Investing in Real Estate Made Easy

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Buying real estate is not just finding a place to call home. Investing in real estate has become a common investment over the last 50 years.

Although the real estate market has plenty of opportunities for making big gains, buying and owning real estate is a lot more complicated than investing in stocks and bonds. This article, explores real estate as an investment.

Rental Properties
This is an investment where a person buys a property and rents it out to a tenant. The owner is the landlord and he/ she is responsible for paying the mortgage, taxes and costs of maintaining the property.

Hopefully, the landlord charges enough rent to cover all of the aforementioned costs. A landlord may also charge more in order to produce a monthly profit, but the most common strategy is to be patient and only charge enough rent to cover expenses until the mortgage has been paid, at which time the majority of the rent becomes profit.

Furthermore, the property may also have appreciated in value over the course of the mortgage, leaving the landlord with a more valuable asset. According to the U.S. Census Bureau, real estate has consistently increased in value from 1940 to 2006, then proceeded to dip and rebound from 2008 to 2010 and has been increasing overall.

There are, of course, blemishes on the face of what seems like an ideal investment. You can end up with a bad tenant who damages the property or, worse still, end up having no tenant at all. This leaves you with a negative monthly cash flow, meaning that you might have to scramble to cover your mortgage payments. There is also the matter of finding the right property. You will want to pick an area where vacancy rates are low and choose a place that people will want to rent.

One of the he biggest difference between rental properties and other investments is the amount of time and work you have to devote to maintaining your investment.

When you buy a stock, it simply sits in your brokerage account and, hopefully, increases in value. If you invest in a rental property, there are many responsibilities that come along with being a landlord. When the furnace stops working in the middle of the night, it’s you who gets the phone call. If you don’t mind handyman work, this may not bother you; otherwise, a professional property manager would be glad to take the problem off your hands, for a price, of course.

Real Estate Investment Groups
Real estate investment groups are sort of like small mutual funds for rental properties. If you want to own a rental property, but don’t want the hassle of being a landlord, a real estate investment group may be the solution for you.

A company will buy or build a set of apartment blocks or condos and then allow investors to buy them through the company, thus joining the group. A single investor can own one or multiple units of self-contained living space, but the company operating the investment group collectively manages all the units, taking care of maintenance, advertising vacant units and interviewing tenants. In exchange for this management, the company takes a percentage of the monthly rent.

There are several versions of investment groups, but in the standard version, the lease is in the investor’s name and all of the units pool a portion of the rent to guard against occasional vacancies, meaning that you will receive enough to pay the mortgage even if your unit is empty. The quality of an investment group depends entirely on the company offering it. In theory, it is a safe way to get into real estate investment, but groups are vulnerable to the same fees that haunt the mutual fund industry. Once again, research is the key.

Real Estate Trading
This is the wild side of real estate investment. Like the day traders who are leagues away from a buy-and-hold investor, the real estate traders are an entirely different breed from the buy-and-rent landlords. Real estate traders buy properties with the intention of holding them for a short period of time, often no more than three to four months, whereupon they hope to sell them for a profit. This technique is also called flipping properties and is based on buying properties that are either significantly undervalued or are in a very hot market.

Property flippers will not put any money into a house for improvements; the investment has to have the intrinsic value to turn a profit without alteration or they won’t consider it. Flipping in this manner is a short-term cash investment.

If a property flipper gets caught in a situation where he or she can’t unload a property, it can be devastating because these investors generally don’t keep enough ready cash to pay the mortgage on a property for the long term. This can lead to continued losses for a real estate trader who is unable to offload the property in a bad market.

A second class of property flipper also exists. These investors make their money by buying reasonably priced properties and adding value by renovating them. This can be a longer-term investment depending on the extent of the improvements. The limiting feature of this investment is that it is time intensive and often only allows investors to take on one property at a time.

REITs
Real estate has been around since our cave-dwelling ancestors started chasing strangers out of their space, so it’s not surprising that Wall Street has found a way to turn real estate into a publicly-traded instrument.

A real estate investment trust (REIT) is created when a corporation (or trust) uses investors’ money to purchase and operate income properties. REITs are bought and sold on the major exchanges, just like any other stock. A corporation must pay out 90% of its taxable profits in the form of dividends, to keep its status as an REIT. By doing this, REITs avoid paying corporate income tax, whereas a regular company would be taxed its profits and then have to decide whether or not to distribute its after-tax profits as dividends.

