Why You Should Invest in Single-Family Rentals

Why You Should Invest in Single-Family Rentals

After a year marked by stock market volatility, many investors are looking for alternative investments to stocks. Such investors should consider the advantages of investing in single-family rentals.

High Demand 

A low level of homeownership is one reason single-family rentals are in high demand. People are not seeking homeownership at the high rates of the past. Some seek single-family rentals to maintain their freedom to live anywhere. Others are would-be homeowners, but they have large amounts of debt from student loans and credit cards that make it difficult to qualify for or to pay a large mortgage.

With unemployment low and rising wages, strong job growth also is contributing to the high demand for single-family rentals. The country’s healthy labor market also is one factor that is leading the Federal Reserve toward a rise in interest rates, which would result in higher mortgage rates. An increase in mortgage rates would be good for investors in single-family rentals. Some people will continue renting because higher mortgage rates will price them out of homeownership.

Low Inventory 

Currently, there’s a low inventory of single-family homes. The combination of high demand and low supply means landlords can charge more in rent (see below).

Rising Rents 

A single-family rental has excellent potential for providing investors with positive monthly cash flow because rents are rising. Rental rates are expected to continue increasing in the near future.

Increasing Asset Value 

The value of single-family homes has increased over the past year and is forecast for continued growth in 2019. Long-term investors in single-family homes are likely to see these assets gain value over time.

Asset Volatility Unlikely 

Asset volatility is common in the stock market. However, prices in the housing market are not correlated to the stock market. The stability found in the real estate market may be attractive to equity investors.

Different Tenants 

Cultural shifts and demographic changes have put new faces on tenants who rent a single-family home. Young adults are not putting the cultural value on homeownership that previous generations did. Although many young adults aren’t planning a home purchase, they still want the benefits of a single-family home, such as a yard and additional bedrooms, for their children. Downsizing baby boomers rent because they either cannot afford or don’t want a new mortgage.
3 Ways to Invest in Commercial Real Estate

3 Ways to Invest in Commercial Real Estate

3 Ways to Invest in Commercial Real Estate
When the topic of real estate investing comes up, most people think of fix and flip opportunities. While that was once considered a valued method for building wealth, it’s certainly not the only way to get started in investing in real estate. By looking at several options, you may identify a method that best appeals to your skills and resources.
Directly Investing in Commercial Property
The fix and flip is starting to die out as people realize this isn’t the get rich quick scheme that television suggests. However, buying into a commercial property and holding onto it as a source of rental income is a legitimate way to make money in real estate. It requires patience and commitment because it will require you to maintain the property in good condition. You will also have to manage tenants and ensure each unit is consistently providing income. If you have the time and passion to devote to a commercial rental property, this may be the investment for you.
Becoming a Limited Partner
As a limited partner, you invest capital into a commercial rental property, while allowing another partner to manage the day to day operations. While you may get a say in how major decisions are handled, you leave many of the operational decisions up to the general partner. You simply invest capital along with other investors and, in exchange, you own a percentage of the property. If you want the perks of real estate investing without having to get your hands dirty, this is one way to accomplish that goal.
Invest in an REIT
Also known as a real estate investment trust, an REIT is essentially nothing more than a mutual fund that invests in real property assets. Each REIT focuses on a certain type of asset, so you can choose a REIT that invests in commercial shopping centers or one that invests in multi-family homes. The benefits here are that you don’t have to devote much personal time to the investments, while the REIT diversifies your holdings to maximize your potential for growth.
These are a few of the most common ways to invest in real estate. As mentioned, each type of investment requires a different level of personal involvement. This may be one of the deciding factors in determining which type of investment is right for you. Alternatively, you may choose to try multiple types of real estate investments to maximize your earnings. Your personal tastes and needs will determine which strategy is best for you.
A Beginner’s Guide To Investing In Industrial Real Estate

A Beginner’s Guide To Investing In Industrial Real Estate

 A Beginner’s Guide To Investing In Industrial Real Estate

Industrial real estate has long played second fiddle to more consistent investments like apartments and traditional retail outlets, but industrial investment is suddenly breaking out in a big way. The past few years have seen a steady 10% growth in the market, and the market was valued at almost half a billion in 2017. It’s a trend that’s likely to stay steady, bolstered by the growth of e-commerce and the need for more warehouses to support their operations. If you’ve ever considered investing in industrial real estate, now’s the time, and here are some tips that can help you make the most of your money.

Determining a Property’s Value

The industrial sector has been in decline for some time, and that means that there’s less in the way of formal standards for evaluating their value. You may have to do some extra work to figure out a property’s worth. Start by measuring the square footage and comparing it to other warehouses in your region. From this baseline, you can adjust the value by using a number of metrics like age, security, and the presence of useful equipment and technology.

Determining the Right Location

While residential and commercial properties have fairly similar standards for desirability, warehouses follow different rules. The one major selling point for a warehouse’s location is how well positioned it is to deliver product efficiently. The ideal location is situated near a major transit hub like an airport or seaport as well as a centralized highway. And while that’s the principle thing to keep in mind, picking a warehouse that’s near a major population center can also be a huge selling point that can increase your property’s values significantly.

The Advantages of New Properties

The obvious choice for new investors might be to put their money into aging warehouses. Older warehouses in urban areas are often outperforming newer developments due to their location, but there are a couple of reasons why they’re unwise choices for a long term investment. The scarcity of these locations makes them highly competitive targets, and many of them aren’t equipped to meet the needs of new e-commerce retailers. Their lack of height means that they aren’t well-suited to the more efficient verticality of modern warehouses, and upgrading them to accommodate the robotics that power the modern warehousing industry is so costly that they can’t really be seen as an economically frugal alternative to newer developments built from the ground up to meet the needs of tenants.

