering Turnkey Real Estate: How to Build a Passive Portfolio

In 2017, the median rent in Manhattan was $3,150 a month. According to Rent Jungle, the average rent for a one-bedroom apartment in San Francisco was even higher: $3,334 a month. Over the course of a year, that adds up to $40,000 in rent for a one-bedroom apartment.

For reference, the median family income in the city of St. Louis is $52,000 a year. In St. Louis, that money can buy buildings.

On the coasts, it buys you the right to spend up to 39 percent more than the national average on basic necessities like groceries. The costs are pretty crazy, but the craziest part is that spending a family’s annual salary on rent is somehow considered a perfectly normal financial decision for a young person to make.

Young people spend that money with no expectation of getting a return. Rent, groceries, and transportation are costs—not investments.

What is the risk of embarking on a rehab project compared to the 100 percent certainty of spending $40,000 a year on rent?

How We Measure Risk

Risk is exposure to uncertainty. Because of this, renting doesn’t feel like a risk. Neither does spending a lot to live in a big coastal city. The costs are large, but they’re constant. We know them up front: $40,000, paid in tidy, predictable monthly increments.

Or do we?

What is the real risk of renting away your twenties—and how do you compare it to the risk of a rehab project? Does renting in a big city make your financial future—not in 10 months, but in 10 years—more certain or less so?

When you’re embarking on a rehab project, uncertainty stares you in the face. The risks are all right ahead of you, a landmine of knowns unknowns:

  • Do we have our contractors lined up in the right order?
  • Have we done everything we need to pass inspection?
  • Will we hit our rent targets once all the work is done?
  • Is it cheaper to fix this or replace it?

Those seem like hard questions to answer. Small wonder that most people warn you away from real estate.

Except when you’re following a safe, “normal” path, uncertainty isn’t gone. It’s just waiting for you out of sight.

Five years from now, will I be working at a job I don’t like? Or will I be free and doing the things that matter to me most in life?

Ten years from now, will I have the resources to protect what I love? To support my family, friends, and community?

Those are hard questions to answer.

For me, those questions would have been impossible to answer if I lived in a big city on the coast, took a fancy job where I was well paid but spent most of my salary on rent and groceries, and had to spend most of my time working for someone else.

We are conditioned to deal with long-term uncertainty the same way we’re taught to deal with short-term risk: by avoiding it.

But avoiding risks doesn’t make them go away. It doesn’t teach us anything. It doesn’t get us any closer to answering life’s hardest questions.

The numbers on our first rehab deal told me two things. In the worst-case scenario, I would come out of the deal not losing any more money than someone who chose to rent in a big city. In the worst-case scenario, I would come out of the deal with an education that would allow me to take control of my financial future.

I could live with that.

The Numbers Tell the Story

My business partner, Ben Mizes, and I started our real estate portfolio with an FHA loan. We were only required to put a small down payment on a relatively stress-free, low-maintenance fourplex.

Five months later, we were planning to borrow $315,000 from the bank and $105,000 from private family investors and spend as much of our own time, sweat, and money as it took to come out the other side of our first four-unit rehab.

The project would be our first BRRRR (or buy, rehab, rent, refinance, repeat).

We were upgrading kitchens, bathrooms, and AC units to bring the rents up from $825 per door to $1,400 per door—a 70 percent increase.

With renovations complete, Ben and I would try to appraise the building for $700,000. Depending on the lender, you can borrow between 70 to 85 percent of a building’s appraised value. In this range, as long as we hit our numbers, we could completely repay our investors, recoup our costs, and walk away owning a cash-flowing castle.

The potential upside was clear. Just as important, we looked at our downside.

Ben and I modeled a worst-case, “do-nothing” scenario, trying to understand what would happen to us if we got stuck and couldn’t complete the rehab at all.

What Could Go Wrong? 

Well, plenty.

Ben and I had a contract to buy the building for $420,000. At the closing table, the seller would credit us for the $20,000 worth of repairs that had to be done immediately: fixing a collapsed sewer, repainting and sealing damaged windows, and replacing falling fascia boards.

Note: We always, always, ALWAYS make our buildings watertight before doing anything else. If they aren’t watertight when we buy them, we negotiate for repair credits to fix problems on the seller’s dime—immediately upon closing.

The $20,000 repair credit provided by the seller brought our effective purchase price to $400,000. Combined, our mortgage payments, taxes, and insurance came out to $2,277 per month.

The numbers told us we could make our mortgage payments comfortably, even in its current (read: very rough) condition. The building was generating income of $3,350 per month, or about $825 per door.

Assuming we got completely stuck and had to keep renting the units out for their present value of $825, we would have $1,073 per month with which to pay all of our fixed and variable expenses. Utilities and HOA fees (the building is in a private subdivision with an annual assessment) came out to $380 per month, leaving $693 a month to deal with variable expenses.

In a worst-case scenario, we would be self-managing to save on property management fees. That would still leave us with vacancy, repairs, and maintenance costs, and the need to set aside money each month for a capital expense escrow.

Was $693 really enough?

