After experiencing another long year of rising rent and home prices while going through a declining inventory throughout the country, it is evidently challenging to find a suitable place to invest in expecting to reap reasonable returns shortly. Nevertheless, there are still some scattered sweet spots that can offer investors some much great returns. These cities provide a rare combination of job growth that is better than average.
They also offer some runway before housing is overpriced. Investors who are looking for high-growth markets should try to put their investment in the following cities that have a promising future of good returns in the coming years.
1. Orlando, Florida
Orlando is known as the land of Harry Potter World and Mickey Mouse. In 2017, the housing and home prices of Orlando recorded a hike of 9%. This price increase hit an average of about $247,550 in that year. Interestingly, a Local Market Monitor predicts that these prices are likely to rise with an estimate of 35% from 2018 to the start of 2021. Generally, Orlando city does well when the average American market improves. Optimistic investors should consider investing in Orlando.
2. Provo-Orem, Utah
Provo-Orem was the top newcomer city in the list produced by Forbes for the most promising cities regarding the future of housing prices. The city recorded an estimated average home price of $266,169, a 7.2% population growth in three years, and a 6.7% job growth in the last two years. The city was estimated to have attained a 10% home price growth over the previous year. Moreover, Forbes predicted that the towns home price growth at 31% in the next three years.
3. Ogden-Clearfield, Utah
The Forbes listed Ogden-Clearfield at position five. The city recorded an average housing price of $246,251. Its population was found to have achieved a 5.1% population growth in the past three years. Additionally, Ogden-Clearfield attained 5.7% job growth in the last two years and a 1-year home price growth of 10%. Forbes also forecasted home price growth of 29% in the coming three years.
4. Springfield, Missouri
Springfield city has an average home cost of $154,557, a 3-year population growth of 2.3%, and 5.1% job growth in the last two years. Moreover, Forbes predicted that the home price of this city at 14% in the next three years.
Springfield, Ogden-Clearfield, Provo-Orem, Orlando prove to some of the best cities to invest in housing in 2018. Any of these cities serve as a great option for an investment opportunity for anyone who is looking for a strong return.
If you’re looking to turn some extra cash into profit, you have a multitude of options. Real estate investment is only one of them, and many people enjoy it. While it is a solid business, you might find yourself encountering these common myths when researching this subject.
It Takes a Lot of Money
You don’t have to be a millionaire to become a real estate investor, and you don’t need to be free of debt. Many entrepreneurs make money by finding opportunities and presenting them to buyers who have existing capital. Even if you have only $5,000, you can enter a real estate investment trust and split profits down the line.
You Have to be Rich to be Successful
Thankfully, your level of success doesn’t depend on your existing bank balance. You can choose from three different types of real estate investing: residential, commercial and land. These come in assorted sizes, shapes and price points. Mostly, your skills and knowledge determine the level of success.
You Need Special Certifications
Real estate professionals often function as investors, but it’s because they know the market and deal with properties daily. Their success does not rely on a real estate license. Since any adult can legally buy property, you can purchase real estate that’s in any type of condition for investment purposes.
Real Estate Investing is Time Consuming
People see frantic professionals darting from place to place with a phone pressed to their ear. This makes them think that investing in real estate takes a lot of time. While it is true that engaging in pursuits that lead to profit takes time, it won’t eat up your day.
Consider that many people spend at least three hours per day watching television. What if you used some of that time to research sound investments? Additionally, when you go house hunting, you can involve the whole family and have some fun too.
You Need Experience
Chances are, some people might try to talk you out of real estate investing because you lack experience. However, don’t let irrational fear stop you. While experience improves chances of success, it’s neither necessary nor does it guarantee anything. At one time, everyone is a beginner and will gain experience by practicing.
While there are plenty of myths out there about real estate investing, do not believe them before you conduct some research first. With the right information, you will be ready to take on the world of real estate investing in no time.
When built-ins and fixtures in a home start looking worn and old, it’s time to update.
Homeowners don’t usually think about making changes that can increase the value of their homes until it is time to sell. Then they may be short on cash or the time to make improvements that can add value. The key is to make gradual changes along the way that will keep a home looking fresh and contemporary. Consider the following ways homeowners can increase the value of their homes.
Keep the outside looking fresh
Nothing grabs attention more than a home with curb appeal. Since the outside of the home is the first impression a buyer will make, the outside should be neat and inviting. Keep shrubs and other vegetation under control with regular trimming. Pressure wash concrete surfaces and siding to keep them looking new. Remove dead flowers and plants. When perennials start to get grassy, it may be time to dig them up, clear out the weeds, and start fresh. Make sure wood trim is painted, and clean the cobwebs from around doors, windows, and light fixtures. Curb appeal is usually a matter of regular maintenance and costs very little.
Consider a kitchen upgrade
An upgrade can make the kitchen a place where the entire family enjoys gathering, but an out-dated kitchen can be depressing and a deal-breaker for a buyer. Swap out tired looking white or black appliances for edgy stainless steel. When today’s homebuyers walk into a kitchen, they expect to see stainless steel appliances and granite countertops. Something as simple as s trendy new backsplash can add pop to an otherwise boring kitchen.
