Common Real Estate Investment Terms (and what they mean)
With any type of investment it is important to understand the terminology used so that the investor can appreciate everything there is to know about the investment. One should not be investing in anything without that knowledge. Real estate investment involves large sums of money that can also be highly leveraged which means plenty of risk. That risk can be reduced with a positive earning property. This article provides some key investment terms that real estate investors should know about.
Any real estate investment without positive cash flow is one an investor should walk away from. Unlike actively traded stocks real estate cannot be bought or sold with the click of a few buttons. Instead the act of buying real estate takes time to not only find the right cash flowing property but then to get all the post contract acceptance aspects in line prior to closing. Therefore if an investor makes a wrong decision one cannot simply sell their investment real estate without taking a loss due to the transaction costs involved.
The cash flow from real estate investment needs to not only be positive but large enough that the cash flow can be banked so that a reserve fund can be setup. If one already has a reserve fund setup to cover major expenses (like HVAC, roof, plumbing and more) that is great, but the cash flow is still required otherwise once a major expense does pop up that real estate investment will become a net negative investment. Real estate...
The Pros and Cons Of A College Rental Property
Within residential rental property there is the college student rental subset that investors can consider. Rents can be higher with a college student rental but the turnover and turnover costs can also be higher. Whereas with a traditional rental property tenants sometime stay for years at a time, with college rental there can be new tenants every year. College rentals have consistent demand and can be recession proof. There are other pros and cons to consider when buying college student rentals as this article explores.
Pro: Higher Rents
Rents over all run higher for college student rentals and some of the reasons for that include: the fact that tenants may only be there for a year or less higher rents can be charged; college students can be a little harsher on their living quarters; overall demand for rentals close to a college campus are high in general; and students can join together to help offset the cost of renting a place. A four-bedroom house can house 4 students and even more when the students share rooms. An equivalent sized house in a non-university area will more likely be housing a family where one or two of the residents will be responsible for paying the rent and they have more options to consider.
Pro: Consistent Demand
So long as the rental property is located close to a well-regarded college or university there should always be demand from students for off campus housing. Many college rental owners start their ...
Different Kinds Of Home Rehab Projects
Real estate investors looking at the fix and flip model or the buy and hold model often look for properties that have some sort of value-add feature so that they can boost their investment through price appreciation. Houses come in different conditions and investors should understand the different type of house repairs that will be needed as part of their investment decision making process. This article looks at the different conditions investors can expect to find in a home bought for investment purposes.
Fix and Flip vs Buy and Hold
The two main strategies are fix and flip and buy and hold. With the fix and flip strategy investors are looking to buy a house that needs repairs, make the repairs and then sell the home for a profit. With the buy and hold investment strategy the investor is looking to buy a house that needs repairs and then will keep that property in their portfolio as a rental property, making money from the rent and from the increase in value.
As part of the buy and hold strategy or fix and flip strategy many investors will use cash or a hard money loan to make their purchase since the type of homes they are interested in usually do not qualify for a traditional mortgage loan. Once the repairs have been completed the buy and hold investor will often times refinance the property into a traditional mortgage and take out cash at the same time to make another buy and hold purchase.
The Top Ten Most Expensive Apartment Buildings In Greater Cincinnati
The Greater Cincinnati area has been getting a lot of attention from out of state and even out of country investors looking for multi-family apartment buildings in order to build their cash flow empire. With prices being paid for buildings in the Greater Cincinnati area investors can find their dollars generating more cash flow in Cincinnati than in many other large markets around the United States. Check out some of the most expensive multi-family listings available on the market today as well as learn more about the locations they are in. If you want to learn more about the cash flow possibilities of any particular property be sure to get in contact today with a local Cincinnati and Northern Kentucky Real Estate agent. (This list focuses on multi-family buildings in one location as opposed to a listing of a portfolio of property spread around the city that are listed for sale as a package deal.)
Settled in 1788 Cincinnati metropolitan area is one of the 28th largest economies in the US. Home to such major corporations such as Kroger, Procter and Gamble, Great American Insurance and more it has a population of approximately 2.1 million people. Being so close to other major cities makes Cincinnati a great place for those looking for work or low cost of living housing.
Located in the Northern part of Kentucky it is close to the Cincinnati metropolitan area. It was settled in the early 1800s.
Who Should You Hire To Sell Your Real Estate Investment Property?
Real estate like many other fields has many niches that make up the overall market. In real estate there are buyer agents, listing agents, agents who specialize in luxury homes, agents who specialize in investment real estate, agents who specialize in the renting out of real estate and more. So while any real estate agent with Multiple Listing Service (MLS) access can list investment real estate for sale that does not mean they will provide the best service, service which will make the transaction flow much smoother for both the seller and the buyer. This article looks at why real estate investment owners who are looking to sell should connect with real estate agents who have experience selling investment real estate.
Would Any Listing Agent Do?
Certainly any real estate agent who has access to the MLS can list investment real estate for sale and may be even able to successfully get some offers in for the seller. That does not mean the process will be easier for a real estate agent who has no experience selling investment real estate (such as a real estate agent who specializes in selling luxury real estate). While that agent may have learned the ins and outs of selling all types of luxury real estate, selling investment real estate is a different ballgame. When listing any type of real estate the goals for the agent are to make sure they target the right buyers with the right marketing mix. Once the right buyers take notice of a piece of property they will want to...
