SYNDICATION INVESTING 101 – HOW TO INVEST PASSIVELY IN REAL ESTATE
In real estate, as in any other industry, there are varying levels of investment. For the average person, buying a home is their biggest investment. And as sweet as buying a home of your own is, almost nothing beats the feeling of buying a house for the price of a car. However, for those who want to put more money to work and see greater returns, a real estate syndication is an option worth exploring. Syndication investing can be done passively, which makes it a very attractive proposition for those who don’t have the time or inclination to become full-time real estate investors. Whether you’re an investor, home-buyer, or seller—MY SMART COUSIN can help. We specialize in real estate investments for aspiring homeowners and investors, with a special focus on Black and Brown folks and women. As your Real Estate Investment Coach, we walk you through all aspects of owning property, from evaluating markets and identifying appropriate strategies, to identifying opportunities and securing financing. Whether you’re seeking to buy a house for the price of a car, our personal favorite way of investing, or purchase higher-end property, we’ll help you develop and execute a strategy that is custom-tailored for you. In this blog post, we will explore what syndication investing is, and how you can get involved without having to do a lot of legwork yourself. Let’s get started! WHAT IS SYNDICATION INVESTING AND HOW DOES IT WORK? Syndication investing is when a group of investors pool their money together to purchase a property. The group will then elect one or more people to act as the property manager. The property manager will be responsible for day-to-day operations, ranging from screening and securing tenants, to addressing maintenance issues and keeping the property move-in ready. As an example, if a group of ten investors is interested in purchasing a $1 million apartment building, with each contributing the same sum of money, each investor would only need to contribute $100,000 to secure a property that would otherwise be way outside of their budget. Syndication investing also can provide passive income for investors, as each investor will receive a portion of the rent collected each month without taking on full-time operation and management duties. While there are many benefits to participating in a syndicate, it is important to remember that it still has risks, just as buying a property as a stand-alone investor does. Before investing, be sure to do your research and consult with a financial advisor to ensure that you are making a wise decision. THE BENEFITS OF SYNDICATION INVESTING If you’re thinking of investing in real estate, you might want to consider engaging as part of a larger group. In syndication, a group of investors comes together to pool their money and purchase a property. This can have several advantages: · First, it allows you to buy a property that you couldn’t afford on your own. · Second, it gives you access to an experienced management team who can make decisions and manage the property through the benefit of multiple perspectives and resources. · Finally, it spreads the risk among many investors, which can protect you if the property doesn’t perform as well as expected, or faces issues that you alone wouldn’t be able to address. HOW TO GET STARTED WITH SYNDICATION INVESTING A real estate syndication is a great way to invest in large-scale projects that require more manpower, time, and money than you can handle on your own. But it can be tough to get started if you don’t know where to begin. Here are a few tips: FIND A SPONSOR A sponsor is an experienced and often well-heeled real estate investor who will help you raise capital, find and purchase a property, and manage the day-to-day operations. Look for someone who has a successful track record and deep industry relationships. CONDUCT YOUR DUE DILIGENCE Once you’ve found a potential project, do your research to make sure it’s a good fit for your pocketbook, timetable, and risk tolerance. You’ll also want to vet the sponsor to make sure they’re experienced and trustworthy, and that you share a common investment philosophy. UNDERSTAND THE COMMITMENT While syndication investing is a passive investment, it is not without any work. Just as with a mutual fund or real estate investment trust, you will want to spend time analyzing the opportunity, both at the front end and ongoing to determine if performance metrics are being met. HOW TO FIND SYNDICATION INVESTMENT OPPORTUNITIES IN YOUR AREA Commercial real estate and large multifamily projects tend to be particularly fertile ground for syndications. The reason is that the amount of equity, debt financing, and technical expertise that must be brought to bear is more than one person has at their disposal in abundance. This means that there is a huge opportunity for those looking to invest in real estate to find syndication investment opportunities in these sectors. There are a few ways to go about finding them: · First is to search online for real estate syndicators, either by region or by property type. This can be done by searching for terms like “real estate syndication” or “property syndication” followed by your target geographic location (a state or region) or target real estate type (shopping center, apartment building, etc.). Online groups provide another avenue for finding syndicators. · Another option is to attend local and online real estate investor meetings. These are often advertised through real estate publications and networking groups. · Finally, you can reach out to accountants and financial advisors specializing in the real estate sector, real estate agents, and real estate brokers, and ask if they know of any syndication entities or upcoming syndication deals. FAQs ABOUT SYNDICATION INVESTING Here are the answers to some frequently asked questions that will help you better understand syndication investing. · WHAT IS A SYNDICATION? Syndication also called a syndicate, is simply a group of investors who come together
ARE NEW CONSTRUCTION RENTAL PROPERTIES A GOOD INVESTMENT OPPORTUNITY?
