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Fund Advantages
Multifamily and Commercial Real Estate was once regarded as an “alternative investment” but positively, it has mutated into a mainstream level. Considering the extreme cost linked with owning income-property, the majority of people are restricted to purchasing small multifamily or commercial spaces.
Real estate investment funds supply another entry point for those eyeing to invest in multifamily real estate. They are specifically enticing to those who want to own multifamily or commercial property but do not want to take a hands-off approach to everyday activities. A real estate investment fund pools money from a lot of investors, and then the fund sponsor manages all the activities of its funds, such as, but not limited to, property management in the case of a fund that purchases and renovates or just simply holds property for some time. Investing in a real estate fund is an excellent way to obtain passive income from those who are eyeing having a real estate property, but do not want the responsibilities as direct owners.
We have listed some of the benefits of real estate funds and how they are structured. We also explain how they are obtained and returned to investors:
· Flexibility – It is a traditional misconception that real estate investment needs an investor to sacrifice flexibility. TO tell you the truth, the opposite is a fact. If you were to invest in a single or sole asset, chances are, you have put all your eggs in the basket. You would simply hope that things will turn the way they should. But, investing in funds supplies more flexibility and control. If an investor that has one (1) million to invest can select to invest in quarters of a million in four (4) different funds. There are tons of funds focused on different asset classes and geographies, which gives freedom for the investors to select which types of properties they are wanting to buy and the location. This will give you the leeway to customize such portfolios without having to purchase individual assets directly.
· No Lock-in Policy – The majority of fund managers supplies a switching service so you can alter funds easily and immediately if your investment permits or circumstances change.
· Profitability – Real Estate Investment funds are traditionally tailored to return profits to investors before any type of profit is obtained by the sponsor of the fund. In return, the sponsor is highly motivated in making sure that the deal attains its profit margin. Funds are set up in this manner to maintain interest in coherence with the sponsors and investors.
One can enjoy a regular income. Funds can supply you with a steady source of income, regularly. Investors can select to take distributions in cash payments. They can also have the option to reinvest back into the fund. Reinvesting your income can compound your returns which translates to higher prospective growth.
· Efficiency in Tax – There are some advantages to investing in a real estate fund. As a sample, most funds are set up to last more than a year, so unless one of the assets is sold within a one-year frame, it will be taxed, pegged at long time capital gains rate instead of the short-term capital gains rate.
As such, more real estate fund investors may take advantage of the so-called “pass-through depreciation”. Encompassing all tax matters, the advantages that accrue to investors will depend on the advice that they obtain from their accountants and pegged on their unique situations.
· Diversification – funds can implement a broad array of investment parameters, widening the reach of prospective investments. For example, a fund may pay close attention to a sole asset type but be open to several locations like multifamily investments in hot markets all over the United States. Similarly, a fund may invest in an array of product types in a single market like the Texas Metroplex.
Another fund might only invest in opportunistic real estate investments that require medium to heavy rehabilitation located on a mid to long-term array. Other funds will have a few investment options. By investing in real estate funds, people can diversify their portfolios, hence mitigating the risk of having all investments in one basket. This is one solution to how investors will secure themselves during economic turmoil.
Please be reminded that one is different deals that all have to sell, refinance, and excess cash flow capital events occurring on multiple properties. There is a slim chance that all of the assets would not perform well, all at the same time.
· Preferred Returns – The majority of the real estate funds offer real estate investors a preferred return on top of their pro-rated shares of the entire net profit.
While no fund can ever guarantee payment of a preferred return, people who invest in a real estate fund are assured that they will obtain the intended profits from the investment fund activities before such sponsor receives its share more commonly known as carried interest. This setup will make sure that the sponsor of the fund is motivated to attain their targeted returns. Instead, the manager of the funds will not earn their piece of the pie as expected.
· Absolute Returns – The entire returns of a fund refer to the profit mount has obtained. It includes any added returns on top of the preferred return. Exceptional funds will supply absolute returns preferably higher than the anticipated preferred return. But, investors must be cautious since a fund’s past performance does not guarantee its performance in the future. Always scrutinize and assess a real estate fund based on its present merits. Always assess a real estate fund based on present advantages, not only previous merits and the track record and experience of the sponsor.
· Link to other Asset classes –Multifamily real estate, in general, has a low correlation to other assets such as bonds and stocks. This is due to the extremely illiquid nature of real estate, which cannot be bought and sold at a moment’s notice. With this having said, a lot of individuals will opt to invest in real estate investment funds as a solution to secure and diversify their holdings. In contrast, remember how a stock market plummets overnight?
Unlike the stock market, which would quickly lose significant value, real estate portfolios tend to continue paving the way. In other words, rents continue to pa paid, and profits are regularly returned to investors. While a real estate portfolio may hit the waves, there is no similar link to other asset classes which can experience momentary ebbs and flows.
· Transparency – utilizing a discounted cash flow method to value monthly property-level accounting books and yearly are mandated to have a full audit of books. The audit is available to all investors. Demand is not even needed.
You can take your 50 grand and be invested in x doors say a thousand doors are bought by your fund which is improbable in single asset syndication.
Also, a dedicated fund CPA combing through property level books for red flags is prevalent each month. It is also a mission-driven investment where you put your money into a cause you care about instead of only getting richer.
· Qualifications – when investing in real estate funds, investors take advantage of the qualifications and experience of the fund sponsor. The sponsor is an industry expert; it might be an individual or a team that is extremely qualified to supervise a fund that will be deployed in several multifamily real estate projects. A high-quality sponsor will have the capacity to supply detailed financials for the review of investors. They will have all the possible answers to every question in terms of their approach, assumptions, and how such funds were structured and will come up to be effective.
Lastly, the fund manager has control in terms of everyday activities linked with the fund. This will give freedom for people to invest without having distracted by the approach of each transaction embodied in the fund.
· Open to International Investment Opportunities – as an investor, it is a bit complicated to come up with a portfolio of global investments directly. Investing globally through the managed fund can enhance your Transparency and diversification and will give you access to companies and industries outside of the United States.
You do not require much money to initialize. You can invest even a few thousand dollars or less. There are funds available for personal investors, self-managed funds, and the like. You do not need anything to lift the heavy burden. It simply means that you do not need extra time maintaining your investments as the funds are managed by other specialists.
What’s behind the male-female financial-literacy gap? These Academics say they’ve Found an Answer
Women possess lower financial literacy as compared to men, but they know more than they think they know. There is a chance that women will tend to respond that they “do not know” the answer to financial literacy issues as compared to men. But when forced to choose an answer, in a lot of cases than not they choose the proper one.
A swing of surveys mainly tells that men are financially literate as compared to women based on their capability to properly answer questions that test one’s know-how of ideas like compound interest. However, financial knowledge only is about 67% of the entire financial literacy story. The remaining can be devoted to confidence.
That is based on research findings commissioned by Rob Alessie from the University of Groningen in the Netherlands, Anna Maria Lusardi of George Washington University, Maarten Van Rooii, researchers located at the Dutch Central Bank, and Tabea Bucher-Koenen of the University of Mannheim. Financial Literacy tests practically instruct people to choose a multiple-choice response that includes “do not know”. A lot of women will select “do not know” if given the opportunity as compared to men.
But, if the option is unavailable, there is a big chance that women will select the correct answer.
“In other words, women have lower financial literacy than men, but they know more than they think they know,” the researchers mentioned above, stated. They surveyed almost two thousand Dutch citizens and more than half of the respondents identified as male. They were particularly selected to study respondents from the Netherlands because the central bank of the country has been regarded as one of the few that collects financial literacy data and information. These researchers could easily restudy some individuals who participated in the survey.
At the onset of the survey, respondents could choose “do not know” as an answer to the three (3) main questions that came up by Olivia and Lusardi Mitchell, a professor at the Wharton School of the University of Pennsylvania. But in the next survey, respondents will not be able to select “do not know”. It is at this time that one-third of the financial literacy gap can be attributed to lower levels of confidence among women.
Finally, another cultural reason as regards the gender gap between men’s and women’s expertise in finance are male-dominated engineering courses and computer science courses. It is a known fact that tech company offices can be a hostile location for women to work and mind you, there are few opportunities for women to advance. Other reasons are a too-tiny pipeline of women eyeing pursuing careers in Science, Technology, Engineering, and Math (“STEM”). Whether you attribute the lack of women going for STEM or bias against their doing so, both of these problems originated in cultural quandaries in terms of the ability and interest of women in these fields.
Earlier research accumulates to growing pieces of evidence that these stereotypes are not based in reality. In its entirety, women practically outperformed men on a nationwide average assessment of technology and engineering fields for the last five (5) years by the National Assessment of Educational Progress (“NAEP”).
Girls may be beaming with societal messages during their early years that they are not for STEM fields amidst their excellent skills. Even women who pursue an inkling in the field of biology or engineering can experience discrimination. Based on studies, 100% of working women of color in the field of STEM report having experienced bias throughout their careers. Some of them are mistaken for being a helper or janitor based on a survey eight (8) years from the Hasting Center for Work-Life Balance.
Coming up with Your Own Retirement Fund
Meta Tag: It is not as tedious and daunting as it may seem. Creating a successful retirement plan is recognized as a long-term process, requiring discipline and commitment. Your main goals should be enhancing your income and decreasing your debts. It is not sufficient to save a significant amount of money the kicker is to invest it wisely.
Creating a retirement fund, which we will define as saving enough money to pay your bills even if you are not working anymore, may seem to be a daunting challenge. By making a practical strategy that pays close attention to what you can do today will aid you in addressing the challenge one step at a time.
Reality vs. Retirement Fund Theory
Regardless of your present income and age, the key to an effective retirement fund has a simple formula. Just set a goal and focus on that commitment; repeat. One traditional strategy encourages newbie investors to engage in their employer-sponsored retirement savings plan. Another piece of advice is to engage in joining personal information into a retirement planning calculator to be able to estimate the amount of money that is needed to fund such retirement.
While both approaches are effective in theory, reality can enter the picture and crash it quickly. Take for instance, that about a third of all workers in the United States do not have access to retirement benefits based on the 2021 figures from the United States Bureau of Labor Statistics. That leaves us about 2/3 who do, but only ¾ of workers with access to a plan select to engage in it. And only about half the entire American Workers in the private industry are saving in one.
To add, the huge dollar amounts that the majority of the individuals see when they utilize a retirement planning calculator cannot be too engaging. A savings goal of a million or even more dollars can seem unattainable to younger workers with not-so-high incomes, also with high debts, and no savings account. Thinking in terms of the entire amount of money you will require in retirement is daunting. But if you break it into many steps, it is a bit easier to do.
Given these realities, let us begin with a complex take, while a lot of us find ourselves early in our careers, and plot a practical plan for coming up with a retirement plan. Under this approach, it is assumed that you do not have an employer-sponsored savings plan and a high-paying job. It is also assumed that you have a high debt burden from a car loan, college loan, mortgage, and rent to add to the cost of living.
Maintain a Goal and Commit to it. Some goals can be attained in this approach. The initial is to begin saving. Even if it is just several dollars a week, open up a personal account and deposit such money. While we can say that a bank account is not the most efficient investment tool, it is a perfect way to jumpstart to make saving money a habit. Don’t forget that creating a retirement fund entails a long-term journey, and of course, a journey of a thousand miles begins with a single step. As soon as you committed to saving money, the next set of goals are very clear, and that is to decrease your debts and increase your income. Attaining the first objective will aid you in attaining the second one.
To enhance your income, you can either have a second job or obtain a better paying profession as compared to the one you are presently engaged with. Although it may take a significant amount of effort and time to enhance your income, it will aid you in dealing with your plan if you remember that this is a long-term effort. Create a goal of obtaining a better job, or second job for that matter, then commit time to a specified job search.
As soon as you enhance your goal, your new income gig will give you the freedom to decrease your debts. Then you will have the chance to tuck more money into your retirement fund. Coming up with a budget can aid you with this process. It is an excellent way to ensure that you are using your money efficiently Please be reminded that the earlier you begin, the more time your savings can accumulate using a strategy more commonly known as compound interest.
It is a known fact that the power of compound interest is the best trick of all. Coming up with a long-term goal with compound interest as your friend will give you the freedom to turn a tiny, consistent savings rate into a lucrative complacent retirement. Let it be known that the power of compound interest is essential to effective retirement planning.
Investing is the key, do not just save!
As soon as you increase your savings and income, you should have sufficient money saved up to replace your personal savings account with an individual retirement account or more commonly known as IRA. At this point, you are transitioning from a savings account to an investment account.
The Internal Revenue Services (“IRS”) establishes the yearly limit as to how much an individual can contribute to an IRA. For 2021 and the year 2022, people under age fifty (50) can save as much as six grand annually in an IRA. If you are more than fifty (50), you can add a catch-up contribution of $1,000 to the total accumulated $7,000 annually.
It is safe, to begin with, a minimal amount. An IRA is practically different from a traditional investment account, you need to open one with a firm that maintains IRAs.
If you are clueless about investing, just think of it as a manner to make your money work for you. From a practical point of view, you can begin by placing your money into a mutual fund, it is considered as one of the easiest processes of investing for newbies.
Just select either an index fund that replicates the main United States stock market index, like the S&P 500, or an actively maintained fund that invests in blue-chip stocks. To obtain attention, place a goal of learning more about investing and stick with that objective. Begin by learning and reading information as regards introduction to investing to know the fundamentals and acquire terminologies and jargon not known to you. Red topics that are interesting enough to aid you in knowing the next subject that you would like to know more about.
In essence, this is a long-term process. Do not attempt to learn everything in one sitting. Just begin reading, commit to doing it regularly and stick to it. As you know more, make time to teach yourself as regards mutual fund fees and ensure you are not decreasing your returns by paying more than you need to.
Obtain yourself a 401k. As soon as you know the art of investing and budgeting, you will probably eye for more money to enhance bot your way of living as well as the amount you invest.
Conclusion
Retirement planning is recognized as a long-term endeavor. Think of having a marathon instead of racing in a sprint. Sometimes, people take a lifetime of effort to come up with the best retirement fund. We cannot deny the fact that preparing for retirement entails a lot of persistence and less brilliance. When eyeing to engage in retirement, you have to think of crockpot and not microwave. Commit to your devotion and continue to modify your stand by decreasing your debts, enhancing your income, and making your education deeper so to speak. While the coming years will truly be a challenge, the development that you put into your commitment will slowly manifest and become more evident.
Apartment Queen: House Hacking Live in an Upscale Neighborhood While Saving Money
Are you one of the citizens who are living their lives in an upscale real estate market and feel that the affordability of properties is quite impossible to reach? Would you be glad to be an owner of the property but have accepted that reality means reaching way your property budget?
This is 2022.
In many places all over America, prices of properties have skyrocketed and somehow in coherence with wage increases in some of the United States’ most lucrative cities. This does not pose a large quandary for those at the top of the salary scale who are garnering the highest salary such as executive leadership, salesmen, and the like. But it poses a problem for the median American trying to supply a good way of living for their family while staying away from a two-hour commute.
On the other hand, talking about the blue-collar, hardworking people who work in main business districts, perform work crucial to the economy’s infrastructure, and compose the backbone of a city’s financial health? What do we tell the huge amount of workers who have planted their occupational roots in big cities having fast wage increases, but who are not witnessing those increases in wag themselves? Are they bound to an existence of hour-plus commutes not to mention the daily road rages?
Chances are, they could be. Unless they know more about it in terms of revolutionary technology that is opening the doors of homeownership in lucrative communities and giving freedom to those willing to exercise a tiny pinch of flexibility and creativity to be able to build financial wealth. We are talking about the term more commonly known as “House Hacking”.
House Hacking is a term invented by BiggerPockets podcast host Brandon Turner. While it is true that Brandon invented an enticing name, the idea has been there for a long period. And while the concept is not novel, creative home purchasers have adapted and are looking for novel ways to own a property without breaking the piggy bank.
House Hacking 101. In simpler terms, house hacking is an approach that involves renting out parts of your main residence to obtain income that is utilized to offset the cost of your expenses such as mortgage and maintenance linked with owning a property. When executed properly, it gives freedom for individuals to live in lucrative communities completely for free, or even garner positive income using homeownership. Not too shabby, eh?
House Hacking is an approach for people who cannot afford a lucrative property to utilize creative strategies to be able to attain that goal. It is a way of getting every last drop of value out of a property that you can, to be able to take advantage financially. Just like all of the things in life, House Hacking comes with a cost. To be able to save on the financial aspect, the homeowner must be willing to shed a little time for work and sacrifice some comforts throughout the process.
House Hacking is slowly becoming famous together with the so-called “FI” or Financial Independence. It gives freedom for people to trim down expenses on their property and commute, significantly. It also gives freedom for previous renters to begin availing some of the tax incentives linked with homeownership such as mortgage interest tax deduction. For a lot of Americans, housing expense is considered to be the most expensive line item in their budgeting. By battling this figure utilizing house hacking, they can enhance their budget significantly and free up some money for investing, saving, or even paying down their mortgage.
House Hacking can be able to help you save a significant amount of money in many ways such as:
- Lower your monthly housing allowance employing obtaining revenue by renting out an area of your property.
- Decreasing your taxable income base by obtaining extra tax incentives like mortgage interest deduction.
- Lowering transportation costs such as gasoline expense.
- Lowering spending unproductive time during commutes.
- Having the chance of eradicating your insurance, car payment, and expenses on maintenance all at the same time.
- Learning the ways how to be a landlord and transitioning into the realm of real estate investment. And the truth is, there are a lot more.
Another big advantage to house hacking is you do not have to shell out 20-25% of the property values when you buy. House Hacking approaches being utilized allow purchasers to buy a property with extremely low or no money down payment since they are buying a home to be utilized as their main residence. This gives freedom for investors to save their money destined for beneficial purposes, and allows those who are not in a position with huge amounts of expendable capital to still pave their path into the housing realm.
So how can this be implemented? Let us unravel the ways…
The Roots of House Hacking. House Hacking originated when housing became too lucrative to be able to attain comfort. While a lot of property buyers decided to move further away from work to save a significant amount of money, or simply rent instead of owning a property, wise purchasers find ways to have what they want. By constructing, purchasing, making, or otherwise obtaining multi-unit properties, keen real estate investors were able to live where they wanted, and have other people pay much of their expenditures.
This was swiftly executed by obtaining multifamily properties. These types of complexes are traditionally utilized for House Hacking since they offer multiple spaces to garner revenue and can still be bought with a low down payment. These properties are specified by lending fundamentals and regarded as “single-family property” even if they hold multiple units in one complex. When individuals know about this, they began purchasing these properties, living in one unit and rented out other units.
The concept is plain, purchase a multifamily property, and move into one of the units. Have the rest of the units been rented out to others? The amount of rent you obtain from the tenant will aid you in augmenting housing expenditures. This will give the freedom for the owner to save all the money destined for rental and mortgage expenditures and create their wealth while living in the best upscale area in the community. If you have the chance to acquire a property in a downtown community that is in proximity to a lot of establishments and public transportation or allows easy biking going to work, you can also significantly lessen your transportation costs. In return, you will be able to save a significant amount of money.
Tons of successful real estate investors obtained their start House Hacking. These individuals tell stories of manners they saved money by renting out even a bedroom unit or other parts of the complex to those who needed a place to live and did not want the responsibility of paying full rent. Whether you are the homeowner renting out a certain space in your property, or the lessee renting the space, House Hacking gives you the benefit of sharing expenditures as well as gives freedom for each occupant to enhance their wealth and save money.
Definitive Reasons to Invest in Multifamily Real Estate
Pandemic is still there. The stocks are down. Yes, it is not the best time to invest your money. But only few know that real Estate can be an alternative for those who cannot stand the atrocities and outrages of the stock market. It is also an excellent investment for those investors who are eyeing a dynamic process in increasing their capital, instead of passive income by putting their money into a fund which is practically managed by other people. One of the many advantages in real estate investment is that there are an array of techniques in which one can succeed.
Some notable names in real estate investment are Zhang Xin and Donald Bren who built their empire by developing various commercial and residential properties. Some obtain their wealth by obtaining an income-producing portfolio of rental properties. Have you heard of house flipping? Other real Estate investors have made several million dollars by flipping properties. These people buy properties that are in despair for cents on the dollar and remodel them before they sell to a new owner.