Much like regular dividend-paying stocks, REITs are a solid investment for stock market investors that want regular income. In comparison to the aforementioned types of real estate investment, REITs allow investors into non-residential investments such as malls or office buildings and are highly liquid. In other words, you won’t need a realtor to help you cash out your investment.

Leverage
With the exception of REITs, investing in real estate gives an investor one tool that is not available to stock market investors: leverage. If you want to buy a stock, you have to pay the full value of the stock at the time you place the buy order. Even if you are buying on margin, the amount you can borrow is still much less than with real estate.

Most “conventional” mortgages require 25% down, however, depending on where you live, there are many types of mortgages that require as little as 5%. This means that you can control the whole property and the equity it holds by only paying a fraction of the total value. Of course, your mortgage will eventually pay the total value of the house at the time you purchased it, but you control it the minute the papers are signed.

This is what emboldens real estate flippers and landlords alike. They can take out a second mortgage on their homes and put down payments on two or three other properties. Whether they rent these out so that tenants pay the mortgage or they wait for an opportunity to sell for a profit, they control these assets, despite having only paid for a small part of the total value.

In Summary
This article has looked at several types of real estate investment. However, within these examples there are countless variations of real estate investments. As with any investment, there is much potential with real estate, but this does not mean that it is an assured gain. Make careful choices and weigh out the costs and benefits of your actions before diving in.

Real Estate Crowdfunding for Retirement

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Real estate is an important part of any well-diversified portfolio. Not only is it a good way to protect yourself against volatility in the stock market, it can also provide retirement income.

One of the best things about investing in real estate is that you have so many different ways to do it. House-flipping is one option if you want to pocket big profits all at once. Becoming a landlord is another way to go if you’d rather be on the receiving end of monthly rental payments.

Real estate crowdfunding, is an alternative that’s gaining popularity. It’s estimated that the real estate crowdfunding industry topped $2.5 billion in 2015 and is still growing. If you are wondering if this is a good time get in on the game and start fortifying your retirement goals, here’s a overview of real estate crowdfunding.

Real estate becomes more accessible. Private real estate deals have historically been reserved for high net-worth investors who possess the right connections to gain access. Real estate crowdfunding opens up many of these opportunities to the average investor.

This is a great opportunity for investors who are struggling to find an entry point into the real estate market. Crowdfunding enables investors of all ages, risk profiles and wealth levels to acquire real estate for the first time. With as little as a $5,000 investment or in some cases even less, investors can buy a stake in a property. From residential projects to shopping malls to office buildings, there are numerous options.

Crowdfunding is removing barriers to investing in real estate that previously shut a large number of investors out of the game. The SEC’s approval of Title III of the JOBs Act in October 2015 widens the possibilities even further by allow non-accredited investors to take part in crowdfunded real estate deals.

The opportunity for diversification expands. With direct ownership, your options are more limited when you don’t have the ability to purchase multiple properties. Real estate crowdfunding eliminates that obstacle.

Instead of being locked in to a single property type, investors have more flexibility where they put their money. They also have a choice between investing in equity in return for a share in a particular property, or debt investments, which are tied to the property’s mortgage.

If you buy a property to flip or rent, you’ll most likely feel more comfortable investing in your own backyard. When you are investing through crowdfunding, you can invest throughout the country and more easily diversify across property types, investment types and geographies.

It’s a less stressful way to invest in real estate. Owning a rental property or tackling a flip project is great for investors who prefer an active role but it’s not necessarily a good fit for someone who wants to relax in retirement.

With house-flipping, investors have to factor in all the costs involved, from buying the property to physical construction, as well as the interest paid to lenders if you’re financing the project. Besides that, there are the tax implications that go along with realizing short-term financial gains. Bottom line, it takes a long time to master the art of rehabbing. Investors have to be able to anticipate problems and have a counterattack ready.

Owning a rental house is no less of a challenge. There are the difficulties that go along with finding tenants and making sure you’re adhering to the legal guidelines for renting. Then there’s the day-to-day demands associated with managing a property, which can be time-consuming.

The passive nature of real estate crowdfunding as being more suited to retirees who have less of an interest in direct involvement.

Real Estate Investing is a Great Way to add Retirement Income
For some investors, real estate is a viable option for generating money and diversifying your investments.

Understand the risks. While real estate crowdfunding may be more preferable to direct ownership for some retirees, there are some potential drawbacks.