Under our most-conservative model, we planned to put aside $10,000 each year for repairs and escrow. After five years, that equals $50,000 put into proactive maintenance—enough to deal with a roof, a complete tuck-pointing redo, and major structural repairs.

Then, we figured 10 percent vacancy cost—high for the area but not impossible if we had hard luck. What was the worst that could happen?

deal analysis

Under our worst-case model, we would be losing $600 every month. Losing $600 a month is a losing deal. That’s not a deal that gets you on a podcast. It’s not a deal that successful investors show off in a blog post.

Luckily, it’s not the deal we ended up with, either. (Spoiler alert: We came out of this rehab with a lot more paint on our shoes but a lot more cash in the bank, too.)

But when we talk about “risk,” here’s the curveball question: Would this “worst-case” deal be a step away from, or a step toward, financial freedom? Let’s look at those numbers again.

The Difference Between Costs and Investments

An investment is any place where you can put your money, such that it creates more wealth over time. In the model above, a lot of the expenses that look like “costs”—that is, look like places where Ben and I would have lost money—are actually investments, places where our money helps us build wealth.

Related: Why Turnkey Rentals Might Just Be an Ideal Investment for Real Estate Newbies

1. Loan Pay-Down

In our worst-case scenario, we would pay $600 a month (on average) to cover the costs of repairs and build a sizable rainy day fund.

However, our $1,600-per-month mortgage would be completely paid for by our tenants. In the first year alone, our tenants would pay for our ~$14,000 interest payments and help us build $5,000 worth of equity in the building.

Over time, that equity build-up only accelerates. In our thirties, Ben and I will build up $85,000 through principal paydown alone (pun intended).

The amazing part is that would be the case even if the rehab project was a complete failure. Breaking even on mortgage and utilities and scraping out of pocket to cover unexpected repairs, Ben and I would still be positioning ourselves to accumulate passive wealth in the future.

2. Proactive Maintenance

If you spend $50,000 on a building in five years, it becomes a lot cheaper to maintain. Under our worst-case model, we would have $10,000 a year to deal with maintenance issues before they became more serious.

When you budget to deal with problems up front, it makes for a less-impressive pro forma—but it also means that maintenance costs get significantly lower over time.

If you plow $10,000 every year into it, even a problem-ridden property will get easier and easier to take care of. It might be a painful cost to swallow in the short-term, but you haven’t lost the money that you spend on a property you own. You’ve just re-invested it.

By contrast, if you spend $40,000 in one year on rent, the money is out of your hands for good.

3. Hands-On Education

When you buy your first rehab, the most important investment you make isn’t in the building. It’s in yourself. You’re taking out (quite possibly) the only student loan in the world that can pay itself off in less than a year.

The most daunting part of diving into a real estate deal—the part that makes people say it’s too risky—is that you don’t just stand to lose money but time, too.

The time costs on this project would have made this a losing deal for a veteran investor. We spent untold hours painting, fixing plumbing, and (like you saw above) drilling holes through concrete when a contractor dropped the ball on us.

But we weren’t veteran investors (yet!). As Ben and I looked at the numbers together, we realized we were buying ourselves both a building and an education, too. Even if we broke even, we would come out of the project with an education that in itself was worth hundreds of thousands of dollars.

So—What Happened?

A few years ago, I sat looking at the numbers on a $400,000 real estate deal that could either set me on the fast-track for financial freedom or go completely off the rails. In the end, both things happened.

My business partner and I got screwed over by not one but four different contractors before we finished the project. One caused thousands of dollars of water damage to the floors, embroiled us in a months-long insurance claim, and tried to take us to court after he lost.

We dealt with an irascible tenant who threatened us and damaged his apartment.

Time and again, things took more time, sweat, and money than we had expected. But the age-old mantra of real estate investing held true: You make money when you buy. The numbers of the deal were strong.

And now that we’re done dealing with contractors, tenants, and renovations (at this property), we have a building that rents for $1,400 a door, water-tight with low maintenance costs, and a fair market valuation between $650,000 and $700,000.

Now we are on pace to refinance the building, fully repay our investors in the first year, and walk away with the funds to do it all over again.

Taking the Plunge (Again)

Is this crazy? Fast forward and I’m sitting here, head spinning, looking at the numbers of a 20-unit deal in St. Louis.

Since starting our renovation project one year ago, we’ve used the education and cash flow we gained from it to build a 22-unit portfolio—and a high-growth startup.

Now, with a refinance underway, I am looking at a deal that could double the size of our portfolio overnight, all while working full-time.

A new project brings new unknowns. More questions we don’t know how to answer and lots more numbers to keep me and Ben busy.

Source: BiggerPockets.com – Luke Babich

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Condo Investors: How a retail director turned a $75,000 wedding gift into a $1.4-million portfolio

Her first investment was a $289,000 pre-construction condo in CityPlace
The buyer

Sandy Silva, a 39-year-old sales director at Tulip Retail, a software platform for retail companies, with her seven-year-old son, Xavier.

