Investing in Land for Real Estate Projects

Investing in Land for Real Estate Projects

Buying raw land is a lucrative investment for a seasoned real estate developer. It is flexible, cheaper than improved land, and appreciates over time.

A bit of creativity is all it takes to turn the area into a premium location. Still, the developer must use strategies that work for that particular location. Here are some tips.

Buy Raw Land in Cash

Land investors pay for land on a cash basis. It gives the buyer a competitive edge during negotiations, saving significant amounts of cash in the long run. Besides, most home equity lenders shy away from financing raw land purchases. There are a few instances when loan financing is an ideal option:

  • If the purchase will cripple the investor’s liquidity.
  • When the investor wants to save up enough cash for improvements.

Land Flipping – Buy and Sell

Land flipping involves buying land cheaply and listing it as an owner-financed sale for a quick cash return. For example, an investor can get a tract worth $20,000 at a throw-away price of $5,000. Without making any improvements, the investor can put this land up for sale as a financing option of say $300 per month for the next five years. By the 5th year, the investor will have received total payments amounting to $18,000, which is still close to the original value of the land. This strategy works best when the investor wants incredible returns within a short period.

Hedging - Buy and Hold

In instances where there is stiff competition, the investor may decide to buy and hold the property until conditions improve. Also, in the event of a recession, the land investment provides ideal hedging against inflation.

Land for Cultivation

The land is an excellent asset for agribusiness. Instead of hedging, the investor can buy the farm, cultivate it, and then sell it after the harvest. It is a win-win scenario for property buyers with expertise in farming.

Land Entitlement

Land entitlement strategy involves buying then zoning the raw land for a specific purpose like residential, commercial, or farming. Investors should study the current property trends before settling for the zoning option.

Land takes time to sell. But, with the right strategies and market understanding, an investor can turn an undervalued raw estate to a premium commercial unit. Here, timing is vital.

Refinancing Your Investment Property

Refinancing Your Investment Property

Refinancing of a rental property is the most honorable thing for a person to engage in at this time. He or she can seek to refinance a rental property as an investment since it increases the cash flow and lowers the payments. The concerned party will thus establish low rates, and a constant flow of income is guaranteed.

Advantages of Refinancing Property

Lower Interest Rates

The interest rate that one is likely to face in the real estate business is high. The high rates charged can be attributed to the risk present in the real estate business. Lenders will charge highly to mitigate the risk of defaulting that can be present in the business. Refinancing seeks to lower the rates incurred when investing in real estate.

Change of Mortgage Term

Refinancing provides one with an opportunity to renegotiate the mortgage terms. Thus, enabling one to secure an agreement that will allow for lesser interests accruing and shorter payment durations. As an investor, it is easier to enter into an agreement that pays a fixed amount monthly other than the one whose rates change every month.

Cash-Out Equity

Refinancing allows a person to own the property when the mortgage balance is zero. Lender will be lien to the property until the mortgage is paid back. The lien will be entitled to seize property following failure to make the payments borrowed on the stipulated time.

The Right Time to Refinance

The right time to seek refinancing is when the interest rates are low, and the value of properties is high. During this time, the refinancing party is at liberty to borrow larger amounts at lower interest rates.

Obstacles to Refinancing

  • Low credit score and unclear sources of finances.
  • How to Avoid Issues and Delays with Refinancing
  • Prepare and organize necessary documents to avoid issues and delays.
  • Places to Seek Refinancing

Refinancing entities include; banks, credit unions, private lenders, hard money lenders, among many other sources.

Refinancing is the best option for lowering the rates changed in the real estate business. Other advantages of engaging in refinancing entail changing the mortgage terms to one’s convenience and increasing the cash out equity options. The best time to seek refinancing is when the interest rate is low, and the property value is high. To avoid delays in refinancing, the preparation of necessary documents is key.

5 Mistakes to Avoid in Multifamily Property Renovations

5 Mistakes to Avoid in Multifamily Property Renovations

If done right, multifamily property renovations are an absolute goldmine to maximize investors’ return on investment. As more exquisite multifamily properties join the real estate world, older assets, consequently, require an upgrade. Enhancing the aesthetics and available amenities of older communities ensures that they remain abreast of the competitive real estate market. Below are mistakes to avoid when it comes to multifamily property renovations.

Ignoring the Housing Market and Demographics

Undertaking multifamily property renovations without analyzing the housing market is a costly mistake. For any investment, making renovations should translate to more returns.

When considering renovations, perform a real estate market survey, especially with actual tenants. Then, re-design the property based on the tenants’ upgrade requirements, not on general trends.

Ignoring the Property Age

The property age, to a great extent, impacts the overall cost of renovation. Older assets command more renovations to remain at par with the more modern property.

However, the investor must also consider the expected returns upon performing renovations. Always ensure that the renovation budget doesn’t outweigh the expected returns.

Ignoring the Energy Efficiency Factor

Most investors often overlook the energy efficiency of their property. Energy efficiency benefits both the tenants and investors since the energy bills and turnover rate reduce significantly. Moreover, lower energy consumption means increased property value.

Embracing energy-efficient initiatives for the multifamily property could be as simple as adopting energy-saving lighting. Reduced energy usage also lowers the cost of regular maintenance checks.

Not Hiring Professional Contractors

Going for a low-cost general contractor will reduce the whole renovation process to zero. Despite having tempting offers, such contractors will have the investor making losses instead of desired profits.

