by admin | May 10, 2021 | Media, Real estate investing
2020 was a wild year for the real estate market. The COVID-19 pandemic has affected so many aspects of our society, and real estate was certainly no exception. Along with rising home prices and low mortgage rates, some of the defining themes from this past year have been recording low housing inventory, mortgage forbearance and the foreclosure moratorium. Right after his inauguration, Biden got straight to work requesting federal agencies to extend eviction and foreclosure moratoriums nationwide among dozens of other executive orders since taking office.
The current US housing supply is only at 2.3 months (Washington Post, 2021). This means if no more houses were listed for sale, all current listings would be sold in about 2.3 months. This is less than half of what would be considered a balanced market of 6 months of inventory. One of the reasons for the low housing supply is the fact that mortgage rates are at the lowest in years, with experts saying that they will likely continue to stay low throughout 2021. Low rates, make borrowing money cheaper, and in turn, increases the demand to buy. High demand coupled with a low inventory, causes home prices to skyrocket.
At the same time, COVID-19’s economic impact has caused 2.7 million, or 5.5% of all mortgages in the US to be in forbearance programs as of Jan. 3rd (Reuters, 2021). While this is lower than the peak of 8.6% in June, it still represents a shockingly large amount of mortgages where homeowners are unable to make their payments. What is particularly worrisome is that the homeowners who continue to be in forbearance may be more likely to be in distress as many have been unable to make their mortgage payments for months on end.
Furthermore, the foreclosure moratorium was originally issued on Sept. 4th to help reduce the spread of COVID-19 by reducing homelessness. It has recently been extended until at least March 31st, by the Biden administration (Miami Herald, 2021). This is not the first time it has been extended. In fact, before leaving office, Trump extended the original moratorium that was set to expire on Dec. 31st until Jan. 31st. The question now is: What will happen after March 31st? It is possible that there could be another extension. If so, we will probably continue to experience a low housing inventory. However, if the moratorium does not get another extension in March, we could possibly see millions of foreclosures hit the market in the following months.
This potential increase in supply may cause housing prices to flatten out or even decrease in the months after the expiration of the foreclosure moratorium. Furthermore, it may also provide prospective homeowners and investors more opportunities to find deals, which have been increasingly difficult in many competitive markets. To keep up to date with real estate-related news, and to learn more about real estate investing check out more blog posts and podcasts at https://bulletproofcashflow.com/.
by admin | Apr 25, 2021 | Media
There are so many ways to invest in real estate. You can buy and hold, or Fix and Flip. Some focus on cash flow, while others prefer appreciation. You can invest in residential or commercial real estate. Just as there are many ways to invest in real estate, there are many ways that an investment can go wrong if not carefully executed or managed. Many investors that do not have the time or knowledge to actively invest, opt to invest in real estate syndications. Some of main advantages of investing in real estate syndications include passivity, professional management, and reduced risk.
First of all, it is important to define what a real estate syndication is. The word “syndication” is defined as “the transfer of something for control or management by a group of individuals or organizations”. In the context of real estate, this means that a group of investors will pool their resources together to invest in large deals, such as apartment complexes, shopping plazas, or office buildings. There are many different ways to structure syndications and various minimum investments required, yet the fundamental concept of bringing people’s money together to fund deals remains the same.
Many people think of real estate investing as passive income. While in some cases that can be true, oftentimes it is not. Say you want to buy a duplex and rent it out as an investment. In order to do that you will have to secure funding, find the right property, close on the deal, make any necessary repairs, fill vacancies, and manage the property’s day-to-day issues. As you can see, traditional real estate investment is not so passive as some may think. However, with real estate syndications, the general partner will take care of all the work, while you enjoy the cash flow and appreciation. You will likely have to pay acquisition and asset management fees to the syndicator so make sure to read the fine print and understand how those fees will be structured. However, the fees are typically small enough that you still get a great return on your investment providing you chose a solid syndication to invest with.
Professional management is a huge benefit of investing in a syndication. There are many hassles and headaches to deal with when managing your own rental properties. However, the syndication will have a team in place to professionally manage the asset throughout the entirety of your investment. This helps assure that the property will perform at optimum levels and continue providing investors with great returns.
Risk is an inherent part of any investment. However, investing with a reputable syndicator will reduce the risk by dispersing it between investors. Also, by investing in a syndication you are diversifying your portfolio into asset classes that you may normally not be able to afford to invest in. This diversification reduces your risk in the event of an economic downturn or recession.