The backstory

In 1999, Sandy started dating her soon-to-be husband, Ryan, in Waterloo. She studied economics at Wilfrid Laurier University while he took political science at the University of Waterloo. In 2002, they got engaged, and Sandy’s father gave them an early wedding gift of $75,000. Sandy and Ryan used that money for a down payment on a $289,000 pre-construction two-bedroom condo in CityPlace. In 2005, they got married and moved into the unit.

Within a few years, they were thinking about having children, and being near family became a priority. At the time, they both worked in Toronto: she was a buyer for Sporting Life and he was a supervisor at an automotive manufacturing company. They used their combined savings, along with equity from refinancing their condo, to buy a $470,000 detached house in Brampton, where Sandy’s parents lived. Meanwhile, to make some extra cash, they rented out their CityPlace condo for $2,150 a month.

The value of their properties increased enough, after four years, that they decided to leverage their equity to scoop up more real estate. They knew, from having lived in the Waterloo Region during their college years, that demand exceeded supply in the area. Ryan also had family in Waterloo, which meant someone could take care of their investment properties. So they bought two detached houses in Waterloo for a combined $462,000 and rented them to university students for a total of $4,675 a month. The rental income was enough to pay their mortgage and turn a profit. In 2013, Xavier was born.

Three years later, Sandy and Ryan separated. Ryan sold the two Waterloo homes for a total of $540,000 and split the $78,000 profit with Sandy. He also kept the place in Brampton. Sandy held on to the CityPlace condo and took $250,000 in equity from the Brampton property, which she used to invest in Rent Frock Repeat, a designer dress rental company.

The bottom line

Sandy recently joined Tulip Retail as a sales director. She lives part time at her CityPlace condo, which is now worth $850,000, otherwise she stays at her parents’ place in Brampton with Xavier. And Sandy’s not done investing. She recently bought a one-bedroom condo in Vaughan—which she plans to use as a rental property—for $525,000. Her portfolio is now worth $1.375 million. Before the end of 2020, Sandy would like to buy a place in Brampton.

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What is the best age to invest in real

What is the best age to invest in real estate?

Knowing the best age to invest in real estate is one of the most frequent doubts that those who are beginning to think about their future have. Especially because they see in the real estate area a financial security that other types of investment as the stock market no longer offers.

The short answer is that there is no right age to invest, but the sooner you do it, the more opportunities you will have to make money – and your investment will last longer.

However, it is true that investing is not a habit that we have all been taught. Not all of us receive financial education, and some do not even have the habit of saving money. We know that it can be difficult to do when you are young and you are between your twenties or beginning the thirties: travel, shopping, transportation expenses and fashion technology tend to monopolize the attention of your money.

Unfortunately, this lack of financial education ultimately affects the future. Especially when you decide to start investing and you realize how much time you lost because you did not do it before.

Why should we start investing as soon as possible?

As you will remember, one of our 10 tips for investing in real estate and not die in trying your purchase, is to understand that in real estate investment, patience is the key to success.

Something that guarantees the value of a property is the capital gain that it has, depends on the location in which the property is located. The capital gain acquires more value over time. That is why the big investors are those who can analyze the market and see beyond what is trendy. Imagine if 10 years ago you had invested in real estate developments in the Riviera Maya, or in real estate developments in Tulumplaces that are currently a magnet for tourism and foreign investment.

That’s why we say that the best time to invest is now; the more time you spend, the less chance you will have of acquiring properties at a lower cost that guarantees a high return on investment.

We must also consider that the responsibilities we acquire over time can make it more difficult to become a real estate investor. Marrying or having children can make you reconsider your expenses and how much money you can use to invest.

Each individual has different priorities and opportunities. There are those who see in their twenties the opportunity to promote a future while there are others who can invest only after their 30’s or 40’s. It is also normal and natural for some to think about investing until after retirement, when they have the money to do so.

Nor can we deny that each generation has different perspectives on what we should consider a priority and what not. For example, while for millennials acquiring experiences is a priority -as traveling- for generation x and baby boomers, acquiring properties is more important.

However, this does not mean that millennials – who are between the ages of 23 and 38 – have a chip that prevents them from being good at investing in real estate, on the contrary it is they who are changing the notions of success and ways of doing business and even as we think about work and lifestyle, this makes them less incompatible in investing in real estate, they are the ones who are beginning to consider investing their money to obtain financial independence.

For example, for the baby boomers and generation X financial security meant having a stable job and a fixed salary in order to save for retirement or get their pension. Today the notion of working from home without the need to attend an office is a reality for many people, as well as the existence of jobs that 30 years ago were difficult to imagine.

30 years ago it was hard to think that ordinary people could make money using the internet. Computers and the Internet were exclusive to those who were studying something related to technology. Today you do not need to be a hacker to be able to use digital platforms to make money like blogs or investing in services like Uber.

The orange economy – that is, the creative economy – allows retirement to become more possible at an early age. Which has also become possible because more and more people decide to invest their money in a smarter way – and do it at a young age – to be able to live on their investments and not have to be dependent on a job.

Years ago we thought that buying a property was to live in, today thanks to applications like Airbnb, more and more investors decide to buy apartments and houses only to rent them on these platforms.

You do not need to be a millennial to start investing. The technological evolution has made both applications and platforms as well as access to them, are increasingly easier to use.

