REI Strategies for the Hands-Off Investor

Investing in real estate doesn’t have to be a dirty job. Here are three strategies to help hands-off investors make money from real estate.

Real Estate Notes

A real estate note is a type of promissory note such as a mortgage or deed of trust, which is secured by a real estate asset like a house. The borrower promises to repay the lender a certain portion of the debt at regularly scheduled intervals. While the original lender may be an individual note investor, usually the first lender is an institution such as a bank. Individual note investors also can purchase existing notes from banks, hedge funds, or other individual investors.

One way investors make money from real estate notes is to collect the debt payments with interest. Existing real estate notes are classified as performing or nonperforming. A performing note means the borrower is current on the note payments. With a nonperforming note, the borrower usually is at least 90 days behind in payments. A hands-off investor who is buying an existing note should purchase a performing note. Nonperforming notes are labor-intensive.

For more on publicly traded real estate investment trusts and utilizing property managers, see my full blog at http://jasoncohenpittsburgh.net/real-estate-investment-strategies-for-the-hands-off-investor/.

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Real Estate Investment Strategies for 2019

The rules of real estate investing are rapidly changing. With the rise of the digital era, investors must quickly adapt to new technology and new rules. In 2019, investors must remain flexible and be willing to adopt change in their investment strategies. What worked five years ago may not work today. Here are some tips to help make 2019 a banner year for real estate investors.

Study Real Estate Market Data

Investors should study real estate market data every year, not just in 2019. Data tells a story about neighborhoods and the climate of the housing market. Interest rates, construction costs and neighborhood trends are a short list of data points that investors should carefully study. Real estate apps and the internet make this easier than ever before.

Think of Market Slowdowns as an Opportunity

Many real estate experts suggest the market will experience a cooling trend in 2019. The deals that did not make sense last year or the year before might make sense this year. If rents stay strong and values start to decline, it could present a solid opportunity to invest in multifamily real estate.

Pay Attention to First-Time Homebuyers

With rising interest rates and tight inventories, most homeowners are staying put. However, there is always demand from first-time homebuyers. Experts suggest that flipping starter homes in 2019 could lead to nice profits, while the rest of the housing segment sits on the sidelines until the market stabilizes.

Focus on Equity

Some experts predict that housing prices will start to peak mid-year. If the predictions are true, it could be the right time to extract some equity. Cash in hand gives investors the flexibility they need to secure deals with a proven rate of return. Cash also helps investors transition into other classes of real estate.

Invest In Low-Income Communities

Congress created Opportunity Zones as part of the tax bill in 2017. These zones provide investors with tax breaks and incentives if they invest in distressed communities. Every state in the U.S. has locations designated as Opportunity Zones by Congress, and most real estate websites offer maps of the specific zones.

2019 could be a tricky year for real estate investors. Some experts say interest rates will continue to rise, while others suggest they will fall. What remains a constant in the industry is a sound investment strategy always delivers in any market conditions.

(I originally discussed this topic at JasonCohenPittsburgh.com.)

Looking to Sell Your Home? Become a Landlord Instead!

When a person owns a home and decides that it’s time to upgrade or relocate to another area, they have a big decision to make. Should they sell their old home or turn it into a rental property? To answer that question, it’s important to analyze all of the factors that are involved. Here are five of them to consider:

What Does The Cash Flow Look Like? 
The first factor that should be examined is if a property will produce a positive cash flow when it’s rented out. If the rental income is more than expenses like taxes, monthly mortgage, insurance, vacancy, utilities, repairs, etc., it will be profitable and may be a good candidate for creating rental income.

Considering Taxes
The Internal Revenue Service allows homeowners to avoid paying taxes on the sale of their home if it has been their primary residence and they have lived in it for a minimum of two of the last five years. This is based on sales that are at least $500,000 when married and $250,000 for individuals who are single. On most capital gains, an individual has to pay taxes that are equal to as much as 20 percent of the sales price.

Tough Markets
By renting out a home, it leaves a back-up plan during times when it would be difficult to sell. For example, if a person gets a job offer in a new city and the value of their house is currently below what they paid, they’d have to bring cash to the table. By renting, it would give them time to see if the market can recover.

Handling Tenants
Another consideration that should be analyzed is if a person wants to actually become a landlord. While there are a number of good tenants, some individuals require patience and time to deal with. There is always the option of using a professional property management company to handle everything, but that would cut into your bottom line.

How Does The Future Look?
If the future for appreciation looks bright, a person may want to keep their home, rent it out, and see if its value escalates in the next three, five or ten years. While no one has a crystal ball and can accurately forecast this, a person can gauge if growth is possible. Are current homes being renovated? Are retail buildings being constructed in the same location? These type of indicators are positive signs that the value of a home could appreciate in the future.

For more real estate blogs, check out my professional website. 

How Changing Seasons Affects the Real Estate Market

It’s no secret in the real estate industry that spring is peak season for potential buyers to start looking at homes. Families want to relocate while the kids are out of school and there won’t be any chance of snow-related issues during the move.

While you may get more traffic by listing your home in the spring or summer, that may not be the best choice overall. One study found that sellers are more likely to sell their home above asking price between the months of December and March. This is even true for areas with cold winters. Furthermore, homes listed in the winter sold slightly faster than those listed in the spring, on average.

A possible reason for this could be that people looking in the winter are looking because they’re more serious about buying in a timely fashion. For example, if a couple needs a bigger home before the arrival of a child or if a professional needs to move for a new job. To get in a home they love quickly, they’ll sometimes be willing to pay top dollar.

Before you make winter listings your new passion, there are a few things to consider.

  • The Area’s Housing Market

Real estate fluctuates constantly. Before listing a home, do some research. Look at the homes currently for sale when winter hits. Have they all been on the market for two months? If so, it may be better to wait until the spring when there is a heavier flow of potential home buyers. If someone sees that the home has been listed for a while, they may try to use that as leverage to lower their asking price.

  • The Asking Price

Some sellers choose to price a home low to generate a bidding war. In the winter, that’s not a great idea since you’re less likely to receive multiple offers. However, you also don’t want to list the home too high because that could be an immediate turnoff. Seasoned real estate agents are pros at finding that sweet spot to hone in the right buyers.

  • Repairs that Matter

Home buyers in the winter aren’t looking for a major fixer-upper if they’re trying to move in immediately. If there are problems with the HVAC, furnace or roof, it could be a deciding factor that sends the buyers in another direction. Be sure that the home’s major systems have been inspected and updated if any repairs are needed. Additionally, change air filters, weather-strip the windows and clean the gutters before any showings or open houses.

Winter home sales might not be ideal for every seller, but it’s an option that shouldn’t be completely off the table from the start.

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Originally posted at http://jasoncohenpittsburgh.com/how-seasonality-affects-the-housing-market/