Real Estate Tips For Beginners

Untitled-3

Have you always wanted to invest in real estate but don’t know where to start? Here are some of the different areas of the industry that you can invest in:

Areas That You Can Invest In

Residential: these are properties such as townhouses, apartment buildings and vacation houses. Here a person or a family will pay you in order to live in your property. The length of time that an individual lives in your house depends on your rental or lease agreement.

Commercial: commercial real estate consists mainly of office buildings. When you construct office buildings you can rent them to companies and small business owners. Again the length of time that the business owners use your property depends on your agreement.

Industrial: this one consists of car washes, storage units and any other special type of real estate where customers use your facility on a temporary basis.

Retail: it consists of trip malls, shopping malls and any other retail storefronts. When you construct a mall, you can rent it to a person interested in running it or you can run it yourself.

Mixed-use: this is where you combine any of the above categories into one project. For example, you can construct a storied building with offices, malls and residential areas.

Real estate investment trusts (REITs): this is where you invest in real estate trusts. When the mortgages generate profits, you get a share of it.

Tips on How to Be Successful In The Industry

For you to be successful in the real estate business you need to do a number of things:

Involve an attorney: regardless of the area of the industry that you are interested in always involve an attorney. A good attorney will help you in finding the right construction company. The attorney will also help you in writing professional rental contracts.

Neighborhood: the area where you invest in greatly determines the amount of money that you will make from your investment. To be on the safe side always go for a neighborhood that is growing or has the potential of growing.

Run the numbers: many investors assume that when they construct a building they will have a tenant, which is usually wrong. Before you invest in a building you should run the numbers and find out if you will be able to pay the mortgage if the property sits empty. If you find that you can’t be able to repay the mortgage in the event that the property doesn’t have a tenant for a month or two, chances are that you are stretching yourself too thin.

Article Source: http://EzineArticles.com/9016172


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

 

Advertisements

Passive Income – Making Money Work for You

Untitled-1

In the current economic climate it is more important than ever to not only work hard but have your money work hard for you. These days just about everyone puts in a lot of hours at their place of employment. However, in the past few years the job market has failed to provide the security/stability that people are looking for. Jobs that many used to rely on to provide for their families have vanished with many pundits proclaiming them defunct, never to return. In addition, many people are questioning the effectiveness of the stock market as a means of growing their retirement funds in light of the recent crash and subsequent volatility. With the collapse of trusted institutions such as the job market and stock market many people have been looking for alternative vehicles that they can entrust their hard-earned dollars to in order to help grow their wealth. More and more people today are realizing the importance of finding sources of passive income to help supplement or in some cases replace the earned income from their jobs.

What is passive income? Passive income is typically considered money generated by any trade/business or income-producing activity which the individual does not participate in directly. For example, royalties paid to an author from having his/her book published would be considered passive income. Another example is if you were to write a song and received royalties for that effort. Unfortunately, the likelihood of becoming a successful author or songwriter is not a viable option for most of us. There are also a multitude of online systems geared towards generating ongoing streams of income. Everything from affiliate marketing to blogging has been touted as the definitive way for people to supplement their income or escape their day job. In other cases passive income is derived from owning an asset such as a business or real estate. In the case of real estate passive income comes in the form of rent collected from tenants.

This then prompts the question, how do you determine the most effective way of generating passive income? The number of courses, systems, and programs that offer ways of making money can seem overwhelming. So how do you narrow down the options? When doing research on the best system/investment to employ I would recommend you keep the following in mind:

  1. Are there any tax benefits associated with the vehicle you’re looking into? As many accountants and financial planers are fond of saying, it isn’t just how much you make it’s also how much you keep! You could cultivate a healthy source of additional revenue only to have the government cut out a hefty slice come tax time.
  2. Does the vehicle in question allow you to leverage other people’s time/resources? As we are all aware, time is a very precious commodity that most of us often feel we don’t have enough of. When investigating a prospective investment or money-making system ask yourself if this will help you to grow your wealth without severely impacting your already hectic schedule. For example, with real estate investments you can usually enlist the services of a property management company to oversee the day-to-day operations for a modest monthly fee. Having a professional team looking after your asset(s) is usually preferable to doing everything on your own!
  3. Does the system or investment you’re looking into offer a good return? There are many courses or investments that cost hundreds, sometimes thousands of dollars. Many of these systems promise the world but don’t necessarily guarantee anything in the end. If there is a particular money-making system or investment you’re interested in be sure to do some research. You can often find blogs set up by people who are already using that same system; this can provide you with invaluable information to assist you in determining whether or not to make the investment or move on.