For example, since 2017 Airbnb host users over 60 years have increased by 120%, while women over this age have become the best rated on the platform. Which indicates that even baby boomers see technology as an opportunity to get a better return on investment with their property.

What is the best age to invest in real estate?
Investing in real estate is possible at any age, but the sooner you do it, the more opportunities you will have to enjoy your money.

What is the best age to invest in real estate?

As we mentioned, not all ages or stages are the same for every person. For some it may be impossible to invest in their twenties and find the possibility of doing it later.

Our best recommendation is that rather than being guided byan ideal age you start doing it for the goals you have and the opportunities that come your way.

There are many myths around investment, especially when you want to do it at a young age, and one of the factors that keep people away from real estate investment is the lack of knowledge on the subject and investor stereotypes. We are not surprised when we hear cases of clients who want to become investors but fear not being able to do so because they do not understand numbers or be experts in the subject.

Knowing the real estate sector is one of the biggest keys to becoming a successful investor, this does not mean that it is a privileged knowledge that you cannot access.

Many millennials have the fear of investing in real estate because they think they need to buy a house to do so, and they ignore the investment possibilities that residential or industrial lots have.

For this reason, they fear not being able to do it because they believe that it is economically impossible for them, and they do not consider the possibilities of acquiring properties in other cities. For example, for some foreigners, investing in Mexico is a better option than doing it in their countries, but in the same way for some Mexican residents, investing in states such as Merida where there is increasingly strong demand in properties not only for housing but also for businesses and offices, it can be more accessible and profitable than doing it in places like Mexico City.

That is why it is important that you do not wait to have an ideal age and start thinking about becoming an investor or making an investment from now on. So the sooner you do it, the sooner you can designate your budget and create a work plan to invest or start saving money and then invest.

Otherwise, as you let time go by, you will be less likely to find suitable properties for yourself and especially if you have the opportunity to invest in places that are in presale in areas that will later have even more capital gain.

What is the best age to invest in real estate?
Millennials are redefining what financial security and quality of life mean, so real estate investments are becoming an option for those who want to travel or retire early.

How to start investing in real estate?

One of the most common mistakes made by young people who aspire to become investors is to obtain immediate profits and be able to spend them on whatever they want. But as you know, this is not possible in the real estate market.

Being an investor is a goal of many to be able to have financial freedom and not be tied to a job or to live experiences like traveling or living in different parts of the world, investing to earn money immediately is not an actual goal.

This does not mean that you cannot earn an income in a short period of time. For example, apartments near tourist areas can generate profits if you decide to rent them. The same happens if you acquire property near schools, universities or hospitals.

What we really mean is that if you want to invest to enjoy the results you need to be patient and prepare constantly about the subject.

The preparation on the subject not only includes understanding how the market works, but also observing and analyzing where it is going.

That is why it is very important that you start to know very well and read everything about the area and the developments that are developing in the city you are looking to invest. Find out about the market and how real estate works in the place. About the papers you must have in order and the types of credits -if you’re considering obtaining one- to which you can access.

Begin to consume information and observe how other real estate investors are generating income with their properties. One of the advantages of investing in real estate is that it is a safe investment, but it also gives you the opportunity to take advantage of your investment.

There is a lot of information especially now that we live in the age of the Internet, but it is always good that you can approach the experts and work with a real estate agent to solve your doubts if you are already thinking about acquiring a property. Ask everything you need to know about the property and the area: the places of access, the maintenance fees, the projection of growth and the amenities with which the development has.

What is the best age to invest in real estate?
One of the keys to real estate investment is patience. Real estate usually increases its value thanks to the capital gain, and this depends on external factors of the property such as the location and the services that are around it.

What factors should I consider when investing in real estate?

We already mentioned in our definitive guide of the real estate investorif you want to be successful when acquiring a property you need to analyze the location and interests of your possible market without letting yourself be guided by the trends.

Actually, what makes your property acquire value is the capital gain of the area. This depends on external factors such as the location, amenities and even the roads that the property has.

Mérida is a city that we love to take as an example because the boom that is experiencing is related to the intervention of factors such as security and the excellent location in an area that attracts tourists and allows them to have access to beaches and archaeological sites.

In the best cities to invest in Mexico we have also mentioned the importance of decentralization that Mexico is living and Mérida is an example of how the diversity of industries can be an important factor in the development of the economy and in the demand for properties and offices, and therefore is another opportunity to ensure your future.

The more diverse of jobs and industries, the more likely you are to be victorious in your investment, as in the case of a crisis, for example, the closure of a factory or a big company that is in the area.

That’s why we emphasize the importance of not investing where everyone is investing, in the end -it may sound cliche- you get what you pay for.

Many new investors make the mistake of acquiring goods in areas that, although cheap, end up being insecure. In the end these investments end up being losses because they end up investing even in luxury finishes in areas where house prices are quoted in an amount lower than what they are thinking of asking for, whether they are rents or for sale.

The capital gain depends a lot on the area, the location and the amenities. And even if you get a very cheap property, in the end you will not be able to generate income if it is located in an area where there is no capital gain or the market cannot access the amount of money you propose. You will lose more money, unlike you decide to invest in an area with a guaranteed gain capital, thanks to all these external factors that we already mentioned.