Turn a bathroom into a spa
Not only do homebuyers expect kitchens to wow them–clean bathrooms with that spa vibe are also on many homebuyers’ wish lists. If you can’t put in a new shower, consider adding a rain shower head. Clean the tub and shower until it is sparkling. Replace old sink fixtures and faucets with updated versions. Consider adding a new mirror and get rid of the 1990s vanity strip lights. Replace the wallpaper with a fresh coat of paint in a spa-inspired color.
These are just a few simple, and mostly low-cost changes that a homeowner can make to increase a home’s value. Even when a homeowner is not thinking of selling, updates can make a home feel like a brand new living space.
is one of the most critical aspects of real estate investing. It is a situation where the winner of a bid pays more than the worth of the property. It is an unfortunate occurrence since no one wants their efforts to go into waste. Performing objective due diligence is the best way to dodge the curse or any other unforeseen circumstances. Additionally, it helps to overcome bias in decision making.
Although the winner’s curse is unfortunate to an investor, it is a benefit to real estate fund managers. This is because they can differentiate early enough whether a valuation is optimistic or conservative. The curse has also caught experienced investors. They tend to overlook certain property fundamentals or rely on unviable strategies.
Atlantic Richfield engineers noticed that sometimes aggressive bids might prove to be too optimistic. They discovered that in the oil and gas auctions, essential information might be hidden beneath the surface.
Although valuations may vary in different industries, in real estate, prices might not reflect the underlying value. This is maybe due to the risk in investment property of setting the wrong prices, false assumptions or business plans that are not feasible. Furthermore, in private equity real estate, there is the rush to close the deal instead of waiting for the right opportunity or time.
For most investors, sticking to conservative strategies seems the most rational thing to do. However, behavioral economics indicate that markets are not always rational. In most cases, sellers hold unrealistic prices while buyers concentrate on factors that do not add intrinsic value.
There are limitless deals in the real estate industry. However, it is advisable to carefully check the inefficiencies that prevent investment opportunities to achieve the expected value. In fact, nowadays there is growing data science that can help to evaluate properties before committing an investment.
Due diligence is the best way to control the risks involved in real estate investment. However, it may not provide the nature of the risks. There are two major lessons when investing in real estate. First, joint ventures do not always guarantee favorable returns. Although getting into partnerships might reduce structural risks, they also limit control of investment and ultimately lessen the proceeds. Second, making off-market deals does not always guarantee a better return on investment. Therefore as an investor, find a suitable data-driven procedure that will help evade the winner’s curse.
If you want to be a better real estate investor, you have to overcome common challenges. The two biggest problems that real estate investors face is finding the property and then actually getting the funding to acquire it. However, it doesn’t have to be as hard as it used to be. Here is how technology is changing the way people solve these issues:
Finding properties is one of the biggest challenges that investors face. After all, the market value of an area is not set it stone. In order to understand if something will pay you back, you need to know the area.
You can now know about an area and what kind of demographics it has easier than before. First of all, with online maps, you can scout it on your laptop. Secondly, people on the ground can be hired to walk around and film with a drone to capture video so you can really get the feel for the location.
You can look into the local economies of locations that you are considering. See how their local businesses have been doing in recent months with sales. In addition, find out the employment rates to make sure there is an economy that is healthy enough to support the investment you are looking to make before just jumping in without the information.
The Need for Capital
You might have the best information in the world, but you still need funding to get that property. Therefore, raising capital has always been a burden to investors. Thanks to technology, there are new options, however.
Using public sites you can raise funds from investors, large and small, all around the world. This lets you act quickly on properties without breaking the bank. In addition, you might find properties that you didn’t otherwise think you could afford.
When it comes to real estate investing, it can be one of the most lucrative opportunities in the world. However, to make money with real estate, you need to find the property first. Then, you need to get the funding to purchase it. Technology has made these two things much easier than they ever were in the past. Therefore, you should look to utilize this technology in your own career to leverage the benefits contained.
While many people are rightly skeptical of going into debt, experienced real estate investors know that the judicious use of leverage
can dramatically boost their bottom line. Leverage is used by real estate investors to boost what is known as their internal rate of return. This is simply a reflection of the fact that the less capital one has invested, the higher their potential return on invested capital is.
How does leverage increase returns?
If a new real estate investor had $50,000 to put towards the purchase of a property, they would have a number of options on how to best invest that money, starting with whether or not they wanted to use mortgage financing or pay cash. Some people may opt for the latter option, deciding that the risk of taking on mortgage payments is beyond their tolerance levels.
However, for the astute investor, using mortgage financing can provide a much higher rate of return. In the case of buying a property for $50,000 in cash, if that property nets $5,000 per year of income, then the total rate of return on capital for the property will be 10 percent. However, if that same $50,000 is used on a down payment to buy a $200,000 property with the same 10 percent return on the purchase price, the return on capital for the second deal will be 40 percent! This is because the investor is earning $20,000 per year of income but has only invested $50,000 of their own capital.
It is important to understand that leverage works best, by far, when rents and property values are rising. Using leverage can still work in other markets, but investors need to have sufficient liquidity to cover downturns, such as high vacancy rates or declining overall property values. Generally speaking, investors should stay away from using leverage in markets with a negative macroeconomic outlook for the short to medium term. While these investments can still prove to be highly profitable over the long term, the short-term capital requirements can bankrupt smaller investors.
The best way to mitigate the risks of using leverage is to perform in-depth due diligence on the local macroeconomic trends. Study trends in property values, employment quality, and quantity and net migration trends. Try to avoid entering into leveraged real estate deals near market peaks.