Mar 18, 2020 | Real Estate
Under the Jumpstart Our Business Startups (JOBS) Act, which was signed into law by President Obama on April 5, 2012, the Securities Exchange Commission (SEC) relaxed the rules about advertising investments. This allowed the trend of crowdfunding to expand dramatically giving real estate investors more opportunities for pooled-funds investing.
What Is Polled-Funds Investing?
A pooled investment fund takes in money from a group of investors to use to acquire real estate for larger amounts than each investor’s money would support. Prior to the passage of the JOBS Act, these pooled investment funds were only accessible by large investors through private placements and private real estate investment trusts (REITs). The minimum investment might be up to $250,000 or more. High-net-worth individual investors and institutions were the only investors capable of the buy-in to gain access to these investments, which usually offered better and more stable returns.
After the JOBS Act came into being, the advertising of these pooled investment funds was possible under the new law. The phenomena of crowdfunding came out of this. Money from many investors creates a larger investment fund managed by a professional team, intending to obtain strong performance results.
Better Investment Opportunities For The Smaller Investor
These new investment opportunities allow the smaller investor to participate in a greater diversity of real estate than they could achieve on their own. Moreover, an investor can create a pooled fund to acquire a property with the help of other investors. To use this technique to buy real estate, it is helpful to work with a qualified real estate agent or broker who understands this concept of pooled investment funds.
Due Diligence Required
Not all investment pools succeed in producing decent returns for investors. The SEC is no longer regulating these polled investments carefully. This means that the challenge of due diligence falls on the individual investor. Before investing, it pays to conduct exhaustive research about the pooled investment fund, the cost of the fund management fees, the expertise of the fund’s management, and their past investment-performance history. Always remember past results are no guarantee of future performance and never invest any funds that you cannot afford to lose.
Summary
The relaxing of SEC regulations in 2012 allowed many opportunities for pooled investments to flourish. While there is the possibility of strong returns on investment, there is also some risk. Investors considering a pooled investment fund, such as a crowdfunding deal, should conduct thorough due diligence and get advice from a qualified REALTORS® in the market where the property will be located before making any investment.
If you are in the market for a new home or interested in listing your current property, be sure to consult with your trusted real estate professional.
Mar 12, 2020 | Real Estate
Recent advancements in technology continue to disrupt the real estate market. This includes the use of “Big Data” for data mining, artificial intelligence combined with machine learning, augmented and virtual reality, use of drones, blockchain technology, and the ongoing deployment of 5G.
The Use Of Big Data
Consumers have access to more information about real estate market conditions because of the collection and online presentation of the results of data mining “Big Data.” For example, it is easy to learn if a market is a buyer’s or a seller’s market by searching for the median number of days a house will be on the market before it sells in a certain area.
Artificial Intelligence And Machine Learning
Artificial intelligence (AI) combined with machine learning works with data mining of Big Data to make the information more actionable. Real estate investors can set up search parameters to look for the exact type of properties that they want and let the AI software do the grunt work to find the investment opportunities.
Machine learning allows AI chatbots to learn correct responses to inquires from the questions previously asked. AI chatbots provide customer service 24/7 non-stop to handle leads and make sure to neglect no one.
Augmented And Virtual Reality
Virtual reality allows interested buyers to do a digital walk-through of a property and be able to imagine what it looks like. Augmented reality is used by some REALTORS® to digitally stage a home, listed for sale, by using digital furniture in the virtual walk-through. This furniture is selectable based on a potential buyer’s taste. Staging a home digitally is far less expensive than using real furniture.
Use Of Drones
The exciting use of drones captures a beautiful fly-over and fly-around a property to show what it looks like on the outside and its surrounding environment.
Blockchain Technology
Blockchain technology, which is the type of software used for cryptocurrency, will have an application for digital verification and signatures in real estate transactions. This technology allows the reduction of all the massive paperwork for a title closing to a secure, digital format.
Deployment Of 5G
The 5G mobile technology allows the connections to a smart device that can broadcast information about a property listing to the local environment. This allows for digitally-assisted home viewing, which is responsive, interactive, and for a potential buyer to ask questions about a property.
Summary
Technology continues to make the search experience when buying more effortless and more pleasant. The promising news for REALTORS® is that even though around half of the homebuyers find a property online that is of interest, the vast majority (93%) use a real estate agent to close the transaction. Technology is making the process easier; however, smart buyers still work with a qualified real estate agent to buy a home.