We always have to remember that owning a rental estate can be a fantastic way to broaden your investment portfolio and obtain a steady flow of money. A multifamily investment property can multiply your money with only minimal cost. Multifamily rental properties are basically easy to finance compound returns more quickly and tend to avail of the benefit of economies of scale.
Real Estate investment is the most excellent way of investing for those people who are eyeing for an added source of income together with a steady increase in their portfolio. When talking about residential real estate, there are two major classification of properties that one can invest in: single-family and multifamily. As the name suggests, single-family properties are residential buildings with only the sole available unit for rental while on the other hand, multifamily properties or more commonly known as apartment units are residential properties that possess more than one unit of rental space.
Listed below are some benefits to investing in multifamily real estate investment. Here are three major reasons to mull over on why you should choose to invest in such:
- Expensive but a lot easier to finance. In the majority of cases, the cost to obtain an apartment building will surely be a lot as compared to a single unit investment. The investment can surely go up to millions. At the onset, you might think that securing a loan from single unit properties would be less tedious than trying to come up with a multifamily property complex, but the truth of the matter is the latter is more likely to be approved easily for loan as compared to the average home.
It is a given fact that multifamily properties generate a steady flow of income on a monthly basis. This is perfectly alright even if the complex has a couple of tenants who are late at their rental payments. Imagine if a tenant from a single-family property moves out, the entire property is practically vacant. No income flow for the next several days, months or so.
Further, a ten-unit apartment, with one or two vacancies would be at most, 20 % vacant. And when we translate it to investment, there is a small probability of a foreclosure. The risk in a single unit investment is very high. All of these will translate into a less risky investment for a lending company. Thus, can even translate in to a more practical interest rate for the owner.\
- Enhancing your portfolio will not take you any longer. Multi-family real estate investment is also applicable for property investors who want to create a strong huge portfolio or rental properties. Obtaining a large ten (10) multi-family property is a lot more efficient in terms of application than purchasing ten (10) single-family properties.
In the latter option, you will be dealing with several sellers and conduct inspections individually. To add, in some scenarios, this choice would also need an investor to open up ten (10) different individual applications for each single-family unit. All of this tedious legworks not to mention the headache, could simply be avoided by leaning towards purchasing a multi-family complex.
- You have control in which Property Management to hire. Granting for argument’s sake that you do not want to manage your own property, hiring a property management company to handle the daily dose of transactions and operations of your rental is the way to go. A property manager usually gets a percentage of the monthly income that a property obtains, and their responsibilities must include screening and looking for tenants, collecting rental payments, handling eviction and ejectment issues, and maintaining the property.
A lot of real estate investors who own a single or two unit single-family property do not have the freedom of hiring an external property manager simply because it is not financially wise because of their small portfolio. The value of money that multi-family properties generate on a monthly basis will surely give the investors a huge room to take advantage of property management services without having to cut their margins.
Bird’s Eye View
Similar to stocks, real estate investment will give you freedom to be successful through an array of different techniques. One of the most famous methods of investing is to own a complex of rental properties. When you want a better type of investment, engage in multi-family real estate investment.
Multifamily Real Estate: Three (3) Features That Every investor Should look for an Effective Investment
At present, consumers have the choice to invest their hard-earned money in an array of investments, ranging from bonds to stocks, from real estate, crypto, and commodities, and what may appear to be an excellent investment to a newbie investor, may turn out to be a theoretical choice. How do you select which is the most efficient vehicle for your money? What characterizes a good type of investment, and how multifamily real estate investment is the best investment to engage with. The three (3) main features that each real estate investor should pay close attention to are:
- Leverage
- Liquidity
- Control
Inevitably, there are tons of features, but these three (3) traits cut above the rest as superior investment from average features. Let us dive into the three (3) characteristics and how multifamily has it all:
- Leverage. This is coined as the rocket fuel to coming up with huge wealth. There are some investments where you can capitalize as minimal as $150k and control about a million-dollar asset. You can ask your financial advisor like www.apartmentqueen.com to avail this type of leverage. It is guaranteed that the next thing you will hear is a click on the other line of your phone going dead. You will reap all your benefits even though you may have only about 10-20% of capital earmarked for all the investment:
- Principal pay down payment
- Economies of Scale
- Tax Benefits
- Appreciation
- Cash Flow
Did you realize why a lender would need a minimum down payment to obtain a property? In simpler terms, the buyer is obtaining a revenue stream that makes all the expenses of the property and wastes excess cash flows. The bank feels protected and safe with real estate. Real estate is tagged as one of the very few assets that enjoy this huge opportunity.
This is an extra benefit with the present economic climate that everyone is experiencing. The government is making money like drunken sailors, and this upsurge in the money supply is more commonly known as inflation. Verily, inflation definitively leads to price increases and erosion in terms of the value in dollars. It also gives freedom for borrowers to pay lenders back with money that is practically less than it was originally borrowed. This benefits borrowers significantly.
The rationale behind it is that multifamily real estate allows real estate investors to take control of more assets with minimal release of capital. This will practically lead to a burst of wealth when such assets appreciate. You also have to know that leverage works in other entries as well. If you lose money in a specific investment, such losses will be amplified with leverage.
- Liquidity. At the onset, real estate weakens on this criteria. But if you possess the patience, real estate offers an extraordinary way to access liquidity from your investment. So, how do we knock into the equity of our property? The approach is more commonly known as cash-out refinancing. It is one of the major reasons why we have been able to enlarge our portfolio with minimal to no capital coming from our pocket.
A cash-0ut refinance is made when the bank shoulders to pay your old mortgage and issues a new restructured mortgage based on the present property value. Another big advantage is that the loan proceeds are tax-free. You are taking a new loan with a bigger balance and the lender must pay it back with corresponding interest through a period specified in the contract. So there is no income tax when you refinance your property. They say, “It is not what you make, it is what you keep.” It may take some time to access such liquidity, but the benefits that you will reap are simply worth the wait. As soon as you cash out your initial investment, you somehow play with your house money. You will have zero if you let your own money in the deal. To add, you can be able to cash out more than your primary investment on all of their cash-out refinance. The most benefit that one can give is that the borrowers still have control of cash-flowing assets that will be the ones to shoulder for the monthly amortization.
- Control. Multifamily gives the real estate investor the control in a lot of angles, like:
- Decreasing expenditures;
- Increasing rental pays
- Refinancing;
- Selling; and
- Coming up and executing the business plan
See, you have control over your asset performance, such that you are the decision-maker. Multifamily real estate offers an owner a deal that practically will eradicate single-family home investment. A good investment is a large complex with more tenants under a single roof, as compared to multiple single-family properties scattered. That will increase the expenditure. If the complex has a vacancy, there is a great chance that the rest of the lessees can still pay the mortgage. When you have more lessees, your downside risk is limited.
On the one hand, a vacancy in a single-family unit means no rent for that period. So, the owner has to shoulder the expenses. You can run your multifamily complex like a business and enhance up operations by getting the services of full-time employees. You will realize your true success when you do not do the dirty stuff and begin focusing on managing the asset and in the long run, purchasing more.
Another extraordinary advantage that is always there is the huge tax benefits. The government, on the one hand, realizes that there was no way they could be able to supply sufficient affordable housing. The answer was to give big incentives to real estate owners to take the wheel and get the job done. Depreciation is a huge tax benefit in real estate investing, especially when it is paired with a study in cost segregation.
Depreciation is a non-cash expense that gives owners the freedom to avail of the deduction on the income collected, ergo, decreasing your tax obligation. Don’t you like the idea that your asset is appreciating while you can avail depreciation for tax purposes?
The government also gives the owner the freedom to utilize cost segregation studies, whereby the owner specifies personal property assets that are paired and classified with real property assets and segregate out personal assets for purposes of tax reporting. It simply means that you are accelerating depreciation a lot of times and reclassifying them to a shorter period. You are writing off a bigger portion of your depreciation expense and getting more losses faster.
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- Women-owned family offices or offices/funds who support the social initiative to teach financial literacy to women
- Angel investors supporting women
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Kaylee McMahon
Apartment investor/TREC Brokerage, LLC Owner
C: 469-990-4627 (text or call)
IG: The Apartment Queen
Multifamily Real Estate Investment: Demonstrating your “Because”
Multifamily Real Estate Investment: Demonstrating your “Because”
In multifamily real estate, you are your boss. You have the freedom to invest in your manner, preference, and strategy. But, this is not the proper thing to do. In every war, you have to be prepared. You have to know your goals and objectives in investing. In other words, you have to know your “why” and you have to demonstrate your “because”. You need to possess a mission and vision.
The Mission and vision should be in line with the freedom to invest in real estate as an individual when your means permit your capacity without any control. Having the freedom to have steady cash flow monthly is excellent simply because you can just be yourself. And you are living your life the way you wanted it to be. Having said this, when you can be still and have that freedom, you will have all the time to assess and earmark where you want to invest your money.
Going back, your particular “because” should be in coherence with your present state; it varies. So if you are thinking of engaging in real estate, and you are looking at transitioning from single-family to multifamily apartments, there will surely be leads that are designed to your liking that the real estate industry can bring to you.
But, you have to consider the lingering economic state brought about by the pandemic. There are several considerations before engaging in multifamily real estate investment. Like the present scenario brought about by COVID-19, you have to know the ins and outs of how to deal with these complex times. Listed below are shocking facts of the present state of the real estate investment industry and some solutions.
It is a known fact that the great recession started the depression. The 1930s, that was the time when rich people stimulated the economy for the nation to get afloat. Here are shocking truths:
- Right, the United States equity markets are trading below the average trade and are continuing to get lower at this point because of the emergence of the new variant; omicron. More than twenty (20) million will be unemployed as predicted by Goldman Sachs as of November 2021 and is still rising to this point.
- And since all these equities are drastically decreasing, multifamily investment is dropping as well because one way or the other they are linked. However, you might still see deals but at a very slow pace.
- On the other hand, unemployment is still not out of the woods, and the loss of jobs is increasing. We don’t know if there is still a stimulus package that can be given by the government. The people are continuing to incur economic injury.
- Covid-19 has made a serious impact and is continuously affecting the real investment industry. It is important to adapt to the “new normal” and look for a solution to alleviate and facilitate effective investment without face-to-face contact with clients, especially now that Omicron is spreading like wildfire. There are other tools that you can make use of such as video conferencing and social media. Since one cannot be able to go on a physical trip, a 3d virtual model is the most effective way to show the client of the prospect unit.
- Sales volume hits a tremendous decrease up to this point so expect a high volume of loan applications. People tend not to buy anything because of this pandemic and you see the effect on individuals and families. Their purchasing power is under question. There will surely be more loans that will manifest shortly. So a more competitive loan for each agency will manifest. Multifamily real estate loans will be a lot competitive these coming days and so a mission-driven deal will depend on the income level and rent for the location. Each client differs per requirement and preference.
Looking at the brighter side, you can aid in stimulating the economy. To date, the multifamily investment industry remains strong as compared to the healthcare and retail industries. The rentals remain to be competitive and a minimal increase of 1.1 to 2.4% in delinquency remains to be fair. But then again, this date might change in a short period.
Hence, crowdfunding can help enhance the economy. This may be the best time to look for different sources of capital. And your money, when pooled together with another individual can make a difference. It means that a bigger capital can be invested and can obtain bigger properties in real estate, particularly multifamily apartments.
Constructing a Smart Apartment: Factors in Selling One
Constructing a Smart Apartment: Factors in Selling One
Imagine almost forty (40) million individuals possessing Google Home, Alexa, or Amazon in their apartment units. Real estate companies can avail of it and begin to come up with a value for the new generation clients who are eyeing to just move into their units, utilize their Alexa, and can control everything in voice or mobile command.
Elena Ashkinazy, Director of Time Equities, always strives to be technologically innovative and advanced. In the year 2020, they completed the pioneering smart apartment situated in the upper east side of the city of Manhattan. They made it on a pre-war apartment and when you think about pre-war structures, the first thing that comes to your mind is bare, not aesthetically designed, and you will never expect to witness anything smart, but it is possible. The project was completed successfully and it was even featured in the New York Times. This apartment was scheduled for a remake. They spent an extra ten (10) grand but they were able to dispose of the apartment for $120,000 within a similar complex just one flight down. The difference in the costs was pegged at ten (10) percent and the first apartment was on the market a couple of months before the smart apartment. The idea is they sell it faster for a premium.
One of the major hurdles and it has become a value proposition for the clients was that old devices can be controlled with the use of one application so the clients do not have to hassle between several applications. It was also estimated and assumed that the smart apartment has the capability of being supper energy-efficient such that potential clients can save up to almost thirty (30) percent on their electric bills. The bottom line is, it is all about convenience. You have the entire control using your voice. Just say what you want and you will have it; all with your phone. Smart door locks, for example, you can still utilize traditional keys, but you don’t need to. You can do it anytime and anywhere. So, imagine one is standing in traffic and his guest came early, he can just open the door even if he is still not in the unit. You can see and monitor the activity of your door and you can give access to anyone. That is why people love it since it is very suitable and useful. A smart lighting system throughout the unit is also prevalent. The system is amazing and you do not have to touch the switch any longer. It works especially when you are tired. You rest in bed and before someone tells you to turn the lights off, Alexa will do the deed. It is like a genie saying your wish is her command. So, convenience is the kicker.
A smart color lighting system is also the way to go. You can pick, mix and match any color within your pleasure. During an open house for apartment units, the lights can also be used for baby gender reveal. Say if it is a girl, “Alexa make all lights pink, and whoa!”. That will just create a wow factor that you can make use of even when you just show the unit to prospective tenants. Smart shades and shutters on the other hand can also be installed in the bedroom. You can open and close them with your voice and you can automate and schedule them. So if you want, you can schedule the days when you want to open it or when you wake up. You can also opt to stay the shutters closed during the weekend for a longer resting period. Tranquillity at its finest.
Smart kitchen appliances are also on the list. A smart refrigerator is always a game-changer for potential clients. Initially, you can see what is inside your refrigerator while you are outside doing your shopping. To add to that, your refrigerator will begin tracking expiration dates. You know everyone has their stuff inside a fridge. Sometimes, one has no idea how long it was there. So now your refrigerator will take care of it and will transmit a so-called notification on the date of expiration. It also has a huge screen on the door. So instead of using stickers, you can now send voice messages, pictures, and private messages to your family straight from the fridge door. Mirroring a TV is also doable, you can also do shopping or play music. There are other kitchen appliances installed as well.
The unit has a smart gas range. The idea is to begin cooking while you are in an apartment, and then you will set up a timer. And then you can go anywhere and control it anywhere. You can also change the temperature where you can turn the range completely off. You can also verify if you forgot to turn off the gas. All you have to do is just go off the app and check that everything is alright.
The list goes on. They also have a smart dishwasher that transmits you a notification when the cycle is finished or when there is not enough dishwashing soap. Smart outlets are also prevalent. So, any type of appliance you plug into the outlet is converted to a smart appliance. So, in the units, there is a kettle, and they configure Alexa. For example, when one says good morning, Alexa automatically starts to boil water and will tell you the weather outside the latest news and the traffic in your proximity on your way to work. Motion sensors are also activated in the apartment. It can aid you in creating different scenarios. For example, you have a situation like “midnight snack”. So if you want to move after midnight to get a grub, you don’t want to get blinded by the bright lights so you can schedule if a person will enter the room after midnight, the lights will be dimmed with the help of the lighting system. The firm also introduced some technologies destined for the restroom and the bathroom. Imagine a showerhead incorporated with LED lights. So, gone are the days that you have to try the water and see if it’s hot or just fine. You can simply see if the water is hot, the light becomes red. In the same manner, if the water is cold, the led lights become blue. And it is also nice during a hot summer, you can get a blue light shower. When it is winter, you avail of the red light shower. It is also enticing to the eyes of kids.
What is not awesome in controlling climate and temperature? This is a must-have to possess a smart AC and thermostat. It is a no-brainer that you will witness tons of opportunities and benefits to add smart technologies in multifamily apartment units. This is a plus idea to add value to each unit.
At the onset, it is an excellent competitive advantage. It is an excellent marketing tool for you. To add, statistics show that you can enhance its sales price or rental price by five (5) percent on average. Furthermore, it is also energy-efficient. So, if you are a building owner or manager who is paying for gas for heat, you will take advantage of this scheme as well. All you have to do is to mull over where you can begin. For example, renovation is the most practical consideration to add smart technologies or if you have a vacant unit that you can utilize as a mock-up space. Feedback will come over to you and then roll out and scale across your portfolio.
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C: 469-990-4627 (text or call)
IG: The Apartment Queen
Four Misconception in a Multifamily Real Estate Investment
For the last twenty five (25) years, multifamily investing has showcased stellar results to real estate investors. Based on a study, it was proven that between 1992 and 2019, the multifamily asset class has garnered an average annual return of almost 10%, which is a bit higher average as compared to any other kinds of commercial real estate. The same average is also higher for owners of single family units across a significantly same time frame, based on a Study reported in Texas.
And because of a common misconception in terms of multifamily asset class, some real estate investors veer away from investing in multifamily units and pay close attention to single family units for renting. And because the Investor relations team here at www.rebykayle com transact with thousands of clients annually, we wanted to share in this article what we have discovered to be the most traditional misconceptions in terms of multifamily investing as compared to single family investing:
- It is not cheap to buy a multifamily property. Buying a multifamily property will somehow cost more than buying a single family unit in a similar geographical location. But, recognizing a multifamily real estate property as expensive is misleading.
First, one benefit of investing in multifamily real estate is that it has the capacity to give freedom for investors to obtain residential property for less, on a per-unit basis, as compared to building a portfolio by buying a single unit property at a time. In that regard, one could say that buying a single family residence each time can be a bit expensive and that the approach in multifamily investment will be a lot practical.
Next, even though it will likely cost a lot of money when purchasing a multifamily property as compared to a single family unit, this does not simply mean that an investor can outright afford a multifamily investment. There are some practical ways to acquire financing to obtain a multifamily property like a traditional private financing and bank loan. With a good credit standing, and with the help of specialists from www.rabykaylee.com , you can be able to obtain your dream investment in no time.
- Vacancies in the units will devastate the profitability of the property. With a single family unit, an investor only needed a sole tenant for it to be fully occupied, while in multifamily investment, investors would require finding and maintaining multiple tenants to fill 100 percent multifamily buildings. Consider the flipside of this point.
With a single family unit, if the sole tenant vacates the place, such investment goes out from fully occupied to entirely vacant. This simply means that income on that specific property drops to nothing and will simply remain zero until such time that the investor can find a new tenant.
A multifamily-property, however, has the advantage of an income stream coming from a series of tenants, which can be recognized as more stable simply because even if one tenant leaves, such property will not be entirely vacated. The investor still has all other tenants in place.
- Financing will be a bit of a complex idea. The basis of residential loans is on the financial capability of the borrower which links to existing financial obligations, present debts, income, credit standing and a lot more. In contrast, lenders essentially assess multifamily commercial real estate loans based on the property itself. Ergo, if an investor can find a practical multifamily property with solid financials and features that a future investor may shell out more, the investor should have the capability to secure suitable financing.
- Maintenance of the property is a bit expensive to implement. The idea of paying operational and maintenance costs in an apartment unit might seem to be a little daunting and out of reach for the traditional investor.
But, multifamily properties take advantage of economies of scale, giving freedom for proportionate price savings because of a production increase. Meaning, since there are several individual housing units in a multifamily property, and a fixed price for the entire property, the investor can potentially gain a significant amount of savings in expenses on a per unit approach.
Another way to comprehend this idea is to consider the expense of owning a so-called quadruplex building as compared to owning four individual single family unit apartments. Each unit will have its own separate expense and maintenance as well as operational costs. With a multifamily property, by comparison, any expenses like painting, landscaping, fixing the air-conditioning system or making a leaking roof can potentially be applied to the entire property. Meaning, they share expenses as well as operational costs. Fixing the HVAC on a four-unit structure fundamentally means fixing all the air conditioning units all at the same time. Hence, as stated in the Forbes article, the per-unit cost of maintenance and operational expenses can be lessened for a multifamily building as compared to single unit residences.
