Five Basic Tips for Investing in Real Estate

Five Basic Tips for Investing in Real Estate

There are a lot of things to learn in Real Estate before you start investing. In fact, investing in Real Estate is much more complicated than the stocks investing. That is why Real Estate has become the common investing area for many people and thus have become more popular over the years. One needs to have financial and legal knowledge before investing in the Real Estate.

So, here we are providing you five basic tips which helps you to familiarize yourself with the basic concept of Real Estate.

1. Location:

Location Matters which is an old age saying perfectly suits when we think of the investing in Real Estate. The first thing you should make sure while investing in a property or proceeding forward is whether it is located in a good place or not.

If it is the best location, it can be the worst house there, but that doesn’t matter as you can just fix the issues or resell it to someone who wants a house in the best location. This is called as the Fixing and Flipping formulae by the professional Real Estate investors.

2. Wholesale properties:

Being wise is also very much important while investing. You need to follow the Warren Buffet formulae from the stock market investing which says “You need to be greedy, while everyone else is feeling fearful.” You need to look out for the wholesale properties that are being offered at great discounts and thus avoid paying full prices.

Using this technique, you can buy the property at low price and keep the selling price twice the buying price which helps you in maximizing your investment return.

3. Connect with local investors:

Hanging out with the local investors and talking with them about the local Real Estate market will help you in knowing the things better. Ask them to show their properties and take in every single bit of information they give you.

4. Reading helps a lot:

There is a tremendous amount of information available online these days. You can also gain information that you may need regarding the Property field and investing as well. Buy and read books that give you practical knowledge about buying, flipping, renting and selling the properties.

5. Find a good Realtor:

This is the best part. When you are all set and finally ready to invest in some property, then a Realtor is the person who helps you with it. And a good Realtor who understands the concept of investing returns and also have sold a number of properties can be the best choice.

Property investment can offer fabulous returns, but there are also people who are bankrupted after investing in Real Estate. It is all in your hands, so be sure and know everything involved before you invest.

Article Source: http://EzineArticles.com/9720237

Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 8 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

What You Should Know Before Flipping A House

What-You-Should-Know-Before-Flipping-A-House

Many individuals believe they can flip properties effortlessly, however it is likely they will be dissatisfied with the preliminary outcomes. A profitable flip is one that you generate income and there are many steps you must follow to help you to become successful.

For house flippers, there’s recently been a great deal of news of late, since houses flipped throughout the first half of 2016 produced a median gross revenue of around sixty thousand, the greatest median gross flipping revenue since 2005, the highest it has been in 10 years.

However gross revenue does not contain the expenses to rehab the home, which generally contributes an additional 20% to 30% on top of whatever the preliminary purchase price of the house for the flipper is. Flippers are competing for business with not just additional flippers, but additional homeowners who would like to renovate their residences that they plan to reside within as well.

Although it appears backwards to believe the money is created on the front end of the offer instead of the back end, that’s merely how an experienced home flipper tackles it.

You should fully understand precisely what the home will sell for once it’s fixed up, the expense of enhancing it, as well as the permits, contingencies in addition to your lowest profit so you may proceed to the next offer. The moment you have that worked out, only then may you recognize exactly what to offer the seller..

Capital for home flipping is available, however you may pay much more as an investor

Presently there are a great deal of loan providers available which focus in home flipping. The crucial factor to keep in mind is, you’ll be an investor, not necessarily a home buyer. As a consequence, your interest charges, even if you possess the finest credit rating, will certainly be many percentage points above even the greatest rates, at times towards double numbers. You furthermore may only be capable to finance merely 60% of the property, although many loan companies may finance as much as 130% of the purchase price in order to assure there are funds with regard to the renovating.

Get your team together

In order to be a profitable house flipper, you’ll require plenty of close friends, specifically friends who are building contractors, house inspectors, accountants as well as attorneys and real estate agents. It normally takes a crew to construct a home, and it requires a crew to flip a house. Simply because you have purchased a house, sold a house or even painted a house, does not suggest the expertise to flip a house is there.

You’ll require to operate with a reliable builder to be an effective flipper, as well as a qualified home inspector which can point out items which will need to be repaired that you’ll expect to talk down into the sale price, or it will cut into your gains once you sell. You will also need a competent Realtor which can price the residence appropriately when you depart.

Location is important

It doesn’t matter how great the offer you make on the purchase end of the home if the location isn’t a sensible one. Nonetheless, even a 10% to 20% revenue margin on a flipping offer is an effective one. There tend to be far better markets than others with regards to flipping.

