A lot of people would love to own a vacation home but are intimidated by diving into the realm of real estate investments. That being said, there are certainly a host of benefits for investing in a vacation home. It can actually be one of the best ways for individuals to become property investors and make their way into real estate business. On that note, the following article presents the top reasons for buying a vacation home that people should consider.
Owning a property with Dual-purpose
One of the biggest advantages of investing in a rental vacation home is being able to use it as a second house when spending vacations with family as well as renting it out the remaining months of the year.
Generating Rental Income
Another benefit of investing in real estate properties is having another source of income. Indeed, the money that the second home generates can actually be used to pay for repairs, mortgage, property tax, insurance, and maintenance, just to mention a few.
Increasing Value Through Appreciation
In addition to generating funds on a short-term basis, vacation homes can also allow people to make money in the long run as well, and it happens through natural real estate appreciation. Indeed, the vacation home will most likely appreciate in value with time. This means that individuals can sell their real estate property at a higher price than the one they bought it at, and make profit in the process.
Gaining Tax Deductions
Like a primary investment property, a second house can also offer tax deductions. These deductions pertain to property tax, mortgage payment, rental income, and utilities, just to mention a few.
Learning About Real Estate
For individuals to become experts on real estate, they need to invest in properties and learn how to manage them. That being said, investing in a vacation home is considered to be an easy way in the realm of real estate investment in comparison to other real estate investments, such as wholesaling and being a full-time landlord for instance.
Easy to Manage
A lot of individuals do not have time to manage their vacation homes. So, instead of taking charge of handling the property, a property manager can be hired to take care of the vacation home.
Multifamily investment is continuously rising nowadays. Most property investors prefer it because they enjoy how fast it pays. With little space, many families can be accommodated, leading to greater returns. Following are the four reasons for the rise of multifamily investments.
They’re Always on Demand
Despite how difficult the economic situation is, people will always toil to put a roof over their heads. They will tend to go for cost-effective measures for residence as the situation gets tougher. However, the multifamily property provides a suitable alternative.
The homeownership trend has shifted as the young population finds themselves renting for longer. They tend to capitalize on multifamily properties because rentals are flexible and have low entry barriers. Besides, one can quickly relocate. Following this trend, multifamily properties are always in demand.
Spreading the Risk
Many tenants occupy a multifamily property. This implies that if a tenant defaults rent, the proprietor still has other sources intact. Cashflow to the landlord isn’t highly affected when a tenant vacates.
Reduction of Costs and Expenses
It’s relatively cheap to manage and maintain a multifamily property. This is because some maintenance and management costs are shared. For example, security-related costs are low since the units are under one roof.
People are experiencing harsh economic times. As a result, they flee from high-cost areas to affordable places with less population. With few multifamily properties coming up, the supply is overwhelmed. As a result, investors invest more in developing multifamily housing to bridge the gap. As natural law, when demand is higher than supply, the cost goes up. It’s a motivation to the property owners.
Flexible Financing Options
Investors feel encouraged to dive into multifamily property development due to the number of financial options. The government offers loans with few restrictions making it easier for them to develop.
Multifamily housing is on the rise since it’s the real deal in the current times. It has proved to be a steady asset class in real estate investments. As investors’ gears to put money in the right place, multifamily properties are a choice they should consider.
As a real estate agent, finding the right home for your client isn’t always easy. To find a home that interests a buyer, make sure that you know the buyer’s interest, which is a step in the right direction. To do this, you can ask the client what features they want in their home, and this way, you’ll be able to find the right home for them. Below are some of the trends that attract home buyers;
Many home buyers are always interested in a home with an outdoor space where they can get out of the house and relax without leaving home. In other cases, buyers want a blending indoor and outdoor living space where the living room is extended to the backyard. Outdoor spaces are important to buyers because, in summer, this space is perfect for dinners and barbecues or holding large gatherings.
Location is another critical feature that buyers consider while buying a home. A home that is located in a secure neighborhood is one of the homes that interest buyers. Also, many are usually interested in homes that have easy access to main roads. Locations like these can
be very pricy, so it always necessary to go with your client’s budget.
The kitchen is usually considered the heart of a home. Homes with large kitchen areas, especially open floor kitchens, seem to sell faster. They sell faster because an open floor kitchen allows easy transition between rooms.
Many people have jobs which allow them to work from home. A home office is a feature that such types of buyers look for when purchasing a home. A home office with a door is essential because it helps one concentrate on their work without destructions. The room’s color choice should be considered because some colors do not provide a conducive environment to work.
Nowadays, home buyers are interested in homes that are energy efficient. Such homes are the ones that have hardwood floors, double panned windows, and energy saving lightbulbs. Homes that are energy efficient help to limit utility bills and also benefit the environment
The Number of Bathrooms
Homebuyers are often interested in homes with at least two bathrooms. As an agent, try looking for new homes for your client because most of them have this feature. A home with two bathrooms or more will tend to sell faster than that with only one bathroom because they help save time because you don’t wait around to wait for someone to finish using the bathroom. You could use the other one.
Every home buyer wants a home that has the features mentioned above. To find a home that ticks all these boxes, real estate agents should consider modern homes at affordable prices.