Are new construction rental properties a good investment opportunity? That’s a question that many people are asking these days. The answer, of course, depends on a variety of factors. But in general, buying and renting newly-built properties can be a great investment, if you do your homework and plan accordingly. The Real Estate Investment Coaches at MY SMART COUSIN are here to help you make your investment in new construction a success. At MY SMART COUSIN, we have the skills and expertise that can position aspiring homeowners and investors, and especially Black and Brown folks and women, to succeed in this competitive market and score one of the most elusive of all finds, a house for the price of a car. New investors will benefit from working with us and our approach of developing a customized plan, tailored just for you. If you’re like most people, you’ve been giving some thought for a while to investing in rental properties. And if you’re considering new construction properties, you may be wondering how they compare to investing in existing real estate stock. In this blog post, we’ll take a look at some of the pros and cons of purchasing new construction rentals. We’ll also help you decide if this type of investment is right for you. So, let’s get started! WHAT ARE NEW CONSTRUCTION RENTAL PROPERTIES AND HOW DO THEY WORK? New construction rental properties can be a great option for marketing to those tenants who are looking for a brand new place to live with all the bells and whistles, and a price to match. Often, these rentals come with amenities ranging from a dog park, to exercise and meditation areas, to on-site childcare and recreation facilities. Since the units are newly-built and often outfitted with high-end appliances and fixtures, there are usually no maintenance issues for you to address in the first couple of years. But how do new construction rentals work? Typically, when you buy a new construction unit, you’ll lease it to a tenant for a set period, usually one to two years. At the end of the lease period, you’ll decide if you’ll offer the tenant any incentives to renew, such as one month free, or a 30-60 days deferral on when rent increases will take place. The amount and type of incentives you offer will depend on what’s being offered in the market, as well as how much or how little rental inventory is available in the building and surrounding area. Many new construction rental properties offer flexible leasing options, so as the landlord of a condo that you’ve purchased and are leasing to a tenant, you can determine if you would like to offer a lease that’s less cookie cutter, perhaps 15 months, if this works best for a great tenant who needs to move due to a work relocation, for instance. WHAT ARE THE BENEFITS OF BUYING A NEW CONSTRUCTION PROPERTY TO RENT VERSUS AN OLDER PROPERTY? There are a few key benefits that new construction rental properties have over older ones. · First, newer buildings are built to present-day code requirements, which are often stricter than those in years past. This means that such buildings are typically safer and more structurally sound than older properties. · Additionally, newer buildings often have better energy efficiency ratings, due to efficient heating and cooling systems, insulated windows and doors, and the like, which can save tenants money on their utility bills as well as meet the objectives of tenants who are seeking a green-energy/low-carbon home. Newer buildings might also have faster and more wide-ranging broadband services, allowing for a better technology-enabled living experience. · Finally, new construction rental properties usually have a modern and sleek aesthetic, which can be attractive to high-paying renters. All of these factors make new construction rental properties a great option for landlords and tenants alike. ARE THERE ANY DRAWBACKS TO INVESTING IN NEW CONSTRUCTION RENTALS? There are a few potential downsides to investing in new construction rentals. · One is that the property might come with high maintenance fees to pay for high-cost and more expansive common areas, on-site pool, and tennis facilities, for instance. One way to offset these costs is to seek out properties that were built with tax credits, and offer savings on property taxes or other rebates. · Another downside is that new construction can have a lower charm factor due to few historical architectural features, ruling out some tenants who might otherwise be interested. · New properties often cost more per square foot than older properties, leading to a lower return on investment and a longer breakeven timeframe. · Additionally, new construction can be subject to unexpected construction delays, leading them to take longer to complete than a property that simply needs a few finishing touches to upgrade it. Construction delays can lead to unforeseen higher costs in addition to delaying when you start earning rental income. Ultimately, whether investing in new construction is right for you depends on your target rental market and goals. WHAT IS THE BEST WAY TO FIND NEW CONSTRUCTION RENTAL PROPERTIES IN YOUR AREA? There are a few ways you can go about finding new construction rental properties in your area. · One option is to drive around and look for signs advertising new developments. Dial into county zoning meetings and look for infrastructural projects such as new roads or sewer improvements as an early indicator of planned developments. · Another option is to search online listings or contact a real estate agent who specializes in new construction. When searching online, you can use keywords like “new construction” or “new developments” to help you find relevant listings. · Once you’ve found a few potential properties, you can then contact the property manager to schedule a showing. · Finally, when touring the property, be sure to ask questions about what a property like this would rent for, whether there are
THE BENEFITS OF INVESTING IN REAL ESTATE
If you’re like most people, you probably think of Real Estate as a place to live for work, vacation, or family, or as a location for your retirement. But what about using real estate to make money? There are many benefits to investing in properties. Educating yourself about the benefits and best ways to go about buying a property for investment or leveraging your current home for profit, is the first step to creating additional cash flow and growing wealth. At MY SMART COUSIN, we specialize in helping new property investors conceptualize, fund, and build their real estate empire, penetrate the lucrative market of buying a house for the price of a car, and develop a Real Estate asset plan that will grow with you over time. As seasoned Real Estate Investment Coaches we work hand-in-hand with our clients, with a special focus on Black and Brown folks and women, to implement their strategy and position them for success in today’s ever-changing market. Are you interested in investing in real estate, but at a loss on how to move from idea to action? If so, read on to learn the first steps you should take, no matter if you’re a first-time homebuyer or an experienced investor! THE ABC OF REAL ESTATE INVESTING Real estate investing is the process of acquiring, owning, managing, and typically improving real property (real estate) to generate income from rents, sell it for a profit, or use it as collateral to secure a loan. Real estate is an evergreen