But wait, there’s one final misconception. By realizing that multifamily real estate investment is essentially a viable real estate investment strategy, it is also worth paying close attention to another misconception that some individuals have about real estate as a whole; “it is a passive income/investment”.
Unluckily, this is not the true case. No matter how smoothly a multifamily property or shall we say, single family unit or even any type of real estate investment for that matter, seem to be running, in the event that an investor purchases the property on a direct approach, that investor is recognized as an active investor. Even if it is possible to outsource all the day to day operational duties and regard everything to a property management firm, the investor will still have to come up with decisions, answer questions, and deal with quandaries relating to the property. That is regarded as an active more than passive kind of investment.
If the prospective returns of multifamily investing sound enticing but coming on a direct responsibility in terms of managing a multifamily property does not, there is another approach that is truly passive in nature, and that is investing in multifamily properties by means of an online platform. www.rebykaylee.com supply investors access to investments in multifamily properties reinforced by our team of specialists and experts in the field.
At the end of the day, real estate investing of any class, such as multifamily investing, has its own share of risks and passive income assets entirely carry the present risks of the loss of both regular and principal income either because of the issues with the investment or more so, general market downfall.
Landlording 101: 18 Ways to Pave your Way to Property Management
Landlording 101: 18 Ways to Pave your Way to Property Management
For a lot of individuals, being a landlord is a rewarding and lucrative kind of experience, but if you are newbie to the realm of real estate investment, you might realize that maintaining a rental property is not a simple task. Taking one step backward to comprehend some of the crucial landlord roles, and property marketing strategies as well as facets of the law will surely go a long way in aiding you to look for a tenant, efficiently manage your rental system and stay away from the most common landlord no-no’s.
In this definitive guide, www.apartmentqueen.com have collated eighteen (18) tips for new landlords in helping you reap what you sow and obtain the most out of your real estate investment.
- Jumpstart with Landlord 101. You have to figure out for yourself if you are ready to be a landlord. If you are reading this definitive guide, the answer is a big YES! You need not be a management professional or a real estate specialist or an experienced contractor to be an effective landlord. All you have to do is to shell out a significant amount of time to learn the trade and keep up with the request of the tenants as well as address rental property maintenance problems.
- Come up with a work schedule. It does not matter if you manage a single property or a portfolio of multifamily units, you have to establish a work schedule and try to perform it by heart. While it is true that projects are unpredictable, and there’s a need to be comfortable with the probability of handling tenant problems at any time of the day or even night time, making up time with land lording industry like staying on top of your maintenance department and tracking your expenses will surely maintain a productive routine. If you did not prepare the schedule, maintaining even one small unit can feel like a daunting task. Talking about the business of landlording, you have to insure to treat it as such. It is best recommended to initialize a Limited Liability Company (LLC) for ownership of the property. This can aid you in securing you personally from legal manoeuvres and acts.
- Maximize the skills that you already possess. An amount of skills from other professions and other deep experience can be widely used in landlording, such as sales and customer service. You also need to have a grasp on excellent interpersonal and inter-professional relationships with your tenants. Marketing, accounting, maintenance, proper delegation and time management is imperative because oftentimes the best business decision is knowing when to call for a specialist.
Taking a deep knowledge of your real estate investment. Perhaps you are regarded as an “accidental landlord” who simply inherited a property or opted to rent your property after a move. Or maybe you can be able to invest in multifamily property. Whatever your path is, a rental property is best recognized as a long term type of investment. It does not matter if your goal is to supply your present income or to create your finances over time.
- Looking for the right property. When you begin looking for a rental property or you are just trying to specify the valuation of the property you have obtained, there are some guidelines to consider such as access to transportation, neighbourhood, businesses around, schools, church and the like. The amount of the property may be enticing, but you will want to ensure the location is as golden as its price. If you do not want to live in the complex, it will follow that your prospective tenants will not want to live there as well. Further, if you are buying a property with tenants already settled there, do not assume that there is a built-in stream of income. You have to find out if your lessees have been making dependable payment of rents.
- Find out what your cash flow is. Before buying a property, you will want to determine if it possesses a potential in producing positive cash flow considering the present market conditions. A positive cash flow simply means there is more money coming into the property either by rentals or by auxiliary income streams like parking lots and the like, than going out of the property through taxes, maintenance cost and mortgage payments. Simply put, if you are able to collect $1500 monthly rent and you spend around $1000 for monthly expenses, then you will surely have $500 as your income to put in the bank. You will have to mull over on what your budget can bear as well as the amount you want to earn in order to make your real estate investment worth your effort and time. You have to make sure to take a conservative valuation to any types of financial projections for the property and prepare for unwanted expenses and missed rental payments. You have to remember that you are still answerable for the mortgage payments even if your tenant defaulted in paying their rentals or worse, your property remains vacant.
- Specify your rent. As soon as you acquire your rental property, it is now time to comprehend the dynamics of the local real estate investment and its market in order to set and specify your rental price. Try to research others at rentals within your community that have the same area and size, proximity and quality to transportation and businesses. You should have a feel of your local market.
When you are just beginning as a landlord, you can anticipate some negative cash flow during rough times, just as you might experience in other new businesses. But, saving up for a rainy day and staying updated in terms of your local market can help enhance the entire return of your property.
- Managing your rental system. You have known of your local market and found an excellent real estate investment property. You also concluded your due diligence and are very eager to obtain a tenant in the unit and start generating income. During your existence, you require repeating the process of looking for tenants, countless times. While this is the secret to effective rental system business, it does not have to be tedious and daunting.
- Looking for a perfect lessee/tenant. The wide array of renters search online for their next home. The key here is you need to be where they are. You can begin the process by marketing your property over the internet with a free listing service. A referral from your network would be a great way to obtain tenants.
Your listing should be clearly stated leaving no vague information and should include the basics such as the number of bathrooms and bedrooms, area, deposits and securities. Further, you will want to give credit to the proximity and amenities. You should also invest in high resolution photos of your rental. You will get your money’s worth to have professional photos taken during summer and spring months so your property will be highlighted.
- Have a knowledge of fair housing laws. Before you begin advertising your units, you require a fundamental knowledge of fair housing and discrimination laws. Fair housing laws are federal statutes that make sure equal access to housing for everyone. It is not legal to discriminate against anyone on the basis of color, race, nationality, disability and religion. A lot of local state governments have added securities that you should be familiar with. As a general rule, pay close attention to the amenities and properties in your advertising as well as conversations and not to a group of people or features leaning towards a specific group.
- Showcase your property. In showing your property, you can schedule personal appointments or host an open house party which can basically save you time and energy. By this regard, you can also create a sense of urgency among prospective clients. Either way, if the property has no tenant, you have to ensure its cleanliness. It is a plus factor when searching for a tenant. On the other hand, if the property is occupied, you have to ensure to alert the present tenant a fair warning that you are coming and consider giving them instructions to clean. Also, showcase a classy designed flyer with good photos that presents facts and features about the property. This simply reflects your care and value on the property and helps your rental cut above the rest.
- Scrutinize applications. As soon as you have a prospective tenant, it is time to have them fill out a rental application. This aids you in reviewing their qualifications, and it is an imperative process of recording your rental system Utilizing similar parameters and application form for each and every prospective lessee gives you the freedom to evaluate tenants objectively and aids in making sure that your compliance is fair and in good faith. You can decide whether an application is free of charge or with fee, but regulations vary in each state. So you have to talk to a professional like “the apartment queen” to know what is permitted in your zone. Then, you can confirm that the details inputted by the client are matched by interviewing the client in person, through phone or even electronic mail. Record every engagement you have with the prospective client by listing simple notes on the questions being asked.
As soon as you verify the application, you may want to engage in a background and credit standing check, verify sources of income and talk with at least two (2) landlord references. Actually, there are some internet services that offer background and credit investigations. It is best recommended that a renter should not spend more than thirty (30) percent of their monthly income or rent. However, it still varies especially if the market is at its high. You have to make sure to abide by the similar process for each application review.
- Reject or accept a prospective tenant. As soon as you have an idea that a prospective tenant is qualified, then, good for you. You secured your tenant. You have to ensure to update or remove your internet listings to reflect the situation. If you realize that an applicant is not qualified based on the facts and records you unraveled in your investigation, you should call them to let them know as soon as possible. You also need to send a written notification telling the specific reason on why you arrive at such a decision.
- Ask for a Security Deposit. Ahead of signing of contracts of lease, you require collecting the security deposit, which is akin to insurance in case something goes sideways with the tenant at any point during their stay. It can aid them in covering the cost of property damage beyond the usual wear and tear. Security deposits are allowed over the United States but laws governing the maximum amount as well as return of a deposit may vary. All you have to do is to check with a legal specialist in your area. Same caution is also required to be taken with the manner of holding your funds, because each state has different guidelines as regards account classification and refunding interest.
- Contract of Lease Signing. Since it is a contract agreement, it is said to be binding. It is your covenant with the tenant. Having said this, you will want to ensure that it basically addresses the policies, terms and conditions, and conflict resolution, for all intents and purposes, the procedure for living on your complex, and concretely specify tenant and landlord roles and responsibilities. You can find a lot of generic leases over the internet, but you have to ensure to include any local requirements. You can hire a legal specialist to review your contract and utilize the similar lease agreement for all your tenants for uniformity. All you have to do is to keep it up to date with the new guidelines and other pertinent laws. Further, give tenants the choice to sign the lease over the internet. It will surely make your job easier and give copies of the essential documentation to both parties in real time. This is also a plus, since we are now experiencing a pandemic due to covid-19 situation.
- Make a final walk-through of the unit. Before the turnover date, make a final walk-through to assess the condition of the unit or apartment and list down notes of possible issues and/or damages. This will be truly helpful to eliminate possible lawsuits down the road. Utilize a move in/move out checklist to maintain a track of anything you wind or you want to record.
- Maintain your Rental Charge. Now that all the documentary requirements are in order, and your tenant has moved in, maintaining your rental property should be more of a passive activity. But, you still require to make your responsibility as a landlord which includes making sure that the property is safe and liveable. You should also perform periodic rental property maintenance as well as responding fast to tenant requests. If you can do that, you can complete a lot of maintenance responsibilities. However, some state laws require that plumbing and electrical works must be delegated to a professional. You should get adept of your local statues and set up a system to obtain requests handled in no time.
- Collection of Rent. There are various methods to collect the rent, but a lot of tenants prefer and expect to pay over the internet. There are tons of internet options, some of which are low-cost or even free of charge. This is a convenience to all renters in ensuring that the rent is paid on time. If there is a late payment, remind your tenants of the terms and conditions of your lease, such as any late fees to encourage timely payments. While you want to maintain a harmonious relationship with your renters and be considerate of some unavoidable circumstances, this is your business so you have to be straightforward and firm on every decision as well as your expectations with the tenants.
- Renewal of Lease. A few months before the lease is up, you have to ensure with your tenant to learn if they have plans in renewing the said property. This is also a perfect time to make another market study to know if you should escalate the rate and if so, by how much. Give your tenant proper notice so that they can be able to decide if they want to stay in your property.
Whether you plan on being a full time landlord or just making it another source of your income on the passive side, when perfectly done, managing and owning an investment property can shell out long-term dividends. Educating yourself in terms of the tenant and landlord laws and other pertinent guidelines, establishing rental screening process and coming up with a schedule for managing your business will aid you in being a more efficient, profitable, and compliant landlord.
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Multifamily Real Estate Investing: Above and Beyond Rollover IRA
A Rollover IRA can be an excellent option for money in old retirement accounts. To stay away from Tax Hits, you must perform it in the right manner.
What is Rollover IRA? It is an account utilized to consolidate and move money from old 401k or any other employer-sponsored retirement plans into an IRA. An advantage of a rollover IRA is that when performed correctly, the money maintains its tax-deferred status and does not invite taxes or penalties at worst. It can also provide a much wider range of investment options.
Traditional IRA as compared with Rollover IRA. A rollover IRA can be a traditional IRA. However, it can also be a Roth IRA if you want to roll money coming from a Roth 401K. You can also roll money coming from a traditional 401k to roll over Roth IRA. However, you will have to pay income tax on the money that you rolled over. One evident difference between a traditional IRA and a rollover IRA is that you can rollover any amount of money you want into the rollover IRA.
Contribution to a Rollover IRA. IN the years 2020 up to the present, contributions are only up to $6000 annually, and if you are over the age of fifty (50), you can contribute as much as $7000. If you select a Roth IRA for your rollover, your capability to contribute may be restricted for a bit; and the basis of which is your income. Meanwhile, your capability to deduct traditional IRA contributions from your annual taxes may be constrained if you and your spouse have access to a workplace retirement plan to which you have accumulated earnings over a specific period. If you connect IRA rollover funds and IRA contributions in a sole account, it may be complex to move your rollover funds back to 401k, say, if you engage in a new job with an employer that has a superb 401k plan.
Can you withdraw money out of a rollover IRA? Rollover IRAs in a way, are subject to similar withdrawal guidelines as all other IRAs. Unless you possess qualifying circumstances, a withdrawal from an IRA before you reach the age of 59.5 is likely to be applied with income taxes and prospectively a 10% penalty from the IRS.
Perform a rollover IRA in Three (3) Easy Steps
If you have an existing IRA, you can relocate your remaining balance into the IRA that you possess. As stated above, this may make it complicated to roll your money back to a 401k if need be. So, it is imperative to open a new account if that bothers you a bit.
Meanwhile, if you do not have an existing IRA, you require making two (2) decisions upfront. Which type of rollover IRA you are eyeing and where to open that specific account? The three (3) steps are:
- Select a rollover IRA account type
- Select a rollover IRA provider
- Move the money
Advantages of a rollover IRA.
If you are resigning from a job, usually you have three (3) options and they all have advantages:
- Just stay as it is if your former employer gives you the freedom, you can leave your money originally where it is. This is not the ideal scenario. The HR team will not be able to help you with questions and you may be charged higher 401K charges as a former employee.
- The best choice for a lot of people is to roll it over. You have the choice to roll over your money into the retirement plan of your new employer or simply in an IRA. In a lot of cases, the IRA is the journey of choice. There, you will possess a plethora of investment options and minimal charges, specifically compared with a 401K, which can have short investment list choices and higher administrative charges.
- Your worst option is to cash out. Not only it does hamper your retirement, but you may be subjected to some cruel taxes and penalties made by the IRS. You will pay a penalty of 10% for early withdrawal and ordinary income taxes on the distributed amount. This means you may shell out 40% of that money right off the top.
Two (2) guidelines to know in Taxes for rollover IRAs
I say you do a direct rollover, you are all right. NO taxes will be considered until you begin withdrawing money in retirement. On the other hand, if you perform an indirect rollover, that is you receive a check made out in your favor, then there are separate rules to follow so you will not be caught with a huge tax bill:
- The Sixty (60) day rule. This was enunciated in the previous article. With an indirect rollover, you are given sixty (60) days from the date you receive the distribution to obtain that money into an IRA. If you forgot the deadline, the IRS will deem this an early withdrawal, which also means that aside from income tax, you will be subjected to a 10% early withdrawal penalty.
- Taxes are being withheld. With an indirect rollover from a workplace retirement plan, the check you obtain will be the difference between the amount of your 401k and 20% of it. If you have a common 401K and you are eyeing to have it roll over into a Roth IRA, you are required to pay additional taxes. However, if your money was in a Roth 401K, you need not pay taxes. To obtain your money back, you must put into your IRA the entire account balance together with the amount withheld for taxes.
Say, your total 401k account balance was pegged at $20k and your previous employer gives you a check worth $16k. In case you are wondering, that is the full amount less 20% of it. Assuming you do not have plans to go the Roth route, you will have to generate $4k so that you can be able to deposit the entire amount into your IRA. In other words, you will shoulder the 20%.
During tax season, IRS will know that you rolled over the whole retirement account and will refund the amount that was withheld in taxes.
You should also stay away from the 10% penalty. On the one hand, if you only place $16k into the IRA, the IRS would regard that the remaining 20% was withdrawn early. You practically owe the early withdrawal penalty on the 20% as well as the income tax.
Selecting rollover IRA investments. As soon as the money is placed in your new IRA account, you can proceed to the exciting part which is choosing your investments. If this is your first IRA, you will surely be surprised at the massive amount of investments, right on your doorstep. For the majority of individuals, the most effective choice is to select a few low-cost index ETFs or mutual funds, based on asset allocation. It simply means that the way you allocate your money among cash, stocks, and bonds that makes sense for your risk tolerance and age.
If you do not want to engage in that, there are hands-off alternatives. If you were engaged in a target-date fund in your 401k, you can look for the same, less expensive fund for your IRA with the help of your broker. If you initialize your account with the help of a Robo-advisor, that company’s computer algorithms will re-calibrate and choose your investments based on questions you answer in terms of your stomach for risk as well as your timeline. But we are not saying and it is not recommended that you can turn a blind eye.
Does my rollover consider a contribution? It is not considered a contribution since it is separate from our yearly contribution limit. So you can contribute added capital to your rollover IRA in the year you open it. You can add up to your limit on allowable contributions.
In terms of rolling over an IRA, is there a limit on the amount of money? No, however, you need to follow the guidelines as regards your yearly contribution limits for future contributions to your IRA. I am positive that there is no limit to the number of IRAs you have possibly have. However, you may find it easier if you maintain your amount of IRA’s at low. This will make it easier to maintain your funds and comprehend things such as asset earmarking.
Is 401k similar to rollover IRA? In general, you initialize a rollover IRA so that you can transfer your money from a 401k without having the burden to pay income tax because of such movement. If will just withdraw the money from your 401k, instead of rolling it over, you will surely be subjected to income tax and withdrawal penalty. A rollover IRA gives you the freedom to move money out of 401k without sacrificing the advantage of delaying your tax bill up to your retirement.
While it is undeniable that rollover IRA accounts and 401K have some resemblance, they are different in a way. Both of them give pre-tax savings. You can place money in before you pay taxes on it and you can delay your income tax payment until such time you take the money in your retirement. However, with 401K, your option in investment is practically dictated by your employer.
With an IRA your choices and options in investment are eternal since the majority of the brokers offer a plethora of selections to invest with. On the one hand, 401Ks showcases a higher yearly contribution limit of about $19,500 in the year 2020 and $26,000 for people age 50 and above. You compare with the IRA contribution limit of contribution pegged at $6,000 in the year 2020 and $7,000 in the year 2021 for ages 50 and above. Verily, there is no limit to the amount you can roll coming from 401k to IRA.
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C: 469-990-4627 (text or call)
IG: The Apartment Queen
Multifamily Investing 2021: Four (4) Indicators Why it is still Lucrative During Pandemic
COVID-19 came like a thief of the night all over the world. From everyday living to work, we have witnessed major changes in just one (1) year. Despite all the uncertainties, it is safe to presume that real estate investment will not do anything well. For that very reason, a lot of individuals have followed suit and shied away from these classes of assets since the emergence of the pandemic.
But for others, see the market and outlook from a different perspective. For seasoned real estate investors who had been through significant market ups and downs, and took advantage of the long-term effect of operating and owning properties during uncertainties, this pandemic will just be a walk in the park for you. In the realm of real estate investing, we are witnessing more stable areas with positive growth in multifamily assets as compared to the emergence of a worldwide pandemic. As time goes by, it is anticipated that drastic change in the capital with multifamily, making this class of real estate asset class the hidden treasure in the realm of investment. We have listed four (4) possible reasons for such, as follows:
Impacts on Demand as well as Generational Shifts. There is a true movement in the wants and needs of the primary and dominant members of the people of today. Millennials have continued to be a big help for multifamily properties, as they now regard themselves renting for a long period. Tons entice millennials to engage in multifamily options, such as the rental flexibility, low barrier to engage like no down payment scheme, and a change from the traditional dream of owning a property. This makes them lean towards multifamily kind of living minus the financial issues that come with buying a property. To add, it supplements flexibility on individuals if they want to relocate or move regardless of the reason. Ergo, this trend simply translates to greater demand for multifamily properties.
