Month: January 2022

January 21, 2022

Before you jump in and decide investing in real estate is a smart financial decision for you, it’s important to make sure that you understand the risks and rewards.  Below we will look at some of the most important criteria someone should consider prior to making any major real estate investments.

Geographic Area

It’s important you understand where the property you’re considering investing in is located and what the obstacles are for investing in one particular area over another.  You should consider where exactly you want to be investing based on your unique circumstance. Is it best for you to invest in a city or rather in the suburb or a more rural area? Some investors prefer investing closer to cities because there is more demand for housing and it can be easier to find tenants. That said, if you’re willing to spend the necessary time looking for good renters, then perhaps for your situation the suburbs would be a better fit since they tend to have lower crime rates than more populated cities.

Understand All Costs

You should have an in-depth understanding of all of the costs associated with making a large investment in real estate before making a final decision. For instance, it’s important to understand that there are legal fees and other expenses involved with purchasing real estate.  Making sure ahead of time that your budget is prepared for those extra costs as well as any other potential startup costs will put you ahead of your less informed competition. Don’t forget to account for the taxes on your investment returns, so you know what to expect at tax time every year.  Additionally, if you’re considering a residential property, then you should make sure to not forget about maintenance costs and utilities because those can eat into your profits often times before you realize it.

Get Clear On Your Goals

Being really clear on what your short- and long-term financial goals are ahead of time will help you determine the type of property that’s right for you. For instance, if your goal is to use this investment property as a retirement home, then maybe look into purchasing a vacation rental in a gated community since these properties are often good for retirees because they generally have a lower amount of crime.  If, on the other hand, your objective is to gain revenue from renting out a property long term, that will require an entirely different approach than focusing your time on vacation properties.

Get Insurance Coverage

You need to make sure you are covered in the case of an emergency with a good home insurance policy. There are many different insurance plan options designed to fit your investment properties specific needs, so it’s a must that you know what common things could happen ahead of time and protect your investment accordingly. For instance, if you’re considering purchasing commercial real estate, the property should be covered under property insurance because commercial properties are often more valuable than residential ones which often put them at a higher risk of being the target of theft and other crimes.  On the other hand, if you’re thinking about purchasing a vacation home, you’d be wise to have an insurance policy that covers natural disasters like earthquakes or flooding.

Above are just a few examples of the types of information you should consider when you’re thinking about investing in real estate.  Make sure that you take the time before making any final decisions to understand the specific market conditions, know what kind of property type is best for you, and always remember to protect your investment with good insurance coverage.

January 14, 2022

Real estate is one of the wisest assets someone can invest in. One big advantage real estate investment has over other industries is that the value of a property does not tend to fluctuate much from day to day. This is one main reason many investors choose real estate as their primary source of investment. Of all the various real estate options available; commercial, land, and residential properties are the 3 primary types of investment available if you’re ready to give real estate a try. Commercial properties specifically in most markets are in constant demand. Investing in commercial properties will likely increase your ROI overall.

Commercial real estate values are growing rapidly in many major markets. These are the primary properties that are home to a wide range of office spaces, retail stores, and countless different businesses. Any non-residential real estate that is not used for business operations is known as commercial real estate. Investing in commercial real estate is one of the smartest ways to expand your financial portfolio. Below we will look at a few of the top benefits of investing in commercial real estate specifically.

Positive Cash Flow

Compared to the many investment options out there such as the stock market, company shares, and cryptocurrency, the ROI from commercial real estate investment is generally higher. The generated ROI for commercial properties also tends to perform better than simply purchasing bonds. The stability of investing in commercial real estate makes for a healthier environment even if real estate markets temporarily become more volatile.

Build Equity

Equity is commonly described as the difference in value from what a property is currently worth versus how much money is still owed on the investment. When investing in commercial real estate, it is not uncommon to build equity in a much smaller time frame than other investment strategies allowing for more flexibility to leverage the earned returns as your investment in commercial real estate appreciates.