If you are interested in establishing a source of passive income you may want to consider Turnkey Real Estate Investing. It offers a number of tax benefits, it allows you to leverage other people’s time & resources, and often times it provides a very good return on investment (ROI).

Article Source: http://EzineArticles.com/5034770


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

 

Things to Know Before Investing in Real Estate Outside of Your Market

Untitled-1

Investing in cash-flow real estate is an excellent way to build wealth. However, many investors find themselves in a situation for one reason or another where they cannot purchase cash-flowing real estate in their local market. If you find yourself in this situation, your only option may be to purchase property in another market, and this can present several challenges. Purchasing real estate outside of your local area can be done successfully, and if you pay attention to the things below, you will increase your chances of success dramatically.

Find the Right Location

When it comes to real estate, you have probably heard of the first three rules: Location, Location, Location! The location of the property is probably one of the most important factors you can choose. When considering cash-flow investment properties, you should be looking for working class neighborhoods that have well cared for homes. These are the best locations to invest in because these neighborhoods have a higher demand for rentals, and they are more reasonably priced creating potential for higher returns.

Find the Right Property

When purchasing rental property, you need to make sure you are purchasing properties that will give you the best chance for success. You should be looking for “bread and butter” rental properties which can be defined as properties that meet the following criteria:

  • Sized at 800 to 1200 square feet
  • 3 or more Bedrooms
  • Has a basement
  • Has a garage

Homes that meet these criteria are called bread and butter properties because they meet the demand of most prospective tenants. By purchasing properties like these, you will have the largest pool of prospective tenants to rent to, and thus your rents will be higher and your vacancy rates will be lower.

Find the Right Tenants

Your tenants are one of the biggest keys to making a real estate investment property successful. If you select the right tenants, you will reap the returns you expect. However, if you select the wrong tenants, your investment can become a liability very quickly. The key to finding the right tenant comes down to conducting the proper tenant screening. This includes:

  • Proof of income
  • Criminal history
  • Rental history
  • Credit check
  • Personal interview

If you make these checks you will get a very good idea about the prospective tenant and you will be able to make an informed decision whether to rent to them or not.

Get the Right Protection

An old joke with real estate investors is that the definition of a tenant is “a plaintiff”. Of course it is not true that you will get sued by every tenant, however, the point is that there is a high likelihood that you could get sued while investing in real estate. Therefore you need to protect your liability, and there are several strategies that you can and should implement to protect your liability. These strategies normally include how you setup your entity structure and the insurance you have for your properties. Before making any decisions about your entity structure or insurance you really should discuss them with a real estate attorney.

Set Your Business up Right

To make the most out of your investment you need to have your business structure and taxation setup properly. There are many opportunities for tax planning while investing in real estate, and making the proper plans can save you a lot in taxes. Everybody’s situation may be slightly different, and therefore you should discuss your real estate investment goals with a CPA experienced in working with real estate investors.

Find the Right People

To invest in property outside of your area, one of the most critical things to do is to find the right people to invest with. At a minimum, you will need a real estate agent, a property manager, a general contractor, a CPA, and an attorney. Finding all of these professionals in the market you are looking to invest in can be a very difficult task, however there is an alternative. Rather than try to find all of these professionals yourself, you can decide to work with a company that specializes in putting together turnkey investment properties. The advantage to doing this is that you will be working with a company that has already established all of these contacts, and they will have a very good idea about the real estate market they work out of.