asset, meaning that it always has value. It can be a physical space like a house or office, or it can be something full of potential like an undeveloped lot or piece of land. One attribute that all real estate has in common is that the underlying land is a finite resource— as the old saying goes, they’re not making any more land! There are many different ways to make money through real estate investing. The most common way is by buying properties and either renting them out or selling them for a profit. Buying a house for the price of a car is both a low-cost and high-return option for entering the market Another avenue for investment is through real estate development projects. In these projects, your investment takes place through lending money to developers who are building new properties or flipping houses. Real estate development can involve buying properties cheaply and selling them after making improvements, or developing properties to hold for a rental. Real estate can also be used as collateral for personal or business loans. The key to this strategy is to ensure that you have a solid business plan that will generate cashflow near term so that you can service the loan. THE TOP BENEFITS OF INVESTING IN REAL ESTATE · STABILITY AND SECURITY Real estate has always been considered a safe haven and for good reason. Unlike crypto, high-risk stocks, and similar investments that can fluctuate wildly in value and even result in no underlying value, real estate is much more stable and always hold some residual value through the building or land. Even during times of economic recession, the value of land generally tends to remain flat or increase slightly. This stability makes real estate a great long-term investment, particularly for those who are incorporating real estate into a retirement plan. In addition to its stability, real estate offers a high degree of security. Once you own a piece of property outright, the only avenues for losing it are through unpaid and ongoing obligations such as property taxes and municipal services (water, sewer services, and the like). This makes real estate an ideal investment for those who are risk-averse. If you are looking for a safe and secure investment with long-term potential, real estate is a great option. · TAX BENEFITS There are several reasons why investing in real estate can be a smart move, but one of the most compelling is the potential for tax benefits. When you own a property, you can deduct a variety of expenses including mortgage interest, property insurance, repairs, and more. This can significantly reduce the amount of money you owe in taxes each year. Additionally, if you sell your property for a profit, you may be able to avoid paying capital gains tax on the sale by reinvesting the funds into another property— consult with a tax pro before proceeding with this. In short, investing in real estate can be a great way to save money on your taxes. And who doesn’t love being able to keep more of their hard-earned cash? · APPRECIATION POTENTIAL Real estate also offers the potential for appreciation of the asset— perhaps because of a growth in the economy increasing the price of the property, or an increase in rents, making the property more valuable. And while there’s no guarantee that your investment will appreciate, historical data shows that real estate values have increased at a rate of four percent to six percent annually over the long term. When it comes to appreciation potential, there are a few things to keep in mind. First, the location of the property is key. Properties in desirable areas tend to appreciate at a higher rate than those in less desirable areas. Second, the condition of the property is also important. Investing in a fixer-upper may offer the opportunity to add value through renovations, resulting in greater appreciation potential down the road. Finally, the type of property you invest in an impact appreciation potential. For instance, single-family homes tend to appreciate at a higher rate than condominiums or townhomes. So if you’re thinking about investing in real estate, be sure to keep these factors in mind. With a little research and careful planning, you can maximize your chances of seeing significant returns over time. · OPPORTUNITY TO LIVE IN THE PROPERTY YOU ARE INVESTING IN There are many benefits associated with investing in Real Estate, including the opportunity to live in
THE PROPERTY MANAGEMENT CHECKLIST EVERY LANDLORD SHOULD HAVE
Property management can be a lot of work, whether you are managing a property yourself or hiring someone to assist you. Owning a home or investment property is at the top of many people’s list of success markers. MY SMART COUSIN is here to help you get into the property ownership game and do what few others can—buy a house for the price of a car! As Real Estate Investment coaches we specialize in assisting aspiring investors, especially Black and Brown folks and women, to learn how they can reach their goals quickly, while also leveraging homeownership resources to lower down payments and maximize low-cost financing options. If you are already a landlord, then you know that property management requires discipline and attention to detail. Between finding tenants, collecting rent, and dealing with repairs, there’s always something to do. That’s why it’s important to have a property management checklist to help you stay organized and run your business smoothly. In this blog post, we’ll share a checklist to help ensure you manage your property or your property manager, more effectively. WHAT IS A PROPERTY MANAGEMENT CHECKLIST? A property management checklist is a useful tool for landlords and property managers. It helps keep track of maintenance tasks, rental payments, and other important details. The checklist can be used to create a schedule of when certain tasks need to be completed. For example, a landlord may want to check smoke and carbon monoxide detectors every six months to ensure they’re operable or change the air filters on a furnace each Fall to maximize the performance of the furnace. Even with the best of intentions, meeting these goals consistently can be hard to do without a calendar and formalized process. A CHECKLIST FOR PROPERTY MANAGEMENT · HAVE AN EMERGENCY FUND TO COVER SCHEDULED AND UNEXPECTED REPAIRS As a property owner, you should always have a reinvestment fund and an emergency fund set aside to cover routine maintenance, replacement of systems that can no longer be repaired cost-effectively (for instance, an old hot water heater), and unexpected repairs. – Establishing and replenishing these funds will help you avoid dipping into your personal savings or taking out a loan to pay for property upkeep. – In addition, having a maintenance fund and emergency fund will help keep your property in good condition and avoid withheld rent when tenants make repairs themselves after unmet responses or potential legal problems that could arise from deferred maintenance. To put together these funds, start by setting aside at least $100 each month per fund from rent payments or other income sources. Once you have built up a healthy reserve, you will be able to breathe a little easier knowing that you can cover both scheduled and unscheduled maintenance without putting your finances at risk. · SCREEN POTENTIAL TENANTS CAREFULLY As a property owner, you know that screening potential tenants are one of the most