With more and more people flocking to popular towns and cities, combined with the increase of all things digital, Airbnb is a company that couldn’t have arrived at a better time in the digital age. In fact, there really wasn’t another time where Airbnb could have thrived in the way it does now. And while it has helped countless people make their vacations more affordable, as well as benefit those renting out their own properties, is it possible that this app has also brought some trouble to the real estate market along the way?
Property Owners are Catching On
Property owners are concentrated on buying properties in cities that draw large crowds of tourists. You may be wondering where Airbnb ties into this statement, but this is where it gets interesting. Current property owners and people looking to purchase property to rent out have grown keen to the fact that Airbnb can be a helpful indicator of places that are seeing a booming influx of visitors, which in turn signals to property owners that their city may very well be a hot commodity for all things hipsterdom and tourism
So, what has happened as a result is that many property owners are beginning to raise the prices of their rental properties in an attempt to capitalize on a bustling metropolitan area. Also, current property owners in cities where this is occurring are also optimistic as it provides them with a chance to sell for a much higher price than they bought.
Airbnb rental properties can be money-making machines. If you operate an Airbnb in a sought-after travel destination, you are likely to acquire a continual, large-sum of revenue each year. With this in mind, property owners have opted for renting their spaces out short-term for the whole year as opposed to on a long-term basis (short-term means more money). Now, since long-term rentals are becoming increasingly less available, this has pushed property owners into a heightened sense of competition, which in turn causes prices to go up due to demand.
Airbnb is a great tool for people looking for places to stay while vacationing and for people looking to make some extra profit. But if the invisible hand of Airbnb continues to increase the prices of the housing market, we may be headed for a destination that no one wants. The conversation on how to create and maintain sustainable housing costs while allowing people to continue their ventures on Airbnb is a dialogue that is certainly worth having, both for the tourists, locals, and property owners.
House-flipping has become a trendy and exciting career for many hungry professionals looking to establish themselves in the housing/real estate market. But in an attempt to chase after a truly promising career, far too many people repeat the same mistakes.
To help remedy the recurring problems that come along with house-flipping, below are two all too common pitfalls that seem to perpetually plague real estate moguls longing to turn a passion into a paid project.
What is Flipping?
First, we need to establish what constitutes “house-flipping” in the first place. “Flipping” is a type of real estate strategy in which the buyer purchases a house for the sole purpose of renovating and selling the property. The way that profit is made in this business is by purchasing low and selling high.
For instance, investors who flip properties might buy a property in an especially “hot” market, renovate it, and then sell it at a price that makes sense with its newly added, state-of-the-art upgrades. This is also where the true work comes in, too. House-flipping doesn’t just require smart investment purchases, it also requires home renovation and remodeling skill.
Mistake #1: Poor Time-Management
Renovating and flipping can often be a time-consuming business. Not only do you need to find a property, but you have to have enough time built into your project to account for inspections. After that, of course, you need to play the waiting game that comes along with listing. It takes a lot of confidence in your skill to be patient through this whole process, especially if your goal is to make enough money to at least break even.
Mistake #2: Not Enough Skills
House-flipping isn’t easy, and the competition is certainly present. Many skilled plumbers and carpenters often flip houses as a side project. If you desire to excel in the industry, there’s a lot more to it than buying low, taking a sledgehammer to the bathroom, and listing it on the market. Like it or not, the real money in the house-flipping industry comes from what the professionals call sweat equity. If you’re comfortable (and skilled) with a hammer, hanging drywall, and laying a carpet, then you just may have what it takes to make it in the house-flipping industry.
In the end, patience and hard-work are equally as important as any other skill in the house-flipping industry. If house-flipping is a passion of yours, then going into the industry with research and guidance is imperative. It won’t be easy, but with the dedication needed to accomplish the task at hand, house-flipping and renovation can be a great career full of excitement and fulfillment.
Investing in real estate meanings putting the money you have today to work for tomorrow. Simply put, real estate is a business that requires a healthy dose of foreknowledge, confidence in your research, and skill in assessing the lucrative real estate markets of today and tomorrow. The revenue you make on your return must be enough to cover things like taxes and the cost of owning real estate investments like paying for utilities, maintenance, and insurance.
Basically, real estate is the real world equivalent to monopoly. But just because the concept is easy to grasp doesn’t mean that the industry is easy to excel in. Below are a few helpful tips for those who are novices in real estate investing.
Deciphering the best cities and bustling towns to start investing in real estate is crucial. If you can develop the foreknowledge it takes to scope out lucrative areas, then you are already off to the best possible start. An old real estate investing adage is to look for the worst house on the best street. Why? Well, a good location provides strong potential for tourism, and “fixer-upper” property allows you to buy low, invest your money into renovating and upgrading, and then sell for a price that reflects your renovations.
The 1% Rule
If you plan on purchasing a property that you’ll rent out to one or more tenants, then you should utilize the 1% rule.
The 1% Rule states that an income producing property must produce 1% of the price it costs you every month. For example, if you buy a property for $150,000, then the monthly rental income should be 150,000 x 1% = $1,500. Simple enough, right? Well, the true skill in this area comes from searching out and capitalizing on properties that are conducive to the 1% rule.
Appreciation is when the land and market around you goes up due to an outside factor in the community. A major new shopping mall, city upgrades, and even the investments you put into your properties that make it more appealing to potential buyers all help produce appreciation. While extremely lucrative, this is one of the riskiest elements of real estate investing, and caution should be taken when playing the tricky game of real estate appreciation.
Real estate investing is a great industry to enter into, and simple as it may be in its description, the application of it is something that requires skill and precision. However, difficult as it can be, implementing these three steps will prove to be extremely useful for you in the long run.