Article Source: http://EzineArticles.com/5613573


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

Why You Should Buy Investment Properties in Memphis Now

memphis-real-estate

One of the most important decisions that you will make in real estate investing is choosing the right city, and then the right neighborhood for your income property. This article shows you why you should seriously consider Memphis investment properties if you are looking for a good deal likely to bring you sound profits.

Memphis Real Estate Overview

When thinking about investing in real estate, Memphis, TN might not be the first market that comes to mind. However, this should change. Memphis is one of the hot real estate markets for 2016, and this will continue in 2017 and beyond. Wondering why?

Here are the reasons why Memphis investment properties are a great idea at the moment:

  • Affordability

Both for homebuyers and for real estate investors, housing prices are a key factor. Memphis investment properties are really affordable right now. Median home prices in Memphis are less than half of the national average. Condos, single-family homes, townhomes… Various types of Memphis investment properties are all available at very reasonable prices, below the national averages.

Well, part of the explanation for the relatively low property prices in Memphis is that household income is also below the nationwide average values. This fact will work well to your benefit if you are not from Memphis (and thus enjoy a higher income) and are considering out-of-state real estate investing.

  • Millennials

If you are thinking about Memphis investment properties, your target tenants should be the Millennials. The Memphis population is generally young, which means that they still cannot afford buying a home on their own, at least not in the next few years. You should take advantage of this reality and invest in a rental property which can accommodate a small family.

  • Southward Migration

It is not only local Millennials that make the Memphis real estate market hot but also such migrating from northern locations with less amiable climates. As Millennials across the nation are starting to get married and have children, many of them are willing to move away from the busy 24-hour cities into places which offer a home with a yard with place for a car and a dog. Memphis is an ideal location because of the availability of such homes and because of the nice weather.

  • Young Population

The next reason you should really think seriously about Memphis investment properties is demographic again. As we’ve just mentioned, Memphis enjoys a relatively young population (15% of the people are under 9 years of age). So, investing in the Memphis real estate market is not only an excellent option in the short run (to accommodate the Millennials without a home yet) but also in the long term (to provide housing for these youngsters when they grow up in 10-15 years and want to move out of their parents’ homes).

  • Moving Towards a Seller’s Market

It is not exactly clear whether Memphis real estate market is a buyer’s or a seller’s one at the moment. What is clear though is that it will soon be an evidently seller’s market as inventories have started to decline. If demand continues increasing, inventories will drop even further, while prices will go up. So, it is now the time to buy Memphis investment properties.

The Numbers

Real estate investing is all about numbers, so let’s take a look at the Mashvisor analytics of the Memphis real estate market:

  • Median Property Price: $182,000
  • Traditional Monthly Rental Income: $936
  • Airbnb Monthly Rental Income: $2,130
  • Traditional Cash on Cash Return: 2.3%
  • Airbnb Cash on Cash Return: 9.9%
  • Traditional Cap Rate: 6.9%
  • Airbnb Cap Rate: 15.0%

These numbers tell us a few clear points:

  1. Memphis investment properties are really affordable at the moment. Hurry up! This might not last for long.
  2. Airbnb is definitely the optimal rental strategy in Memphis as it is way more profitable than traditional renting.
  3. Memphis Airbnb is actually quite a good deal with expected monthly rental income of $2,130, cash on cash (COC) return of 9.0%, and a cap rate of 15.0%.

Top Memphis Neighborhoods

Once you’ve settled on buying one of Memphis investment properties, you have to make another important decision: which neighborhood is the best. Mashvisor data points out to a few top neighborhoods in Memphis for investing in real estate. The common thing among them? That they are all much better suited for Airbnb rather than traditional renting.