If you have some money to invest in real estate, but don’t want to do all the work yourself, investing in a real estate syndication might be the perfect way to diversify your portfolio and passively collect some great returns. We currently have an active deal and are looking for investors to fill a few spots in our latest project. Check out https://www.investinbluestone.com/ to find out more. Also, if you want to learn more about real estate investing and keep up to date with related stories, you can find more articles as well as podcasts at https://bulletproofcashflow.com/.
by admin | Apr 21, 2021 | Episode List
Luke Shankula is the founder and CEO of Paragon Digital Marketing, he and his team apply their expertise to get from lead generation through conversion. He leverages his background as a loan officer to identify leads and convert them into investors. His digital marketing tools include Facebook ads, Instagram, and YouTube.
In this episode, Luke shares how to use digital marketing to build your investor list.
by admin | Apr 21, 2021 | Episode List
Powell Chee leads a global networking community called MultiFamilyMasters, which is the fastest growing multifamily meet-up on the planet. The interesting thing about our next guest is that he lives in Los Angeles, but all of his investments are out of state. He is a general partner in 1000+ apartment units. Currently he is closing his first self storage facility located in Baton Rouge, LA.
In this episode, Powell will be explaining how to expand beyond multifamily investing.
by admin | Mar 7, 2021 | Uncategorized
As US home prices rise at the fastest pace in over 6 years (CNBC, 2020), there are now 312 US cities where the typical home is over one million USD (Mansion Global, 2021). That is a 17% increase in these so-called million-dollar cities compared to last year. As a result, more and more Americans are finding it harder to afford homes, especially in coastal metro areas. However, what if I told you there was a way to reduce or even eliminate your monthly mortgage payment? Welcome to the world of house hacking.
While the concept itself has been around for a while, it has recently been gaining popularity among financially savvy home buyers. To put it simply, house hacking is renting out part of your primary residence in order to help cover the costs related to home ownership. To give you a better understanding, let’s take a look at a real life example from a friend of mine who closed on his first house hack last year. For reference, Jack, bought a duplex and lives with his family in one half, while renting out the other unit. Here are the numbers:
Purchase price: $260,000
Down payment: $9,100
Monthly mortgage payment and operating costs: $1,800
Net monthly rental income: $1,900
Not only did Jack completely eliminate his monthly housing expenses, he actually makes $100 a month to live in his home. Sounds easy right? Well yes, and no. While anyone can do it, not every property you see for sale will cash flow like this. For example, if Jack’s purchase price was twice the amount, but his rental income was the same, he would be paying out of pocket for his monthly payments. Housing prices and rental incomes varies widely based on location, size and the condition of the home you are looking to buy.
However, there are strategies you can use when trying to house hack. Most importantly, is to look for properties that have as many rentable spaces as possible. Looking to buy a single family home? Check if there is a finished basement or attic space that can be used as a studio or additional bedroom. Multi-family homes offer more opportunities to generate revenue with each additional unit. Triplexes and fourplexes offer more cash flow potential then a duplex would.
As with any real estate investment, location is one of the most important factors to consider when looking at a property. Look for areas where rent prices are growing, and the job market is steady. Other things to consider are crime rates, school ratings, and public transportation access. Make sure to check the zoning laws in your area as multi-family homes are sometimes zoned in areas with a bunch of other multi-family homes which can sometimes make an area less desirable. Ideally, look for neighborhoods that have a good mix between single and multi-family homes.
Depending on your market, you may want to consider alternative rental strategies. The typical method would be to find a tenant, have them sign a 12-month lease, and collect rent every month. However, if you live in an area close to a university you could rent out each bedroom room to a different student on shorter leases and possibly make more money than you would with a traditional yearly lease. Or if you house hack in a touristy area you could list your property on AirBnb or VRBO for daily and/or weekly stays. Make sure to check that your area allows you to do short-term rentals before committing. Going the short term lease route means you have higher turnover. This can mean a bit more work on your end. However, high turnover means that you get the opportunity to inspect for damages and maintenance issues more often than when you have a long-term tenant.
There are so many ways to invest in real estate, so make sure to figure out what works best for your financial goals. To learn more about real estate investing check out the Bulletproof Cashflow Podcast at https://bulletproofcashflow.com.