The Shocking supply of multifamily properties. With traditional pandemic-related risks, lack of entire visibility, and economic instability, new supply is somehow restricted and guarded. Based on assumptions, it is predicted that novel developments will still manifest but at a pace slower because of the uncertainty in the market. Common developers that construct high-rise properties in urban locations are not sure of demand because of the dense-city flight and of course, the emergence of the pandemic brought about by COVID-19. Renters are moving out of high cost-of-living locations and dense communities like New York and San Francisco for less dense locations and affordable cities like Texas. With lesser multifamily housing properties showing onto the market, especially in the affordable class, the supply side is anticipated to remain constrained. At the end of the day, it is the fundamental economics: Enhance demand and lower supply means higher demand destined for multifamily property managers and owners.
Investor Demand Together with Low Rates Results in Compression of Cap Rates. The cap rate, or more commonly known as the capitalization rate, specifies the income divided by the purchase price. Cap rate compression manifests when investors are willing to pay a premium for a similar amount of income. United States Treasury bonds can be utilized as a benchmark versus cap rates to know the spread against a risk-free bond.
In the scenario of the present economic context, the spread between decade-long treasuries and capitalization rates is higher as compared to levels of the historical average. Traditionally, the spread is pegged at 2.5%. But, at this point, cap rates are averaging around 4.75% to 5%, and the decade-long Treasury bond is pegged at almost 1%, making the spread almost posted at 4%. Ergo, there is room destined for cap rate compression, which means an advantage on the present buyer and higher prospective valuations.
Further, the M2 Money supply which is a measure of money supply in the economic system appears to be like a hockey club, with a present figure of almost 19 trillion dollars. Based on the Federal Reserve, federal rates are anticipated to be nil by the end of 2023. It simply means that an enhanced supply of capital will be pursuing transactions, placing a solid pressure in terms of pricing.
Resilience to Pandemic and Recession. It is a known fact that COVID-19 has caused a noteworthy economic downturn across the board. However, multifamily has always endured drastic fluctuations in the market. They stated two (2) reasons for this:
- Federal governments are extremely motivated to support citizens financially so that individuals can be able to afford their rents. Of course, one will not forget the CARES Act $1200 stimulus check at the emergence of the pandemic. There is an intrinsic desire to aid individuals along and carry them utilizing their financial burden with government help during trying times.
- Housing is a fundamental human requirement. Even in difficult times, lessees will do their best to answer for their rent and maintain a shelter. Multifamily properties recognized as class B and C tend to be located along main commuter roads, giving freedom for the tenants to get to work in no time, making it a lot enticing. For the owner, multifamily properties can give a tangible asset together with capital appreciation while giving a steady income.
Multifamily housing is not going anywhere anytime in the future. It only goes out to show that it is justified as one of the very solid asset classes for real estate investing, even during trying times like this pandemic. It is highly recommended for investors to diversify their portfolios in real estate, specifically multifamily properties. It is quite an obvious selection for a place to invest in in 2021 and the years after that.
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C: 469-990-4627 (text or call)
IG: The Apartment Queen
Multifamily Real Estate: How Proptech and other types of Applications Can Aid Real Estate Owners Defeat the Present Quandaries
Supplying housing to more than 100 million settlers in the United States living in apartments, low-income housing, nursing homes, and other rental properties has never been frank as individuals outside the industry might presume. Quandaries relating to municipal codes, compliance with housing loans, managing comprehensive operational risk and preventative maintenance have always served as booby traps to investment returns. But property managers nowadays have a completely new facet of roles and responsibilities because of the pandemic brought about by COVID-19. And that is the preservation of the safety and health of not just the settlers but also the site employees.
This novel high-stakes role of complying and developing with COVID-19 safety protocols comprises the need to closely monitor and record cleaning measures, potential onsite outbreaks, and employee temperature checks.
Landlords also must maintain amenities and packages and showcase units in remote environments, all of those signifies an added burden to owners who are upfront unable to collect charges in rents in a lot of cases. The increasing trend in remote work incorporates more requirements as homeowners demand efficient internet connection and in some cases, a socially distanced co-working space with safety protocols but beyond their own homes. Multifamily real estate is not just another place to live since it must be a justified refuge from all over the globe. And in the same manner, supporting full-time employees like never before.
The Different Manners Real Estate Leaders can Utilize Proptech
A lot of proptech providers have extended their arms to bridge the gap to address the issue in the market. We have listed some of the alternatives for multifamily real estate stakeholders and leaders to mull over as they enhance their sites:
- Some applications constructed the social media of an apartment building and give freedom for lessees to sign on during the time they want to use the pool, gym, and other types of property amenities. Owners of apartment complexes who utilize an app such as this then possess a resource to make sure lessees maintain safety health protocols such as social distancing, streamline onsite activity and enhance crowd control.
- Some companies are eyeing to solve a main tenant and landlord complaint which is package delivery. It is a given that some packages are stolen or arrived but in poor condition, or never arrived at all. And now employees and residents are wanting to have contactless methods to deliver and receive these packages. Some of these companies utilized centralized lockers while others, like Amazon key, give freedom for employees to leave packages inside the corresponding apartments. Other companies paved another strategy where they accept the package of the tenant offsite. Then they will notice the tenant on the said application and will schedule a delivery at their most convenient time.
- A lot of tenants do not feel safe when going physically to the office, so digital communications incorporated with property managers can be a bit of a complex. Communication platforms can aid property managers in transmitting announcements, answer queries and build trust loyalty, and confidence with the residents.
- One of the solid fears during this pandemic is how to maintain the safety of the people while they share the air of their co-residents. Air filtration systems, Robots, and Artificial Intelligence are technologies that can aid in making sure a germ and virus-free environment. Property managers can also utilize existing technology to incorporate a vaccination tracking platform to serve as a centralized source of COVID-19 vaccination information as well as reach a huge portion of the population right where they reside. Other technology companies supplement this kind of technology infrastructure to aid in giving peace of mind to this huge chunk of the population.
An Obligation and Accountability to Support the Community
The pandemic has been lighting that struck technology entrepreneurs in seizing the moment and leverage their software to address novel problems in multifamily real estate. As an outcome, there are an array of solutions that can now be utilized to aid landlords to maintain their properties efficiently. A lot of existing technologies can also transition to better support crucial tasks during pandemics while still abiding through on the reasons they were created; to make everyone’s lives including the managers and owners easier and better.
What we are witnessing in multifamily housing is an exciting example of what may occur when the technology ecosystem comes together to address this problem. The truth of the matter is, technology is only a part of the solution. Following the safety protocols such as wearing face masks and shields, socially distancing, and sharing resources is truly a humanistic effort and not technical, so to speak.
Tech businesses have a role to quickly deploy the technology that presently exists to guide customers and the community at large during these trying times. But, when considering technologies like these, managers and owners must perform at the onset their due diligence to make sure that the companies with whom they are considering engaging with possessing a solid track record of timely and successful deployments, solid ongoing client support as well as the feature set that satisfies the crucial pain points.
Property managers at apartment complexes are overburdened by habit. That is why any solution that can relieve a pain point for them is very important. Getting a product that either supplement a bad end-user experience or fails to relieve that said pain is considered a waste of money, effort, and time.
Having said that, the quick pace of innovation during the previous year as companies look to accommodate a new platform of contactless operations and remote management has resulted in a sprout of novel solutions that can aid deliver an effective ROI and are worth the effort and time for an appropriate review on due diligence.
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Kaylee McMahon
Apartment investor/TREC Brokerage, LLC Owner
C: 469-990-4627 (text or call)
IG: The Apartment Queen
Five (5) Important Methods to Lessen Risk in Multifamily Real Estate Investing
There have been rumors of an impending recession for the past several years. And this probability now seems more likely considering the present trade wars with China, the present inverted yield curve, Brexit, and a lot more indicators. Does this simply mean that one should stay away from purchasing real estate properties or invest in them?
Of course, the answer is a big NO. While it is true that it is better to obtain no deal at all than tying yourself up with a bad deal. But it does not mean that there will be no better deals along the way. Patience is a virtue. Again, the competition is stiff and the prices are a bit too pricey. That is why you require to be even more cautious and selective. You have to pay close attention to the essentials when investing in multifamily real estate. We have listed five important methods to minimize your risk when investing in multifamily properties:
- Market Condition. A bad market will destroy even an excellent property investment. On the other hand, an excellent market will make a bad investment not look so bad. You have to pinpoint which types of industries are most likely to get the hardest in times of economic downturn. You have to stay away from cities that depend heavily on those types of industries.
You also have to look for places with excellent employment potential and a broad array of opportunities because this type of place is a lot more economically resilient as compared to a city that is so dependent on just one industry or sole company.
- Cash Flow. Having healthy cash flow is imperative in maintaining a happy investor. A property with a great cash flow generates at least six (6) percent cap, which is the net operating income (NOI) divided by the initial purchase price. You may not have this 6% minimum cash flow at the onset, and it depends on where you purchase, but you should have reached this number at least after some renovation.
But, prospective cash flows are solidly dependent on the capitalization rate of a specific market. The cap rate of a hot market is somewhere around 3-4 percent, so it is a bit complicated to obtain a property in this kind of market to a 6 percent cap, even after adding value to the property.
Ergo, you require making sure that your real estate investors know of this. Let them know that a significant amount of the return will not be realized until the property is disposed of. In this regard, they will get the idea if they do not see a high return during the holding period especially if you hit a recession and require extending the holding period several more years.
- Appreciation. Always be conservative with your underwriting. Do not depend much on appreciation or growth in rent too much. Even if there is significant growth in the market last year, do not expect the same growth each year or for the next succeeding years. You have to peg an amount that is closer to the history over the past decade.
If the present market cap rate is five (5) percent, you have to assume that you will be selling the property at around 5.25% or a bit higher in the next five (5) years. The principal rule is to enhance the capitalization rate at a sale by five basis points yearly.
- Capital Reserve and Capital Raise. Do not ever depend on cash flow to finance and shoulder your renovation cost. This will surely lead you to disaster. Depending on when you rely on your cash flow to finance the renovation, it will restrain your capital and slow down the progress of your value add. It will be too risky if the cost will land much higher as compared to the original budget. Do not earmark money that is just enough for renovation. You have to raise an additional ten (10) to fifteen (15) percent of the computed budget since the world of construction is full of surprises.
- Term of loan. Try to secure permanent financing as soon as probable. You can sign for either twenty (20) or thirty (30) year loan immediately, or obtain a loan with an option for permanent financing. Permanent financing is very crucial because you will not have to worry in terms of refinancing for many years. If a recession manifests and negatively affects your property, you do not have to worry in terms of refinancing at a much lower value or selling your property.
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C: 469-990-4627 (text or call)
IG: The Apartment Queen
BIG SISTER SECURITY
Time for some updates. This is annoyingly long.. buckle up.
I was so upset at myself that I was having some subpar relationships (or worse) in the Multifamily space.
I assumed everyone was like me- radically transparent, giving to a fault first versus using others, stood for justice, treated others how they wanted to be treated, worked their ass off for the long game without shortcuts, did not use others weaknesses against them to take advantage of their shame and past pain….
It kept happening about 50% of the time at the beginning of my career.
The other 50% were soulmate partnerships that I was LUCKY to attract. Always prioritizing the organism of the team over the cell.
I couldn’t understand why the vast difference.
Then I started deep research to look at the patterns and origin of the people, the groups they came from, who they surround themselves with, their past professional behavior patterns, digital footprint, and things they hadn’t even been caught for yet.. this revealed a lot about behavior patterns which will always repeat.
Deep research has forever changed my life!!!
Mostly the pattern found was that- those who preyed came from a group led by a sex offender. This is PUBLIC information. Those who associate with this type of person find it normal to prey on the innocent.
Also a big WAKE UP moment for me… ask yourself why am I attracting these fuckers?
I kept living in the past and the current story of the family trauma I’ve experienced and still deal with (aftermath).
My healing journey is mine and I no longer need to share everything about that with everyone.
Since realizing this I have slowed down to really evaluate those who aggressively pursue me, watch their behavior over time while “business dating” and always using my deep search resources. This is So I can empirically compare with what my intuition/eyes tell me.
Facts now prevent and stop this bad behavior. I no longer feel scared. I no longer feel the need to create artificial closeness quickly, the right people will support you no matter what pops up. I no longer partner with weak people.
Now the business has picked up immensely since I now can identify those who deserve success and are on the same path as me to make a forever impact.
My life is only getting better now with the right people. Go read #whonothow!!
I am the most peaceful, influential, powerful, proud, woman of my generation, and nothing can stop me.
My goal is to see 1B women around me build the confidence that struggle begets to stand up, value, and care for themselves!!
In the journey, you will have pushback to keep you down. You must make the decision to ask for help. With help, you can do ANYTHING!
We have now launched a service for women going through a partnership or business abuse. Click here for more info and support.
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Housing is a serious issue for Women
The housing crisis has hit women a bit harder as compared with men, because of a lot of factors like domestic abuse which is number one, and earning less income. Sometimes, women are regarded to be “hidden homeless” because of these circumstances.
No matter where one lives, or how you pay for your home; whether social renting, homeownership, sheltered accommodation or private renting. One of the nuclei of the United States housing crisis has affected a significant amount of people all over the globe, regardless of age, in many different types of households. We have listed the ways by which the housing crisis disproportionately handicaps women all over the United States:
Women earn less income but they pay more, in rentals. The silly gender pay gap simply comprehends that women continue on average, to obtain income significantly less than men. It simply means that households supported by women are shelling out money bigger than average proportions of income on rent. According to studies, the gender pay gap presently pegs at 18%, with more women working in low-earning jobs or not full time. Across an existence, this simply means less disposable income, a higher value earmarked on rent, more difficulty saving for a deposit minus the financial security.
Services on Domestic violence are being cut. It has been said that about 25% of women experience domestic violence throughout their existence and 8% of them will suffer domestic violence at any given time. There is a big concern that housing benefit changes are making it more complicated for women’s shelters to support and operate women who flee from their homes because of domestic violence.
Women who are homeless do not obtain the services they need. A lot of women who become homeless have multiple complex needs. A lot of women who become homeless have several complicated needs. Based on the report, it was found out that higher rates of drug use among the feminine gender and a higher occurrence of mental health issues have been prevalent. As per the statistics commissioned in the United States, about 33% of 4000 correspondents are experiencing homelessness, and 33% of them are drug-dependent females. There is also a huge occurrence among homeless women diagnosed with mental health issues like depression. A smaller number of homeless women means a lot of homelessness services default to the needs of men can be unintentionally hostile for the opposite sex.
At the end of the day, women still bear the force and effect of caring responsibilities. They are often regarded as the main carers after severance of one’s marriage. This simply means that they are more likely to live in a home classified as under-occupied under the government parameters because of kids being young enough to share a room or just move out.
In our society, women always carry the burden. In turn, they lose their house security. That is why __________________ helps women from all walks of life to raise their dignity and uplift their disposition towards life. In real estate investing, they help women increase their wealth and widen their portfolios.
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C: 469-990-4627 (text or call)
IG: The Apartment Queen
8 Ways to Identify the Best Places to Buy Rental Property
8 Ways to Identify the Best Places to Buy Rental Property
How do you regard a market steady and high growth rate in rentals for the next ten (10) years? If you are looking for markets with the highest rental growth in the previous years, then you are not on the right track.
A solid performance in the past does not mean it will also perform well in the future. You require paying close attention to the essentials that are driving rental growth. Sometimes, the essentials are there, but the growth in terms of rent has not manifested yet. Those are “hidden treasures” that you want to invest in.
Investing in a real estate industry is based solely on concrete historical track is like purchasing a growth stock in blindsight. The investment has been doing well but it can be reversed in a period when the demand goes at a decreasing rate. Like how individuals sell their stocks when they feel that such a company is becoming overvalues, residents can obtain priced out of a market when the city becomes high-priced.
We have listed eight (8) fundamentals to explore that will aid you in spotting the most efficient real estate markets:
- Growth in Population. Communities possessing 1.5 percent minimum year-over-year (YoY) growth for the last twenty (20) years and a population of more than 100,000 people. It is imperative to look at population growth at the onset since it is efficient for trimming down the list. Rank the cities covering about 100,000 individuals from highest to lowest YoY growth in the last ten (10) years. Try to look for ten (10) markets that you are interested in. A market where you know a lot of people living there should be on top of your list.
- Income Growth of Households. You have to look for an income of a household growing at about one (1) percent minimum YoY for the last twenty (20) years. You have to be reminded that without substantial income growth of a household, there will not be great growth in the rental. If a city possesses a strong rental income growth but a weak growth in household income, then it only signifies that its settlers are getting priced out of the market. The effect is that population growth will begin to slow down.
- Crime rate. You have to pay close attention to a crime index that has been consistently declining over the last ten (10) years. A falling crime index is an efficient sign that the community is improving steadily. Companies also make an analysis in terms of the crime index in making sure that their office locations are enticing to workers, especially those with families./
- The ratio of household income to rent. You have to look for the minimum present median household income to median rent ratio at 1:4 or more. This is an efficient basis for measuring affordability in the location. You have to be sure in using median and not average because high household incomes can surely affect the average.
- Employment growth. You have to look for at least 2% minimum employment growth for the last twenty (20) years. It is a known fact that employment growth is a key indicator of the condition of the economy. An increasing population is not sustainable without excellent employment growth. But, you have to identify what companies or sectors are propagating, whether the growth will continue or stop.
- Employment Miscellany. You have to compare the present employment ratio to the national employment ratio. You have to look for cities with excellent diversity about employment. You have to look for cities with excellent diversity about employment. It simply means that the local ratio of the city should be within a few percent of the National average across all industries. You should eye for employment diversity to lessen the risks relative to specific industries falling.
In an industrial community where there is a thick job availability, say in manufacturing, but the national manufacturing job ratio is not that high. This simply means that manufacturing is an important industry. But statistics showcase that the amount of employees has been declining. However, one should not worry if the local employment ratio is a bit higher in terms of the professional services industry or education since the same possesses an excellent long-term outlook and is stable in a way.
- Median House Value. You have to look for at least 2.5% YoY growth in the median house value over the last twenty (20) years. This is an effective indicator of the entire wealth in the city. To add, if the median house value has been consistently appreciating for twenty (20) years. This simply means that it is not cheap to purchase a house, forcing renters to be renters for a long while.
- Landlord-friendly communities. Although this will not be a deal-breaker, you have to stay away from States that have hard rent control and guidelines on eviction of tenants. If you have selected a market that is not landlord-friendly, then you have to make sure you record this in your projections and underwritings. Get in touch with a seasoned property manager to know the trades deeper and how fast you can renovate your units so that they can add value and eventually increase rents.
Conclusion. Everyone does their market research in the approach that they know is right for them.
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Addressing Rental Eviction Issues
Addressing Rental Eviction Issues:
Truly indeed, eviction is a pain in the arse. The emerging issue that creates risk on eviction on our portfolios and how we can make use of pioneering and state-of-the-art financial products to enhance both the lives of the tenants and their ability to pay rent but also the performance of your portfolio. Based on studies, it is said that about almost a million eviction happens each year. A lot occurs in the shadows and landlords utilize different taxes to obtain residents out of our portfolios who are considered delinquent.
Why do evictions happen? The bottom line is the rent is extremely high. That is a fact and everyone heard that. Affordability issues are affecting the entire community as landlords in looking for residents who have the proper capability to pay rental charges. There are notorious skippers and professional informal settlers. Some property managers have faced battles for those. But more importantly, the cash flow challenges within the resident base. Drive almost all of the default and eviction that was witnessed in one’s portfolios and put the risk of eviction on a wider set of residents.
Why do tenants face eviction issues and risk in cash flow? They have a median household income of about forty-five thousand dollars and that is the tradition we all know. Also, there is stagnant growth in wages with increasing costs rent being the main cost that they replace on the resident base. In the same manner, half of the American population recognize 25% month-to-month volatility on income.
Also, the majority of the population in the United States has limited savings. Half of the country has below four hundred dollars in accessible savings to battle the financial turmoil. As landlords, they are putting a restriction on the residents’ base themselves. They are placing a cash timing constraint by charging rent every first of the month which makes it complicated for the tenant who is likely to pay thirty (“30’) to fifty (“50”) percent of their salary to the landlords on that very day.