important steps in managing your investment property. After all, uncollected rent, damage to your unit, or refurbishing the property to a rent-ready state for another tenant, can leave you unable to cover your mortgage or earn returns for many months. When screening tenants, there are a few key rules to follow: beylikdüzü escort bayan, gaziantep escort, ataköy escort, esenyurt escort, seks hikayesi, kayseri escort, şişli escort, beylikdüzü escort, beylikdüzü escort – First, be sure to check the person’s rental history to see if they have any red flags. If more than one adult will be living in the home, check the rental history of each person. – Next, run a credit check to see if the person is financially responsible. As part of the credit check, determine if any judgments have been ordered (for instance, due to a past eviction or vehicle repossession) and if the judgments have been satisfied. – Finally, do a criminal background check to make sure there is no history of violence or other serious offenses. If the person owns a pet, keep in mind that many property insurance companies will not provide insurance for certain breeds of dogs (and other animals such as pet snakes) that the insurer classifies as ‘dangerous’. As such, you will want to add a no-pet clause for these breeds to the lease agreement. By following these steps, you can help ensure that you find the right tenant for your property. · INSIST ON RENTER’S INSURANCE As a property manager, it’s important to keep your property and your tenants safe. One way to do this is by requiring tenants to get renter’s insurance. – Renter’s insurance protects tenants in case of damage to their belongings, or if they are held liable for damages to the property. – Renter’s insurance also provides some financial protection in case of a natural disaster or another emergency. – Lastly, renter’s insurance gives tenants peace of mind knowing that their personal possessions are covered and enables them to reach out to their insurance, rather than to you, if the furniture, keepsakes, or other items are damaged due to a leak, for instance. · INSPECT THE PROPERTY REGULARLY By regularly inspecting the property, you can identify problems early and resolve them before they become major issues. Here’s what to include on your inspection checklist: – Check the condition of the exterior of the property, including the roof, any large tree limbs on or near the roof, gutters, siding, and sidewalks in front of the property, and the driveway. – Inspect all windows and doors to make sure they are in good working order. Housing authorities and rental licensing departments will require that windows open and lock. and will disallow certain kinds of door locks and burglar bars that are unsafe in the event of a fire. – Walk around the perimeter of the property to look for signs of water or physical damage, pests, overgrowth of trees or bushes, pets that are not permitted per the lease, and signs of excessive wear and tear on gates, fencing, porches, and decks. – If
A HOMEBUYER’S GUIDE TO THE ESCROW PROCESS
When most people think of buying a house, the first thing that comes to mind is the mortgage. How will you afford it? How much can you borrow? What is the likely interest rate? Can you find an affordable property? These are all important questions to be considered. Despite inflation, high mortgage rates, and the newly declared recession-lite phase of the economy, the housing market remains hot. At MY SMART COUSIN, we work with aspiring real estate investors and homeowners, and particularly Black and Brown folks and women, to help you find properties that fit your needs! As your Real Estate Investment Coach, we will walk you through evaluating the current property landscape and develop a custom-tailored plan on how best to invest your money and buy a house for the price of a car. One element of purchasing a property is the escrow process. While this process can seem daunting, it doesn’t have to be. This guide will walk you through the key steps, from start to finish. So whether you’re a first-time homebuyer or an experienced pro, read on for all the info you need. WHAT IS AN ‘ESCROW’ AND WHAT DOES IT INVOLVE? Escrow is a system where two parties involved in a transaction (usually a buyer and seller) deposit all funds and property related to the transaction with a non-related third party. This third party holds the funds and assets until all conditions of the deal are met before finally releasing them to the appropriate party. This process helps to ensure that both parties uphold their end of the bargain before any money or property changes hands. In real estate transactions, for example, the buyer typically deposits funds with an escrow agent at the beginning of the sale process. Once all contingencies are met and both parties are satisfied, the escrow company will release the funds to the seller. Escrow can also involve other assets besides money, such as intellectual property or physical belongings. By entrusting these items to a third party, both parties can be sure that they will receive what they are owed promptly. HOW TO PREPARE FOR THE ESCROW PROCESS? The escrow process can be confusing and overwhelming, but it doesn’t have to be. Here are a few tips to help you prepare for escrow: · First, be sure to choose a reputable escrow company. Ask for recommendations from your real estate agent, attorney, or financial advisor. · Second, make sure you have all of your documents in order. This includes your purchase contract, loan papers, and any other pertinent paperwork. · Third, be prepared to pay any necessary fees. This may include an escrow fee, loan origination fee, and/or title insurance premium. · Fourth, be patient! The escrow process can take several weeks to complete. But once it’s finished, you’ll be the proud owner of your new home. WHAT TO DO DURING THE ESCROW PROCESS? Once you’ve found a home you want to purchase and made an offer that’s been accepted by the seller, it’s time to enter escrow. Escrow is the period between when your offer on a home is accepted and when the sale finally closes and you become the legal owner. During this time, your real estate agent will be working hard behind the scenes to make sure everything goes smoothly. Here’s what you can expect during the escrow process: 1. Your agent will order a title search to make sure there are no outstanding claims or liens on the property. 2. The lender will order a home appraisal to make sure the property is worth at least as much as the loan amount. 3. You’ll need to get insurance for the property. 4. The escrow company will prepare all the necessary paperwork for the closing. 5. You’ll need to sign all the paperwork and wire the down payment and closing costs to the escrow company. 6. The seller will transfer the deed to you and you’ll be given the keys to your new home! WHAT TO DO AFTER THE ESCROW PROCESS IS COMPLETE? So you’ve finally made it to the end of the escrow process. Congrats! You’re now the proud owner of a new home. But what comes next? Here are a few things to keep in mind in the days and weeks following the close of escrow: · Pat yourself on the back – you’ve just accomplished one of the biggest milestones in your life! Make sure to celebrate accordingly. · Get in touch with your homeowner’s insurance company and set up coverage for your new home. · Start thinking about any customizations or renovations you might want to make to your new place. A little bit of planning now will save you a lot of headaches down the road. · If you’re moving from out of state, start researching local schools and amenities so you can hit the ground running when you arrive. · Most importantly, take some time to relax and enjoy your new home. You’ve earned it. SUMMING IT UP So, there you have it! Your comprehensive homebuyers guide to the escrow process. Escrow may seem challenging at first glance, but with our helpful tips and a little preparation, you’ll be ready to take on this important step in the homebuying journey. Are you excited? We certainly are! If you have any questions about escrow or would like more information, don’t hesitate to reach out to us. We’re always happy to help. Until next time, happy house hunting! YOU CAN ALSO READ: HOW TO ESTIMATE YOUR RENTAL PROPERTY EXPENSES FOLLOW US: @MYSMARTCOUSIN