Another factor that we highlight and that you have to take into account are pre-sales. There is no better way to guarantee your money than buying before, remember our example of the Riviera Maya and Tulum? Now imagine how much it will cost to buy a housing development once it is popular.

Acquiring properties in pre-sale is an excellent way to invest your money, since once the developments begin to acquire capital gain, your property will have more value than what it cost and you can adapt your income according to the costs of the area or decide to sell it to a higher price, or keep it to get more return.

So, if you’re wondering what is the best age to invest in real estate? It is better to start asking yourself; how can I start investing in real estate? And start making a plan so you can reach your goals and start creating a safe economic future for you.

Source:  Peninsula Development – OCTOBER 28, 2019

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Is now a good time to buy a home in the US?

Canadian snowbirds or real estate investors considering a home purchase in the United States can be confident in the state of the market according to a new survey.

Results of a poll conducted in the fourth quarter of 2019 have been released this week by The National Association of Realtors and show that 63% of American consumers felt it is a good time to buy (33% strongly) while 74% said it is a good time to sell.

The strength of the jobs market and economic conditions are boosting sentiment.

“The mobility rate has been very low as many have opted to stay put for longer,” said NAR chief economist Lawrence Yun. “However, this latest boost – Americans saying now is a good time to move – is good news. With mortgage rates low, the timing is indeed ideal for those who want to enter into homeownership and for those looking to move on to their next home.”

Older respondents (the Silent Generation and Baby Boomers) showed the highest confidence in buying conditions and higher earners ($100K+) and those in the West are more likely to feel that it’s a good time to sell.

“The Western region has seen home prices increase to the point that costs have outpaced income,” said Yun. “So, it is no wonder that those living in the West would think that now is a perfect time to place a home on the market. California especially is seeing some of the highest prices ever.”

Home prices

The NAR survey has also asked about home prices with 64% saying their believe that prices in their communities have increased in the past 12 months.

More respondents expect local home prices to rise in the next 6 months (48% said so) than those that expect them to stay the same (41%) or decrease (11%).

On the economy, 52% believe it is improving although this falls to 47% among millennials and 41% of those living in urban areas (66% among those in rural areas).

“Whether it is a reflection of politics or true economic conditions, there is a difference of views between rural and urban areas,” added Yun.
Source: Real Estate Professional – by Steve Randall 10th January, 2020

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How to Get a Reluctant Spouse on Board With Investing in Real Estate

indecision
Is the white-hot fire of real estate investing burning in your heart? Do you solidly know within your gut that real estate investment will be life-changing? Do you have vivid pictures of the freedom owning property will offer you?

Hmm, now how to impart that passion to your spouse…

You want them to see it as you do. You want them to feel as intensely committed as you feel. You want them to be as excited as you are. You want them to see the vision for your future.

Why You and Your Spouse Would Make the Perfect Investing Team

You can do this together. You have a lot of practice.

Now let me say, this may seem different than other decisions in your relationship, but actually it’s not. Really!

I say this because all types of big decisions like this in a relationship require similar elements. Among these are a bit of understanding, a whole bunch of open-hearted listening, a giant amount of belief, and a huge heap of trust in each other. I mean it!

Planning a wedding, having a child, changing jobs, moving, buying a car together, taking out a student loan, purchasing your first home, raising your kids—every one of these requires discussion and negotiation. The point is, every big decision obliges you to be there for each other’s excitement. But it also necessitates being patiently present for each other’s fear and anxiety.

Where to Start the Discussion About Investing

So, let’s step this out.

First, have you already talked to them about investing? If you haven’t, then that is where you need to start. And then keep the tips below as tools in your tool bag to make the convo go smoothly.

Young displeased black couple.American african men arguing with his girlfriend,who is sitting on sofa on couch next to him with legs crossed.Man looking away offended expression on her face.

However, if you have already talked to them—and they were less enthusiastic than you wanted or expected—perhaps the conversation had one or more of these possible outcomes.

You two discussed it and:

  1. They seemed open, but they were not necessarily excited about the idea
  2. They were fine with you doing it, but they don’t want to be part of it
  3. They have no interest, and they do not want you to do it at all

OK, so none of these three scenarios are what you most want, but they are manageable. You have managed to work out compromises on other large events in your life, right? You can do the same here.

Think of it as excellent practice for negotiating a complex real estate deal. (I’m not kidding here.)

Why Don’t They See the Potential in Real Estate That You Do?

Let’s get into the reasons, the “why” they didn’t feel your same sense of sureness and excitement.

When you negotiate with a property seller, your first job is to find out what they really want or what is holding them back from saying “yes.” And honestly, when you first start talking with a seller, you cannot assume that they even know or are truly “in touch“ with what their hesitations are. Nor can you be sure that, even if they do know what’s bugging them, they will confide their reasons to you!

They might be too embarrassed or ashamed to say them aloud—or even to admit them to themselves. Or it might make them feel vulnerable to admit their hesitations to you. You have to uncover objections by asking questions. You have to listen carefully and openly. You need to pay very close attention.

