For any Millenials considering or even beginning to scope the real estate world, you’re on the right track. Real estate investing is one of the smartest moves anyone could make, considering the versatility and potential returns. Investing in property comes with neat benefits like passive income, tax benefits, and full control over not only the property and your investment strategy but also your profits.
That being said, deciding to invest in property can be super daunting. Where do you start? What do you do with the property?
To nudge you in the right direction, here are some essential things that Millenial real estate investors should know before jumping in.
Know your budget and credit score
While it’s not necessary to be wealthy to invest in real estate, having some savings will help buffer any risks from investing or at least reduce the uncertainty.
Establish a financial goal and investment strategy
Know your goals and the best plan to get there. Generally, most investors don’t need to pay for an entire, say $250,000 property. This is for the Millenials who are still struggling to pay off school debt: don’t worry, you can invest as well. The cool thing about real estate investing is you can purchase most properties with a down payment, which tends to about 20% of the total price. Options like getting a bank loan or lending from a trusted partner are also helpful for millennial real estate investors with limited cash at their disposal.
Scope the market
Knowing where to look for viable property options requires looking at patterns like population growth, rental demand, and job availability.
Consider the type of property.
Here, you have a few choices at your disposal. The top types of real estate include single or multi-family properties, syndications, or buy & hold turnkey funds. Single or multi-family properties are in high demand and involves a short-term strategy. Syndications are larger, commercial properties with a group of investors, resulting in less risk. Turnkey real estate funds are longer-term investments that offer immediate passive income from tenants already living there.
When you know the type of property you’re looking for, it’s time to take a look at locations you’ve identified based on the real estate market. With your budget in mind, figure out if you want to flip a house or if you’d rather be a long-distance landlord for a turnkey property.
Above all, millennial real estate investors must continue learning and growing. While the first step is to try it out without hesitation, further education will make Millenials savvier in their real estate journey.
The most popular choice among real estate investors, the single-family house, is well understood and profitable. Even in a market prone to recession, many people prefer single-family homes over condominiums, duplexes, or triplexes when it comes to investing. However, not everyone is delighted at the idea and wants to follow that route. Some investors may consider investing in multi-family units. And multi-family dwellings, especially with fewer units, tend to increase the value that matches closely with single-family homes, and their cash flow is a lot better compared to single-tenant dwellings.
This information talks about the details of finding a multi-family property and offers insight on why it can be a pleasing alternative.
Location, Location, Location
Location is of absolute importance in determining the value of a multi-family property. When the neighborhood has well-maintained lawns, quality homes, clean sidewalks, and proper signaling at intersections, it’s easier to find tenants. If there is construction activity in the neighborhood, it’s a sign of growing demand. On the flip side, if crime is on the rise in a particular area, people want to move away, reducing the neighborhood’s overall value. A change in zoning from residential to mixed-commercial use can result in a significant price reduction.
What is Inside Matters
The physical condition of the property, age, and structural stability have a noticeable effect on property value. The choice of paint color, cabinets, countertops, and flooring material matters too. The more bizarre the upgrades, the more likely that it’ll lose its market value. Likewise, the quality of craft, both in terms of original construction and recent upgrades, should be considered before purchasing a multi-family property.
Hiring a Real Estate Agent
A real estate agent can help find a multi-family property unless you insist on doing it yourself. With an agent’s assistance, you can easily wade through many unique situations, questions, and doubts that are usually not encountered in a typical single-family home buying. For example, your loan interest rate and type of purchase ( residential or commercial ) will depend on whether you are buying a duplex or an apartment with five or more units. Should you hire an accountant as well? Probably yes, if the number of units and complexity of your overall tax situation increase.
Homeowners often buy and sell their property. The most important aspect of a house listing is to be seen by as many people as possible to increase a sale’s chances. Despite a general market saturation in the housing sector, it is possible to achieve a higher listing and to reach a wider audience with a few tips and tricks as outlined below.
Invest in SEO Marketing
Search Engine Optimization is a tool that, when used properly, gives homeowners a competitive edge when it comes to online searches increasing home showings. The house listing is prioritized through specific keyword searches. It is advisable to have several long keyword phrases that include the general scenery where the house is located.
Make use of a Lockbox.
A lockbox is becoming one of the avenues that are giving homeowners a competitive edge. It allows the agent to show the house to house hunting individuals even when you are not home. It should ideally be located close to the house so that the agent can have easy access to it while you are away.