HOW TO ESTIMATE YOUR RENTAL PROPERTY EXPENSES
Breaking into the world of real estate investment can seem daunting, but it doesn’t have to be. By estimating your expenses, you’ll have a better idea of what you’re getting into and whether the investment is worth your time and money. MY SMART COUSIN is here to help you realize your real estate investment goals. As a Real Estate Investment Coache, we have the skills and expertise that can position almost anyone for success in this competitive market. We help aspiring investors and homeowners, particularly, Black and Brown folks and women, develop and execute a customized, step-by-step plan to scale their finances and move from idea to action. With planning and persistence coupled with guidance from us, we will help you develop a portfolio and break into the most elusive of all real estate channels— buying a house for the price of a car. When structuring your first rental property acquisition, it’s important to estimate your expenses ahead of time. This will help you determine if the property is worth your investment, and whether you can afford it. There are a few different factors you’ll need to consider when projecting your expenses, so keep reading for more information. WHAT ARE THE MOST COMMON TYPES OF EXPENSES FOR A RENTAL PROPERTY? There are several different expenses that you may incur when you own a rental property. · Acquisition expenses are those expenses associated with the initial purchase of the property. These include fees charged by the mortgage lender, legal fees, and municipal or county fees associated with recording the deed. Importantly, the real estate commission will not be paid by you as the buyer— the seller pays the real estate commission, and that commission is split between the buyer’s real estate agent and the seller’s real estate agent. For instance, if the property you purchase costs $50,000 and the real estate commission rate is 6%, the resulting $3,000 commission will be paid by the seller and split 50/50 by the seller’s agent and buyer’s agent. · Rental leasing expenses are those expenses associated with finding and signing a renter, such as advertising and background checks. If you are managing the property yourself, then you will incur these costs, both in money and time. If you hire a property manager, then the property manager will charge you the first month’s rent (or a higher or lower amount, depending on the property management company), and that fee will be used to pay for the advertising, screening, and other renter-onboarding expenses. As an example, if your rental property is listed for a rent of $1,000 per month, then the first month’s rent will be paid directly to the property manager as their fee for finding and placing a tenant. Each time a new tenant is placed in the unit, the one-month fee will be charged. · Operating expenses are those expenses associated with the day-to-day operations of the property, such as maintenance materials, repair costs charged by handymen or contractors, and property insurance. As with the rental leasing expenses, if you hire a property manager, the property manager will charge a fee, ranging from a low of 5% to a high of 15%, depending on the market and the services provided. That fee will pay for the manager to communicate with the tenant on any issues with the property. · Finally, owner expenses are those expenses associated with your involvement in the property, such as travel costs to visit the property. By understanding all of these expense types, you can be better prepared for the financial commitment of owning a rental property. HOW TO ESTIMATE YOUR RENTAL PROPERTY EXPENSES If you’re considering acquiring and renting out a property, it’s important to have a clear understanding of all the associated costs. · CALCULATE THE MONTHLY MORTGAGE PAYMENT One of the biggest expenses you’ll need to account for is your mortgage payment, which comprises principal and interest. To calculate the principal, simply take the total amount you borrowed and divide it by your loan term. For example, if you owe $100,000 on your mortgage and have 20 years, or 240 months, mortgage, the principal portion of your monthly mortgage is $416. Your mortgage interest expense will equal the interest rate on your loan times your loan amount. · ADD IN THE QUARTERLY PROPERTY TAXES In addition to your mortgage payment, you’ll also need to factor in property taxes. These are typically paid every quarter, so you’ll need to divide the annual amount by four. For instance, if your annual property tax bill is $2,000, your quarterly property tax expense would be $500. . ESTIMATE MONTHLY HOMEOWNER’S INSURANCE PREMIUM To estimate your monthly homeowner insurance premiums, start by looking at the average cost of premiums in your area. Insurance rates and provisions vary by the insurer so be sure to get quotes from at least three companies. · INCLUDE ESTIMATED MONTHLY MAINTENANCE AND REPAIR COSTS Next, you’ll need to calculate an estimated monthly maintenance cost. This can be done by taking into account the age of your rental property and the expected wear and tear that it will experience over time. If you think your rental property will need major repairs or renovations in the near future, be sure to factor that into your estimate. By taking the time to calculate these monthly expenses, you can get a good idea of what it will cost to rent out your property each month. This information can help you make informed decisions about the appropriate rental rate to charge. · FACTOR IN ANY APPLICABLE VACANCY RATES OR LEASING FEES You’ll also need to factor in any applicable leasing fees. These can vary depending on the type of property and the location, but they’re typically a percentage of the total rent amount. · SUBTRACT POTENTIAL RENTAL INCOME TO GET YOUR NET OPERATING INCOME (NOI) To calculate your net operating income, take your potential rental income and subtract any vacancy loss,
THE BEST SHORT-TERM INVESTMENTS AND STRATEGIES