This is the same process you will use with a hesitant spouse.

Focus on Problem-Solving

If they aren’t overly enthusiastic to talk about real estate investing, be patient. Talk with them in a setting that is quiet and relaxed. Let them finish their sentences. Ask questions without anger, accusation, or judgement.

Remember, you are collecting information so you can solve the problem. Don’t make this an argument. Use your best puzzle- and problem-solving skills.

The solution to this puzzle is one of the most important solutions you will ever uncover. So, I repeat, pay close attention. Listen to the clues.

You are not just a “spouse” in this situation, you are a detective, a troubleshooter, an analyst, an entrepreneur, a visionary.

You see, if you can truly get to the heart of what is making them uncomfortable, only then can you begin to brainstorm solutions. Those solutions need to be two-sided, because when you can help your spouse feel better and more comfortable, you minimize their negative reactions and you increase the likelihood of their participation and willingness.

Related: Investing With Your Spouse? STOP and Read These 4 Survival Tips!

You also increase the possibility you will engage your spouse in your excitement about the opportunities real estate offers your family.

OK, after years as a therapist, I will tell you that when it comes to real estate investing, there are some very specific stressors, fears, and anxieties that people tend to experience. These usually boil down to one or more of the primary concerns listed below.

That said, no two situations will be identical. Your situation with your spouse will be unique.

If you review these potential concerns before you have the conversation, you can develop some well thought out and realistic solutions for how you can alleviate your spouse’s specific hesitations. Anticipating objections and concerns this way should increase your chance for a successful conversation and positive movement ahead in your joint real estate investing future.

Pick out the issues below you are most likely to face (or have already experienced) when talking with your spouse about your desire for their participation in a real estate investing venture. Write out the questions you might encounter and how you might respond. Note the trigger words you might want to avoid with your spouse—you know, the ones that tend to spark an unfortunate outcome!

Then, pick a time and place, and go for it!

Consider Their Fears

Money fears: The fear of losing money and being left without security or unable to pay the bills.

Not enough time: In the beginning, real estate takes time and commitment. As with all skills and education, it requires study, reading, practice, and repetition until it becomes seamlessly familiar.

Afraid of failure: Whenever we start new things, we run the risk that until we master the skills and knowledge, we may not be as successful as we want. But practice improves everything!

Uncomfortable with change: Some people love change—even crave it—but there are others who abhor change. Most of us are somewhere in the middle. But in truth, fear of change is almost as common as the fear of public speaking, which is the highest reported fear. The best way to deal with this concern is to just jump in and try. The sooner you start, the sooner the transition is in the past.

Not knowing who to trust/fear of being taken advantage of: Being new at something means listening to lots of other people’s advice, paying attention to tons of new information, and not knowing which is trustworthy and which is not. Practice makes perfect, or at least very good. So, the more you perfect your skills in listening to your gut while really hearing the person opposite you, the sooner you will know “when to hold them and when to fold them.”

Fear of getting started: When learning something new, it can be very difficult to decide where or how to “jump in,” and those concerns can be intimidating.

Don’t think they’re interested: Sometimes when we don’t know a lot about a topic or skill, we perceive it as boring or uninteresting. Then, once we are exposed to it, we may recognize that we have lots of talents that would make us incredibly successful in that area. But we don’t know until we try.

Afraid of handling tenants: It can seem quite daunting to suddenly have so much power over people’s daily comfort and happiness, but it’s not as hard as it seems at first. Start by giving people the service you would want (just that good ole “golden rule” stuff). Over the years as an investor, I have found that communicating with tenants, sellers, and buyers in the manner I wish to be communicated with goes a long way toward creating positive results, happy tenants, and satisfied colleagues.

No experience/“I don’t know enough”: No one wants to look like they are clueless. It never feels good. Word of wisdom: sometimes the honesty of saying, “I’m new at this,” goes a long way in getting people to warm to you, open up, and be willing to help you deal with any of the hiccups occurring in any new line of business.

Other investors will always be able to find better deals: It’s true! My answer to that is, “Yes, because they keep trying.” They keep networking to meet more people, they make offers on more properties, they talk to more sellers. Does any of that mean you shouldn’t start? Nope. Why? There will always be a “Joe Investor” who will do a deal and make $60K. That doesn’t mean that a deal you do that makes $30K is any less a good deal. Your wallet will still be VERY HAPPY! (This I guarantee you!)

Scared to get it wrong and look foolish to family and friends: This is a really significant fear for a lot of new investors. But are those same family and friends taking risks to build wealth? Are they investing in themselves and their futures by learning new things and creating new investment opportunities? Probably not, and therefore your willingness to invest and trust yourself makes you something special. You and your spouse are pioneers on the adventurous journey of increasing your wealth and building your own personal future success.

Related: A 3-Part Plan for Presenting Real Estate as an Investment to Your Spouse

New Skills Bring New Discoveries

So honestly, some of this list may resonate for you, while many of these concerns may not seem realistic or valid at all. It doesn’t matter. You yourself have your own unique worries and stresses in your heart and mind that your spouse does not share.

