Everything About Real Estate Investing

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Mortgage: A Major Factor In Profitability

Everything Real Estate Investing – Eps. 6 Market Capitalization, Cap Rate, and Multi Unit Buildings

Understanding the types of mortgages available and the benefits of each, as well as the risks, is critical to your real estate investment success. Investors typically must have 20 percent of a property’s sale price to qualify for an investor mortgage. Investors should shop around to find mortgages that offer favorable interest rates and proceed with caution when it comes to zero down, adjustable rate, and balloon investment mortgage types. There are many options for investors and each should be weighed carefully.

How To Find Your First Property

The age-old saying in real estate is location, location, location. Where your property is located is important, but so are other factors if you want your investments to be profitable. There are several avenues available to find your real estate investments. The most successful real estate investors use multiple sources simultaneously to find the best deals.

What To Do When Youre Ready To Sell

If youre planning to sell a property, you can sell it yourself or with a real estate agent. Selling it yourself is known as ‘for sale by owner’ and there are numerous websites that help facilitate that process, such as FSBO. The major benefit here is that you’ll save the cost of paying a seller’s agent, which is usually 3% of the sales price. Although you are saving money, you will have to put in more work to market the property, hold open houses, and pay for selling costs. These costs include adding your home to the MLS and renting a lockbox to give agents access to your property.

When you sell with an agent, they take care of everything for you. Depending on your lifestyle and budget, selling your house yourself may not be the best use of your time. If you opt for an agent, you should first interview several to understand their experience and expertise and how you will work together. The agent you choose should provide comps of recently sold properties and a marketing strategy detailing how they plan to sell your home quickly for top dollar.

After you have selected an agent, your biggest job will be to ensure the property is always clean and unoccupied before showings and to promptly reply to messages from your agent.

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Everything You Need To Know

Throughout the past decade, tech stocks are the clear winners. Additionally, since the pandemic, they are even more critical to society. So why are tech stocks down if they are more important than ever?

For one, the Fed introduced a low-interest environment to stimulate economic growth. As a result, shares of tech companies ballooned as future earnings potential skyrocketing. Consequently, the economy is getting overheated, with inflation hitting a 39-year high in December.

Therefore, the Fed is now pulling back some of its support, with the first-rate hike likely coming in March.

At the same time, technology isnt going anywhere. With shareholders demanding companies continue increasing earnings, tech plays a vital role in the process.

For example, any business can benefit from automation from small companies to large corporations. Rather than paying human capital, technology can help speed up processes while saving costs.

Overall, the dip can present a buying opportunity with past leaders holding their own. Continue watching relative strength to find leaders with long-term potential.

And the next time you are wondering why are tech stocks down, take a look at the yield rates, they often paint the picture.

How Does Reit Investing Work

Real Estate Investing for Beginners

The simplest and most widely available way to invest in a REIT is to purchase shares in a publicly traded REIT company or in a REIT mutual fund. Any individual with a stock trading account can invest in REITs this way.

But accredited investors typically high-net-worth individuals who meet certain minimum financial criteria based on income and total assets can also invest in private REITs. These are not publicly traded and are not registered with the Securities and Exchange Commission, which means they do not have the same regulatory requirements to disclose details about their financial records. This is why investment opportunities in private REITs are typically open only to accredited investors.

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What Is The Vacancy Tax

As the name suggests, a vacancy tax is a tax levied on property owners who have vacant properties in their portfolios. Also known as an “empty house tax,” this measure is meant to increase the available housing supply in a municipality by incentivizing landlords to develop vacant land and to rent out vacant homes and storefronts.

Although every municipality considering this type of ballot measure would have its own tax rate, Los Angeles’s proposed vacancy tax is an annual tax of $5,000 per vacant property and between $5,000 and $40,000 per vacant lot. The city intends to use the additional tax revenue to combat housing insecurity by increasing access to affordable housing.

How Do I Start Real Estate Investing With No Money

There are various ways to get started investing in real estate without upfront cash. You can explore owner financing options, in which the owner essentially lends you the funds and your monthly payments go to the owner instead of the bank. Hard money loans, which usually must be paid back in 12 months or less, are a good option for fix-and-flip projects. You can also look into loans from the Small Business Administration or other government programs.

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Th: Dallas/fort Worth Tx

Last year, the Dallas/Fort Worth market ranked 4th in the best places to buy real estate list and is also a longtime survey favorite. Just like Atlanta, these cities are grouped into the Super Sun Belt Magnet group for their booming population and for remaining affordable despite being a large and diverse market.