To avoid this mistake, conduct extensive research regarding prospective expert contractors. The contractor of choice should bear substantial experience working with multifamily properties. Reviews from other real estate investors come in handy during the vetting process.

 

Hosting a Virtual Open House for Your Investment Property

Hosting a Virtual Open House for Your Investment Property

The thought of a virtual open house for an investment property might seem strange or daunting to some. Why would a potential buyer watch a virtual open house when they can just visit the house in person? In fact, many modern buyers prefer watching a virtual open house through Facebook or YouTube. It allows them to view the property without ever leaving the house–and if it’s a live video, they can ask the realtor questions along the way. And for realtors, they have the advantage of showing a property to dozens or even hundreds of clients at once without dealing with a large crowd.

Which is Better: A Live Feed or a Recorded Video?

Outfront points out that there are two types of virtual open houses: the live feed where viewers can watch the open house as it’s happening, and the recorded video where the realtor uploads a pre-taped video. Both options have their own set of advantages. With a live feed, potential buyers can ask the realtor questions as they walk through the house. A live video also creates a sense of excitement about the property. When people watch a live video, they feel like they’re actually tuning into an event, like a concert or a sports program.

A pre-taped video loses the excitement factor, but it gives the seller the chance to put together a professionally edited video that makes the property look as appealing as possible. It’s also a good option for sellers who aren’t comfortable talking to people in front of a live camera feed.

How Does a Seller Generate Leads Through Virtual Tours?

With traditional in-home tours, it’s easy to collect contact information and follow up with potential buyers. A virtual open house has no sign-up sheet, so it can be difficult for sellers to get potential leads. Reminder Media recommends ending the tour with a call to action, asking potential clients to submit their contact information. A seller could also set up an online form on their website, making it easy for buyers to get in touch with them. Once they get that information, the seller can send an email with all the details about the property and answer any questions they received.

Successfully Managing Multiple Real Estate Investments

Successfully Managing Multiple Real Estate Investments

When handled correctly, investment properties can be profitable undertakings. Yet, the potential rewards do not come easy. It takes a large amount of hard work and dedication to experience desirable results. For those that want to try a hands-on approach to their properties as well as take home the full profit, here are tips that can set them up for success.

Become Skilled at Organization

Handling one property may seem easy, but with multiple estates, many more activities can occur at a wide variety of times. To keep the properties updated and rent collected on time, owners have to become experts in organization. This involves having all the necessary documents, dates, and repair work scheduled, recorded, and saved in a secure place. Better yet, they will see even more positive results if they master computer and web-based applications well.

Understand Market Value

There is a fine balance in creating a profit from rental holdings. If the owner charges a price that’s too high, they won’t find the tenant they require. Yet, if they charge less than they should, they can suffer a tremendous loss. By learning about real estate market analysis, they can see how size, location, and price can factor into their income-generating process.

Advertise Effectively

To gain a profit from their real estate, owners must keep them filled with desirable tenants. This is best done by using the most popular online and print sources, which will yield a large pool of applicants. Moreover, they should showcase the features that cause their property to stand apart from other rentals.

Thoroughly Screen Potential Tenants

As owners acquire and rebuild their properties, they have a vision in mind about how they would like their real estate used. No one wants to see their hard work go down the drain by excessive damage or delayed payments. By deep-diving into the past of prospective renters, they will learn if they have a steady income and good credit. Owners can also speak with the applicant to learn if they have pets and how many people will occupy them.

Stay Prepared

Even after making the right decisions, owners will still encounter problems they have to solve. The best way to prevent problems from getting out of hand is by preparing for them before they occur. By maintaining relationships with lawyers, contractors, and handymen, a property owner won’t have to lose precious time when an issue occurs.

Just by setting up the right structure and plan, property owners can experience an impressive return with multiple investments.

 

Real Estate Financing Options

Real Estate Financing Options

When it comes to financing real estate, there are a variety of channels. Some are very standard and well known, while others are hidden gems. Some factors to consider when selecting an avenue are the timeframe, the amount, and down payment. To get ready, set up contacts with as many financial systems. When a viable piece comes up, run it past several outlets to compare interest rates, fees, and terms.

Traditional

This type of financing is something that big-box banks and institutional lenders offer. The loan officer must adhere to standard protocol. In the event some data does not fit into the box, they may not approve the deal. Some individuals choose this form because it is straightforward and comfortable.

Some hybrids of traditional real estate loans are FHA, USDA, and VA. These are government loans, and each one requires the applicant or property to meet specific criteria. Borrowers will pay mortgage insurance on an FHA loan. USDA loans are restricted to certain rural areas, and to qualify for the VA product, one must be a veteran or a veteran’s spouse. Both active and retired military personnel can apply. These loan products have different down payment requirements, which run from nothing down for the VA loan to 20% or more.

Private Funds

Private money is an agreement between two parties that does not need any outside confirmation. Private money can come from friends or family members or outside groups. Peer-to-peer platforms are popping up online. Through these portals, people can put in their credentials, the type of project, and the cost. Investors on the site comb through the opportunities and offer deals, or some operations have preset parameters.

Interest rates are typically higher, but the terms can be very flexible. Often these investors can get the cash out quickly, which is essential in a hot market.

Depending on the contract, there may be little to no down payment. For family and friend loans, that is not uncommon, but the peer-to-peer ones usually require some down.

Hard Money

Hard money is a blend of traditional financing and private funds. A hard money lending company collects funds from a group of investors. The borrower will have to meet some standards, and the process will go through a review. The investors will want some level of security, which can come in the form of a hefty down payment.