Covid-19 pandemic caught us unaware in 2020, bringing a lot of uncertainty in the financial and property markets. Yet, like every dark cloud, the silver lining was the realization that our homes should be a paradise where we can be comfortable even when on lockdown. Well, 2021 is promising to be a healing year. And, we anticipate more homebuyers looking for low-cost properties in less dense areas. Here are three such best locations for real estate investing in 2021:
Population: 1.4 million
Median Home Price: $298,998
Cost of Living: 102.3
Raleigh, a high-tech powerhouse, ranked #3 as the best location for business and careers in the US in 2019. Despite the pandemic in 2020, Raleigh offers lucrative job opportunities, a good climate, and a conducive family culture. According to Zillow, home values in Raleigh grew by 5.7% in 2020. They are to rise by another 7% in 2021. And more people are migrating to Raleigh, making it a prime spot for real estate investing in 2021.
Population: 1.345 million
Median Home Price: $238,156
Cost of Living: 101.6
The Dallas housing market felt the impact of Covid-19, causing its residential sales to drop by 35% in May 2020. But, the market is recovering, experiencing a 20% increase by July. And, the mortgage rates are at an all-time low, a great incentive to homebuyers. This prime spot has a growing job market that supports the 59% renter population. Areas like Flower Mound have 10,000 job openings, accounting for its 115% renter population rise.
Median Home Price: $268,424
Cost of Living: 100.1
Tampa Bay is hosting the 2021 Super Bowl, its fifth time to host the tournament. With this, the international stage shall boost the city’s economy. Already, the city’s unemployment rate is dropping, reaching 6.8% in August from 10.2% in April. Likewise, a third of the population is renters, opting to take part in international events while on vacation. And, rental properties near the MacDill AFB attract military personnel with access to a guaranteed housing allowance. The allowance motivates them to rent first before buying a house in the region.
The millennials are now getting into their prime buying years, and rental income is on the rise. And, the just concluded presidential elections saw politicians doing all they can to support the economy. Hence, 2021 presents real estate opportunities in these three top cities.
In every investment an investor puts money on, the essential thing is the return on investment of that particular project. Similarly, knowing the ROI is vital just as it is in other industries. There are some ways investors use to know the ROI. However, the surest way is through calculations.
What is ROI exactly?
Return on investment is the outcome one gets after investing in a project, and in this case, real estate. Precisely, it’s the ratio between the cost of investment and the profits. It’s determined as a percentage of the cost.
Importance of calculating ROI In Real Estate
There are many benefits of calculating ROI in real estate, especially to an active investor. Below are some;
Allows for Comparison
The critical thing potential investors do before putting their resources in a project is making comparisons to know the available opportunities. For instance, real estate is comprehensive. It entails housing and land. Therefore, comparing the options available in it and their potential return is essential.
The Project’s Outcome
Return on investment allows the investor to know how much assets the real estate will produce in terms of income. That allows for room for selection.
Here are the common steps to follow;
Understanding How to Calculate ROI in Real EstateCalculate the Yearly Expected ReturnsUnderstanding How to Calculate ROI in Real Estate
It’s important to estimate how much returns to get at the end of the year before calculating any other thing.
Eliminate the Expenses
Secondly, subtracting expenses incurred throughout the month is also an essential primary step.
Don’t Forget Equity
Calculate equity and add it to the flow column to determine the net income.
Find the ROI
Do that by dividing the result in the above step by the total investment made.
Below is the formula to use;
Calculating ROI in real estate using the above formula may require consideration of various variables such as expenses. However, it’s not as complicated as others may think. Furthermore, real estate investment is a perfect investment option that you can consider. Both housing and land are profitable as long as you track your investments sufficiently.
The above steps are recommended, especially where practical results are desired. The application of the formula in real estate will enable you to get accurate results.
Taking good care of a home’s exterior can make it stand out from all the other houses on the block. The exterior is the first thing people notice when they see a house, so it can instantly make or break people’s first impressions. These are some exterior home improvements anyone should consider.
Proper landscaping and yard maintenance
Cleaning up the yard will make any home look more appealing. No one wants to see clutter or a messy front yard when they see a home for the first time. Even taking the time to get rid of little things like dirt and leaves will make a difference. A neat yard can make any home’s exterior appear significantly more appealing. Hiring a landscaper is an option for people who do not have the time to do their own landscaping.
A fresh coat of paint
A nice coat of paint can make an old house look new again. If a house looks like it needs to be painted, people will notice, and this can make the house look less attractive. When people get their houses painted in popular or classic colors, their homes instantly seem more inviting and valuable.
This bright detail can make a house look more welcoming. Outdoor lighting can be affordable or pricey, depending on the type, but it is worth the investment.
A wooden deck
A deck opens the door for countless possibilities, from outdoor family barbecues to summer cocktails with friends. A deck is always worth the investment and can easily make any home stand out. It is something that people search for when looking for new houses and could be the deciding factor that makes potential buyers choose one home over another home.
Gardens are known for being beautiful and whimsical and can instantly make any home appear more appealing. They add color to a home’s exterior, along with a newfound sense of fun and playfulness. Gardens will seem extra attractive to potential buyers with families, as kids will enjoy playing in the “secret garden” and couples can enjoy planting flowers together as a new hobby.
All these home improvements are worth the investment, as they can bring any home’s exterior to the next level.