According to Byron Carlock, PwCâs US Real Estate Leader, even though Dallas/Fort Worth has been knocked from its previous top spot by smaller upstart markets, this is not a signal that the cities have lost their ground. Around 375 people are moving into the area each day, so there is no doubt that Dallas/Fort Worth will continue to be one of the countryâs top real estate markets in 2022 in terms of everything from construction to investment.

However, Dallas/Fort Worth still has work to do on the issues of quality of life, particularly healthcare, education, and diversity. There also seem to be concern about changes in the real estate business brought about by everything from COVID-19 to climate change.

Dallas Real Estate Investing Statistics

  • Median Property Price: $568,793
  • Traditional Cash on Cash Return: 1.49%
  • Top Dallas Neighborhood for Real Estate Investing: Near East
  • Type of Market: Sellerâs Market
  • Real Estate 2022 Forecast Property Value Appreciation: 21.19%

Fort Worth Real Estate Investing Statistics

Other Dallas/Fort Worth Real Estate 2022 Rankings

  • #4 in Homebuilding Prospects
  • #8 in Local Public and Private Investment
  • #9 in Investor Demand

Conventional Loans And Government Programs

Monetize Everything in Real Estate Investing

When investors are starting out with rental properties, they may purchase the property and live in it while fixing it up or waiting for it to go up in value. Sometimes, they house hack by renting out bedrooms to cover the mortgage. Multi-unit properties or homes with a mother-in-law unit are popular for this purpose. If you will be occupying the home, conventional mortgages and government programs can be a possible source of funding.

Conventional mortgages may be available to you from either a credit union or a bank. Credit unions often have lower interest rates and fees because they are nonprofit organizations. Additionally, because credit unions are membership-based and serve specific communities, they may have easier underwriting guidelines that improve the chances of your loan being approved.

Government programs that may provide funding include U.S. Federal Housing Administration, Veterans Affairs, and U.S. Department of Housing and Urban Development loans. Each will have its own specific criteria for eligibility. For example, FHA loans require a down payment as small as 3.5% and can be used to finance a maximum of four units. FHA loans also require an upfront mortgage insurance premium of 1.75% and ongoing premiums of .45% to 1.05% each year. When your mortgage balance is greater than 80% of the home value, youre charged an insurance premium that protects the bank in case you default on the loan. With an FHA loan this insurance is called MIP.

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Cons Of Real Estate Investing

  • Potential returns aren’t as high as the stock market: From 1991 to 2019, the S& P 500 gained over 600% housing prices increased by only about 160%.
  • Real estate investment can be cash heavy: If you really want to get a steady income stream going, then you need enough cash on hand. Whether it’s your own money or it’s loaned to you, you’ll need to be able to pay for building improvements, maintenance, and more.
  • Properties are not liquid investments: You can’t turn a property into cash quickly like you can when you sell a stock.
  • Managing tenants and building maintenance can be a challenge: Whether you hire a property manager or manage it yourself, running a property can be full of unexpected problems. These can include overdue rent, roof leaks, power outages, and more.

Keep A Handle On Your Expenses

Its absolutely essential that you keep track of all your investing expenses. This includes things like property taxes, taxes on the investment income itself, and maintenance and insurance on the property. Its easy to look like youre making a profit only to get hit with a big tax bill that suddenly puts you in the red.

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Make sure you completely understand the expenses of investing in a particular property. Look into things like what youll pay for utilities if the property goes unrented. Find out how much itll cost to insure, and understand what youll pay in the mortgage and for taxes. Then account for costs like a fresh coat of paint between tenants, larger but less frequent upgrades, and any services youll need to pay for to be a successful investor or landlord.

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Real Estate Can Be Easier To Understand

When you start investing, it can be difficult to understand everything you need to know to make a profit. Many types of investments rely on abstract concepts and complex algorithms, which are especially difficult to understand.

Real estate, on the other hand, involves the purchase of physical property and most people are familiar with real estate to some degree. Investing in real estate can be much easier to understand than complex investments developed by mathematicians.

Best For Reit Investors: The Intelligent Reit Investor

Beginner

REITs can appeal to real estate investors who want more of a hands-off approach to investing in property. A REIT is a company that owns property investments as a REIT investor, you get the benefit of dividend income generated by those properties without any of the headaches that go along with being a landlord and having to deal with tenants directly.