You’re an investor, not a homeowner

With regards to the essentials of home flipping, it’s crucial to select a house which demands only cosmetic modifications, such as kitchen cabinetry or a fresh paint job, which may be completed comparatively swiftly as well as somewhat avoidable. Furthermore, if the house is a foreclosure, discover how long it’s been empty and if it has encountered considerable structural damage while vacant. It’s very probable the previous property owners removed everything worthwhile from the house prior to leaving, such as kitchen appliances, electrical wiring and possibly copper piping. Select a house that’s structurally sound and will not call for significant renovations such as a brand new roof or electrical and plumbing.

Also, whenever pricing the flip, it’s vital that you remain inside the conforming loan restrictions established by Fannie Mae and Freddie Mac throughout the market region. Or else you’re constraining your retail customers who won’t be approved for a massive mortgage or need to put 20% down.

In the event that you remain beneath the conforming loan limitations, you’re raising your buyer pool. If not, you are escalating the probability that the house will remain in the marketplace and you will need to carry the loan for a longer period of time.

Article Source: http://EzineArticles.com/9653739


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 8 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

Buy and Hold – Real Estate Investors Know Best

buy-and-hold-real-estate-investors-know-best

The main advantage real estate offers to those investing is leverage. Using a small amount of money, or even no money down, in some cases you can buy real estate worth tens or hundreds of thousands of dollars. The second advantage is the price appreciation that occurs in real estate, you may doubt this right now, but as a buy and hold investor you look at a 10 year property value appreciation, in which central Pennsylvania (Harrisburg, Lancaster, York) real estate investors saw a gain of 10-12% at current market value. A true retirement plan. The third advantage these savvy investors take advantage of is rehabbing a fixer upper, and if acquired properly will put a quick 20-30% of equity in your pocket to start the leverage ball rolling.

Multi unit buildings, small apartments, and single-family homes that you rent are good investments, because there is always a shortage of housing, and there are always people who can afford to rent but cannot afford to buy a home. There could not be a better description of the current housing market. The high price of home ownership, and the fact that it is generally undertaken with borrowed funds, there will always be renters, those who are afraid of the financial obligation or unwilling to leverage themselves into ownership, or today just plain old fact the lack of bank lending.

Pricing of real estate is also boosted by the simple law of supply and demand. The supply of rental properties is growing slowly, and the population that is currently in need of them has exploded, through both the record numbers of foreclosures, and the tightened credit market. As long as demand for rental housing continues to outrun supply rental rates will creep up, and market time of those rental units will come down.
Article Source: http://EzineArticles.com/1869707


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 8 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

Buying and Holding Real Estate For the Long Term Compared to Flipping

buy-and-hold-real-estate

Beginning real estate investors are often attracted to the quick money that can be made by flipping deals. Flipping deals by assigning contracts is a very lucrative way to make a very nice living – when the market is going up. In the previous boom there were many “flippers” that made hundreds of thousands of dollars assigning contracts. I even bought some of my houses from people that flip contracts. These people are known in the business as “wholesalers. Please note that flipping contracts is not the same as flipping houses. Flipping contracts is essentially transferring the rights of a purchase contract to another buyer. There are three main advantages to flipping contracts:

Requires no cash – you can put down as little as $10 on a contract
No risk – if you don’t flip the deal you don’t lose anything
Quick cash – money in your pocket now
There is no doubt that these advantages are the reason why so many beginners are attracted to “flipping” contracts. The majority of the wholesale real estate books and courses that exist are related to flipping or assigning contracts. It is without a doubt the easiest way to start out with no money and no experience. However, there are also some distinct disadvantages to flipping contracts. The main disadvantages are:

You are dependent on your buyers to close
You make no money if you can’t flip (assign) the contract
Whatever money you make in assignment fees is taxable so don’t spend it all or you won’t have enough to pay the IRS when your tax bill comes due
You only make a small portion of the profit
Here is an example. Imagine a house that is worth $100,000 that a wholesaler has placed under contract for $60,000. This wholesaler manages to sell the contract to an investor for $65,000 and makes a $5,000 assignment fee. Wholesalers often sell their deals to rehabbers (people that buy and fix up houses). Rehabbers typically look to buy their houses at 65% to 70% of the after repair value (market value when fixed up). So a wholesaler that signs a purchase contract to buy a house for $60,000 should easily be able to assign this contract to a rehabber like myself for a fee of $5,000. This fee of $5,000 is taxable so after taxes of 25% assume that the tax free cash that is left over is $3,750. This is the maximum amount of profit that the wholesaler can get from flipping this contract. Compare this to the investor that buys the contract for $65,000 on a property that is worth $100,000. That investor has just added $35,000 to their net worth. If this property is held long term then the equity should grow over time and as long as the property is not sold there should be no capital gains taxes due. Even if the property is sold, if the investor completes a 1031 exchange they should be able to roll their profits into their next real estate transaction without paying any capital gains taxes. The profit potential is far superior for the buy and hold investor than it is for the “flipper”. Consider that at an average annual appreciation rate of 5.8% (the historical appreciation rate of real estate in the U.S) what that house could be worth just five years later (answer: $132,564.84). If you owed $65,000 on this house then after five years you would have over $67,000 in equity. And still you would not have paid any capital gains taxes. As long as you do not sell you will never have to pay capital gains taxes. In fact, you would have been able to take advantage of a tax deduction (interest expense), as well as another tax deduction (depreciation expense) which would have lowered your income tax bill. Take a look at the list below to see what a $100,000 house would be worth over 30 years assuming that it appreciated at this average historical rate of 5.8%.