So, if a tenant will not be able to pay rent, what should they do? What present alternatives do they have? They have family and friends, family banks, relatives to ask for help, and the like. That might work but the truth is people are a bit embarrassed to do that and the capital base is limited inherently. We have banks and real banks. The truth of the matter is a lot of the tenants, especially in the workforce housing space are underbanked obligations. They have restricted access to the credit solutions and right capital that can stabilize their financial capability and means to shoulder rental charges on time.
Some have internet peer-to-peer banks they utilize. These are shelling out a lot of personalized lending solutions that can aid in solving this issue but a lot also possess main requirements that are more than what the clients basically need. They also have title lenders and payday. Many of the residents are utilizing payday and title loans in financing rent. These are giving their residents about two (2) to four (4) weeks to pay them back as well as charging them 3-700 percent APR’s.
To add, there are three (3) times as many payday lenders sitting in the rental communities as there are fast foods all over the United States. So they are the real capital source for their tenant base. And the worst part in terms of the residents utilizing them as a credit solution is that they are enhancing the long-term default risks on the tenant base. Basically, the traditional payday loan will be refinanced about eight (8) times. And once the borrower reached the last cycle, they are likely in default to both the payday lender and to utilize the landlord
Lastly, it is imperative to highlight the landlord. And as landlords, they offer credit to their client base but it is not an efficient credit. They usually have payment plans. This is applicable for tenants who are responsible and they hit a cash timing issue. A payment plan is destined for them because you do not want to lose them and in the same manner, the cost of eviction is a bit pricey.
But more predominant is the second form of financing that is also offered to appropriate tenants. They are just giving tenants a form of financing more commonly known as late fees. Verily, the late fees are pegged at five (5) to ten (10) percent of the rent for that specific cycle and an allowance of two (2) weeks to pay.
What happens if the defaulting tenant doesn’t pay? That is the time they file a case for eviction and charge them and if they do not pay then they put them on the street. Let us analyze the late fees for instance. Say, it is pegged at 10 percent they will give them about fifteen (15) days. That is about two hundred (200) percent APR and they are not giving the tenant any sufficient period in resolving the problem that they are experiencing.
Fair housing makes customized rental payment solutions a bit of a challenge. And the landlords are under-resourced to make this kind of credit. Landlords do not actually have an idea of what the credit risk of the residents is if there is a need. So there is a myth that should be dismissed and hear all the time from our landlord partners and people around. Some treat late fees as revenue. But the truth of the matter is, it is not. At consolation, it is a breakeven value proposition.
Landlords are bad at delivering credit. Landlords tend to look at their income statements and there is a lame line of thinking that late fees make landlords feel good. Some are running a portfolio that possesses a million dollars in yearly leave fees. The challenge in understanding the ins and outs of late fee revenue is understanding the underlying costs that drive and are linked with the collection effort. It is best recommended to go look at each portfolio and basically pull apart these costs to know if you are truly generating money. And it is almost 100 percent sure that you are not. Traditionally, there are five (5) different items sitting in three (3) different sections of an income statement. Bad debt, is easily tracked because it sits in revenue. They also have excess vacancy because of longer turnover for eviction as compared to a traditional turnover. It also sits on revenue but it is a bit complex to comprehend. Another thing is the collection team costs, eviction filing cost which is not apparent in property management expenditures. It is not a surprise that eviction costs us a lot. Turnover beyond the regular turnover that is hidden somewhere. In reality, they push it as a capital expenditure but are also hidden in maintenance as well as turnover costs. Verily, the worst part is that the resident is the largest loser in this equation. So even if they are not evicted, they will surely experience the stress of it, monthly. But the other hand, the ones that were evicted are damaging their state of confidence. This is because there are destroying their credit scores as well as their capability to look for housing in the future. A lot of families who are evicted are forced into transitional housing with friends or family hotels or homeless shelters. Children are ripped out of schools and the result is that there is an entire community loss. Parents who are the breadwinners of these families experience instability and uncertainty in terms of money. They are also parted from their job opportunities making it complicated for them to basically earn income to rent a home.
Some firms like Till presents a series of financial products that are particularly tailored for the multifamily and single-family rental realm. They have a central rental loan that is destined to address financial emergencies. It is a quarterly or semi-annual type of loan. They underwrite the tenant on their capability to pay. They are making sure that they have the ability to pay not only the lending company but also the landlord in the very near future. Firms like Till partner with landlords to deliver this type of scheme. This is another solution that the property managers have to give their tenants who are having a problem paying their regular monthly rental. These firms take the whole risk from the landlord and they will pay the same on time and direct. Each tenant’s balance that borrows from these firms goes to zero when they pay landlords. Also, they have a short-term rental loan that is designed to solve intra-month cash timing problems. As stated earlier, almost half of the income of tenants is spent on rental fees.
They have tailored as landlords a very uncompromising scheme allowing tenants to pay rent when they have an issue and they utilize sticks with late fees to oblige them to have payment on time. The short-term loans allow the firm to pay such landlords monthly on time and it gives the tenant the definitive flexibility over that months’ time to pay the firm back. The scheme to pay them back is dependent on the tenants. They can pay them back weekly or even daily; whatever enhances their ability to pay to lower their entire default and fees.
Truly indeed, affordability issues can be addressed with innovative financial solutions. Alternative credit particularly tailored for the rental industry can do well, and can financial stability of each tenant can be enhanced while enhancing the performance of your portfolio in the same manner.
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Multifamily Real Estate Investment: Apartment Complexes Eyeing to Enhance Pet-Friendliness
Pet shelters immediately emptied during the emergence of the pandemic. It was one of not so many heart-warming facets of the year 2020. A lot of those new-homed pets inevitably went into the apartment industry. Based on the Multifamily Pet Policies and Amenities Survey recently given by J Turner Research and PetScreening, about ¼ of the pet-owning commissioned respondents shown they obtained their pet during the pandemic. The rate pegged before increased to almost 40% when restricting to student-only commissioned respondents. The said survey, which commissioned the feedback of more than two thousand (2000) apartment residents, also stated that 20% of the respondent that presently does not own any pets, shown that they are eyeing to obtain one by the year 2020. That simply implies the increase in pet adoption will not be in plateau anytime soon.
The drift has placed the burden on apartment managers and operators to enhance their pet-friendliness guidelines to aid in capturing the ever-increasing amount of pet-owning tenants. It has also got their attention to come up with the most pet-friendly environment possible in their communities to aid in ensuring that pet-free tenants remain comfortable in their personal space.
On a macro context, a present American Pet Production Association National Pet Owners Survey stated that 2/3 of the United States households possess at least one pet, which showcases a solid increase from 56% in the year 1988, the year when the survey was first commissioned. We have visited some of the guidelines operators have enacted to aid in meeting the pet scenery.
Pet-based Leasing Incentives and Rescue Partnerships. Some Apartment complexes and property management was already a pet-friendly operator. A wide array of multifamily communities have pet parks. Some companies also partner with a local ASPCA. Some companies also incorporate pet-based incentives into their lease. Say, for example, tenants who sign a contract of the lease on a specific weekend may receive the freebie of no upfront pet charges. On the other hand, some apartment complexes also host pet-adoption events and showcase pets available as prospects and present tenants.
It is a known fact that pets are near and dear to everyone. A lot of us bring our pets to the corporate office during work. It is but normal to walk past someone’s workstation and have a baby gate up because their pups are with them. Some have also pup showers at their office when someone has a new pet dog. Some apartment operators come up with treats available for pets in community leasing offices. Some companies are making partnerships with local rescue organizations and one just hosted a Great Dane puppy activity at Austin Texas-based locations. A lot of those puppies got homes. Partnering with your local rescues to aid in giving pets in homes. With the information that nearly 70% of tenants share their homes with pets, apartment complexes should continue to address their request on having that companionship, specifically in this time of the pandemic.
Amenities, Socialization Channels, and Pet Perks. Based on surveys, the outpouring of new pets in the year 2020 and those who want to aid them is merely recognized Considering a lot of communities are armored with fancy pet spas, pet snack bars and upscale dog runs, it is an open story that a lot wanted to become part of the solution.
Most of the communities eradicated pet deposits and charges for adopted or forested pets. These complexes wanted to make sure tenants knew that they appreciated efforts in giving their pet a new home. They wanted to do everything they can to help. Some communities also partner with local shelters and make a cash donation for each contract signed. They continue to be very knowledgeable of their pet population. Some of them throw a pet-supply drive during the holidays. Some also engage in activities such as giving a pet-pack gift set for random acts of kindness.
There is also a so-called Pet Perks Program that focuses on pets like Instagram contests, and the like. Some are the best costumes and best pet attire, cutest pet, and many more. They also added pet-themed events that create lasting memories with the entire community and residents. Some also do holiday portraits with their pets and tenants with themed backgrounds.
Coming up with a Pet-responsible Involvement. As property managers and owners extend extra efforts to boost up their pet-friendliness, they do not want to disaffect another class or residents which are the non-pet owners. That simply means the policy of the property must not only be pet-friendly but also pet-responsible. As the population of pets increases at apartment complexes, it can sometimes be overwhelming. Property personnel has to efficiently manage all of the new pets and make sure they possess a proper record of each of them. On the other hand, some other complexes are lessening the breed and weight restrictions to enhance their amazing appeal, but it has to be a responsible, measured parameter to be efficient.
Based on a survey commissioned from J Turner Research and PetScreening, non-pet-owning residents are reasonably accepting of the animal population of a community. On a scale of one (1) to ten (10), with zero (0) being “not so adorable” and ten (10) being “very comfortable”, non-pet-owning tenants possess an average level of comfort pegged at 6.3 with having pets on the complex. But such residents are not without problems of contention.
The three (3) main complaints were off-leash pets pegged at 37%, barking pegged at 62%, and pet waste pegged at 84%. With pet waste as a precise worldwide issue, a lot of communities have stepped up their efforts in maintaining things clean. That includes teaming up with Doggie DNA providers that can track the waste back to a specific pet.
Several communities utilize it, and they love it since it decreases the accumulation of pet waste. With pet waste being the number one complaint, they want to ensure that communities and complexes are kept clean with waste stations placed throughout the property. The surge in the pet population is not a dream. And while a large population would agree that it is a hugely positive trend, it has shifted
And while the majority would consent it is a hugely positive trend, it has taken over the picture in the realm of the apartment industry. Property managers that take an inactive approach to the increasing arrival unquestionably will thrive to remain competitive with their competitors that strive to sharpen their levels of pet accountability and pet-friendliness.
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AI and the Real Estate Investment Industry
AI and the Real Estate Investment Industry
Over the last decade, the major ingredient for success in real estate investing is investing in it. Some have performed better than others. But the market was on a steady up and it is a known fact that the next decade will probably look a bit different. Guy Zipori, co-founder and CEO of Skyline AI will tackle the meeting point between real estate and artificial intelligence. They are coming from the technology industry and not from the real estate realm.
When talking about Artificial Intelligence, it is changing the way one works. It does also alter the way people do business and the way one discovers, unravel and vet new information. However, it is coupled with fears. A lot of individuals are speaking in terms of how Artificial Intelligence is coming for jobs. When you hear some news about driverless vehicles and other things makes people fear and it is a fact. Hollywood has done a tremendous job scaring us about the new technology. It turns out that a story on how Artificial Intelligence and AI will rule the whole wide world sells a bit more than the story on how AI aid is in enhancing our business revenue.
Remember Skynet from the Terminator? It has nothing to do with Skyline Artificial Intelligence. Just to be clear at the onset and the fears that individuals experience nowadays are pretty same to the fears that individuals felt way back in the industrial revolution. Hearing the gadgets that will come and take over their day jobs. But eventually, the industrial revolution comes up not just with new jobs but new opportunities and transformed economies for the best to reach greater heights. We all know that it is much easier to look at innovation when trying retrospectively and now it is time for a change. Real Estate is at an all-time high in terms of dry powder about 280 billion dollars that is sitting there un-deployed just this June, and Artificial Intelligence technology is very far. Computer nowadays can detect anomalies more efficiently than humans. Looking at the history of Artificial Intelligence, there is always one plot and that is machine versus human. Whether it is Deep Junior or the one who defeated Gary Kasparov in chess, or Watson beating trivia at Jeopardy.
But, the truth of the matter is, this is not how real-life application of Artificial Intelligence appears to be. Both should incorporate each other. Machines with men work in a variety of ways in a very powerful tandem. One good example is the CIA used Artificial Intelligence to capture Bin Laded, or forecasting flooding in India to save tons of lives. The combination of machine and human is formidable. If you take the efficiency out of both of them, maintaining the machines doing repetitive responsibilities, like data crunching, and leaving the humans for strategy and creativity and other tasks that we perform much better than machines. Artificial Intelligence is not replacing lawyers in court but is aiding them in reviewing contracts in pinpointing mistakes. It also helps doctors with x-ray scanning allowing them to analyze and identify cancer and diseases.
Do you have any idea how much time out of a 16-hour flight from Los Angeles to the Philippines is manually flown by a pilot? It is only eight (8) minutes. So, at this point in our lives, we trust Artificial Intelligence so much. But what about our investments? Imagine a 14-year old boy who is a geek at his age, selling superhero toys on Amazon. And imagine women managing billions of dollars of our pension funds who have less technology than the 14-year old kid. And this should be the scenario. Nowadays, computing power is much more powerful as compared to before. Computers that were once a “want” for only businesses owning supercomputers or seven-digit capitals are now in the hands of each people and more data is available. For instance. Planet Data, possessing twenty-one (21) satellites and they are capturing about 1.5 million photos every single day covering more than two hundred million square miles.
Advanced technology, data, and computing power give us the freedom to sequence the DNA of Real Estate investing. Say for example, instead of eyeing comparable assets but assessing vintage or location or other still features, now, we can utilize data such as the internet browsing data, where individuals are, looking for on the internet to better comprehend and analyze what assets are truly comparable.
Skyline AI is a commercial real estate management technology company. They work hand-in-hand with major commercial real estate players to come up with investment vehicles with the help of Artificial Intelligence. At this point, they are linked with more than one hundred thirty (130) different sources. They try to be hands-on on each piece of information that may affect the value of the real estate. They utilize artificial intelligence technology to obtain insights and acquire forecasts based on this data. And together with their real estate partners, it aids us in coming up with better real estate investment decisions and attaining excellent outputs as compared to the industry benchmarks.
Our technology is impacting the lifecycle, the entirety of it in terms of real estate investment. Whether it is looking for a deal giving freedom to find the best opportunities available no matter where they are hidden, or scrutinizing those opportunities a lot faster instead of weeks and with hyper precision.
Or within the period of ownership, realizing the scenario in our asset and constantly compare it to competing assets around us. For testing, they took a portfolio of one of the top real estate investors in New York and they allowed their technology to specify which asset would include if they support the firm. So they have two (2) portfolios. The one is maintained only by the human and the second one is a subset of this portfolio to which, only the asset that the technology would recommend to acquire. And the output was astounding. The technology together paired with the human brain 21.87% IRR as compared to just 15.6% IRR destined for the real estate investment firm alone. That is a whopping 40% higher in terms of returns. The Artificial Intelligence revolution has begun. DO you want to be part of this history?
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Three (3) Methods to curtail Risk in a Real Estate Portfolio
Three (3) Methods to curtail Risk in a Real Estate Portfolio
When you invest in single-family rental property, it can be an inert risky type of business. Granting that there are sufficient opportunities that can result in a substantial income, there are the same multiple parameters that might go the way we don’t want them to be. The good news is that there are tons of good ways to curtail your risk as well as the awful likelihood of ending up with a “below the profit” rental unit. By determining the main three (3) ways to lessen the risk in your real estate portfolio, you will drive your investments away from unwanted complications of investing in rental properties to lessen your risk:
- Invest in several locations. Among the evident effective ways to secure your real estate portfolio from economic downturns in any one market is to enhance and broaden outside of a sole location. Novel platforms and technologies have made it a lot convenient than ever to invest in properties nearly at any given point all over America. Further, if you incorporate a trusted property management company as same as real property management varied and expanded on your team, you could obtain rental homes within your proximity and even hundreds of miles away. As an output, you can be able to stretch the market-related risks and own investment properties in some of the country’s mainstream markets altogether.
- Purchase value. One efficient way to lessen risk in real estate investing is to purchase value. “Value investing” means looking for properties priced below market value. In the real estate market, this could be as straightforward as looking for below-market value properties. But as it occurs, there are some approaches in mulling overvalue. Investing in rental properties with lower than the prevalent market rate supplies a chance to escalate rents and maintain steady cash flows.
Another clever course of action would be to look for a property that, with minimal cost-efficient enhancements or more up-to-date type of services would improve the tenant appeal and the value of the property, or all at the same time. Definitively, monitoring a close eye on future development and purchasing in locations before housing prices start to appreciate can also be an effective way to always make certain that your investment can give you stable returns in the future.
- Obtain practical financing in your favor. Relative to financing, there are a lot of ways you can use to be able to aid in reducing risk. Shelling out a higher down payment can sometimes lessen your rate of interest and monthly mortgage payment. When you have your cash available, this is the chance to make the future costs low and secure your investment from real estate market fluctuations.
Another efficient consideration is to look for lenders who can supplement your advantageous and practical terms or say more creative financing options. Maintaining practical financing solutions can cause low-interest rates and higher cash flow shortly. Say, if you are eyeing to hold a property for less than a decade, you might take advantage of an Adjustable Rate Mortgage (“ARM”). ARMs are traditionally connected with a lower interest rate at the inception, which simply means improved cash form for you. Finally, if the rate of interest drops, you have to know whether it is a good moment to refinance a higher rate of interest.
Conclusion. By investing in broad markets, buying with an eye toward value, and ensuring your financing works for you, you can practically lessen a lot of the risks that are present with investing, regardless of what type of investment.
If you are looking to move to Dallas Texas and need an expert to help you find the right neighborhood, contact us today at ReByKayle
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e.
Four (4) Things to Comprehend Before Investing in Markets with Decreasing Populations
Four (4) Things to Comprehend Before Investing in Markets with Decreasing Populations
Small communities with decreasing populations are prevalent in every state. As an enthusiastic real estate investor, it is almost unavoidable that you will find, come across, experience, or be presented with chances to buy properties from excellent sellers in communities with a decreasing population. While some of these gigs may seem lucrative outside, there are serious factors that may require scant consideration before you invest with your money and time.
When investing in places with decreasing populations, you must practice the so-called “due diligence” to comprehend and understand the marketplace as a whole together with your exit approach. Listed are few facets to watch out for when purchasing properties in places with decreasing populations:
- Understand the marketplace in micro-approach. It is imperative to get a proper feel on the whole local market and have an idea where most locals live in connection with the specific property you are eyeing to buy. Investing in locations with a bigger population will traditionally enhance the odds you will be able to immediately sell and obtain income from your investment property. Contrariwise, selling in a location with a declining population may restrict the number of serious purchasers you may come across to find for this investment. If people are living in the city in droves, it is crucial to understand the reason why. One excellent way is to speak with a local real estate agent in this location with decreasing population to obtain an understanding of the number of days on the market the same properties are undergoing.
- Understand the mass exit that may be happening. There is a very sound reason for any significant decline of settlers in a community. Perhaps, there was a major factory that closed out of business or moved to other states. It can also be that a major company just redacted or laid off a significant amount of employees in said town. Worst case scenario, an entire industry left the community, like Detroit, or major contamination makes it unsafe for the people to live there. When eyeing a new community you are not familiar with, visit the local police station, convenience store, or local Chamber of Commerce to ask about the crime rates and the reason for the city’s transformation into a ghost town.
- Know the demands of both parties (buyer and seller). This is truly more than meets the eye. If this declining town’s population is diminishing, then the town is subjected to a state of a so-called “buyer’s market”. The reason being, there is a higher supply of sellers as compared to lower demand or low buyers. While it is true that you can buy a property with a significant discount from a motivated seller, you may experience complex time in renting or selling said property for the similar reasons the present seller is experiencing. It is a known fact that over time populations and cities expand and grow. If the specific property you are looking at is a location next to a growing city metro, it may be a logical forecast that in the next few years, the metro city will expand and grow into this presently declining market. It may show financial and business sense to purchase and hold properties within the so-called “way of progress”.
