The real estate business is one of the most profitable investments that an individual can choose to undertake. The two options available when investing in real estate is either a resale or new construction. A resale describes a house built sometime back and had a tenant, or the owner was living in it. On the other hand, new construction represents a house where the current buyer is the first occupant.
A resale is purchased directly from the owner, while the new construction is from the individual who developed it. Compared to a resale purchase, investing in a new construction comes with several benefits, as listed below.
Investing in new construction, especially during the early phases attracts great discounts than waiting for complete construction. The real estate builders and owners easily offer these discounts as it helps them in financing the unfinished construction and gives them leverage during the development.
One of the main advantages of investing in the new construction is the low deposits that the builder needs to seal an agreement. A deposit of up to 10% of the purchase price is enough to secure the developer’s new property. The advantage of settling for the new construction is that the deposits are negotiable, allowing the buyers or investors to minimize as much as possible the amounts they spend on the property beforehand.
Low Maintenance and Repair
New constructions come with amenities that are new with no damages to them. This factor eliminates any immediate repairs and maintenance costs that the buyer would have incurred if it was a resale. This investment’s greatest benefit is that the buyer gets a warranty from the builder to cover all systems’ costs, including plumbing, for up to 2 years.
For buyers who are looking for properties to resell, the new constructions provide the advantage of faster appreciation than the resale. The general growth around the new property and closeness to essential amenities increases the value of the property.
The construction world is quickly changing, and the user preferences and tastes lean towards new technologies that the resale cannot provide. New constructions are designed and built with the latest technologies in heat insulation, air conditioning systems, environmentally friendly materials, and low maintenance technologies. This factor means that you get much better deals, better value, and satisfaction with the new constructions.
Those who lived through the 1980s may well remember it as the decade of excess where bigger was better, and whoever died with the most toys won the game of life. The concept of living large may have continued for years were it not for the housing market collapse in the Great Recession of 2007.
Tiny Houses Make Their Debut
For all its disadvantages, the Great Recession also introduced the country to a wildly new way of thinking about housing. Suddenly, small (typically under 600 square feet) creatively-built, often whimsical homes called “Tiny Houses” began to get a toe-hold in the housing market.
Twelve-plus years later, tiny houses remain an attractive option. From an economic standpoint, they cost significantly less than a traditional home, and often buyers can outright avoid even carrying a mortgage. Additionally, many homes are available in kit form, an appealing choice for the growing DIY demographic.
Statistically, tiny homeowners carry less credit card debt. After all, with less room for storage, they simply aren’t going to buy as much. This creates the added benefit of being able to save more or invest in other more adventurous pursuits. Tiny houses also tend toward lower energy costs, a seductive sales point for the environmentally-conscious among us eager to lower their carbon footprint.
If not already a minimalist, deciding to live in a tiny house requires the paring down of possessions. Tough decisions must be made about what is needed, and what can be done without. It also requires making a pivot toward the concept of more open, functional, multi-use living space.
Partners and family members must also consider how their tiny house might impact their relationships. Even the closest of couples need their space once in a while, which can be a challenge in tight living quarters. Having a game plan about how to handle disputes or the need for alone time is an important consideration.
There are also residential zoning regulations to consider. Many towns have established minimum square footage requirements for homes, or restrict where they may be located. And if they are built on wheels, they may not be considered as permanent housing at all. Then again, having a tiny house on wheels offers its advantages, opening the door to travel and the freedom to live large in a whole new way.
Previously, older generations used to save up their money to buy their houses and invest in the stock markets. Millennials on the other hand, decide to rent instead of purchasing a house. Many Millennials decide to rent instead of buy because of the large amount of debt that they have. Instead of taking on more debt, Millennials decide to forgo a mortgage.
A popular trend that we are seeing within real estate is that older generations are selling their homes ad renting apartments or condos while the younger generation, the Millennials, are continue to rent and invest in real estate properties. In this blog we will take a look at why millennial real estate investors are on the rise.
Millennials are the most populous generation in the United States.
The Millennial generation is the group of people born between 1982 and 2000. With over 75.4 Millennials in the United States, they have have the greatest impact in housing market shifts. This is why it’s important to understanding Millennials’ real estate and investment strategies.
Millennials are skeptic about the stock market.
Many of Millennials believe that real estate investments have a better return than investments made in the stock market. A lot of Millennials have this mindset because many of them were in college during the 2008 recession and found it challenging to find a job. Back in 2007, over 65% of Americans were investing in the stock market. Today, half of that percentage has left the stock market and is instead investing in real estate.
Real estate is on the up and up and Millennials have noticed.
One study shows that 86% of Millennials are planning on buying a house one day even if they are renting now. Some Millennials are known for being entitled and lazy, but they are actually pretty savvy investors. In general, they are producing a greater return on their investments. Millennials have been able to identify areas of population and job growth and track real estate market areas that are on the rise.
Millennials are investing in real estate online.
In recent years, there has been an increase in crowdfunding investments. Online crowdfunding lets anyone invest in real estate for a smaller initial investment. A lot of crowdfunding companies will require an initial investment of anywhere between $500 to $5,000.
One of the benefits of investing in real estate online is that you don’t have to deal with the hassle of being a landlord. Usually the crowdfunding or syndication companies will outsource property management.
The Christmas season is upon on, and although your focus may be on holiday dinners, visiting family, and buying the perfect gift, in the back of your mind, you can’t help to think about getting back to real estate investing.
There are so many helpful real estate investing tips out in the world, but many of them are for real estate market during the non-holiday season. Your real estate investing efforts don’t need to stop just because of the holiday. You can use this time to get ahead of your competition and plan for future deals in the new year. Below are just a few real estate investing tips that will give your business an extra boost during the holiday season.
Tip #1: Don’t Stop Making Deals
Although it’s the holidays, don’t stop making deals. Throughout the month of December a lot of investors take time off. This is your time to swoop in on some great deals. You will find that during the holiday season, there is far less competition than any other time of the year.
Tip #2: Generate Leads No Matter What
Take the holidays to generate a few leads. Of course don’t let it get involved in family time, but by generating a few leads you will feel much more prepared as you enter the new year. A few great lead-generation strategies you can lean on this holiday season is creating holiday-themed direct mail and throwing holiday-themes wholesaler parties. Staying with a holiday theme in your strategies not only helps spread holiday cheer, but help you start a conversation with people and form connections.
Tip #3: Asses and Plan Out Your Year
As 2019 comes to an end, take a step back and reflect on the good and bad of the year. Be sure to ask yourself a few important questions:
Ask yourself, “What went right?”
Over the past year look at your wins. This is a great way to examine what stratergies worked well. It is also a great way to boost your confidence!
Ask yourself, “What didn’t go according to plan?”
Sometimes we don’t always succeed, and that’s okay. You can’t beat yourself up over it. Think of it as a learning experience. You will be less likely to make the same mistake again.
Ask yourself, “What are your plans for next year?”
One you have looked back at the year, start to think of goals for the future. These goals should be both concrete and tangible. Be sure to be as specific as possible and lay out what actions you are going to take.
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.