Your spouse has a different set of concerns.

We all have insecurities and deep-seated discomforts that can hold us back. But remember, if you can be there to provide support, if you can be present and caring for your spouse during these scary and exciting life changes, you are also very likely to discover the two of you are an amazing team that knows NO LIMITS!

Source: BiggerPockets – B.L. Sheldon

 

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How to Buy a Second Home (Hint: It Won’t Be Like Your First)

As a home buyer, you braved the real estate buying circus when you bought your first home, and you have a great place to show for it. You’ve trudged through the open houses, experienced exactly how stressful closing can be, and dealt with legions of moving trucks. And still, a part of you wants something more: an escape in the mountains, a beach cottage, or a pied-à-terre in the city. You want to buy a second home.

With current mortgage rates at a historic low, you might be tempted to jump in. But beware; buying real estate as an investment property or second home won’t be the same as your first-time home-buying experience. Here are some differences and advice to keep in mind.

First things first: Can you afford to buy a second home?

If you scored a sweet deal on a mortgage for your primary residence, don’t expect lenders to give you the same offer twice.

“Second-home loans generally require more down payment and a better credit score than owner-occupied home loans,” says John Lazenby, president of the Orlando Regional Realtor Association.

You may have to pay a higher interest rate on a vacation home mortgage than you would for the mortgage on a home you live in year-round, and lenders may look closely at your debt-to-income ratio. Expect a lender to scrutinize your finances more than when buying a single-family primary residence.

“Lenders look carefully to ensure that second-home buyers are financially capable of paying two mortgages,” Lazenby says.

Make sure to review your budget with a second mortgage payment in mind, and make adjustments if necessary after you know what interest rate you will receive. And make sure you can afford the real estate down payment—a healthy emergency fund and cash reserves are essential if an accident or job loss forces you to float two mortgages at once.

Evaluate your goals

Understand exactly how you plan to use the property before you sign on the dotted line.

“Buyers should consider their stage of life and that of their children to ensure they are going to actually use the home for the amount of time that they’re envisioning,” Lazenby says. “A family with young children may find that their use of a second home declines as the kids grow older and become immersed in sports.”

If you’re certain you’ll get enough use and enjoyment out of your new purchase, go for it—but make sure to carefully consider the market.

For most homeowners, a second home shouldn’t be a fixer-upper. Look for homes in high-value areas that will appreciate over time without having to sacrifice every weekend to laborious renovations on your “vacation home.”

Buying in an unfamiliar area? Take a few weekend trips to make sure it’s the right spot for you. In the long term, you’ll want it to be a good investment property, as well as a place to play. Pay close attention to travel times, amenities, and restaurant and recreation availability, otherwise you might spend more time grousing than skiing and sipping wine. And make sure to choose a knowledgeable local real estate agent who will know the local real estate comps and any area idiosyncrasies.

Understand your taxes

You may be familiar with a bevy of home credits and tax breaks for your first home, but not all of them apply to your second.

For instance: You might be planning on using your new home as a vacation rental when you’re out of the area. If that’s the case, you need to calculate the return on your investment property purchase price that you can expect over the course of a year. How much can you charge per night or per week for your rental property? How many weeks will you rent out the property? And what expenses will you incur?

“Property tax rules and possible deductions for second homes used as rentals are complicated and vary widely, depending on both the number of days per year that the owner occupies the home and the owner’s personal income level,” says Lazenby.

vacation home offers more flexibility to buy based on your potential property tax burden—for instance, if you’re looking to buy in an area of high real estate taxes, consider widening your real estate search to another county, which can save you thousands of dollars. Your real estate agent should be able to help you find property you as a buyer can afford.

Lazenby recommends consulting with a tax professional about tax implications, especially if you’re planning on renting out the house.

A vacation home you use part time and also rent out may be considered rental property for tax purposes, depending on personal-use days as the homeowner, and the number of days you rent it out. If you rent out the vacation property for more than 14 days in a year, you must report the rental income on Schedule E of your individual tax return, and you can deduct the rental portion of expenses such as mortgage interest and property taxes. However, renting out your home as a short-term vacation home for 14 days or less in the year means you cannot deduct rental expenses, but the income from your renters is tax-free.

Jamie Wiebe writes about home design and real estate for realtor.com. She has previously written for House Beautiful, Elle Decor, Real Simple, Veranda, and more.
Source: Realtor.com –  | Aug 28, 2019
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Is investing in Canadian real estate still viable?

When a series of tax and mortgage rules was introduced in Canada in 2016 to prevent a housing market bubble, activity slowed down significantly in the years that followed. Given the current circumstances, is it still viable to invest in property?

In a think piece in Macleans, market watcher Romana King said even with fears of a global recession, real estate is still a smart way to invest.

“For investors, the key to making strategically smart decisions is to consider the underlying economic factors that impact your investment,” she said.

King said the housing market could climb out of negative growth forecasts this year. Citing figures from the Canadian Real Estate Association, she said the national sales activity was on target to increase by 5% in 2019 and could expand further by 7.5% in 2020.