- Know your extraordinary advantage, if there is. What are you doing that you are good at? If the property seller you just bought from was experiencing a very complex time selling his property, what do you have in mind you think you will be able to resell a similar property any more easily? And for significantly higher returns? In simple terms, the answer to this question is that you require bringing something extraordinary the seller was lacking. You maybe can:
- Advertise and promote the property better so it is seen by more prospective clients.
- Clean and fix the property so it is more appealing to more prospective buyers.
- Sell together with owner financing; this eliminates the need for a purchaser to look for a bank and apply for a tedious process.
- Renting, which is enticing to any local lessees.
- Relocate the home physically to a new area.
- Doing some optional approach to enhance demand in the property/unit.
Conclusion: Before buying any unit in an area you are unfamiliar with, and obtain as much clarity as needed. Do not rush into purchasing or come out with impulse buying or even closing any real estate opportunities quickly. You have to always remember that as a real estate investor, you are in control and most sellers are eyeing your cash for then they eye for the property/home. Aim to take action every day and aid, local sellers. If a question emerges, you should not hesitate to ask seniors and seasoned specialists on this website www.theapartmentqueen.com
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Guide Inside the Mind of Blockchain Real Estate: A Definitive Guide
Guide Inside the Mind of Blockchain Real Estate: A Definitive Guide
Amidst disruption of the blockchain of financial services, as well as the extensive application all over industries. It is a bit complex to look for a segment that has not been touched by the technology. Cryptocurrencies have given a solid impact in terms of foreign exchange, remittances, and more importantly, payments. Initial Coin Offerings (“ICO”) have challenged stock investing, onset loans, and venture capital. And mind you, even the food industry has been touched by blockchain.
Blockchain is regarded as an ingenious and ground-breaking technology that is formed to change several different industries like real estate. It is recognized as a digitalized ledger that can decentralize access and enhances trust by being a sole unalterable source of information and truth. Often regarded wrongly as cryptocurrency, like bitcoin, blockchain possesses the capability to upend the real estate industry in a series of ways.
It is a known fact that real estate has been the sure-fire investment eyeing to build and look for a generation of good wealth for the long-term. We will help you steer this real estate class and supply you with an overview of blockchain in real estate, the use cases when purchasing, and financing real estate property, and whether an investor should eye in utilizing real estate tokenization.
Blockchain in real estate. Blockchain is always confused with cryptocurrencies such as bitcoin. In simpler terms, bitcoin is a cryptocurrency that uses blockchain as its technology to function. Blockchain gives the tracking of records and transactions all over the distributed network of computers. Blockchain enhances trust as it acts as a solid ledger that is distributed across a variety of computers that is not editable and unalterable and easy access to all parties. We have listed the specific process on how the same works:
- Request for a transaction record.
- Said request is broadcast to a node or a network of computers.
- With the use of algorithms, the nodes will take care of the request.
- The request, which can be a record, legal contract, or any type of currency and information is verified by the nodes.
- As soon as it is verified, the ledger is updated with a new block of data.
- This block of data is incorporated into the blockchain and is considered unalterable.
As you will notice, this method has several real estate applications like financing, legal contracts, buying and selling of a property, and the like. Blockchain can incorporate an added trust level in a real estate business process such as transactions, negotiations, and leasing. The utilization of technology and algorithms to legacy real estate processes will lessen a significant amount of speed and friction up the processes of selling, buying, leasing, and financing this class of asset.
Blockchain had made a mark on real estate and its disruption. Before, transacting with high-value assets like real estate exclusively through digital channels has not been the tradition. Real estate transactions involve engagements in person with several parties. The emergence of smart contracts in blockchain platforms now gives assets like real estate to be tokenized like bitcoin and eth.
Blockchain can “tokenize” real estate. You have to think of tokens as a store of value. In a commercial or residential real estate blockchain, tokens signify and embody an ownership stake in several classes like debt, equity, or cash flow. For instance, a 100-unit multifamily apartment is owned by say fifty (50) different investors contained on a blockchain, each of those investors could own a token to reflect their ownership in the asset equity.
In this case, the real estate blockchain platform is utilized to record, verify, and store these ownership tokens. The said tokens can be easily traded, liquidated, and sold. The true value of blockchain is not just efficiency and trust, but more importantly, liquidity.
The real estate industry is naturally an illiquid type of asset as the sale of the same is process-heavy, tedious, and long. If real estate tokenization is given using a blockchain, it becomes a lot easier to purchase or sell and trade your investment in any real estate asses with the use of a blockchain as a platform by which the transaction manifests and is verified. It also gives more freedom for real estate investing.
Again, that very same one hundred (100) unit apartment building stated above is worth twenty (20) million dollars. Instead of REIT or accredited or wealthy investors buying this, a lead investor purchases through a blockchain transaction. The lead investor divides the cost into twenty (20) million shares or tokens. These tokens can be sold to main real estate investors for a dollar each. This will give the lead investor access to a wide array of prospective clients and thereby creating a marketplace to buy and sell tokens of this specific asset.
At this point, real estate tokenization is presently emerging. One good example is the Saint Regis Aspen Resort, which utilized “Aspen Coin” tokens to garner eighteen (18) million dollars.
Blockchain technology is altering the real estate realm. This type of platform technology can be applied to several aspects of the real estate business. We have listed some of the aspects so that everyone will have an idea:
- Smart Contract. Project Manager of JLL, United Kingdom Nick Clare, states that blockchain can audit, authenticate and draft contracts in real-time, all over the globe and without intervention from any individuals or the so-called middle-man, have instructions emanated in the transactions for the payment to be taken as long as instructions are fulfilled. Thereby supplying transparency to all parties and lessening the probability of disputes in payment. Smart real estate contracts give blockchain freedom that will not only speed up the leasing process and save a significant amount of money on costs but can also enhance due diligence. Blockchain would have the capability to verify identities and incomes and eradicate the probability of fraud.
- Intermediaries are eradicated in the picture. Lawyers, real estate brokers, and banks have long been part of the real estate ecosystem. But blockchain may surely shift in different participation and tasking in a transaction. Novel platforms can assume functions like payments, listings, and documentation about legal matters. Taking the intermediaries out of the picture will result in the main parties getting their much-deserved money as they save on fees, charges, and commissions by these so-called intermediaries. This will also streamline the process faster as the thread between these intermediaries gets cut out.
- Marketplaces and platforms. Real estate technology has originally focused on listing as well as linking both parties. But, blockchain gives novel methods to trade real estate. They have the power to enable trading platforms and internet marketplaces to aid real estate transactions in their entirety. Some real estate companies have developed a platform that utilizes blockchain technology to facilitate rental property and real estate transactions. By tokenizing a real property, assets can be traded akin to stocks and all transactions can be performed online. These firms give freedom for the sellers to tokenize their assets, fundamentally handling them like a stock sale, and liquidating such assets with a token sale with the use of the platform. The garnered tokens can be traded for fiat currency, with purchasers owning a percentage of such property.
- Transactions. The comprehensive real estate transaction process can be executed on the blockchain. The submission of an offer, verification, and acceptance of such an offer, the process of due diligence, financing scheme, and closing can all be codified inside a digital ledger. The utilization of blockchain for real estate transactions possesses significant implications destined for jobs as agents and brokers.
- Financing. Credit checks, identity and income, debt-to-income ratio, and a lot more can be held on and confirmed through blockchain. The mortgage financing method is fraught with frustration and friction. If all your crucial and pertinent documents are stored on the blockchain, you need not look for it to obtain dozens of different papers from your broker or bank.
The transparency related to a decentralized network can also lessen costs relative to real estate dealings. Beyond the savings made by eradicating intermediaries, commissions, and professional fees, there are other costs like registration fees, taxes, inspection costs, and charges relative to real estate. These costs change depending on the place that has jurisdiction. Such as intermediaries, can be lessened or eradicated from the transaction as platforms automate these procedures and make them part of the system.
Worldwide real estate is worth a lot of money but is dominated by rich players and huge corporations. With the use of blockchain technology, more individuals will probably have the freedom to access the market where transactions are showcased transparent, equitable, and secured. Real Estate transactions may become person-to-person (“p2p”) transactions with blockchain-powered platforms performing the majority of the work.
- Land Titles and Deeds. Titles are commonly maintained offline, but the technology of blockchain can verify and store these real estate deeds and contracts, documents, and the like Imagine if you can be able to log into blockchain land registry to verify the ownership of the title of any parcel of land in your area.
- Leasing. Specify contract signing and verification can be facilitated and held on a blockchain. Whether it is the tenant’s income verification, other references, or employer checks, this can all be served and held on a digital ledger.
- Liquidity. Real estate has been regarded as an illiquid asset because it takes time for the entire process to conclude. This is not the story with cryptocurrencies and tokens because, in theory, they can be readily traded with fiat currencies using exchanges. But, as tokens, real estate can be traded any time of the day. A seller does not have to wait for a purchaser who will buy the entire property to be able to obtain some value out of it.
If an asset becomes tokenized to a thousand investors instead of ten, you can increase the liquidity automatically of that said investment. If purchasers and sellers of tokens are a lot easily able to sell and purchase a share in a specific asset. Then, it will follow that liquidity issues and exit strategies drop significantly.
- Decentralization. Blockchain pushes security and trust as decentralized technology. Information embedded on the blockchain is accessible to all parties included in the network. This will characterize the data as immutable and transparent. One only has to reminisce the housing bubble crash in 2008 to witness how lack of transparency and greed on the part of institutions can have disastrous consequences. A decentralized exchange has trust embedded inside. Since information can be verifiable to people, purchasers and sellers can have more confidence in executing transactions.
- Fractional Ownership. A real estate blockchain can be utilized s a sole source of truth to verify ownership of assets. This also comprises fractional ownership with the use of a token, and all the owners of those tokens will be available to the public.
By heeding to fractional ownership, blockchain also lessens the hedge to real estate investing. Generally, investments would need significant money upfront to be able to obtain property. Optionally, real estate investors could also pool their money to obtain bigger tokenized properties. With the use of blockchain, investors would simply have to access a trading app to purchase and sell even part of it. To add, fractional ownership would also aid them to stay away from property management like leasing and maintenance.
There is a new level of future in real estate with blockchain. It has significant implications for the realm of real estate. It could eradicate the need for more parties involved in a transaction, enhance trust among parties, act as a record keeper, expedite all leases, contracts, and transactions. Enhance liquidity, lessening fraud, and unwanted costs and charges. This is a main disruption, but much of this innovation is theoretical.
Even though some real-world examples of blockchain are prominent, we are this close to executing on a full-blown promise of blockchain in the realm of real estate. Real estate investors should consider the parameters and begin thinking about schemes to expose themselves to these upcoming technological advancements in the realm of real estate.
Blockchain technology has made an impact in the real estate industry in an array of ways, such as offering new means for sellers and purchasers to link with one another. It can be utilized to cut intermediaries out of the real estate transaction procedure, hence, lessening the costs. This technology will help in its codification of fractional ownership of the real estate.
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Wealth and Legacy’s New Packaging: How women are Recognizing wealth Giving and Legacy Planning in a New Dimension
Wealth and Legacy’s New Packaging: How women are Recognizing wealth Giving and Legacy Planning in a New Dimension
The emerging economic thump of women is probably one of the most important economic shifts for the last ten (10) years or so. Not only women are managing and garnering a rising amount of income, but they are also steering the economy itself by leading major corporations and instrumental economic players like the International Monetary Fund and the United States Federal Reserve.
To add, touching the worldwide economy, women are beginning to run novel businesses at a fast pace. In the United States alone, women were the majority owners of almost ten (10) a million businesses of all scales with more than eight and a half million employees about nine (9) years ago, based on a 2016 report by the Small Business Administration (“SBA”). These businesses obtained about One and a half-trillion dollars in sales. Another 2.5 million businesses were equally own by people of both genders, had 6.5 million employees, and recorded for another whopping 1.1 trillion dollars in terms of sales.
Paired with accumulated effects of fifty (50) years of increasing female contribution in the work industry, this translate to solid financial control and supremacy:
All over the globe, women held thirty (30) % of entire wealth controlled by families or individuals in 2015, up by a third in 2010; almost half had enhanced their wealth as independent entrepreneurs.
In the year 2020, women are anticipated to manage about seventy-two (72) trillion dollars, a third of all wealth, and up from 51 trillion dollars about six (6) years ago.
In this regard, the Economist Intelligence Unit (EIU) conducted a study of high net worth individuals with a million dollars or more in assets, sponsored by RBC Wealth Management. The survey catered to about 1,051 individuals; 549 are men and 502 are women in the United Kingdom, the United States, Asia, Canada, China Singapore, and Hong Kong. The results are insights and key findings in terms of a very wide and growing set of women who are essentially rethinking the meaning of wealth and giving and who are paving their legacies that will crucially affect the globe and the intergenerational responsibility that the next one will inherit.
Samples and Exhibits Utilized in the Survey Report
For this type of study, the EIU commissioned 1,051 people possessing 1 million dollar or more investable assets, specified not including their personal property and assets like collectibles, consumer durable, and primary residence. The western market comprises 79% of the sample. The remainder comprises Asia.
The generational breakdown was as follows:
- Women are on top of their wealth creation. One study emphasizes the increasingly prominent responsibility women are taking charge in the high net-worth class and suggests their influence is likely to continue to rise considering the number of women in the young age bracket who see an excellent chance to gain wealth.
Even though there are still a lot of high net-worth men as compared to women, the proportion of their wealth; women to men in the study, those possessing 5million dollars or more in assets is roughly similar. The ratio is 27% for men and 22% for women.
Millennial women which are born from 1981-2000 are going in the highest circles of asset ownership faster than older women. On the other hand, about 1/5 of Baby Boomer women that are born from 1946-1964 possess $5million or more in assets, while millennials come in at 1/3.
It is noteworthy that the share of men who think they had a lot of opportunities to obtain wealth than older people, 83% is only a bit higher as compared to the share of women saying the similar thing, pegged at 78%. Indeed, about 1/5 of women with 5 million dollars or more in investable assets are founders/owners of a business, entrepreneur, or self-employed, pegged around 16% of HNW women with lower investable assets. That is interrelated with the study that younger women more often than older women say they have acquired their wealth through business instead of inheritance. In comparison, more than half of baby boomer women stated that they inherited money while a little over 1/3 stated that they acquire their wealth through business.
Half of the millennial women created their wealth.
Exhibit 1. Opportunities to acquire wealth. A percentage of each group who chose each selection, women’s sense of where the opportunities lie for the generation of wealth differs in terms of age as well. While it is true that Baby boomer women specify opportunities and resources to succeed in the workplace as the secret to the acquisition of wealth, younger women pay close attention to resources that aid them in initializing successful business.
The topography of women’s wealth is so broad in the countries commissioned and varies in terms of levels of wealth. The latter, on the other hand, varies by geography, with the United States garnering the biggest share of women with between One million and five million dollars in investable assets.
Exhibit 2. Wealth Distribution.
- A lot of individuals are taking control of legacy and wealth decisions. As more and younger women generate more wealth, they are somehow asserting themselves as strong decision-makers over the entire realm of finance-related quandaries. One specific notable finding is that less than half of the boomer women say they are the household’s main caller of the shots in terms of financial planning. However, for Millennials, the figure increases to more than 1/3.
Meanwhile, the study/survey unraveled considerable variation on the wealth level. For every problem covered, from estate planning, wills, and succession, financial planning to charitable giving, women who possess more than $5 million in terms of investable assets. The difference is broad when it comes to financial planning, where about a third of these women report they are the main decision-maker, as compared with just half of HNW women. Given the share of millennial women possessing $5 million or more in investable assets, it is evident that youth is one primary reason for this finding.
Women also differ as to whom they depend on for advice in terms of wealth planning. More than half of HNW women say their partner or spouse has the most influence, while a little below half of the richest women approve. Younger individuals, though they just married as older people, will less likely say their spouse had solid influence in terms of acquiring their wealth as compared to baby boomers. So that is 41% vs 54%. Almost half of the men, in contrast, state their partner or spouse has the most influence in terms of their decision-making.
Also, children have become more essential influencers as women age: at about eleven (11) percent composing Boomers cited them, as compared to seven (7) percent of Millennials. By contrast, friends and peers, lessened in importance: about ten (10) percent of older women cited them. On the other hand, 10 percent of older women while 26% of younger women stated as well. The theory is that Boomers’ children are more likely to be adults.
Even though half of the Boomer women regard planners or financial advisors as vital influencers, as compared with almost 37% of Millennials, the more wealth women gather, the fewer influence advisors wield, the study proposes. Almost half of HNW women state they depend on a financial planner or advisor as compared with 42% of women possessing at least $5 million in investable properties. Meanwhile, 44% of men say the same. About more than a third of Millennial women are mainly decision-makers for financial planning.
Who is making decisions? Share of each class who are the main decision-maker in each category.
- Younger women defining wealth on a different level. Considering all the differences in HNWI’s sources of wealth and how they come up with decisions. What was noteworthy to emphasize is that few differences in genders are prevalent in how they describe and give meaning to life goals or wealth at a worldwide level; though there are notable differences in terms of age. The majority of the time, HNWIs regard wealth as independence and financial security, selected by 62%, or entire financial asset value, selected by more than half. The only significant difference between male and female HNWI is in how they describe wealth is that almost 40% of women include preparedness for the future in their characterization, as compared to just 30% of men. It is also outstanding that female and male business owners are hitting equal in terms of how often they include the entire value of their business, the economic implication of their business in the communities where they are situated and operating as well as the ability to come up with change using corporate giving as part and parcel of how they describe wealth.
As on a lot of other issues, senior HNWIs possess a different description of wealth as compared to younger individuals. As on a lot of other issues, older HNWIs have a different description of wealth as compared to younger ones, with about 67% of Boomer women, for example, paying close attention to financial security compared with just a little bit half of millennial women. Having said that, it is noteworthy that across all classes of age groups HNW men and women share the same life objectives, most often enhancing their physical and mental well-being, strengthening their relationship with relatives and families, enhancing their wealth, and paving a path to wealth for their children and the future. They also experience similar challenges to meeting those goals predict tomorrow, as stated by half of the men and about 48% of women. They may, in huge part be since men and women in the study possess a lot of background similarities. Nearly about equal in terms of percentage are living as married, or married; 85% of men and 82% of women, respectively. These individuals are business owners or previous business owners, business consultants, professionals, and executives.
Exhibit 4: The true meaning of “wealth”. Equal shares of women and men, about 63%, also anticipate to come up with some kind of significant impact on the world with their wealth as compared to previous generations. But, some significant differences are outward between male and female HNWIs in terms of the responsibility and direction of society to contribute to it. Say, 61% of Boomer women agree society has turned to be a lot inclusive while 61% of men and 72% of younger women still say the same.
About two-thirds of women believe they possess more occasion to discuss societal issues using impact investing, as compared with 56% of men. Among selected business owners, 72% of the women agree in terms of the importance of their business in coming up with a positive charitable community impact, and about 71%, the positive economic impact. The percentage for men are 65 and 67, respectively.
A lot of millennial women than Boomers anticipate the following generation will gain more wealth than they have, with men overall landing in the middle, pegged at 57%. The majority of women of all ages, 92% state they have confidence that the next generation will possess opportunities at a higher rate to own a business. But, although a majority of HNWIs who own and operate business would like to pass them on to their heirs, they are one with facing a serious challenge in persuading their heirs to take over an already founded business instead of working 8-5 in the corporate world or initializing their own business.
- Younger women giving back through spending, investing, and a lot more. Very few HNW women and men, pegged at 4% say they do not have sufficient wealth to give to charity at this point. Among the majority that is sharing, their main preferences and influences are the same but they vary among generations. And there is even a wider array in How HNW people coming from different generations decide where to share and how they regard giving; all factors to consider to legacy and wealth planning as well as the charitable giving itself.
It is also noteworthy that women, more often than the other gender, state that the ability to come up with the greatest impact and specifically measure such impact influences they are giving. 29% vs 26 pay attention to the greatest impact while 17% vs. 11% pay close attention to measurement. Also, significant differences in generations manifest. 44% of HNW Boomer women state that they do not mind the results as compared with 20% of the Millennials and 27% of men. This may emulate a generational gap in how hand-son individuals chose to be with their charitable giving. Older women barely depend on social media or even traditional media commentary/coverage to assess their sharing as compared to younger men or women. But, anecdotal and formal feedback from the recognition and recipient from family are among the top indicators that all three classes; Millennial women and men, Boomer utilize to assess the impact of their giving. There are also generational gaps in how they assess where to give. Millennials often say the ability to come up with the greatest impact about a third, while both Boomer and men prioritize the significance and bearing of the recipient to themselves. On the other hand, tax benefits appear far lower on the list of the millennials priority list at about 19% and are cited by more Boomer women and men at about 29% and 25%, respectively.