Yr 1 $105,800.00
Yr 2 $111,936.40
Yr 3 $118,428.71
Yr 4 $125,297.58
Yr 5 $132,564.84
Yr 6 $140,253.60
Yr 7 $148,388.30
Yr 8 $156,994.83
Yr 9 $166,100.53
Yr 10 $175,734.36
Yr 11 $185,926.95
Yr 12 $196,710.71
Yr 13 $208,119.93
Yr 14 $220,190.89
Yr 15 $232,961.96
Yr 16 $246,473.76
Yr 17 $260,769.23
Yr 18 $275,893.85
Yr 19 $291,895.69
Yr 20 $308,825.64
Yr 21 $326,737.53
Yr 22 $345,688.31
Yr 23 $365,738.23
Yr 24 $386,951.05
Yr 25 $409,394.21
Yr 26 $433,139.07
Yr 27 $458,261.14
Yr 28 $484,840.28
Yr 29 $512,961.02
Yr 30 $542,712.76

As you can see from the above list, buying and holding real estate has tremendous long term wealth creation potential. In the previous example of $100,000 house that the wholesaler flipped for $65,000 the maximum profit potential for the wholesaler was $3,750 after taxes. And they did all the work finding the deal (which is the hardest part). Just five years later, according to the above table the house would be worth $132,564.84. The wholesaler has long since spent their $3,750. However as a long term buyer you would own a property with over $67,000 in equity that would be giving you a tax deduction every year. This is the only true way to build fantastic wealth. By year thirty the house would have no mortgage (no payment) and would be worth over $500,000. History has shown us that the best time to buy is after a sustained decline in prices. We have just completed almost three years of a sustained decline in prices. Buying real estate in 2009 and holding for the long term would be a very wise long term investment.


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 8 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

Real Estate Investors Market Trends

You know how they say that “Ninety percent of all millionaires become so through owning real estate.” Of course, as a real estate investor, you know this. You also understand how important it is to know and stick on to current trends. Now here’s a helpful list of three big trends that have dramatically crashed the real estate investment market over the last five years.

Real-Estate-Investors-Market-Trends

  1. You Won’t Catch the Same Deal You Had 5 Years Ago:

A few years back, the real estate market was beaten with bank-owned properties and short sales. This directed to bargain-basement pricing for investors hoping to grab up a home for a steal of a price. Investors would then flip the property or rent the home out to make income.

Possibly, you were right there among the flippers and were easily unloading renovated properties. Sadly, that has changed in today’s market. Now, usual home buyers have the upper hand and investors are waiting for the market to change once again. Of course, as an investor, you can still make money; you just have to go about it in a different way.

  1. Rental Property is All The Rage:

While home buying for the sole purpose of flipping has diminished to some extent over the last five years, renting as a figure of investment is on the rise. This means investors who presently own property are hanging on to their real estate and reaping the rewards, since they now can charge and obtain higher rent for their properties than before.

To some extent, Memphis is one of the fastest growing locations in the nation in regards to renting. This means, by owning rental property in Memphis, you can rake in a tidy profit. Speaking of demanding more rent…

  1. It’s a Good Time to Cash Out If You’re Ready:

Suitable to the fact that investors can charge a high amount for rent, the demand for quality rental investment property is on the rise. Therefore, many investors are taking advantage of the break to sell their rental properties while the price is high.

There more sellers interested in cashing out, seeing this as the right time to sell their properties.” If you currently own rental property and are ready to sell, it looks like now might be the ideal time.

Of course, this list isn’t far-reaching enough, but it does dip a good picture of what’s going on in the market right now. The main thing to remember is to constantly educate yourself in order to get the most out of your real estate investments.


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 8 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com