“The Intelligent REIT Investor” outlines the most important concepts associated with REIT investing as a wealth-building strategy. Specifically, the authors dive into how to evaluate and choose which REITs to invest in, based on your overall goals, risk tolerance, and time horizon for investing. If you’re interested in adding REITs to your portfolio but you have no clue where to start, this book can help you get your feet wet without getting in over your head.

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Why Real Estate Investing Is A Good Idea

Many of the richest families in the U.S. use real estate as a means to build millionaire-level wealth. Rental real estate is a popular strategy to keep up with inflation because home prices and rental income tend to rise right along with inflation. Real estate also reduces your portfolios volatility because home prices do not go up and down as much or as quickly as the stock market. In some cases, prices of real estate may go up while the value of stocks go down.

For some people, real estate investing is preferable because it provides a tangible investment that they can see and feel. By comparison, getting into the stock market means you usually just end up looking at pieces of paper reflecting your monthly earnings and losses. For some, this makes real estate more interesting, and that interest helps them be more active in growing their wealth.

Another reason real estate investing is attractive to people is that it can be a full-time or part-time endeavor. Many entrepreneurs and families use rental properties as a side gig to their normal nine-to-five job. This makes it a highly flexible investment that you can fit to your lifestyle and personal finance goals.

Remember: All investments come with risk. This guide is not intended as investment advice be sure to do your own research before investing.

Real Estate Terms For Beginners

If you have started to conduct any research at all, one of the first things you will have noticed is the abundance, perhaps even excessiveness, of confusing jargon and acronyms. Although there are many, it is imperative to know at least the basics of real estate terminology so that you can be taken seriously by other professionals. Here are some terms to help you get started:

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Real Estate Has Low Liquidity

Many investments are highly liquid, and can be bought and sold for a profit in a fraction of a second, as with high-frequency stock trading. But real estate investments are comparably illiquid, because properties cant be quickly and easily sold without a substantial loss in value.

Real estate investors must be prepared to own a property for months and years, especially if it will be leased out.

Effectively Marketing Your Rental Property

Real Estate Investing Tips – Everything You Need to Know about Rental Property Financials

Before posting about your property anywhere, you’ll need to carefully craft your listing. Write down the basics of the property, such as the number of bedrooms and bathrooms, square footage, and the size of the lot if it has one. And don’t forget to mention the improvements you made, such as new carpet, fresh paint, and upgraded kitchen. Think about what sets your property apart from others and its attractive features. Take high-quality pictures of the outside, each room, and the features you want to highlight.

The first places to list your ad are real estate-specific websites such as Zillow, Realtor, Hotpads, and local websites that focus on properties in your neighborhood. For example, WestsideRentals is popular in Southern California. Then, move on to more general websites like Facebook Marketplace and Craigslist. Finally, don’t forget to mention it to friends and co-workers. They may know someone who is looking.

You can also choose to hire property management and take a more hands-off approach instead of overseeing the rental yourself. In most cases, a property manager will handle the marketing of your property. And, depending on where your property is located, you may also be able to employ a real estate agent to help you find a qualified tenant. However, be aware that most agents will charge one month’s rent as a fee for finding that tenant.

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People You Need To Have In Your Life As A Real Estate Investor

As a prospective real estate investor, it is important to have a solid team of trustworthy professionals around you. Whether you are wholesaling, house-flipping, or aiming to create a long-term investment as a buy-and-hold investor, your team can help you identify your blind spots and make the difference between your success or failure as an investor.

Here are the people a real estate investor needs on their team:

We suggest you interview several candidates for each position on your team. Discuss what their ideal client looks like, how much they charge, and their thoughts on how you can best work together. Don’t always go with the lowest-cost option. As the saying goes, sometimes you get what you pay for.

Once you’ve found the right person, ask them for referrals for other spots on your team. Most likely, they will know several good candidates you can interview.

After your team is complete, don’t stop networking and meeting others who might be a good fit. You never know when you’ll need to replace a teammate, and it is a good idea to have a Plan B, C, and D in mind if you want to be successful in real estate investing.

Best For Beginners: The Abcs Of Real Estate Investing

If you’re just entering the world of real estate investing, opt for “The ABCs of Real Estate Investing” by Ken McElroy. As the title of the book suggests, you’ll learn basics like how to achieve wealth through real estate, ways to find and evaluate properties, negotiating deals, how to increase income through property management tools, and much more. McElroy himself has over 26 years of senior-level experience in multifamily asset and property management. Even more, reviewers agree that this is a great starter book, praising how informative and easy-to-read it is for first-time investors.

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