Relative to how they give, younger women at about 39% more often align their investments with giving goals. For example, using impact investing, then either adult women pegged at 24% or men at 26%. Younger women also see impact investing as a form of charity, with about 70% consenting; as compared with 52% of Boomer women and 47% of men.
The same pattern shows up among women business owners. In its entirety, they are more concerned than men about the non-financial impact of their wealth. The more often say it is imperative to them to secure the livelihood of their employees as well as their relatives and families. And that their business possesses a charitable impact on the communities by which it moves, pegged at 72% vs. 65%.
- Women describing legacy coupled with social attention. If millennials will pave the future, then increasing the confidence of women in their capability to preserve and accumulate wealth is pointing them on a more idealistic path by which they prioritize charitable giving, integrate, and align their legacy goals coupled with their investments. For example, using impact investing, and create social obligations bigger attention of their legacy planning.
Millennial women agree they have a larger opportunity to discuss social issues that personally entice them: 83% compared at 65% of older women and 66% of men. They are more often as older women agree they possess an obligation to transfer wealth to the next generation which is 65% vs. 55%. And the majority of them more often say they possess a personal responsibility in utilizing their wealth to benefit the wider community, 65% compared with 52% of older women. Also, they have the chance to discuss societal issues particularly through investing, pegged at 76% compared with 59%.
In that regard, it is oddly surprising that Millennials as compared to Boomers specify their legacy goals from their parents’ goals: 81% of millennial men and 69% of women state they describe their legacy separately from their parents as compared with 58% of Both Boomer women and men.
Another noteworthy difference in gender: Women will often say societal causes have become a lot essential as compared to accumulation of wealth in defining a legacy, with 62% of women agreeing as compared with 53% of men. This implies that as women garner bigger assets, they may turn more capital toward social projects and charitable giving, even at the cost of abundant wealth in the future. Although engagement of younger women as regards impact investing may blunt any reduction in the accumulation of wealth.
When HNWIs assess and plan their legacies, noticeable gender differences arise. While both genders, by huge majorities, regard wealth as the major enabler of their legacy, the amount becomes overwhelming for Millennial men, pegged at 91%, far ahead of millennial women. In the same vein, when asked if they have more opportunity to create a legacy other than previous generations. 75% of all women, old and young, and Boomer men agree, but for Millennial men, the figure increases to 83%. Also, women say by more than 2/3, that they are acting now with their legacy in mind. But here again, millennial men posted an especially high figure of 79%. This may imply that men are still more likely even as compared to younger women to witness their careers and wealth-building activities as making a lasting legacy.
But, women increasingly are moving in their direction: 85% of Millennial women agree that it is imperative to come up with a foundation to describe their legacy for their family and future generations as well, as compared with ¾ of Boomer Women. But, younger and older women agree that it is important to bring into line their wealth plans they want to leave, pegged at 83% and 85%, respectively. Overpoweringly, they also agree that they are in control in terms of their legacy.
Lastly, the survey revealed some significant differences between how individuals plan to steer their legacy. 41% of Boomer women anticipate giving their wealth to their children, fare more than the Millennial women pegged at 15%. While for all men, leaving wealth to their children and spouse are pegged at 35% to spouses and 31% to children. Both genders are expected to come up with modest provisions destined for extended families. Older women expect to share a portion to charitable targets like the community in which they do business, endowments, or foundations, or employees.
Conclusion. Women not only control and won larger wealth as compared before, but they are also changing the direction of wealth management and the goals of wealth creation. Meanwhile, HNW millennial women, specifically, are taking new heights and paths. To add, while a lot of women still feel some of the usual gender constraints, specifically as decision-makers, the survey proposes that the younger they are, the more wealth they can obtain, the less these apply. The scenario that emulates is of high net-worth women who regularly begin and operate the business and who direct their wealth building. The more assets they acquire, the more they control and direct their legacy and wealth planning themselves. In turn, their influence will be left.
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[1] Percentage of women in each category in each country or region
The Lifting of Mask in Texas Creates Solid Reactions from Lone Star Apartment Operators
The Lifting of Mask in Texas Creates Solid Reactions from Lone Star Apartment Operators
While it is true that the status quo is prevailing, some employees and companies are happy about the decision of the government. The pronouncement made by Texas Governor Greg Abbott on February 2 in terms of lifting the requirement of the state that its citizens wear masks in public has made the apartment operators split. They are mulling over as to whether to alter their protocols regarding the wearing of masks of residents and employees.
Property management specialists’ reactions have ranged from “relief and gratitude” to “wild cheers in the corporate office from employees. While others are still afraid of the consequences in terms of health that could be caused by the decision of the governor. Those trying to adjust will place them immediately or within the succeeding week. Others are just waiting for the next move while they are recovering from the pandemic brought about by the COVID-19.
The President of GWR Management, a Houston-based firm, Gina Y. Erwin stated that they transmitted an email today to their personnel telling them that they will no longer require masks of employees. They can remove the signs from the walls and doors already. But that does not discount the idea that one can still wear masks if they feel more comfortable by doing so. The majority of them are excited. However, we cannot deny the fact that there are some in the apartment industry who express their concerns and will continue wearing masks. But in its entirety, the majority are happy to showcase their smiles once more.
Before all this, GWR mandated masks at each property. Some property owners require their staff to wear masks at all times during work and while inside occupied units. As long as people can maintain social distancing of six feet while outside, they were not required to wear a mask. Some apartments require all residents, customers, and guests to wear masks before entering the vicinity and the leasing offices. Signs are posted at each entry point and hallways.
For the common areas inside complexes, some apartment management posted signs that fundamentally put the burden on residents for taking measures about the pandemic. That includes wearing face masks, social distancing and only allowing a specified amount of people to go inside, depending on the capacity. Meanwhile, outside common areas and pools had similar measures as far as distancing and capacity is a concern, but there is no requirement for wearing a mask.
Apartment complexes, as well as other businesses, can specify what policies about wearing masks and the utilization of amenities are best for the employees and tenants. Some apartment owners and managers in Texas are sharing best practices and other measures to aid in lessening the spread of the virus.
Effective March 10, all amenity spaces will resume basic occupancy requirements for each unit. Face shields and masks will remain a mandatory requirement for indoor amenity spaces as well as elevators. Wearing masks is consistent with the advice of health specialists and protocols from the United States Centers for Disease Control and Prevention.
While there are many people excited about the changes, you have to be reminded that not all are comfortable with others in close distance, not wearing protective face shields. It is strongly recommended that face masks and shields should be worn throughout the community and follow the protocol on social distancing. It is being taken positively by the majority of the tenants in the whole of Texas.
Meanwhile, other apartment companies are sorting through rental assistance programs as well as storm recovery. It simply means that they have not given this new mask protocol a lot of thinking yet. Some of them feel that the said confirmation is moving towards the proper direction in terms of recovering from this pandemic. Maintenance personnel who are still interacting with tenants going into homes, as well as office personal conversing with tenants, should still wear a mask. It is a case-to-case basis, for that matter. But after all, it is a given to have some respect for the wishes of others who still opt to wear masks and reciprocate around them.
For some of the apartment managers, some believed that residents would be a lot satisfied with the decision and it would make the experience of customer service a lot better. At the end of the day, we cannot deny the fact that there will be a divided opinion regarding this topic in the coming weeks.
The optional virtual tour. A leading company stated that the national developer and manager of Class A multifamily properties are having a conservative approach and is needing employees to wear face masks when inside the office working with each other and tenants or when engaging in a property tour.
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Understanding the Roth IRA 5-Year Rule: Basics and Beyond
Understanding the Roth IRA 5-Year Rule: Basics and Beyond
5-Year Rule Trilogy
One of the most sought-after benefits of the Roth IRA is your capability, about other retirement accounts, to withdraw funds anytime at your desired rate. But in terms of tax-advantaged vehicles, the Internal Revenue Services (“IRS”) will always make anything complicated. While it is true that direct contribution to a Roth can be withdrawn at your desired time, without taxes, withdrawal of other class are more difficult to withdraw without restrictions. Access to the latter is subjected to a waiting period, which is commonly known as the five-year rule.
The five-year rule is applicable in 3 scenarios through account earnings, conversion of the traditional IRA to Roth, and inheriting a Roth IRA. Unless you are eligible for an exception, income taxes and penalties will be applied to you, in violation of the said rule. Roth IRA gives meaningful tax benefits. The money appreciates but tax-free within the account. You do not have to pay income taxes when you withdraw it. But just like any tax benefit tool, there are considerations and restrictions. If you are eyeing to maintain your distributions clear and free of taxes you need to know the important facts.
Important facts:
While relatively less limiting as compared to other accounts, Roth IRA’s do impose a waiting period on some types of withdrawals known as the five-year rule.
The Trilogy: The five-year rule is applicable in three (3) scenarios: (1) If you withdraw account earnings; (2) If you convert the traditional IRA to Roth; and (3) If a beneficiary inherits a Roth IRA.
Failure to abide by the said rule can result in payment of income taxes on earnings withdrawals on top of a ten (10) percent penalty. You need to dig deeper into the nitty-gritty of the five-year trilogy to make sure that withdrawals from your Roth do not activate tax penalties pegged at 10% of the amount is withdrawn and income taxes.
Fundamental parameters in the withdrawal of Roth IRA
Let us take a closer look at Roth. Roth IRA’s are individual retirement accounts that you fund with the use of after-tax dollars. This simply means that you will not obtain tax deductions for contributions when you make them. You will not also incur taxes on distributions when you take them, which is the opposite of the traditional IRA’s.
Roths are funded with “after-tax contributions” which simply means that you will have no tax deduction for performing it on time, and that explains the rationale that no tax is due on the money the moment you withdraw it. Before mulling over the five-year rules, we listed a quick review of the Roth regulations in terms of distributions to which IRS generally means withdrawal:
- You can always withdraw contributions from a Roth IRA with no penalty on top at any age or at any given time.
- When you reach the age of 59.5, you can withdraw both earnings and contributions with no penalty, provided, your Roth IRA has been open for a minimum of five (5) taxable years.
“Tax years” or sometimes regarded as taxable years, relative to five-year rules simply means that the reckoning point is January 1 of the taxable year when the initial contribution was executed. For instance, a Roth IRA contribution for 2020, can be up to July 15, 2021, but the reckoning point begins on January 01, 2020. In this scenario, you could start withdrawing funds without penalty on January 01, 2025, and not July 15, 2025.
A “qualified contribution” is regarded as a withdrawal that is penalty and tax-free.
On the other hand, a “non-qualified distribution” is a type of withdrawal that incurs penalties and taxes. Failing to differentiate the difference between the two types of withdrawal earnings is one of the regular shortcomings of taxpayers.
In totality, if you get a distribution from your Roth IRA earnings before the five-year cutoff, and before reaching the age of 59.5, you are bound to pay income tax and penalty pegged at 10% of your total withdrawn earnings. For regular account owners, the five-year rule is only applicable to funds converted from a traditional IRA and of course, to Roth IRA earnings.
Five-Year rule for Roth IRA Withdrawals
The first of the Five-year rule trilogy is utilized to know if the earnings or interest savings from your Roth IRA are tax-free. To avail of a tax-free withdrawal, you should take earnings on or after you reach the age of 59.5. You can also avail of the tax-free benefit when you withdraw the earnings five years after the first contribution to any Roth IRA you possess.
Please be reminded that for multiple account owners, the reckoning point of the five-year clock begins with your initial contribution to “any” Roth IRA. It is not the one you are withdrawing funds from. As soon as you satisfy the requirement of five years, you are good to go. Any succeeding Roth IRA is automatically held for five (5) years. Rollovers from one Roth IRA to another do not mean that the five-year prescriptive period should be reset.
Five-Year Rule for Roth IRA Conversions
The Next of the five-year trilogy specifies whether the distribution of principal from the conversion of traditional 401k or IRA to a Roth IRA is free from any penalty. You have to realize that you are supposed to pay taxes when you convert from the pre-tax funded account going to Roth. In terms of contributions, the five-year rule for Roth conversions utilizes tax years. However, the conversion must emanate by December 31 of the calendar year.
For example, if you converted your traditional IRA to Roth IRA in November 2020, your five-year period reckons on January 01, 2020. However, if you convert it in February 2021, the five-year period starts on January 01, 2021. Do not be confused with the extra months’ allowance you have to shell out a direct contribution to your Roth.
Each conversion possesses its five-year period. Say, if you converted your traditional IRA to Roth IRA in 2019, the five-year period for assets that were converted will reckon in January 2019. In the same vein, if you convert other traditional IRA assets to a Roth in 2020, the five-year period starts on January 01, 2020. It is a bit confusing but to know whether you are affected by this rule, you need to know whether the funds you now want to obtain comprise converted assets. If the answer is yes, you have to determine what year those conversions were made.
Try to remember this principle in mind: IRS ordering rules state that the oldest conversion should be taken out first. In terms of the order of withdrawals for both IRA’s are contributions, then conversions, and the last is earnings.
If your age is below 59.5 and takes a distribution within five years from conversion, you will shell out a 10% penalty. But this is with the exception:
- You utilize the money up to $10,000 to purchase your first property
- You utilize your money destined for advanced education
- You utilize the money to pay for expenses about adoption or birth
- You died or became disabled
- You utilize the money for medical reimbursements and health insurance premiums while not employed.
- You take distributions in significantly equal installments.
Five-Year Rule for Roth IRA Beneficiaries
It is given that Death is also an exception. When a Roth IRA owner passes, beneficiaries who inherit their account can avail of distribution without having to pay penalties regardless of whether the distributions are earnings or principal.
But, death does not entirely get you off the radar in terms of the five-year rule. If a beneficiary would take a distribution from a Roth IRA that is inherited and was not held for five (5) years, it will automatically be subjected to tax. But with the help of the withdrawal order stated earlier, you may still end up not having to pay any tax because earnings are placed at the last part of the IRA to be distributed.
Stretch IRA. Beneficiaries of Roth IRA have to take required minimum distributions (RMDs) from the IRA until they are regarded as original account owners. They have several alternatives as to the schedules. Before, non-spouses inheriting retirement accounts could spread out disbursements over their existence. This is more commonly known as the “Stretch IRA”. But after the enactment of the SECURE Act of 2019, this provision was eradicated and repealed. The new rules say that it will need a full payout coming from the inherited IRA within ten (10) years from the death of the decedent which is the original account holder. But, this is only applicable to heirs of the decedent-account holders who died in 2020 onwards.
With the five-year prescriptive period, one has the flexibility of taking a lump sum each year or distribution at any time before December 31. Also, be cautious that if you fail to entirely drain the IRA by December 31 of that fifth and last year, you will incur a penalty of 50% of the amount left in your account.
Roth IRA Beneficiaries under the recently enacted SECURE Act
SECURE, or more widely known as Setting Every Community Up for Retirement Enhancement Act of 2019 has altered the key regulations destined for IRA beneficiaries. Before, anyone who inherited a Roth IRA could select to take distributions stretch during the entire existence. This was part of the provision in “Stretch IRA”. But, under the newly enacted law, only a spouse has the permission to stretch the Roth IRA throughout his/her existence. Any other heirs/beneficiaries like a child must be able to close the said account within ten (10) years.
There is a third 5-year rule that applies to Roth IRA Beneficiaries. Specified Beneficiaries have the choice of stretching the statutorily required minimum distributions (RMDs) inherited from Roth IRAs. The option to stretch is either via the five-year rule or over the life expectancy of the same. Hence, under the newly enacted law, this is only applicable to beneficiaries who are spouses. The rest of the beneficiaries must cash out within a decade.
In some rare scenarios, the documents of the Roth IRA may determine the five-year rule. If you elect the five-year option, the inherited Roth IRA proceeds must be distributed on or before December 31 of the fifth year following the year of the original owner or decedent’s death. Within the five-year prescriptive period, one has the entire flexibility in terms of distributions. You can obtain your lump sum or make a withdrawal every year. You just need to make sure that the Roth IRA is all withdrawn by or before the end of the five years and you will be incurred a 50% penalty on the amount not withdrawn in the year.
If the account has not been opened that long, you can try a few alternatives:
- Disclaim the assets that are inherited. You can opt not to accept the funds if you do not need the money or do not want to face tax consequences.
- Perform a lump sum withdrawal. You will have to pay taxes on the earnings of the account all at one time. However, this might be more effective if you are placed in a low bracket.
- Withdraw your money yearly about your life expectancy. This alternative is available to minor children of the decedent as well as the surviving spouse. This is also applicable for chronically ill individuals, persons with a disability, and beneficiaries who are less than ten (10) years younger than the decedent; a sibling is a good example.
- Roll the money inherited into your own Roth IRA or open a new Roth IRA Account. This is only applicable to surviving spouses.
- Defer withdrawals. You can just leave the money in the account until the five-year mark has lapsed.
Bottom line. Roth IRA’s can be an effective source of tax-free income, but it is imperative to comprehend the nuances of the withdrawal parameters and regulations specifically the five-year rule. Breaking the rule can be pricey, especially if your age is below 59/5. So, your approach should be planned carefully. Otherwise, you can end up paying taxes and penalties.
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Why Risk Is the Most Inaccurately Assessed Factor When Investing
Why Risk Is the Most Inaccurately Assessed Factor When Investing
Put ten (10) investors in a room, and they will come up with tons of definitions of real estate, not investment risk. Not only that, they will have a lot of ways to assess that risk. Another thing, there is also a risk about which more seasoned real estate investors are cautious; the risk of letting good opportunities pass because of either lack of data and information or sudden changes in the market they miscalculated. But hey, as if we can time the market, correct?
It is really hard to go from zero to a real estate hero and generate your first buck. At the onset around 1975 until Labor Day of 1979, there was little to no risk in purchasing residential income property. Then the following month, the tables have turned and interest rates went as high as the sky. Imagine a 16.5% FHA rate and a 21% prime rate? How about an 18-19 percent rate in an investment property? Wait, there’s more, how about a 14% inflation? All of these occurred in a span of three (3) years from 1979 to 1982.
Hold your horses, the year 1981 made it a lot worse with a recession. The Federal cut taxes everywhere and the Reserve supplied us the cure nobody has ever wanted. But the truth of the matter is, that was the recipe for a quick recovery. Volcker, the Fed Chairman started to squeeze inflation by restricting the amount of new money released by the Fed. That is a concrete cure indeed. There were months when the yearly employment rate reached almost 10% at a certain point, and sometimes went beyond that.
Despite all the “not-so-good” news, imagine how well some real estate investors were placed in residential income property with single-digit fixed-rate thirty (30) year loans. The broad majority were able to weather the storm brought about by the terror economic years in the early 80s which prevailed until the early months of 1984. But although things were a lot better in December of 1983 compared to the last several years, the condition was still not enticing.
Say, for example, your client was put into a 7-unit multifamily apartment situated in a great community. And you found him an adjustable-rate loan. Verily, his interest rate on the said loan will decrease every six (6) months for several years. In San Diego Alone, those who abstained from purchasing income property before October of 1979 were placed on the sidelines for the next six (6) years, but dependent on their comfort zone.
On the other hand, those who did not purchase property or obtain cash out through refinancing at single-digit fixed rates before it all hit the fan were safely placed to take benefit of the repeat of the similar rapid inflation in the next half of the 80s. These people repeated what they have done ten (10) years earlier, which was trade up, and for some lucky real estate investors, three (3) times in just about six (6) years.
Back then, the risk was prospectively losing out on the “last breath” of obtaining in before the music stopped for a while. A similar scenario occurred at the end of the 80s with the emergence of the S&L crisis which left the market declining over the next several years.
Key takeaway. It is wrong to regard risk only in the zone of property or note acquisition. The risk of investing can oftentimes be just as devastating to one’s future retirement success.