Mar 10, 2020 | Real Estate
According to data compiled by Realtor.com in the fourth quarter of 2019, it is still more affordable overall to rent versus buy a home — but just barely. The median monthly mortgage payment at the end of 2019 was $1,600, while the median monthly rent payment was $1,319. This is largely due to steadily-increasing rates, rising home prices, and near-record-low mortgage rates.
The Realtor.com study looked at 593 counties across the country. As compared to the fourth quarter of 2018, the average monthly cost of renting a home increased 4%, up from $1,254, while the average monthly cost of homeownership actually declined 1%, falling from $1,658. These numbers represent exactly 30% of a homeowner’s gross income and 25% for renters, based on median household income.
A Turning Tide
In a stunning 84% of the 593 counties that were part of the study, renting is less expensive than buying. The average home price in these areas is 260% higher than the national median, while rent prices average about 79% more than the national median.
Interestingly though, 26 of the 593 counties experienced the opposite for the first time ever: It became more affordable to purchase a home than to rent, even if only by a narrow margin. The largest metropolitan areas in which homeownership is more economical than renting now include Bronx County, New York; the greater Cleveland area; Columbia, South Carolina, and the surrounding areas; Indianapolis, Indiana; and Camden County, New Jersey, which includes Philadelphia, as well as cities in Maryland and Delaware. In 16% of the counties analyzed, buying a home is less expensive monthly than renting, which is up from 12% in 2018.
On the other end of the spectrum, several large counties made the switch from being more affordable to buy a home to more affordable to rent. The top five include the Wichita Falls, Texas, area; Harrisburg-Carlisle, Pennsylvania; Luzerne County, Pennsylvania; the Greensboro, North Carolina metro area; and Craven County, North Carolina.
With the costs of homeownership becoming more favorable over the past year, the gap between renting and buying a home is more narrow than it ever has been in the U.S. If you are in the market for a new home, be sure to contact your trusted real estate professional.
Mar 5, 2020 | Real Estate
Investing in real estate remains one of the best ways to accumulate wealth in America. There are six ways to get started in real estate investing. One way does not require any investment capital, just an investment of your time. Ways to get started include investing in a REIT, buying an incoming-producing property, using a buy-and-hold strategy, flipping houses, crowdfunding, and wholesale deals.
Investing In A REIT
A real estate investment trust (REIT) is an investment instrument that offers a proportional ownership interest in a real estate portfolio that follows a particular investment strategy. A private REIT has a minimum investment that could be $1,000 to $25,000. A publicly-traded REIT sells in shares, just like stocks on the stock exchange. The investment minimum is just one share and some REITs have share prices under $100.
Income-Producing Property
Buy a home and rent it out. For this strategy to work, you do have to deal with the tenant headaches, unless you can afford to outsource the landlord’s work to a property management company.
Buy-And-Hold Strategy
Buy raw land for cheap on the outskirts of a growing town and wait the time necessary for the town to overtake your land for the opportunity to subdivide and develop it for a high price.
Flipping Houses
For those who like doing contracting work, or who partner up with a contractor, there may be profit in buying some fixer-upper homes to renovate and sell for more than the acquisition price plus the renovation costs.
Crowdfunding
Crowdfunding is a way to participate as a small investor in real estate deals and also to fund your own deals.
Wholesale Deals
Wholesale deals can be accomplished with no money down. You work for other investors and secure properties at lower than market prices by controlling them with an offer that is accepted and then assigning the deal to the investors for a fee.
Summary
If you have been thinking about becoming a real estate investor, now is the time to do something about it. Even if you start with only $100 by buying shares in a REIT, at least you got started. Once you get your real estate investment strategy going, you will find it to be a very rewarding experience, if you are careful and make wise decisions.
Be sure to associate with an expert REALTOR® in your marketplace area to get sound advice and information.
Feb 28, 2020 | Real Estate
Think of backyard space as “in-between” or transitional space that is a bit like being inside while being outside. Sunrooms, screened-in covered patios, outdoor kitchens, spas, fire pits and more, are all becoming very popular ways to make more use of the backyard. Making use of the outside area is not limited to only the times of the year that have nice, warm weather.