Making investments can be a great way to supplement your income and grow your wealth. But what are the best strategies for earning a good return on your money if you’re targeting a relatively short period of time? Applying the right strategy at the right time always creates a win-win situation for you. At MY SMART COUSIN, we’re here to help you get into the property ownership game and do what few others do— buy a house for the price of a car. Whether you are limited by lack of funds for a down payment, high housing prices, or lack of real estate opportunities in your area, don’t let that stand in your way, come talk with us. As Real Estate Investment coaches we specialize in working with aspiring investors and homeowners, especially Black and Brown folks and women. Our objective is to help you reach your home or property ownership goals quickly, effectively, and at a low cost, by teaching you everything you need to know before purchasing a property, from evaluating the dwelling condition to structuring the deal, to shaking loose free and low-cost financing. If your focus is directed at the here-and-now horizon and how to find investment opportunities that can be executed quickly and yield cash flow for immediate goals, we’ve got you covered on that front too. This blog post will dig into a few short-term investment and strategy ideas for anyone seeking to generate returns in a short time period, specifically: · High-yield accounts and certificates of deposit. · Dividend-bearing assets such as REITs, or real estate investment trusts · Inflation-indexed bonds, also called I-bonds. · Gold, silver, and other commodities, as a hedge against inflation · Peer-to-peer lending opportunities HIGH-YIELD SAVINGS ACCOUNTS AND CERTIFICATES OF DEPOSIT When it comes to short-term investments, one tried-and-true vehicle is high-yield savings accounts. These accounts typically offer higher interest rates than traditional savings accounts, meaning your money can grow faster. Average high yield rates for the month of July 2022 range from 1.2% to 1.9%. Since these funds are FDIC-insured, you don’t have to worry about losing your hard-earned principal and interest. Another option is a certificate of deposit or CD. These are typically offered by banks and credit unions, and also offer higher interest rates versus standard savings accounts. One downside of CDs is that you typically have to keep your money in the account for a set period of time or you’ll be charged a penalty. However, if you’re looking for a safe place to park your cash, a CD can be a good option. CD rates have climbed out of the decimal-dust territory, as inflation and interest rates have risen. July 2022 rates for deposit terms ranging from one year to five years are in the low to mid two percent neighborhood, at 2.3% to 2.9%. If you currently have a certificate of deposit that will mature soon and you are interested in rolling it over, check with your bank first to ensure that it will renew at today’s higher rate. Likewise, discuss with your bank if you would like a CD that is the same duration as your current CD (as, for instance, five years), or if you would like to change the duration to something longer or shorter (generally, the longer the term, the higher the interest rate). REIT INVESTMENTS REITs, or real estate investment trusts, are mutual funds of sorts that invest in a collection of real estate assets. The assets can be grouped by property specialties, such as hotels and lodges, or grouped more broadly by type, such as residential properties. REITs are required by the Securities and Exchange Commission (SEC) to dividend at least 90% of their earnings to the REIT shareholders. As a consequence, the dividend payout levels for REITs can be hefty relative to other mutual fund baskets. REITs, like stock investments, can be risky, so do your homework and research the property class and asset management team before investing. INFLATION BONDS Bonds are another option and work particularly well for investors who prize stability and low risk over returns. When you invest in bonds, you’re essentially lending money to a government or corporation. In exchange for your loan, the entity that issues the bond agrees to pay you interest payments at regular intervals and return your principal investment when the bond matures. The downside of bonds is that they typically don’t offer as much upside potential as other investments. A particular bond type that is gaining new fans in today’s inflationary market is inflation-indexed bonds, also referred to as I-Bonds. I-bonds are issued by the U.S. Treasury and sold through their website, TreasuryDirect.gov. The interest rate on I-Bonds being offered through October 2022 is 9.62%. The bond has a 30-year maturity term although you may cash it before then. GOLD OR SILVER AS A HEDGE AGAINST INFLATION When it comes to protecting your finances against inflation, gold and silver have long been considered the go-to options. And for good reason: both precious metals have a long history of maintaining their purchasing power, even in periods of high inflation. Gold and silver can also be easily bought and sold, making them ideal for short-term investors. Other inflation-resilient commodities include oil, lumber, and agriculture. These commodities tend to pass on higher prices— witness the higher prices at the gas pump— when inflation rises. Opportunities for investing in these commodities include index funds and mutual funds PEER-TO-PEER LENDING Peer-to-peer lending is a great way to earn some extra income without having to put up a lot of money upfront. And with the advent of peer-to-peer lending platforms, your potential lending circle as a short-term investor is greatly expanded. Peer-to-peer lending sites post potential lending opportunities and act as middlemen handling payments and associated paperwork. FINAL THOUGHTS So there you have it, a few short-term asset, bond, and savings fund-based investment options to consider for generating cash flow. If you want to make your
REFINANCING RENTAL PROPERTY IN 2022: A REAL ESTATE INVESTOR’S GUIDE
Have you been thinking about refinancing your rental property? If so, you’re not alone. Refinancing continues to remain popular with homeowners and real estate investors as a vehicle for locking in interest rates rather than chancing escalating rates under a variable mortgage, or unlocking the appreciated value of a property through a so-called cash re-fi structure. At MY SMART COUSIN, we help homeowners and investors, and especially Black and Brown folks and women, optimize their real estate investment, management, and ownership strategy. As your Real Estate Investment Coach, we’ll help you evaluate the residential property market in terms of the many opportunities that continue to be available, even in today’s high-priced market, and step you through our proven roadmap to buy a house for the price of a car! Whether you are a current or aspiring real estate investor, chances are high that one of the criteria you use to evaluate opportunities is ROI or return on investment. One way to increase the ROI of a real estate investment is to refinance the property at a lower interest rate, at a higher leverage rate, or both. This guide will get you thinking through the questions and answers needed to make the best decision for your portfolio. Let’s read on to learn more! WHAT DOES IT MEAN TO REFINANCE A RENTAL PROPERTY, AND WHY SHOULD YOU CONSIDER DOING IT NOW? Refinancing a rental property refers to taking out a new loan to replace an existing loan. There are many reasons why you might want to refinance your rental property, but some common reasons include: · To obtain a lower interest rate and thereby save money on your monthly mortgage payments. · To tap into the equity you’ve built up in the property by obtaining a mortgage that reflects the higher value of the property. · To switch from an adjustable-rate mortgage to a fixed-rate mortgage. · To shorten the loan term and build