The Future of Real Estate Investing

The Future of Real Estate Investing

Digital trading is the fastest growing trend in real estate investment. The frontrunner of virtual trading is Blockchain, a form of technology that maintains time-stamped records in the form of interconnected “blocks” of data. Each block is connected to one another through cryptography, creating a “chain” that results in data that belongs to no singular person.

Blockchain real estate investment will make buying and selling in-demand real estate faster and more lucrative than ever.

The Basics of Blockchain Investment

Blockchain builds trust through the use of Distributed Ledger Technology (DLT). With DLT, transactions are shared in real-time, which reduces the risk of cyber-security attacks and creates viable records of data for both institutions and individuals.

Decentralized, cryptographically-protected ledgers will make real estate investment safer, faster and more economical in the long run. Updating to a Multiple Listing Service (MLS), brokers and real estate agents will be able to access the entire history of a property in seconds.

Virtual Payment

Cryptocurrency was once regarded as a strange, off-the-wall notion that would never take off. Now, people are making millions and buying properties with it. Bitcoin real estate investment started in 2018, thanks to the company Prime Trust.

Property investment done virtually limits the potential for fraud or fallout. When transactions are conducted online, third-party risks are rendered obsolete, and both buyers and sellers are held more accountable.

Greater Security

As blockchain becomes integrated into more economic industries, real estate investors will receive greater protection. Information will be handled swiftly, sent and received almost instantaneously and all parties’ best interests will be at the forefront of operations.

The digital age of real estate investment is going to explode, so all professionals are being encouraged to educate themselves and jump onto the bandwagon as soon as possible.

Without proper investment knowledge, it’s likely that agents will find themselves being passed over for more independent and fair trading options. The argument that traditional business will always reign supreme is quickly disintegrating in an era of personalized digital services; people no longer feel like they’re missing out when they turn to technology. Instead, they see greater potential as technology can provide them with customized feedback and a catalog of choices ripe for the picking.

What is an Illiquid Investment?

What is an Illiquid Investment?

The liquid rate that an asset is converted into cash determines how easy you can enter or exit an investment. Time is a central factor when investing, and liquidity determines how much time it takes to get your money once an asset matures. Liquidity even helps when taking money out as the market shifts against you. As long as you decide on the liquidity of your investment assets, you can exit your positions according to a strategy that fits you.

When Market Assets are Liquid

Liquid assets are investment instruments that convert into cash with relative ease. The quality of the asset isn’t determined by its liquidity, however. A liquid investment can still present unsatisfying returns, though, it’s easy to get in and out of. Here are some factors that determine the liquidity of an investment:

- Market Participants:
The more people that are involved in buying and selling, the more likely it is that you can close a transaction when you need to.

- Transaction Size:
Large-buy orders, for example, can help clearing agencies, for the bulk of orders can accommodate the market’s sellers.

- Daily Turnover:
The number of transactions play a role, for even when the participants are few, the constant trade orders sustain opportunities for entering and exiting.

- Economic News:
Positive and negative news influences the liquidity of an asset. Positive news can lead investors to flood a market and make buying difficult. Sellers can, likewise, enter the market to make buying easy.

Factors that Establish Illiquid Conditions

An illiquid asset is one that you can buy or sell but with a longer timeframe needed to complete an order. Factors that lower liquidity are determined when you buy or sell.

- Long Term Investments:
The timeframe that someone holds an investment within dictates how long the market takes to acquire or sell an asset.

- Market Prices:
The higher that prices are, the fewer the buyers will be. Prices that go lower allow more participants to get involved and actively trade.

- Market Closures and News:
Bad news, for example, when a company goes bankrupt, can force you to hold an asset longer that you intend to.

How to Calculate the ROI on a Rental Property

How to Calculate the ROI on a Rental Property

Rental properties can be a great asset to investment portfolios, particularly if they are successfully managed. There are many different types of real properties that can be converted into rentals. Commercial properties, when fully occupied, generally pay higher dividends for investors. Residential rental properties are said to be an addictive habit because investors purchase additional rentals consistently over time. Whether an investor chooses to select commercial, residential, or other property as a rental, there are some considerations that should be carefully weighed.

The return on investment (ROI) will be greatly impacted based on a number of different factors. Investors cannot simply calculate the purchase price of the real property and the average monthly lease income for the property. Many other conditions exist and must be factored into an accurate ROI on rental property.