Sitting around a fire pit, with a blazing fire in it, is a perfect way to spend a chilly winter evening under the stars. This is a bit like camping out, without having to leave the comfort of your home.
Here are some tips about how to turn your backyard space into a comfortable and functional transitional area.
Landscaping
Install shade trees, cobbled paths that invite exploration, and water features that are mixed in with attractive landscaping to make your backyard more inviting. Add some inexpensive solar-powered lights to line the walkways for a nice nighttime look.
This can be a labor of love that you take your time doing without having to rush the end result. It is healthy for you to do a bit of gardening, to get some fresh air and light exercise.
Outdoor Cooking
There are many ways to enjoy outdoor cooking such as simply taking a hibachi grill out to cook on a patio. You can cook hamburgers, hot dogs, steaks, chicken, shish kebab, and more. You can even grill vegetables, like delicious slices of eggplant or corn on the cob, for your vegetarian friends on a separate grill reserved for that use.
Pizza Oven
If you really want to impress your guests, then put in a wood-burning pizza oven. Pizza made this way tastes delicious. There are dozens of pizza recipes you can try from thin crust to deep dish.
You can also make loaves of bread and other types of oven-baked foods. When you get a wood-burning pizza oven hot enough to cook properly, you will want to cook plenty of things so be sure to invite over lots of friends and neighbors.
Gourmet Kitchen
Taking the outdoor cooking one step further, some people like to install a full gourmet kitchen and spend lots of time cooking outside. There are many stainless steel grills to choose from that go along well with matching stainless steel appliances, which are strong enough for exposure to the elements.
Temperature Control
When desiring to have some control over the temperature outside, it is best to think of creating usable areas. When it is cold outside, you can use patio heaters that burn propane to make warmer areas for sitting. Another popular idea is to put in a fire pit to sit around.
During warmer times, you will want to have shaded areas and patio covers with ceiling fans. In the hot summers, you might enjoy a misting system that sprays a fine mist of cool water vapor in the air.
Summary
Many neglect their backyards, which is a shame because they can be lovely places to hang out. Rather than investing in an expensive room addition, start thinking about how you can make your backyard more enjoyable as a transitional space between the interior living area and the outside.
If you are in the market for a new home or interested in listing your current property, be sure to contact your trusted real estate professional.
Feb 27, 2020 | Real Estate
There are two times when it is best to buy a home. When you have to buy one and when you can afford to buy one. In general, owning a home is better than renting one because you are building up equity for yourself, instead of throwing your money away by helping the landlord buy the property with your rent money.
Best- And Worst-Case Scenario Planning
Be prepared for owning a home, especially if this will be your first time as a homebuyer. There is a natural tendency to stretch finances to the breaking point when wanting to own a home. Try to be patient and have a contingency plan for what would happen if you lose your job or if your significant other loses his or her job if you are buying a home with the help of another income.
A surprising piece of counter-intuitive advice is NOT to use all of your savings as a down payment, even if you have to pay more for the mortgage. Instead, hold back three to six months of mortgage payments in your savings to use in case there is an unexpected job loss or problem. That will give you enough time to recover from a temporary problem without having to worry about having enough money to make the mortgage payments.
Keep Emotions Under Control
Try not to let your emotions override practical considerations. Most people trade-up from the first home that they buy. A house need not be “perfect”; however, you want it to be in a decent condition to avoid having large expenses right after buying it, unless you are a fixer-upper type and know what you are doing.
Seller’s Or Buyer’s Market
It is useful to know whether the area you want to buy a home is a seller’s or a buyer’s market. In a seller’s market, there may be many buyers for fewer sellers. In that case, you will need to be more competitive in your approach when buying a house.
One easy way to tell if the area is a seller’s market is to ask your REALTOR® to find out the median number of days that homes are on the market for sale and the percentage of the asking price that the average home sells for.
Don’t be surprised to learn in a seller’s market that homes stay listed only for a short time, and they sell for nearly the asking price. Having a pre-approved lending commitment before you go looking for a home in a seller’s market is one way to make your offer(s) stronger.
Summary
Take time when buying a home to do some market research first. Get your loan commitment approved, before shopping for a home. Make looking for a home to buy an adventure. Avoid stretching yourself to a financial breaking point and plan to stay in your home for a few years, at least, before you trade-up.
If you are in the market for a new home or interested in listing your current property, be sure to set an appointment with your trusted real estate professional.