Are Apartments A Good investment?

Are Apartments A Good investment?

Are Apartments A Good Investment?

Apartments have been a fairly good investment for the better part of a decade. That is still the case. Other options may have become more tempting over the past few years, but there are fairly fundamental economic trends that ensure apartments remain a good choice for many investors.

The Big Picture

Humans need homes to stay safe, healthy, and comfortable. That is a fundamental fact of life, and no amount of technology or economic development is going to change that. Apartments are an affordable way for many people to get a home, and the relatively flexible nature of renting appeals to people who aren’t quite ready to settle down. That means that there will always be plenty of demand for apartments. The precise level of demand can fluctuate over time, but there will always be some.

Of course, some investments are better than others. Those who take the time and put in the effort to get the most out of their properties will generally see a much bigger return on their investment than those who do not.

Find Ways to Add Value

Increasing the value of a property is a key part of getting a good return on a real estate investment in the modern market. Most investors will want to consider paying to add amenities that appeal to renters in their area so they can command higher prices and attract more residents. Lowering operational and maintenance costs, or even looking for tax incentives can also be very effective ways to get a better return.

Choose Locations Carefully

It is always best to look for areas with a steady demand for housing before investing in apartments. In general, renters are looking for places with easy access to amenities and jobs. As with all investments, the price is also a factor. Examining local trends is a key part of determining the value of an investment.

Do the Research

Apartments are still a fairly good investment, especially for people who understand how to get the most out of them, but the golden rule of investing still applies: Do the research. Every region’s market is unique, looking at all of the options and honestly assessing them is vital for success. Investors who do their research and pick their investments carefully are the most likely to find success with apartments.

Best Markets to Invest in Real Estate in 2019

Best Markets to Invest in Real Estate in 2019

With incomes soaring in urban hot spots like San Fransisco, Seattle and Los Angeles, housing prices appreciated significantly as well. However, large year over year real estate returns in these markets increases the risk of an eventual crash, leading investors to search for new real estate markets for growth and/or stability.

Financial advisers are increasingly recommending cashing out of these markets now, rather than wait until the market has peaked. Although the stock market has performed well in recent years and the unemployment rate is very low, most job growth has taken place in the lower ends of the income distribution. This means that there should be a steady demand for apartments and cheap housing, while expensive housing markets may start to decline. So, where should investors be looking to for their next opportunities? Here is a list of the most promising real estate markets in 2019:

Orlando, FL

This city is seeing the largest job growth on the list, at 4.7%. This figure has increased from 3.8% only 6 months ago. With home prices increasing slower than incomes (10% vs. 20%), this market looks due for a solid upward swing. With home prices rising fast, however, investors would be wise to move quickly.

Jacksonville, FL

Another Florida town, Jacksonville is seeing 3% job growth and also has relatively affordable housing at its current market levels. The average home price is $270,000, well below average for the best potential markets.

San Diego, CA

This Southern California city is attractive for many reasons. San Diego boasts perhaps the best weather conditions year round of any American city. It also has the biggest difference between home price increase and income increase (7% vs. 21%) on the list. This suggests that although prices are relatively higher ($514,000 average), there is still a lot of room for the market to grow.

Silver Spring, MD

This Maryland town is a great opportunity for investment in apartments. With its close proximity to Washington, D.C, there is a steady demand for housing in the area. Housing prices are quite high in the area, so people will be looking to rent here. The average rent in Silver Springs is lower than that of nearby Washington, D.C’s ($1,398 vs. $1,646), which suggests there is room for growth here as well.
Investing in an Airbnb Property

Investing in an Airbnb Property

Airbnb is undoubtedly leading the way for the vacation rental ownership market. Airbnb is a worldwide sensation with properties located in 190 countries. As of November of this year (2018), 640,000 people have invested in and are hosts of an Airbnb property.  As others see the popularity of the site and its competitors, many wonder if they should jump on board and invest in their own vacation rental property.

Investing in an Airbnb Property

Many people that would’ve otherwise never thought to rent out their home or apartment are looking into buying a piece of property just to get in on the popularity of Airbnb. Thinking of doing the same? Before you invest there are a few considerations you will want to take in account:

1. Research the Local Rules and Ordinances

Before purchasing a property for short-term rental, research the rules and ordinances in the area. Some cities enforce certain rules that limit short-term rentals in favor of long-term rentals. Depending on where one lives, they may find that investing in an Airbnb property breaks the law.

Moreover, some local rules force renters to pay additional taxes and fees on the income generated with their Airbnb. Similarly, these renters may also be forced to obtain certain licenses to be able to rent out their property.

2. Ensure that the Property Can Also Be Used for Long-Term Renting

Buying a property specifically for Airbnb? Be sure that the property is also available for long-term renting. As business is always ebbing and flowing, it isn’t feasible to solely rely on revenue from short-term rentals.

3. Keep Tax Rules in Mind

Renters that set their Airbnb property lower than the market value may find that they are disqualified from using the property as a tax write-off. Before setting the rates or the property, research the IRS tax code and ensure that the property is in accordance with federal guidelines.

4. Review All the Expenses of Your Short Term Rental

While renting a room in one’s apartment on Airbnb requires little additional effort, renting an entire property tack on extra responsibility for the renter. In addition to maintaining the property by repairing and cleaning it, the owner must pay for the water gas, cable, electric, and Internet. All of these should be reflected in the price of the rental.

Don’t invest in an Airbnb if all the aforementioned considerations haven’t been made. Failing to consider these four things can turn a potentially profitable investment into a loss.