equity more quickly. In general, it’s a good idea to refinance if you can get a lower interest rate and/or reduce your monthly payments. Tapping into the equity value of the property through a cash re-fi can also be a great way to put the stored value of these funds to use. As for why you would specifically pursue refinancing in 2022, there are a few reasons: · Even with 30-year mortgage rates currently sitting at a relatively lofty 5.75% – 6% rate, a nearly three-point jump from July 2021’s rate of 2.8%, mortgage rates are forecasted to trend even higher in the next few years. As such, trading in a variable rate mortgage now for a fixed rate loan allows you to avoid the risk and cost of continued inflation and higher rates. · The housing market is expected to cool off in the next few years, so refinancing now could help you tap into equity while today’s housing prices, while they’re still high. · The government is expected to implement changes to the tax code that could make refinancing less beneficial. Refinancing before those changes go into effect may help you save money. Refinancing can be a complex process. When considering strategies that could impact your taxes, meet with your accountant first. Likewise, be sure to speak with your financial advisor to ensure that your specific financial position is considered in your strategy. THE BENEFITS OF REFINANCING A RENTAL PROPERTY There are several benefits to refinancing a rental property. · Perhaps the most obvious is that it can help to lower your mortgage payments. If you have been searching for ways to lower expenses, refinancing may give you the financial breathing room you need. · If a cash re-if is done, the funds obtained from the refinancing can be used to increase the value of your property. By taking out the proceeds from the loan and making improvements to your rental property, you can make the property more attractive to potential tenants, increasing retention and the rental amount. · Finally, refinancing can allow you to tap into the equity you’ve built up. This can be helpful in finding a growth strategy. In short, there are several advantages that accrue from refinancing a rental property. IMPORTANT CONSIDERATIONS TO BEAR IN MIND WHEN REFINANCING YOUR RENTAL PROPERTY Before taking the plunge into the refinancing market, there are a few things to keep in mind to get you started on your journey: · First, make sure you compare rates from multiple lenders to get the best deal. · Second, beware of prepayment penalties, which can cost you hundreds or even thousands of dollars if you try to refinance before your loan term is up. · Finally, remember that closing costs can add up, so be sure to factor them into your refinancing decision. If you keep these things in mind, refinancing your property can be a great way to save money and make improvements. THE PROCESS OF REFINANCING A RENTAL PROPERTY The refinancing process can be a bit complicated, but it essentially boils down to these steps: · Shop around for the best rates and terms. · Gather all the necessary documentation. · Apply for the new loan · Wait for approval and close on the loan. · Use the funds from the new loan to pay off the old one. HOW TO FIND THE BEST REFINANCING DEALS No one likes overpaying for anything, least of all when it comes to making expenditures on an investment that is meant to pay you money. If you’re looking to refinance your rental property, there are a few things you can do to make sure you get the best possible deal: · First, talk to multiple lenders and compare their offers. Pay attention to both the interest rate and any fees or points so that you can do an item-by-item comparison across lenders. · Second, don’t be afraid to negotiate. Let each lender
A GUIDE TO REAL ESTATE ASSET MANAGEMENT
When you’re buying a property, it’s important to think beyond the short-term horizon. You also need to consider what your long-term objectives are for the property, and how everything, from property management to tax planning to the eventual sale of the property, will be evaluated holistically to optimize the value of your asset. That’s where real estate asset management comes in. By using a professional asset manager, you can rest assured that a cohesive economic, operational, and financing strategy will be developed and implemented. When you’re looking to buy a house and structure a real estate asset plan that will grow with you over time, it can be hard to find the right Real Estate Investment Coach. At MY SMART COUSIN, we work with you to understand your resources and strategy inside and out so that we can position aspiring investors and homeowners, with a particular focus on Black and Brown folks and women, to buy a house for the price of a car and scale their finances. In this blog post, we’ll discuss the benefits of real estate asset management, and why it’s such an important part of owning property. Stay tuned! WHAT IS REAL ESTATE ASSET MANAGEMENT AND WHY DO YOU NEED IT? Real estate asset management is the process of analyzing the real estate market for opportunities, and capitalizing on these opportunities with an acquisition, financing, and operating plan. Real estate asset managers ensure that a property generates consistent revenues and cash flow, minimize operating expenses and risks, and leverage financing, tax benefits, and economic incentives to increase the property’s value. The terms ‘property management and ‘asset management’ are sometimes used interchangeably. However, property management, which focuses on property operations— think screening tenants, making repairs, and collecting rent— is a subsection of asset management and only one of several elements required to increase value. THE BENEFITS OF REAL ESTATE ASSET MANAGEMENT Fundamentally, the goal of asset management is to ramp up returns by taking a holistic view of the drivers behind property values and using those insights to make cross-cutting decisions. Chief among the benefits include: – Increased Profits: by carefully tracking income and expenses, analyzing market trends, and executing sound business strategies, asset managers can help to increase profitability and protect against financial risk. Lower Risk: because asset managers analyze all of the information regarding a property, from factors driving the local housing market such as housing prices and jobs to property specifics such as bookkeeper and property management reports, the asset manager serves as the effective chief executive officer of the property. This CEO role helps minimize the risk that critical information or opportunities will be overlooked. HOW TO FIND A GOOD REAL ESTATE ASSET MANAGEMENT COMPANY While there are many reputable and qualified firms to choose from, finding the right one for your needs can be a challenge. Here are a few tips to help you find a good real estate asset management company: – First, consider your specific needs. What type of property do you need to be managed? Are you looking for a firm that specializes in commercial or residential properties? Knowing your specific needs will help you narrow down your search. – Second, ask for recommendations. Talk to colleagues, real estate professionals, and trade associations for referrals and suggestions on asset management companies. – Third, check online reviews. Search for real estate asset management companies in your area. Read reviews to get a sense of what others have experienced. – Finally, schedule