Some Traditional Example of Risk Myth. It is a known fact that purchasing non-performing initial position discounted notes protected by real estate is a lot riskier as compared to purchasing the performing note across the street. This is a no-brainer. Would you rather avoid non-performing notes in the first position protected by real estate or also put them in your performing note portfolio?
Let us make computation and you see for yourself. Over the last three (3) years or so, a lot of individuals come in believing the opposite of what they originally knew as settled fact.
In a normal middle-class community with two properties, identical in each way. They both have a worth of $150,000.00 and both have a loan balance of $100,000.00 on a first position note possessing similar terms and conditions. You can purchase the performing note for $80,000.00 while the amount for the non-performing note is $50,000.00.
Regular payments are on time from the performing choice. On the other hand, there are no payments from the defaulted note. These projected note purchase amounts are obtained directly from studies and averaging.
Which side are you on? If the performing note pays off years from now, say seven (7) years, you have garnered an excellent cash-on-cash return through the payments together with the income of 20% during cash out. On the one hand, you choose the defaulted note, you might end up doing these:
- You pay around four grand to foreclose.
- You install new carpet/paint and hype a light fix-up at around ten (10) grand to make it stage-ready.
- You have to pay your back taxes to the tune of three and a half grand.
- You now have at least $67,500 invested.
- You let go of it for $150,000.00 within market value together with sales and closing fees pegged at 8%.
- The net price is around $139,000.
- Please remember that you have $67,500 invested which leaves you with an extra of about $70,500.
This may all occur in about six (6) months, more or less. Regularly, it may land at an average of eight (8) months. For tax purposes, you may prefer to make it at about thirteen (13) months, because you can be able to claim a long-term capital gain approach. At that point, your tax rate is approximately pegged at 15%.
But the question is, what if you cannot let go of the property away? In the year 1984, people not only experience huge local real estate values starting to rise again. The net income coming from the debt-free real estate cured their wounded pride as they waited for values to hit high or anything they had in mind. In 1986, almost all properties were easily sold and came out smelling like fresh cookies out of the oven. But, lessons learned here.
When you look back at the recession in the mid-70s, a similar situation had played itself out. And the similar scenario is being utilized after the 19080s for foreclosures used in the mid-90s. Although it looks and sounded longer for that one. And in the year 2002 onwards, real estate values have appreciated enough to have garnered an entire race of brilliant minds. The most updated example has been there for the last several years. Those who had first position notes on homes defaulting after the conclusion of the bubble burst or recession hit, found themselves searching for tenants and not buyers. When your home is foreclosed in November of 2010, sometime from 2014 up to the present you likely would sell and obtain a good profit.
In all these scenarios, the investor choosing the non-performing note or land contract in the first position came out positively better as compared to if they purchase the performing note across the street. It would take you three (3) to nine (9) years to satisfy your liens and obligations but you cannot apply that range to a given note. They just pay off randomly. On the other hand, the non-performing portfolio turns over a range of one (1) to two (2) times annually. Except for the stated economic downturns mentioned above. Truthfully, is that in retirement, most look at passive income from performing assets and not the labor-intensive type of assets like what we are discussing here. It is best recommended to stay away from the temptation of purchasing the non-performing notes/land contracts without seeking professional help. This is because what the majority do not or will not tell you is that it is almost impossible to purchase a defaulted first position note in your community.
To add, none of those were in the first position, and none were considered non-performing. This simply means that you will be investing in something a lot far, say a thousand miles.
Conclusion. When you realize, investing about $50,000 instead of $80,000 for the similar debt amount secured by the similar value of the property, practically on the similar street and community is not riskier as compared to the alternative. Oftentimes, common knowledge is nothing but a traditional myth.
“Believe your math and not your myth”.
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MULTIFAMILY MARKET REPORT DALLAS- FORT WORTH Fourth Quarter 2020
MULTIFAMILY MARKET REPORT
DALLAS- FORT WORTH
Fourth Quarter 2020
- The first quarter of 2020 was an excellent flight to the year for multifamily real estate transactions. But it came to a sudden halt because of the pandemic brought about by COVID-19, worldwide.
- Purchasers and sellers have pushed the pause button, and real estate brokers are waiting for the next plan.
- But, mid-summer, the market is slowly getting back on track, and transactions significantly are up, and GreyStone ISG had one of its excellent times yet.
- Real Estate Investors are going to Texas, DFW specifically because of forecasted future growth to add to the fact that capital is having complications in placing equity in retail, hotels, and office, leaving industrial and multifamily as the most effective and efficient alternatives.
- Major firms like Charles Schwab, Facebook, CBRE, and Uber have already transferred or expanded in the DFW community.
- DFW is presently the fourth biggest market in the United States and has been at the top all over the United States in terms of growth in 2017, 2018, and 2019.
- Fortunately, the multifamily real estate investment industry is quick to recover and still making big numbers for both purchasers and sellers.
Dallas-Fort Worth Multifamily Occupancy Rates and Effective Rental Rates
| YOC | Occupancy Rate | T-12 | Absorption |
| 1800-1969 | 90.7% | 0.8% | 321 |
| 1970-1979 | 93.0% | 0.2% | 229 |
| 1980-1989 | 93.7% | 0.4% | 1,643 |
| 1990-1999 | 94.2% | -0.3% | 479 |
| 2000-2019 | 91.8% | 5.0% | 14,563 |
| 2020-21** | 27.7% | 81.5% | 5,273 |
| All | 90.3% | -0.8% | 23,822 |
| YOC | Effective Rental Rate | T-12 | YoY Change |
| 1800-1969 | $952 | 2.2% | $21 |
| 1970-1979 | $962 | 1.9% | $18 |
| 1980-1989 | $996 | 1.3% | $12 |
| 1990-1999 | $1,270 | -0.9% | ($12) |
| 2000-2019 | $1,378 | -0.8% | ($12) |
| 2020-21** | $1,539 | -6.1% | ($100) |
| All | $1,182 | 1.0% | $12[1] |
2020 Amendments in the Perspective of a Broker
- Amidst travel restrictions, information was always provided as much as possible, including virtual tours.
- There is an increase in price in Dallas-Fort worth because of rising demand in the fourth quarter of the year, paired with lower rates of interest.
- Increase in “new-to-market” purchasers coming from coastal markets.
- Net migration to DFW is said to be the highest all over the United States, and it is anticipated to grow with the Biden Administration since changes in policies are also expected.
- DFW is leading in the market for sales transactions in 2020 after finishing on the third spot in the years 2018 and 2019, next to Los Angeles and New York, respectively.
- BFR and SFR portfolios already recovered and are in high demand because of the side effects of the pandemic brought about by COVID-19. It is beginning to create a shadow market that cannot be overlooked.
Construction of Multifamily Complexes for the last five (5) years; 2016-2020
- Five (5) cities in North Texas constructed multifamily complexes at an amazing rate for the last five (5) years, overtaking other United States regions in construction volume, as stated by the RENTCafe.
- During the five (5) years covered period, developers come up with a whopping 22,848 new apartments within the suburbs of DFW such as McKinney, Grand Prairie, Garland, Frisco, and Farmer’s Branch which represents around 4.5% of more than 500,000 units constructed all over the United States during the said period as per RENTCafe and Yardi.
- Frisco is the leading in the entire nation for total apartment construction during the five years, with the suburb constructing around 8,044 units. That is about 42% of its apartment stock is now a new product.
- The North Dallas community of McKinney placed second in RENTCafe’s analysis of apartment construction, with the city structures, 4843 units over the last five (5) years’ time, pushing its share of new units to about 1/5 of its entire multifamily product.
- RENTCAFE also showcases the top 20 and it features Farmers Branch with a total of about 3,788 new apartments over the last five years, Grand Prairie garnering a total of 3,308 apartment builds, and Garland at 2,865 units.
- Analysts state, despite the pandemic brought about by COIVD-19, DFW is not that suffering from oversupply and still holds the class of growing population needed to justify the inflated pace of construction it has recorded for the last five (5) years.
- Frisco had experienced an increase in population from around 152,000 in the year 2016 to approximately 206,000 in 2020, based on Frisco information.
- The second place, Mc Kinney, projected its estimated population increase from 155,000 in the last quarter of 2015 to 195,000 in the first quarter of 2020.
- As the population increases and the area deals with residents moving in, multifamily real estate is in heavy demand among residents for practical places to live.
- The DFW region is not reaching saturation or oversupply in terms of housing, according to Doug Ressler, Manager of Business Intelligence. To him, renting has emerged to be an affordable alternative because of the lack of single-family and restricted growth in income.
- The growing population in DFW of young professionals in the 22 to 34 age bracket is another consideration in maintaining a steady trend in multifamily real estate prior, during, and after the pandemic.
- DFW has a relatively young range in population. Generation Z and the younger millennials are in their prime period bracket where they are demanding in rental properties, according to the former chief economist for the Texas A&M Texas Real Estate Research Center, Jim Gaines.
- The average age of the DFW-Arlington region hovers around 35 years, with about 30% of the population in the 20-39 age bracket as per the United States Census Bureau.
- As the pandemic brought about by COVID-19 pushes young professionals toward the middle of the United States in search of practical housing and jobs, multifamily real estate specialists firmly believe DFW will still emerge to be demandable in terms of multifamily apartment rentals in the next several years.
- These have maintained priced parameters of multifamily investment sales significantly steady during these trying times.
Dallas-Fort Worth Multifamily Properties Sold within more than twenty (20+) units in the last quarter of 2020
YOC
| 1800-1969 | Q4 – 2020 | YoY for Q4 – 2020 |
| #Props | 1 | -90.9% |
| Units | 133 | -90.0% |
| Price per Unit | NA | $78,385 |
| Cap Rate | NA | 5.4% |
| 1970-1979 | Q4 – 2020 | YoY for Q4 – 2020 |
| #Props | 2 | -60.0% |
| Units | 674 | -9.0% |
| Price per Unit | NA | NA |
| Cap Rate | NA | NA |
| 1980-1989 | Q4 – 2020 | YoY for Q4 – 2020 |
| #Props | 7 | -30.0% |
| Units | 1664 | -36.5% |
| Price per Unit | $114,139 | NA |
| Cap Rate | NA | NA |
| 1990-1999 | Q4 – 2020 | YoY for Q4 – 2020 |
| #Props | 1 | 0.0% |
| Units | 312 | -22% |
| Price per Unit | NA | NA |
| Cap Rate | NA | NA |
| 2000-2019 | Q4 – 2020 | YoY for Q4 – 2020 |
| #Props | 9 | 200.0% |
| Units | 2,352 | 118.6% |
| Price per Unit | $161,031 | NA |
| Cap Rate | 4.8% | NA |
| 2020 – | Q4 – 2020 | YoY for Q4 – 2020 |
| #Props | 1 | NA |
| Units | 371 | NA |
| Price per Unit | NA | NA |
| Cap Rate | NA | NA[2] |
Unemployment
- In DFW-Arlington, the unemployment rate as of the first week of January 2021, was pegged at 7.1%.
- There is a minor increase as compared to 6% in December of 2020.
- The year-over-year (“YoY”) unemployment rate was pegged at 3.1%.
- We have listed the numbers as of the first week of December 2020, for weekly unemployment claims in Texas since the first reported United States Case of Covid-19:
- Total Weekly Claims before adjustment = 47,521 claims
- The unadjusted four-week moving average is pegged as 37,528 claims.
- Meanwhile, as of January 2, 2021, we also collected the numbers for weekly unemployment claims in Texas since the first reported United States case of COVID-19:
- Total Weekly Claims before adjustment = 43,583 claims
- The unadjusted four-week moving average = 37,164 claims.
Figures in Leasing Activities
- An increase in North Texas apartment leasing during the last quarter of 2020 was good news for rental landlords.
- Net apartment rentals in DFW are pegged at 4,455 units during the final quarter of 2020.
- Leasing activity was solidly strong in the last quarter of 2020, it was pegged at about double the average volume for the last five (5) years.
- For the entire year of 2020, net apartment leasing in the area added up to more than 20,400 units. DFW lead the United States for both completions and demand in the year 2020.
- The demand for an apartment in DFW for the last 2020 was a bit below 25,810 units in net leasing in 2019 as per RealPage.
- The solid last quarter of 2020 in terms of leasing activity during the pandemic could not keep up with apartment construction in the vicinity.
- Developers finished a whopping 7,289 new rental units in the last quarter of 2020, bringing 2020’s tally to more than 26,101 apartments added to the DFW market.
- Occupancy levels decrease to a tremendous 95% because of the oversupply of apartments.
- Entire quoted rents were also down a bit for 2020.
- The loss was because of restrictions in urban Dallas neighborhoods. Prices came down 5% to 7% over the last twelve (12) months in the Intown Oak Lawn, Dallas, and Medical District communities, contrasting to the plateau to a bit of an increase in rents in the majority of the parts in the metro.
- Tenants in the past who paid a premium to live in gated apartments convenient to entertainment sites and downtown complexes before the rise of the pandemic were more enticed to practical, economical, less dense locations farther out.
- Average apartment rental in the area of DFW was pegged at $1,183 at the end of the year. This is practically down from levels in the second and third quarters of 2020 as per RealPage.
- These rental figures comprise basic concessions a lot of landlords now offer to tenants of new units.
Construction forecast and data in 2021
- As per RealPage, project-by-project information in terms of ongoing development showcases a total of 583,280 market-rate units under construction all over the United States’ 150 biggest metros by the end of 2020.
- That figure is off its present peak by close to 100,000 units, reflecting that building began slowed during 2020.
- But, scheduled completions in 2021 have overtaken the delivery total in 2020, given that a lot of the projects now underway are close to completion.
- Deliverables by 2021 reached 403,644 units, up to about 17% from last year’s new supply figure of 344,380 apartment complexes.
- It is anticipated that some of these projects will miss their scheduled completion dates. But that means that the present year’s new supply is likely to surpass last year’s tally by a minimal edge.
- If the topic is about construction, the state of Texas will always play a major role in the talks.
- DFW is still the United States apartment delivery king over the last ten (10) years or so by a significant margin.
- Anticipated products on the way are pegged at 36,400 units.
- Since starts slowed a bit in the year 2020, that’s the smallest block of ongoing construction that North Texas has been in the last five (5) years, but still possessing an aggressive building pace.
- Apartments that are set to deliver this year are pegged at 28,500 units.
[1] ALN, 20+ units, excludes Senior and Student, Counties include Collin, Cooke, Dallas, Denton, Ellis, Hunt, Johnson, Kaufman, Parker, Tarrant, Wise
** vs. 6-months end of July
[2] Sources: ALN (rent-vacation) and CoStar (sales, 20+ units), Countries Collin, Cooke, Dallas, Denton, Ellis, Hunt, Johnson, Kaufmann, Parker, Tarrant, Wise
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Saving Dollars on Your Biggest Real Estate Expense!
Saving Dollars on Your Biggest Real Estate Expense!
This chapter will talk about your biggest or at least one of your biggest real estate expenditures that any traditional owner or settler, and manager of a multifamily portfolio is going to experience and faced.
When talking about real estate expenses, what comes to one’s mind? Most individuals think of utility charges, cost of insurance and employee cost in the management and administration of your property, and a lot more. But the truth of the matter is that your property tax is your biggest expense. Are you shock?
About four (4) years ago, in the United States alone, more than five hundred billion dollars was paid in property tax, and somewhere around three hundred billion was paid by owners as well as multifamily portfolio investment and business organizations. Naturally, when speaking to multifamily owners, and asked them what they pay in their property taxes, it is typical to obtain an answer ranging from two hundred (200) to five hundred (500) million dollars. Safe to say, an average of three hundred (300) million dollars. And it is still quite a significant range for one of your biggest expenses. That is because individuals look at taxation a little bit differently. They have dissimilar outlooks when it comes to it. Verily, when you utter the words property taxes, eyes immediately roll and it is because one has no patience for tax or even property tax. They just recognize it as another payable. But truth be told, is not like just any other traditional taxes. Yes, that would be fair if you are talking about sales tax, income tax, corporate tax, and usage tax that are easily explainable based on fact. You are supplementing the individual taxing jurisdictions’ information in terms of your sales, your income, your profit, and that is a fact. That is result-based on why they are taxing you. But when talking about property taxes, they will tell you what the value of your property is, and practically, based on your value, that would be the tax you are going to pay the government.
Property tax is a cut above the rest. The same is very subjective since you are getting values from the individual jurisdictions and mind you, there is over seventeen thousand (17,000) different taxing jurisdiction all over America, so when you discuss standardization and transparency, it is all over the place. All the more reason that this needs to be controlled and maintained because there are huge opportunities for savings. Just to emphasize that principle for a moment, there was a study performed by an international entity that measured all the various jurisdictions both in the United States and all over the globe that found the average US jurisdiction just got a grade from a C to a D in terms of standardization and transparency. To reiterate, there are huge opportunities here.
So, whatever resources you need to control and mitigate this cost and expense you just have to regard it as it is. However, on the downside, there is a huge pressure on the department handling it to do something in terms of controlling this wide and broad expense property taxes are, also rising and such research has shown that even when values are pegged at a constant, meaning such values are not going up, the taxes are still appreciating because those local jurisdictions, such fees are not going down and they need to pay for their local improvements.
Another interesting fact about property tax is that it surely impacts your organization in several different manners across all facets of each department. It will be very traditional or typical to look for a couple of individuals within a property tax department sitting anywhere in the office. Again, which department they belong to is somehow questionable, but sitting there doing their thing and maintaining their taxes as well as presenting some information to the accounting department. In other words, as you can see the whole property tax management method is very tedious and complicated. It is linked to all facets of different departments.
As soon as you verify your payments, you will transmit them off to accounting. On the side, you have your finance department performing their forecasts and budgets. They also perform isolation in a silo with the use of their data and spreadsheets to find out what they think property tax is going to be at. You will have acquisitions in terms of buying more properties for your portfolio. Sometimes performing their work up or not even looking with property ta as to what the tax impact is going to be. At this point, this is now becoming a requirement. Specific companies are letting their acquisitions team obtain without having some sort of a suggestion or a report from property tax.
And the long list goes on. It affects operations as well as your leasing in terms of initializing your rent or even recovering tax from those portfolios. It all boils down to one thing; it affects the entire department. And at this point, it is done in silos each with its own. That sets of data without one talking to one another and that is where they are coming from.
And this, it is being assessed that the property tax itself is going to be one of your biggest expenses. It is a known fact that there are significant opportunities in terms of saving a good amount of money. At this point, people know that it is fairly mismanaged and it is all done in solos all over the place. And there is a ton of data included in the process itself. Truth be told, from a data perspective, you are getting data from a lot of individual jurisdictions. It is common for an individual property to have at least hundreds of pieces of individual data every year. Again, deduce this to a portfolio of more than three hundred (300) properties you are easily dealing with approximately thirty thousand (30,000) pieces of data every year. That is an issue.
But how do we address such an issue? Everyone has to rethink the way you manage your property taxes and that is frankly some firms like ____________________ come to the rescue and give you the freedom to optimize and manage the entire process and bring everyone together on common ground. And that is going to attain and allow you to empower your users to come up with smarter and better decisions in terms of each aspect of your operation that includes or addresses property tax. These are not just buzzwords.
It is very essential since all these technologies exist nowadays and they fit naturally and property taxes can blend in with those other departments like the ability to automate the workflow. And as soon as you obtain a new forecast in terms of the value and budget, they would know exactly what they can adjust and amend. You can integrate in real-time with other systems so you can apply an eye to aid you in determining whether the values are out of sync maybe specific values and certain properties. This should be the focal point to appeal to drive savings.
The bottom line is, we are all trying to attain a similar goal. The objective is to optimize the value of the portfolio. Instead of paying much attention to the revenue side which a lot of systems and usually some of the easy pickings so that one can acquire the excellent properties to ensure they are fully rented out to maximize and drive the revenue coming from individual locations. That is a great way to drive revenues and value. But another way to come right is by looking at the expense side and being able to manage the costs especially something as huge as the property tax. The same is going to have a noteworthy impact on the value.
Conclusion. The meat of this article is to not ignore your property tax. There is a huge potential saving in it. If they control all tax, you just need the proper tools, information, and data available so you can properly assess it and come up with well-informed decisions that will impact not just the tax side but all other departments within your system.
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- Women CEO/Founder
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