Investment Security

With commercial real estate, both the structure and land the land the property sits on can have significant value. This is one main reason why commercial real estate can be such a valuable asset. If you are able to invest in commercial real estate in the right location, you can often times avoid a negative income stream even during off-seasons or economic down turns. This is a very positive advantage if you have an investment portfolio with several different types of investments and want to help insure that the performance of said portfolio doesn’t take a hit overall. For these reasons and many others, commercial real estate has become the primary source of resource allocation for many successful real estate investors.

Leverage

The reality is that most of the time, even the savviest investors are not able to purchase a new real estate investment with cash alone and most utilize a mortgage or seek funding through the use of a hard money loan in order to secure their investment. This ability to acquire a new asset without paying for all of it up front is the leverage many investors require in order to grow substantial wealth over time. This is one reason so many investors have been able to build wealth by utilizing a loan from a bank or other 3^rd party lender service.  Commercial real estate can be a secure way to ensure you can repay the loan in a timely manner while building a higher ROI with an asset you will one day potentially own.

Above are just a few of the top ways investing in commercial real estate can be a significant financial benefit to your long-term investment portfolio. As with any investment it is important to do your research and make sure you understand the terms of any investment or loan you need to take before the deal is finalized.   Hopefully the above guide will assist you in learning more about the advantages of investing in commercial real estate.

January 7, 2022

Making the decision to purchase a vacation property as an investment is a serious life commitment. These decisions should never be made in the heat of the moment. It is vital to weigh all the advantages and disadvantages, and calculate the potential risks in order to avoid an unpleasant surprise for you. Below we will weigh the pros and cons of investing in vacation properties in the hopes of providing readers with the information they need to make a more informed decision before the next potential investment comes along. First, let’s look at a few pros of owning an investment property:

New Income Stream

One of the main reasons people decide to invest in vacation properties is the potential they offer in providing a new stream of income to their monthly financial positioning. Renting out just one vacation property in a good location can add hundreds if not thousands of dollars to your monthly income.  Owning multiple vacation rentals over time can lead many to make it their primary source of living.  There are a number of online hosting sites available nowadays to assist you in the process of keeping your vacation property occupied, especially during off season times.

Investing In Your Future

You have more flexibility with vacation properties to schedule rentals according to your future plans. Whether you’re looking to get away over a long weekend, gathering with family for the holidays, or simply planning some alone time, with a vacation property, you likely won’t have to look for a place to stay. Even better, you will be able to sell your vacation property when the right time comes and live on the money from the sale or use it to cover other expenses. The equity should allow you to spend money on your future health, travel, and other needs.

Now let’s take a look at a few of the potential cons of investing in a vacation property:

Expenses Increase Over Time

Vacation rental properties are not a thing that can be left unattended. You will need to make sure that cleanliness is maintained inside and out of the property, that needed repairs are handled in a timely manner, and that all bills are paid on time. It is also important that you not forget about paying for insurance.  There are many property management companies out there that can perform many if not all of these routine tasks for you but beware, they all come with a cost. If you do not have enough upfront funds and need a mortgage, keep in mind that your monthly expenses will increase significantly and there is no guarantee that the rental income will cover them until the end of payments.

Advertising and Maintenance Cost

You should expect to advertise your vacation property on several online platforms. You need to monitor these relationships closely, including review issues, looking at how your competition is performing, and improve your rental conditions to attract new renters continuously.  It may be necessary to add special amenities, such as allowing pets or having a pool. These types of amenities can increase customer demand significantly. The increased level of comfort can easily attract guests, but with the added enhancements comes added costs that will take time to recover.

HOA Restrictions

It’s important to research and make sure you understand all of the potential HOA requirements in the neighborhood before purchasing a vacation property in a particular area. Unfortunately, it is often the case where someone does not do their proper homework only to discover that the local HOA restrictions severely limit their ability to make enough revenue off of a vacation property to make it worth their while.

Prepare Before Investing

Before investing in vacation property, you need to consider several important factors, so that the business will bring not only money but also pleasure.  Vacation property investment can be a profitable investment with proper budget preparation and management. When buying a rental property, you should be well aware of the demand for rents in the region, prices, as well as costs. Prepare the accommodation for guests, always keeping in mind not about what you like, but the amenities that attract specific renters to your property.