So, let’s look at the top 3 Memphis neighborhoods for real estate investments:

1. Midtown

  • Median Property Price: $162,000
  • Traditional Monthly Rental Income: $778
  • Airbnb Monthly Rental Income: $1,948
  • Traditional Cash on Cash Return: 1.5%
  • Airbnb Cash on Cash Return: 10.0%
  • Traditional Cap Rate: 6.1%
  • Airbnb Cap Rate: 15.2%
  • Airbnb Occupancy Rate: 64.9%

Midtown is one of the most affordable neighborhoods for Memphis investment properties, with an median property price of $162,000, which still offers excellent COC (10.0%) and cap rate (15.2%) for Airbnb. The Airbnb occupancy rate is quite high at 64.9%. Midtown is a lively area with many cultural, entertainment, food, and drink options for any taste. Overton Park, located in Midtown, hosts the Memphis Zoo, the Memphis Brooks Museum of Art, and the Memphis College of Art in addition to a nine-hole golf course.

2. Cordova

  • Median Property Price: $195,000
  • Traditional Monthly Rental Income: $1,017
  • Airbnb Monthly Rental Income: $2,166
  • Traditional Cash on Cash Return: 2.5%
  • Airbnb Cash on Cash Return: 10.3%
  • Traditional Cap Rate: 6.9%
  • Airbnb Cap Rate: 15.3%
  • Airbnb Occupancy Rate: 46.7%

Cordova also has cheap properties with median property price just below $200,000. Airbnb promises very good returns in this neighborhood. Unlike Midtown, Cordova is a suburban area which has something for both nature-lovers (fields, wooded terrains, horseback riding, and biking, hiking, and jogging trails) and urban populations (shopping centers, retailers, restaurants, cafes, business, and office spaces).

3. Downtown

  • Median Property Price: $240,000
  • Traditional Monthly Rental Income: $875
  • Airbnb Monthly Rental Income: $3,057
  • Traditional Cash on Cash Return: 0.9%
  • Airbnb Cash on Cash Return: 10.7%
  • Traditional Cap Rate: 5.0%
  • Airbnb Cap Rate: 15.3%
  • Airbnb Occupancy Rate: 53.4%

Although a bit less affordable, you should also consider Memphis investment properties in the Downtown area as the expected monthly rental income from Airbnb according to Mashvisor is above $3,000. This is the most diverse, lively, and eclectic area in Memphis. A home to art, music, dance, and theater options, it is a cultural hub. In addition, it hosts several museums and historical places.

Article Source: https://www.mashvisor.com/


 

Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

4 Ways To Wholesale Real Estate

Untitled-8

Want to invest in real estate with no financial risk and no money or credit? Wholesaling houses is a popular choice. I personally think wholesaling can be a challenging way to get started, but the fact that you can get started in real estate investing without any barrier of entry makes wholesaling an attractive option. If you can get good at this side of the business, you will be success with anything you want to do. The reason I say that is finding deals is what makes a wholesaler successful. If you can get good at finding deals, you have unlimited potential.

Once you find a deal, you need to understand how to sell it to make your profit. Here are four ways you can structure your wholesale properties.

Contract Assignment: This is the easiest, but comes with some risks if not done correctly. It is also somewhat restrictive as bank owned properties will prevent this. This works well when you negotiate your deals directly with the seller. The way this works is you will get a house under contract and then you will assign your rights in the contract to another buyer for a fee. That new buyer will take on the rights and responsibilities in the contract and will close in your place. It is best to get your fee paid up front, but it is very common to get your fee when your buyer buys the house. Here are a few things to keep in mind when assigning contracts.

Be sure that you always disclose to your seller that you are or may assign the agreement to another buyer for a fee. I suggest you actually put this in the contract. Sellers should be OK with this if you are transparent that you are an investor who buys houses for a profit before you start to negotiate.

I would get money from your money that is at least enough to cover any earnest money you put up with your seller. That way if your buyer defaults on the agreement you at least cover your costs. Always try to get the entire fee paid when you assign the contract.

I like this way the best because it is easy to do on your end, it is easy for the buyer and the buyer’s lender, and it is the cheapest way to go.