Liquidity is one issue that may be of more concern to retirees. Depending on how a deal is structured, you may be looking at a holding period of anywhere from 18 months to seven years before you’re able to recoup your investment.

In that scenario, owning a rental property or flipping homes could begin to look more attractive because there’s a more immediate payoff. Factoring in the holding period is important if you have a pressing need for sustainable cash flow outside your existing investments.

With crowdfunding deals that are structured as debt or loans, investors receive returns for loaning the owner/ developer money.

2016 Top 10 Investing Hot Spots

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The national housing market keeps on warming up, with U.S. home deals hitting a nine-year high in May and home costs taking off 4.7 percent year-over-year around the same time. Add to that $636.7 billion in greatly required new development (once more, on a national level) up 5 percent in May over April, and it’s anything but difficult to see why the “talking heads” on TV are energetically bragging that great times are here for lodging once more. As a general rule, be that as it may, as each astute financial specialist knows, lodging is not national. It’s local, best case scenario, and by and large a neighborhood issue that is profoundly impacted by the individual speculator’s capacities and picked contributing technique.

When you dissect the U.S. “hot lodging market,” you discover a considerable measure of alarming particulars in the points of interest. For instance, that $636.7 billion measurement flooding the wireless transmissions nowadays really is exceptionally deceptive in light of the fact that it incorporates all development, including open works and power plants. Actually, the main real lodging giver to that number was multifamily lodging, not new-home development in the single-family-living arrangement segment.

Believe Realty’s “Main 10 Real Estate Markets and Industry Perspectives” is another kind of hot rundown, calculating in the concealed patterns, the unnoticed demographic movements and the essential fine print that most media outlets either neglect to consider or purposely disregard. This rundown variables in neighborhood monetary patterns, work shifts, speculator action, purchasing and offering demographics and applicable enactment and strategy on state and national levels. These 10 markets speak to significant chance to the speculators who get to be included in them in a successful path as of right now as indicated by our examination.

Atlanta, Georgia

Atlanta, Georgia, falled behind the national lodging recuperation and, as a wonderful result, keeps on encountering conventional gratefulness for purchase and-holds in overabundance of national midpoints. (The Atlanta Board of Realtors pegged metro-zone thankfulness at 6.7 percent in May.) Although nearby stock is fixing, especially with regards to single-family “starter homes,” Atlanta still offers various passage focuses for financial specialists, whether they wish to alter and-flip, buy turnkey rentals or put resources into bigger undertakings. With a developing employments market construct decidedly in light of sought after segments like IT, amusement and assembling, the city—which RealtyTrac as of late named the most moderate in the nation—is exceptionally appealing to Millennial laborers wishing to buy their own homes while as yet living in an alluring, reasonable metro range.

Austin, Texas

In spite of as of late being named the “most exaggerated lodging market in the country” (alongside San Antonio) by Forbes magazine, Austin, Texas, has a stunning capacity to take this kind of licking and keep right on blasting. Austin not just encountered a generally light effect from the Great Recession, because of a huge deluge of IT-related employments that hints at no abating, yet the number of inhabitants in IT laborers in the range is managing the city’s development in spite of potential “weaknesses” in numerous Texas markets on account of moderately low oil costs. IT occupations are an extraordinary indication of strength in any neighborhood economy since they pay well, are dependable and have a tendency to make huge quantities of different employments therefore. In Austin, more than six out of each 10 new occupations are in the data innovation part. By correlation, the national normal is just shy of three out of each 10. Current middle home costs in the region have gone up 21 percent since 2012, yet they are still to a great degree reasonable in respect to numerous IT-overwhelming California urban areas, making various tech representatives genuinely consider moving “back East”— no less than a little route—keeping in mind the end goal to discover more moderate, more worthy lodging and driving circumstances. With a business sector that meets the customary norms for “exaggerated,” a financial specialist ought to dependably have different “quick activity” exit alternatives accessible or a system for holding that includes income, paying little mind to appreciation. Right now, Austin still is alluring for these speculators.

Dallas, Texas

Dallas, Texas, is another Lone Star showcase that is making a few people anxious. Worries about Dallas are making openings in the land contributing part that already had been shut just because of an excess of action and rivalry. In the course of the most recent 12 months, costs in the range have risen 9.3 percent, well in front of national increases, and Dallas is in a matter of seconds second just to Denver, Colorado, in home appreciation. Albeit falling oil costs are a noteworthy component in Dallas lodging patterns, different livelihood open doors and professional business charge and authoritative approaches make it likely that open doors for financial specialists to get required in this business sector, especially on the off chance that they wish to possess rentals or multifamily properties, will stay accessible for whatever is left of the year. Because of Dallas’ prominent on the contributing scene, singular financial specialists may think that its hard to “break in” to the business sector at first. Working with a prepared or associated neighborhood nearness might be a decent approach to viably vet arrangements and keep close tabs on business sector and monetary movements.

