Real Estate Investment: Choosing Your Niche

The road to success is easier for real estate investors who select a niche and become an expert in that area. Deciding which niche to choose depends on the investor’s interests, resources, and financial goals. Here are the benefits and drawbacks of common real estate niches.

Single-Family Homes

Since single-family homes make up about 60 percent of the housing in the United States, it’s an obvious niche to consider. Single-family homes are easy to finance because they don’t require commercial loans. However, sometimes rents on single-family properties aren’t sufficient to cover the investor’s monthly costs. Investors also need to plan on carrying the mortgage when the home is vacant.

Small Multi-Family

Some investors choose buildings with two to four units because they can live in one unit and rent out the rest. Small multi-family properties are often easy to finance because most banks use the same standards as loans for single-family homes. Vacancies aren’t as problematic as they are with single-family homes. When a tenant moves out, the investor still has rental income from the remaining units.

Small Apartments

Apartment buildings with five to 50 units generally fall into the category of small apartments. Investors will find less competition because large companies aren’t interested in these properties and they aren’t affordable for many individual investors. Also, small apartments are financed according to commercial lending standards. Managing a small apartment building is labor intensive. Investors may need to consider the additional cost of hiring a property manager.

Large Apartments

Buildings that have over 50 units usually sell for millions of dollars. They may feature amenities like a swimming pool, a gym, or a concierge. Large apartments can be a passive investment since a paid staff takes care of the property. In addition to rent, large apartments often have some amenities offered to tenants at an additional cost, such as a parking space or storage space. Some investors purchase large apartments in a partnership with other investors. Sometimes these properties are owned by REITs (see below).

REITs

Investors in real estate investment trusts (REITs) purchase shares of a commercial real estate portfolio. Some REITs own various types of commercial properties. Others specialize in an asset class like shopping centers, hotels, or office buildings. REITs pay dividends to shareholders and are a completely passive investment. The income potential is not as great as that of hands-on investment niches, but it requires relatively little effort.

There are dozens of ways to invest in real estate, but these options are some of the most popular. One size doesn’t fit all, but knowing how hands-on of an investor you’d like to be is the first step in deciding your niche.

This article was originally published on jasonCohenPittsburgh.org.

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Tips for Selling a Home in the Spring

Early Spring is without question the best time of the year to sell a home. The first two weeks of May correlate with the highest real estate selling prices during the calendar year, so you should target this window of time to list your home if you want to maximize your profit while selling in the warmer weather.

The reason why prices spike during May is the fact that many buyers are starting to look for a home to purchase during the spring. Many buyers don’t want to look at homes during the winter, and those with kids often want to plan their move for after the school year ends. Because of this, the market is saturated. The higher the concentration of potential buyers, the higher your home is inevitably going to sell for, assuming there’s competition.

When it comes to selling a home, there are a few things you should do to prepare the property. Winter is a good time to get your home fully inspected by a professional, which will give you a good idea as to what needs to be repaired. It is unwise to list a home that has damage, so it is critical to address any repairs that need to be taken care of. Not only is it necessary to make any necessary repairs, but you should also think about implementing some strategic renovations to maximize your resale value.

Renovating a home before a sale can put a ton of additional money in your pocket when your home actually sells. Many people are looking for things such as new appliances and granite countertops. The costs that are associated with making these types of renovations pay huge dividends when it comes to the increase in equity your home will experience. Not only are these types of renovations proven to increase equity dramatically, but your home is also going to be a lot more appealing to potential buyers. This is likely going to increase the number of offers you receive on your home, which should lead to your home being sold for a greater amount of money.

Curb appeal is also something that should be on your mind. The better you can make your home appear to the eye, the more interest your home is going to generate. The first impression means a lot, but the interior must live up to expectations, as well.

It is a great idea to hire a professional to stage your home, both inside and out. Having your furniture laid out correctly and obtaining professional photographs will go a long way when it comes to sparking interest from potential buyers who see your online listing.

This article was originally published on jasonCohenPittsburgh.org.

 

Beginner’s Guide to Property Tax in Pennsylvania

Buying a home may be the biggest investment many people will ever make. In the United States, achieving home ownership represents success and an improved quality of life for many people. Owning a home, or any property, however, comes with the added costs of a mortgage, insurance, maintenance and property taxes.

When calculating the total cost of home ownership, it’s important to account for the expense of property and other local taxes, and to know you are getting the best services for the amount you pay. Property taxes pay for public education, libraries, transportation, road construction and maintenance, emergency services, parks and recreational facilities. While low taxes are appealing, excellent services are also important for maintaining quality of life and preserving real estate values.

Property taxes in Pennsylvania, as in most states, are determined county by county, and include county, municipal, and school district taxes. In Pennsylvania, homeowners are assessed property taxes that range from 1 to 2 percent of the assessed value of their residence, with an average effective tax rate of 1.55%. Tax assessors determine the tax burden for each property by assessing the value of the land and any buildings on the property. Pennsylvania uses a system called the mill levy for calculating property taxes, which assesses $1 in taxes for each $1,000 of property value.

For my full blog, please see http://jasoncohenpittsburgh.org/a-guide-to-property-tax-in-pennsylvania/.

 

Are Digitally Altered Real Estate Photos Always Ethical?

By now, most everyone knows how to “photoshop” a basic photo, using a wide variety of programs. In most cases, doing so is harmless and can even result in more stunning photos. In other cases, however, digitally manipulating photos can cause scandal and even ruin to some. A new trend is on the rise in real estate which can run from the harmless and helpful to the costly and potentially downright fraudulent.

Photos and videos have long been a basic staple in online real estate listings, including 360-degree tours. While ordinarily, these can be incredibly helpful to home buyers, many of these images are now being digitally manipulated. In one sense, digital manipulation can be no different than staging a home in the first place. A professional photographer might help make a somewhat less-than-spectacular pool appear to be a crown jewel in a backyard oasis. Photographing your house at the peak of spring when the trees are in full blossom is preferable to the dead of winter when the grass is brown and the trees look dead and lifeless, but isn’t inherently misleading.

A number of virtual staging services are on the rise, however, that could create a problem…

Please see my blog at http://jasoncohenpittsburgh.org/danger-in-the-rise-of-digitally-altered-real-estate-photos/ for my full article.