Double Close: This just means that you actually buy the house and then resell it. There are several ways to do this, but the most common is to buy and sell in the same day or within a day. Typically, you will need to bring in financing to get your closing done with the seller, which is why this is my least preferred method to wholesale. Also, because you have two closings you will have two sets of closing costs, so it is the most expensive way too. With that said, some wholesalers prefer this method because they do not have to disclose to the seller their intent to resell and they can both keep their deal with the seller and their deal with their buyer private. It is believed by some that this is a good way to protect your profits. The information will all become public record at some point, but that is well after the closing.

This is the method you will use by default if you do not do your contract on the front end correctly, so we do see double closing frequently.

Flip the Entity: This has become the most common way to wholesale in my market. Most, if not all, the successful wholesalers will use this strategy. Especially when wholesaling foreclosures where contract assignments are forbidden.

The way this works is the wholesaler will set up a separate entity, like an LLC or a Trust, and put that entity as the buyer of the house to be wholesaled. They will then sell the entity itself for a fee. The benefit with using this strategy is that actual contract on the house does not change. Since the buyer of the house is the entity, there are no issues with any regulation or assignment restrictions. The downside is it could be more work because of the extra step to set up the entity, and there could be additional fees to register the entity with the state. The risk for the buyer is whenever you buy a company you are buying all of it. So, if the entity was used in another transaction and owes money to anyone, the new buyer could be on the hook. Knowing this, the best way to do this transaction is with a brand-new entity used for this one purpose.

Relationship Close: I don’t know if there is an actual name for this method. In fact, it is rarely seen. What I mean by relationship close is that you have such a strong relationship with a buyer that you write offers in the buyer’s name. For this to work, you should be a licensed agent and preview houses for your buyer. You would need to understand their criteria and only offer on houses they will want to buy. I have a client that works this way. He has an agent write his offers and the agent/wholesaler gets paid a commission with each successful closing. They do 2 to 3 deals a month with this strategy. My client just signs contracts without looking at them at this point and trusts what the wholesaler is putting together solid offers. There is always an inspection clause protecting the buyer and the agent, but more than 9 out of 10 houses that go under contract close. That is because the agent/wholesaler knows the business and knows what this buyer will buy.

Article Source: http://EzineArticles.com/9826578


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

 

Investing For Cash Flow and Financial Independence

Untitled-1

Financial Planners will always tell you to diversify. That’s a good idea except that diversification is usually exercised by most people solely through the purchase of many different mutual funds. It is still investing in mutual funds or the stock market. There are ways to obtain wealth (and financial security) that you may not currently be exploring, ways that go beyond buying mutual funds.

Instead of planning for retirement, plan to reach Financial Independence instead. True Financial Independence is an easily measurable known target, and is a goal that can actually be reached within a short period of time. How? Through passive income. Generate positive cash flow from hard assets such as real estate income property. Rental income is passive income for the most part, especially if you have a solid property manager taking care of the details.

The principles of creating a long-term, on-going cash flow can be applied to most kinds of real estate investments. Mobile home lots, apartments, garage/storage units, and houses all make excellent income producing assets. Houses, in particular, low-end houses, make an excellent vehicle for creating long-term cash flow for a multitude of reasons.

While appreciation is often the most significant form of profit for real estate investors, investing for cash flow is easier to determine and with lower risk. So how do you achieve positive cash flow ethically in the real world? You need to buy in the rare market where high capitalization rates (15%+) are the norm. Such markets are usually depressed like Rochester or Memphis and have a large pool of renters. The reason tenants are willing to pay more to rent than they would have to pay to own in such markets is that they believe property values are falling or level in which case not owning is a good idea in spite of the high rent. Positive cash flow is so rare and so desirable that it eventually attracts out-of-town investors. Their coming into Rochester or Memphis or wherever causes property values to climb so that high cap rates are no longer available.

There are the three primary ways that an investor makes money in real estate: 1. from cash flow, 2. property appreciation and 3. paying down of the mortgage thereby increasing their cash flow and equity. Only if you buy on a bargain basis can you get positive cash flow from a rental property.