Taxes and Insurance

The overall ROI depends in part on the geographical location of a particular property. There are various local and state ordinances that require lot rent, property tax, school tax, and other fees to be paid by the land or property owner. These may seem minute, but they will impact the overall return on investment. This calculation can be simplified by the net income gain of the property divided by the cost of the property. Net income gain is basically the income generated minus the cost of the property. These calculations can be based on monthly or annual figures and the end result will be the same.

Maintenance and Utilities

One major area that many landowners and property managers fail to consider when calculating rental income are the essential costs associated with the building or property. Commercial properties of course entail much higher overhead costs than residential properties, but these elemental items should be considered for all types of real property. Second to required insurance, routine maintenance and repairs are among the highest expenses that property owners incur.

Maintenance and repairs on a commercial building may require certified repairs that are filed with a city or county records office. Monthly utilities such as gas, electric, water, sewer, and trash pick up are generally required whether the property is currently being rented or not. Unless these are passed along to tenants, the property owner must deduct these monthly expenses from their net return on investment.

Important Facts About Quitclaim Deeds

Important Facts About Quitclaim Deeds

Real estate transactions are notoriously cumbersome and typically involve mountains of paperwork. Ownership of a particular piece of real property is conveyed through a document known as a deed or title. The official deed certificate proves ownership and also records activity and miscellaneous transactions regarding the real property. When property needs to change hands quickly due to extenuating personal or business circumstances, a quitclaim deed may be a valuable option. There are some facts to be aware of before proceeding with a quitclaim deed transaction.

Expedited Processing Times

Quitclaim deeds are frequently used between family members when it is necessary or advisable to change ownership quickly. This may be due to the original owner travelling overseas and being unavailable for upcoming transactions. Married couples may utilize the quitclaim deed to transfer ownership upon marriage or separation. The original owner of a real property may be unable or incapable of processing transactions on their own behalf due to an accident or a physical or mental disability. These represent only a few of the instances where quitclaim deed could be useful.

Correct or Alter Title Documents

Quitclaim deeds are also used to correct a typographical or clerical error on an original deed record. This is generally considered to be a temporary solution to provide a paper trail of the event or transaction while a new title investigation or other activities take place. In these cases, a new deed will eventually be issued to the real property owner. Not every state permits this type of use of a quitclaim deed, and the rules may change from one municipal district to the next.

Things a Quitclaim Deed Cannot Accomplish

Although quitclaim deeds have many benefits and uses, they are not a viable substitute for a thorough title search. Quitclaim deeds will affect the deed certificate only, and do not transfer ownership or liability of anything else related to the real property. Mortgages, liens, utilities, and insurance liabilities are not transferred through quitclaim deed. These conditions are neither implied nor expressed through the transfer of ownership through a quitclaim deed. Quitclaims offer little to no protection or background information to the new owner, since no documents are authenticated and no official title investigation is required for a quitclaim to be processed.

What’s the Difference Between Net Leases?

What’s the Difference Between Net Leases?

Net leases are essentially an agreement where a tenant pays the owner of a commercial property certain expenses beyond the rent. This might include payment of insurance, maintenance or taxes pertaining to the property. There are several options, which include a single, double or triple net lease. Let’s explore how these leases are different.

Single Net Lease

A tenant that opts for a single net lease will often pay the taxes on the property, in addition to the rent. A single net lease serves the purpose of enabling the landlord to eliminate part of the risk associated with leasing a property. Although the tenant is responsible for the property taxes, they are not responsible for other expenses, such as utilities, repairs and insurance. The landlord is required to cover these costs on a single net lease.

One of the benefits of a single net lease is that the rent is usually cheaper than it would be if the taxes were not paid. This type of lease could be detrimental to the landlord because they still have the responsibility of making sure the taxes are paid on time. This means the landlord would have to pay the property taxes if the tenant does not pay them by the due date. Failure to do so will result in late fees.

Double Net Lease

Of the net lease options, the one most commonly used is the double net lease. This is where the renter is responsible for paying both insurance and taxes, as well as the monthly rent. Just like a single net lease, the rent for a double net lease is lower than the standard amount. When there is a multi-unit commercial property, landlords often divide the cost of insurance and taxes based on the square footage.

Since a double lease does not require the tenant to pay for repairs, the landlord must handle this expense whenever a problem arises that requires maintenance.

Triple Net Lease

Use of a triple net lease isn’t as common as the other options. This type of lease requires renters to pay insurance, taxes and repairs, in addition to the rent. One of the issues that can arise with a net lease is a maintenance problem that becomes too costly for the renter to handle. This will often result in an attempt to renegotiate the rent. A triple net lease on a commercial property can significantly increase the renter’s operating expenses.

Every situation is unique and the type of lease that will work best for a tenant will depend on many factors.