Host an Open House Event
One way to pull in the masses to a house showing is to host an open house event. Employing channels such as social media, the local newspaper, and website listings will attract many interested buyers locally. During the event, it is crucial to keep the guests entertained by serving snacks, having brightly lit balloons and banners, and having a magician or clown entertain them.
Offer Time-bound Deals
Proposing a good deal that runs out in a limited time is another way to get people looking into the property. Scarcity induces demand. Since everybody wants a good deal, they will be more motivated to purchase soon if the offer is only on for a limited time.
Any homeowner’s goal is to make the most amount of money they can from selling the property. However, sometimes pricing it at the higher points doesn’t work in favor of the home seller. Having a competitively priced house allows buyers to get it at the listing type’s estimated market value.
A combination of the above tips gives a home seller a competitive advantage, and the client handling the sale of the house can have a much smoother time as they coordinate the sale on behalf of the homeowner.
The real estate business is one of the most lucrative fields today. From renting to leasing or buying properties, the world is growing at a swift pace. Real estate marketing is, therefore, very crucial for any agent or investor in the industry. You should invest in both online and offline marketing to ensure no market is left out. In this article, you will find some of the creative ways to market your real estate business.
Create a Professional website
You mustn’t create just any website, but a professional one, especially if your focus is on moving property. Ensure that your website is appealing and accessible. The quality of content on the website should encourage visitors to want to see more. Avoid stuffing it with too many ads, and nobody wants that. You can as well include listings on your site and make sure to keep them updated.
Get Social Media Marketing
Make use of all social media platforms such as Instagram, Twitter, and Facebook. Research from the National Association of Realtors (NAR) shows that 92% of real estate customers first use online platforms before consulting an actual agent. So make sure your social media pages are active and highlighting what you are offering. You can even engage social media influencers to help with marketing.
Engage Local Television and Radio Stations
With this, you are sure it will reach the target audience, but make sure you do it right. If you choose to advertise through television, make sure it is one with a large viewership of your target audience. Use appealing and quality images to show your clients what you have. If it is through the radio, give precise details of your location and properties. Do not forget to leave contacts in both.
Start a Blog on Matters Real Estate
If you are a real estate agent or investor and still do not have a blog on the topic, you miss out. It would be best to start a blog to give more details about your services and engage with your potential clients. It is a great way to interact with people and know what they need. From the blog, you can link your website where potential clients can find you.
How do you know if a house is a smart investment or a good property to flip? You may be looking to acquire properties for your portfolio. The problem is it can be a struggle to identify good deals quickly. Read on to learn how the 70% rule will help you.
The 70% Rule is a Simple Rule of Thumb.
Investors and flippers should use the 70% rule to determine whether to buy a property. The rule states that you should only pay 70% of the after repair value of a home.
An example would be a $175,000 home that needs $10,000 in repairs. After repair, it would be worth roughly $200,000. A flipper or investor should only pay 70% of that. The total they should pay is $140,000 for the home.
This protects them from overestimating the value of the home. It also protects against downturns in the market.
Speculating that a property will increase in value can be very dangerous. Seasoned investors prefer to make money when they buy to minimize their risks. This also protects them in case they missed something.
Other Factors To Consider For the 70% Rule.
You should also consider a few other factors. Settlement costs, financing costs, and carrying costs take a large chunk out of the deal too.
Closing costs on a $200,000 property could easily be 2 to 5% of the property. This means it would be up to $10,000. Financing costs would likely be around $5,000.
You should subtract $15,000 from your offer price to account for these factors. Some sellers may not discount the whole amount. It is better to get some of these off the cost to protect your margins.
Exceptions to the 70% Rule
The 70% Rule is a simple rule of thumb for finding rentals and flips. It is only a starting point. There are other circumstances where you might want to ignore it.
One of these cases will be if you’re holding the property long-term. Then, you would not spend as much on renovations.
You would be more concerned about the cash flow. Getting a good deal would still be necessary. A better price will still allow you to get lower monthly payments. Lower payments will help you with cash flow.
Take the time to determine your situation and goals. Are you looking to get quick cash? Other times you’ll be looking for steady returns over the long-term.
The 70% rule is a good rule of thumb. You should always be cautious with your repair and closing costs. It is a good starting place to protect your profits.