Why low-end houses make the ideal Cash-Flow vehicle

First, houses are abundant. Every city, town, and neighborhood has houses. Houses are probably the easiest to buy because they are the most common. Houses are also probably the easiest to buy at a discount, since there are so many sellers who own them in some sort of crisis ownership position: Vacancy, disrepairs, judgments/liens, back taxes, etc.

Houses are the easiest to manage, with the possible exception of storage/garage unit rentals, since these are occupied with stuff and not people, thereby making evictions easy. Well-maintained houses will often keep tenants for a 3-5 year cycle, sometimes longer. Most of the other vehicles have shorter-term occupancy.

Houses are by far the easiest to sell because of the naturally large demand for places for people to live. In most cases the property will sell without holding paper, but many smart investors will sell their houses on some sort of payment contract and be able to charge a 10-15% price premium to the buyer without using a Realtor.

The so-called low-end house can be very desirable from an investor’s standpoint. First, lower-end housing doesn’t mean becoming a slum lord. It means basic, starter homes that are located in good, but not necessarily great locations. These marginal areas typically are more of a buyer’s market, thereby, tilting the negotiation in favor of a hard-cash buyer or a buyer seeking owner financing. Actually, owner financing is easier, much easier in these slightly marginal areas.

Next, these lower level houses can frequently be purchased at various distress auction (tax, foreclosure, estate) sales. In many areas of the US, these houses are bought for prices anywhere from as low as $5,000 to $25,000, without a lot of difficulty (after you know the many inside strategies and secrets).

These homes can typically generate rents of $600 – $900 per month, which based on the low purchase price makes an outstanding return on investment. Returns of 25% – 35% per year are common. It’s not uncommon for smart investors to receive income for 20 years or better from their houses. After this period of ownership many owners will find a stable buyer and sell the house with a vendor take back mortgage (payment contract) and receive another 10 to 15 years of “mortgage” payments.

Article Source: http://EzineArticles.com/4425895


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

The Best Cities For Flipping Houses

real-estate-investing

When you first make the decision to start flipping houses, one of the key questions on your mind should be where you will conduct your activities. After all, as anybody who has had previous dealings in the property market will be able to deal you, location is extremely important when it comes to buying and selling properties, both in terms of the demand for housing and the prices that you can charge for a property.

Simply put, some markets are naturally going to be stronger than others, so it is a good idea to know where to start looking before you make any purchases. Here we will examine some of the best cities for flipping houses in the current market.

Memphis, TN

Memphis is one of the most famous cities in the United States, but according to recent statistics, it is also one of the best when it comes to flipping houses. So far in 2015, the city has seen approximately 250 houses get flipped successfully, which is one of the higher numbers in the States.

Better yet, on average the house flipper made about $50,000 of revenue on each home that they sold, with an average buying price in the $100,000 range, while the average selling price was a little over $150,000. Considering the price of renovation work, this can likely spell about $20-25,000 of profit for each home flipped in the city.

Baltimore-Towson, MD

Baltimore-Towson boasts very similar figures to Memphis, with statistics indicating that 258 homes have been flipped in the city during the first quarter of the year. However, the city is set apart from the rest on the list due to the enormous return on investment offered by each flipped property.

The average purchase price for a home during 2015 has been about $125,000, but the average sale price has rocketed up to a remarkable $243,000. There is simply no better market in the country today for people who are looking to make the largest amount of money from a flipped home, but beware that it will become a very crowded market as more people become aware of the potential on offer.

Ocala, FL

Ocala is an excellent city to get started in the house flipping business, as initial prices for a property are fairly low and there is a very good chance that you will see a solid return on the investment you make in the area. As such, if your budget isn’t huge it can be the ideal place to start out.

Average purchase prices in the city are approximately $51,000, with resale prices sticking around the $90,000 region. While that sale price isn’t huge in comparison to other areas, it still represents almost $40,000 worth of revenue from each sale. A few houses sold in Ocala could mean you are able to save up the money you need to get to work in a more prosperous city. The only issue you will face is that there are not a huge amount of properties on the market, with only 69 being flipped during the first quarter of 2015.

Article Source: http://EzineArticles.com/9136017


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com