Denver, Colorado

At present, Denver, Colorado, brags the best gratefulness in the nation (10.6 percent in the most recent 12 months) however thankfulness alone is presumably the most exceedingly bad thing whereupon to base your land contributing system. Denver is obviously a “hot” business sector, be that as it may, thanks in vast part to its fascination in various age gatherings and demographics who are occupied with purchasing at retail esteem with expectations of costs keeping on rising, exceedingly positioned government funded schools, focused wellbeing insights and a fortunate open travel framework. Likewise, we’d be delinquent to forget the “pot market” in the territory, however numerous investigators and neighborhood speculators caution that weed alone won’t support Denver’s development as more ranges of the nation turn out to be progressively tolerating of its therapeutic and recreational employments. Land putting resources into Denver is extraordinary in case you’re as of now in, however this is another real metro zone that could be hard to break into. Be that as it may, the business area in Denver is pulling in a lot of global movement without further ado and is less aggressive than the private side, making it a possibly fascinating play for financial specialists inspired by multifamily, retail or office space.

Detroit, Michigan

At the nadir of the lodging crash, most investigators were more agonized over whether there would be a Detroit lodging business sector to rank by mid-2016 than they were about putting it on a hot business sector rundown of any sort. In any case, with home costs up 127 percent from their most reduced point amid the accident and still 38 percent beneath pinnacle values, Detroit’s lodging market has space to develop and is making more than one hot rundown nowadays. In the event that you like paying money or getting imaginative with financing, Detroit is a decent place to consider, as one in each two exchanges is still all-trade out the range. The downtown range of the city is thriving, thanks in huge part to greatly astute, key development with respect to vast managers in the territory like Quicken Loans, which was as of late named the “Best Place to Work in IT” for 2016 by industry pioneers. Speculators wanting to get in on the activity in Detroit should be extremely cautious to know about stock “stopping up,” since a significant part of the bothered stock is blighted to the point that it can’t be spared and may not be the arrangement that it seems, by all accounts, to be on paper or on the web. Offering this issue as a powerful influence for your technique, be that as it may, and keeping your examination and due perseverance current ought to keep your interests free.

Kansas City, Missouri

Specialists anticipated a hot year for lodging in Kansas City, Missouri, toward the end of a year ago, thus far, they haven’t been demonstrated off-base. Home costs are up more than 5 percent year-over-year (as of the end of Q2 2016) after a sound 5.6 thankfulness rate for all of 2015. Interest for lodging is still substantial, with 38 percent less homes available as of now than there were a year ago. In any case, lodging remains generally reasonable with middle home costs in the territory floating simply over $130,000 and the metro region making “best” records regarding bearableness all over because of low unemployment, high reasonableness, a rundown of built up bosses that are continually developing and an entrepreneurial/start-up-accommodating business group is hard to match. With rental rates and home estimations both encountering general positive patterns since 2012, financial specialists will have their decision of land putting systems in the zone. In any case, observe: developing licenses are 29 percent in the locale over a year ago, as per the Home Builders Association of Greater Kansas, so there are designers plainly hoping to fill (and potentially surge) the stock void. While not all licenses ever get utilized, the pace at which the city is issuing those grants is much quicker than going before years, and more allows have as of now been issued in 2016 than were issued for the length of 2009, 2010 or 2011. Notwithstanding, with a business sector preferably suited to innovative financing and more routine money streaming rental alternatives, Kansas City unquestionably measures up as a current hot business sector.

Nashville, Tennessee

Despite the fact that Nashville tenants are supposedly attempting to “make the jump” to homeownership nowadays, the city is hot for financial specialists in turnkey investment properties and multifamily lodging. Solid year-over-year livelihood and pay development (3.7 percent and 1.8 percent, separately) make it improbable that inhabitants will take off at any point in the near future, so both lodging and rental markets are solid in this metro region. For the individuals who can stand to purchase, the business sector is extraordinary, as they’ll make back the initial investment contrasted with nearby tenants’ expenses in around a year and five months. Numerous purchasers obviously see the benefit of owning, with home deal