“Canada boasts strong population growth, and government budgetary decisions are acting as stimulants for the national housing market, all of which point to a healthy future for Canada’s real estate market,” she said.

Investing in real estate, however, is not without risks. For investors, it is crucial to know some strategies to lessen the potential risks, King said. The first is to be aware of additional debt. Investors must keep an eye on their credit scores and pay bills on time.

“Most investors will require a mortgage to purchase rental real estate. This can alter your debt ratios, which can impact whether or not you get the best mortgage or loan rates. Talk to an advisor before applying for new credit or renewing a current loan,” King said.

Another must-have strategy is budgeting. King said investors need to control how much they spend on maintenance and repairs to ensure that their rental properties are cash-flow positive.

“An investor needs to budget for a contingency fund. If the anticipated monthly rent covers all monthly expenses, including a repair fund, then the property is cash-flow positive, which is fundamental for a good investment,” she said.

Getting insurance could also mitigate the risks of catastrophic events.

“Virtually all insurance policies will cover a catastrophic loss of a building, but as a real estate investor, you must also consider the loss of income due to damage or destruction. A comprehensive rental policy will provide a landlord with income to replace lost rent at fair market value,” she said.

Overall, investors need to treat real estate investing as a business. Citing Edmonton-based investor Jim Yih, King said the key to successful real estate investing is positive cash flow, and not just the purchase price and the potential sale price.

Source; Canadian Real Estate Magazine – by Gerv Tacadena 12 Nov 2019
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    Building wealth through the property market

     

    From 1948 to1970, close to half a million people from the Caribbean were invited to what was commonly referred to as the ‘mother country.’  Arriving as British citizens (despite never living in Britain) is a trait rooted in the legacy of the Empire. Whilst there were many reasons for their arrival in Britain, many were seeking superior opportunities for themselves and their offspring. Early settlers spoke about a five-year plan to save money and return back to the Caribbean. Prohibited to find suitable accommodation, many migrants were confronted with signs such as, ‘No Coloureds or Blacks’, which was routinely used alongside the use of ‘No Irish and Dogs.’

    Where Caribbean’s were permitted to rent, the standards and conditions of the dwellings were typically unsavoury. Consequently, there was a determination to purchase one’s own properties using a system popularly known as pardner, which involves the collaborating of resources to provide access to funds. This system was particularly useful when banks would not loan to black people. Early settlers from the Caribbean owned houses in what are now some of the wealthiest locations in Europe, such as Notting Hill and Paddington. It was not rare for these residents to own more than two houses that were rented out, characteristically large three or four story Victorian terraced houses. As the decades proceeded, many of these houses were sold due to the owners returning to the Caribbean, or simply moving. Similar trends occurred in Shepherds Bush, Balham and more recently in Dalston, Brixton, Peckham, leaving a decline in property ownership amongst succeeding Caribbean heritage peoples within the UK.

    While the cost of properties has been exorbitant in London, where according to the last Office for National Statistics’ (ONS) Census for England and Wales, 58.4% of black people reside, the cost of properties in locations such as the West Midlands (which is said to host the second largest population of black people) at 9.8%, is considerably lower.

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    Black Landlords UK (BLUK) in Birmingham aims to revitalise the calibre of not only black home ownership, but also the number of black landlords. Founded in late 2017, one of the committee members Garfield Reece revealed how the organization came into fruition. ‘’It evolved (BLUK) from conversations that Rod Shield (senior investor in Birmingham) had during his networking meetings. People were asking him the same questions wherever he went.’’ Some of the questions that Reece cited were ‘’How we got into property management? How to turn a single let property into a high yielding HMO (House Multiple Occupation)? How to resolve issues and conflicts with tenants.’’

    Initially, Rod Shield decided to establish a Whatsapp group to address the myriad of questions he was bombarded with and to mobilize the engagement of black people within the community. The Whatsapp group quickly demonstrated the demand for such an organization and according to Shield, “The Whatsapp group numbers exceeded the allowable quote on Whatsapp; well in the excess of 200 investors in the group. So that’s really where it all started.’’ It was during this time that the committee (who volunteer their expertise for free) decided to galvanise all those that expressed an interest in property to congregate in one room. This lead to BLUK’s quarterly meetings; “The first meeting was held back in January this year,’’ declares Reece.

    The first BLUK meeting in January 2019 had approximately 50 people in attendance, and numbers have been growing rapidly. At BLUK’s last quarterly meeting for 2019, the committee expect to have 120 investors. “We are giving service providers and businesses within the community, an opportunity to sell and promote their businesses,’’ Reminiscent of a market stall, there will be six tables with businesses each discussing topics such as finance and how to raise mortgages. Half of the meeting will consist of Keynote Speakers, who will talk about the process one has to go through when acquiring property. The other half of the meeting will be dedicated to roundtable discussions, “It will be like mini workshops,’’ states Reece. “Each roundtable is going to talk about a different investment strategy,’’ Reece adds.

    The next BLUK meeting will take place on Saturday, November 23rd, 2019 from 14:00 – 18:00 at the Legacy Centre of Excellence (formerly known as the Drum) 14 Potters Lane Birmingham, B6 4UU.

    Source:

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