consultations. Once you’ve compiled a list of potential firms, reach out and set up meetings with each one. This will allow you to learn more about their services and decide if they’re the right fit for you. THE DUTY OF A REAL ESTATE ASSET MANAGER – A real estate asset manager’s job is to increase the value of a property and improve its cash flow. They do this through tasks including developing an investment strategy, finding lenders, helping you structure and negotiate to finance, and evaluating property insurance options and terms. – Cash flow management is a critical part of a real estate asset manager’s job. They must ensure that the property generates enough income to cover all expenses, including mortgage payments, taxes, and repairs and maintenance. – In addition, they must also find ways to increase the income from the property, such as by taking a close look at how property management is being handled and diving into the detail behind revenues and expenses. – By increasing the value of the property, a real estate asset manager can help to generate more income for the owner and improve the overall ROI of the investment. SUMMARY So, what is real estate asset management? In a nutshell, it’s the process of managing the risks and opportunities of a property on behalf of an owner. This could be anything from an office building to a portfolio of single-family homes. Are you considering using a real estate asset manager? If so, share your questions! YOU CAN ALSO READ: A HOW-TO-GUIDE: RENT-TO-OWN A HOUSE FOLLOW US: @MYSMARTCOUSIN
A HOW-TO-GUIDE: RENT-TO-OWN A HOUSE
Are you a renter who’s tired of never quite feeling like you own your place? Or maybe you’re a homeowner who’s been through one too many costly repairs and is looking for a more affordable option? Owning and renting are the two most common options that people think of in real estate. Despite the hot real estate market, or perhaps one reflection of it, owning an affordable home has become the preferred strategy for participating in real estate, particularly if you do so by Buying a house for the price of a car. With MY SMART COUSIN we help familiarize prospective investors and homebuyers with the benefits of investing in properties, and more importantly, walk with them, step-by-step, through a customized roadmap to buying their house for the price of a car. If moving from planning to action sounds like just the medicine you need, we’re here to help you take your finances and investments in a new direction. We specialize in helping Black and Brown folks and women understand the benefits and mitigate the risks of investing through real estate purchases, and building a portfolio of monthly income. If feeling like you’re a perpetual renter with no clear path on how to step into home ownership sounds like you, then examine your current digs and ask, is it exactly the kind of nest that you’d like to own someday rather than continue renting. If the answer is yes, then rent-to-own might be a great vehicle to acquire a house. Rent-to-own, while open to everyone, is well-suited for those who need a little more time to line up a down payment, or to raise their credit score to qualify for a mortgage. In this article, we will outline everything you need to know about rent-to-own agreements and how they work. Keep reading to learn more! WHAT IS RENT-TO-OWN AND HOW DOES IT WORK? Rent-to-own agreements are contracts between a tenant and a landlord that give the renter the option to purchase the property they are renting at a later date. These agreements are typically used when the renter does not have the necessary down payment for a mortgage or is not able to qualify for one. Under a rent-to-own agreement, the landlord agrees to hold onto the property for an agreed-upon length of time, usually one to three years. During that time, the renter pays an amount above the normal rental price, which goes towards the eventual down payment required to purchase the property. At the end of the rental lease, the renter has the option to purchase the property, typically at a price agreed upon in advance. If the renter chooses not to purchase, they simply vacate the property, just as they would if they moved from a typical rental home, with no further obligation to the landlord. THE BENEFITS OF RENT-TO-OWN Many people dream of owning their own home, but the upfront cost can be cost-prohibitive. In addition, the process of securing a mortgage— particularly in the midst of today’s market uncertainty, what with high inflation, rising interest rates, and a looming recession— can be complex and unnerving. Rent-to-own arrangements offer an alternative path to homeownership. · SUFFICIENT TIME TO SAVE FOR A DOWN PAYMENT Rent-to-own can be a great option if your finances have you sidelined due to insufficient savings. With rent-to-own, time is your friend, giving you the flexibility and structure you need to save a specific amount of money by a fixed date. · CONVENIENT FINANCING Rent-to-own agreements often come with less stringent credit requirements, making it easier to qualify for financing. And, because a portion of your monthly rent payments will go toward the purchase price of the home, you’ll already have a head start on the financing. · BUILDS EQUITY A percentage of your rental payment goes towards the down payment or equity value of your home. As a consequence, with each monthly payment, you’ll be closer to becoming a homeowner and building equity in your house. · AMPLE AMOUNT OF TIME TO TEST YOUR NEIGHBOURHOOD Rent-to-own can be a great way to look at your community through the eyes of a prospective property tax-paying homeowner. Conveniences and irritations regarding the neighborhood and nearby amenities can be evaluated anew and considered over a span of years before committing to a purchase. · THE OPPORTUNITY, AND OBLIGATION, TO OBTAIN FULL CONTROL OF THE PROPERTY Rent-to-own agreements can be structured to provide the tenant with both the right and responsibility to make a menu of maintenance decisions and design changes, without landlord input. In such instances where the tenant is given a free hand to customize the house, the costs are often paid by the tenant. Thus, should you decide to paint your home entirely in purple, for instance, your landlord’s approval, or more likely, swift disapproval, is not a factor. That said, the cost of this new aesthetic will be paid for by you. This latitude can be a big plus for people who want the flexibility to truly treat the home as their own and renovate it to their liking. · NO BURDEN OF TAXES OR PROPERTY INSURANCE Rent-to-own agreements often come with no requirement to pay property taxes or property insurance, which allows the tenant to try out homeownership without bearing the full cost of homeownership. If you’re considering a rent-to-own agreement, be sure to do your research and work with a reputable landlord. By understanding the process and being aware of the potential risks, you can ensure that rent-to-own is right for you. DISADVANTAGES OF RENT-TO-OWN While rent-to-own is a great way to get your foot in the door of homeownership, there are a few potential drawbacks to consider before signing on the dotted line. · First and foremost, once the lease period is up, you will still need to obtain a mortgage to purchase the property. · Additionally, the landlord may include clauses in the contract that make you responsible for their