Long Term Rental Vs. Short Term Rentals
With the popularity of sites like AirBnB and VRBO (Vacation Rentals By Owner) real estate investors have some options when it comes to considering how they want to operate their residential rental units. Short term rentals offer benefits such as faster and more frequent payment of rent but have downsides such as the requirement to fully furnish rental units and very frequent need for cleaning due to high tenant turnover. Long term rentals give investors the ability to ensure a steady stream of income with the right tenant and only having to do maintenance when something within the investors control needs repair. There are other considerations to take in mind between short term and long term rentals as this article explores.
Which One Will Make More Money?
The answer to that question is it depends. Real estate is all about location, location, location and the location dictates the price and rental rates for real estate. In locations where there is high demand for areas that tourists like to visit and stay near the demand for long term rental may not be as great. Long term renters want to avoid the hustle and bustle of tourist areas unless they happen to work for one of the tourist attractions and want a short commute. On the other hand tourists may not be willing to pay as much if their location is farther away from the sights they want to see. As a result investors will need to consider location as part of their purchase decision...
Advanced Tips For Real Estate Investing
Real estate investors have probably heard the typical investment advice before: get pre-approved, work with a real estate agent, run the numbers, have cash reserves etc. This article looks to go beyond the typical real estate investing advice and provide more in depth guidance that can help investors protect themselves and their investing partners. This article will explore investing in real estate with partners, syndication investing, getting legal advice and more.
Investing With An LLC
If an investor is purchasing property with cash, with a hard money, or commercial loan then generally it is best to have the property registered in a limited liability company or LLC. Some lenders may even require the investor to register the property into an LLC based on their lending requirements. An LLC provides an extra layer of protection to the investor in that if someone were to sue based on an accident that happens at the property the LLC will limit liability to what is owned by the LLC and keep personal assets out of the equation. Of course an LLC must be properly run and managed and if the LLC was not run properly courts have been known to ignore the LLC and allow personal assets to be considered during a lawsuit.
Generally an LLC can be created in any state and some may choose to create one in their home state. LLCs formed in one state can own property in another state but the investor must review the local laws with regards to registering the LLC as a foreign LLC. For example in Ohio an LLC formed in another state must be registered...
Tips For Buying A Fix And Flip House For Investment Purposes
Popular these days is buying a house which is in average or poor shape and fixing it up in order to sell it for a profit. Some buyers purchase these homes and repair and remodel the homes themselves whereas others are using local contractors to do the work. After the purchase price and repair costs have been accounted for the investor is hoping the home will be worth more so that once sold they can pocket some profit. Obviously there is a lot more to buying a home with the intent of fixing and flipping it for profit as this article explores.
How Do Investors Find Their Homes To Rehab?
Many investors will work with local real estate agents to get access to the multiple listing service (MLS) and have the agent setup a search so that once any property comes to market that meets their criteria they are notified about it via email or text. Oftentimes properties on the MLS (for instance see properties listed on the Greater Cincinnati MLS here) are being pursued by many different investors and the price can be bid up due to competition so some investors shy away from MLS properties. Another alternative that buyer investors pursue is off market deals which are either found directly from the sellers themselves or through Wholesalers whose entire purpose is to find off market property that someone is looking to sell and may not always be in the best of condition. These Wholesalers will then buy the property themselves for a low price and then resell to an investor buyer looking to fix and flip the property. Some other Wholesalers will instead get a...
Should You Self Manage Your Investment Property?
Whether you purchase investment property on your own or happen to inherit it the question of whether one should self-manage the property does come up. By self-managing a property the owner can save money that they would otherwise pay in monthly management fees, save on tenant placement fees and be allowed to shop around for the best prices from contractors. On the other hand a property manager may be able to make you more money out of your investment by treating it exactly as it is which is a business. This article looks at whether real estate investment owners should self-manage their property or turn it over to a property manager.
What Does A Property Manager Do?
A skilled property manager (PM) more than just collects rents and places tenants. Property managers need to be doing just that, managing the property. That not only includes collection of rents and placement of tenants but also includes managing the tenants and managing the tenants and their interaction with your asset. PMs should be inspecting the property on a regular basis to make sure tenants are not abusing the place they live in. While some minor wear and tear to a living space is to be expected, things like broken windows, broken doors, damaged walls, trash disposed of in the wrong place will quickly lead to degradation in the value of your investment asset which means the amount of rent you can take in could also decrease. When PMs notice tenants being too hard on their living space they should be requesting the tenant to live in their rented space according to the lease and other rules set out for them. ...
6 Great Tips For Selling A Home With A Tenant
Whether you purchased a home for investment purposes or inherited a home with a tenant and now no longer want to deal with the property it still can be sold even with a tenant in place. Sometimes you are unable to have the tenant move out since there may be a lease in place and the cost to buy out the lease may not make financial sense. With high interest in individuals wanting to buy investment real estate it can make sense just to sell the home with a tenant in place since a future potential buyer may like that the home is already cash flowing. Whatever the reason may be, selling a home with a tenant in place is something can be done as this article will explore.
If a tenant is on a month to month lease then now is not the time to have them sign a long term lease as the next buyer may be looking to buy the house for themselves rather than own as a rental property. With a month to month lease the tenant can generally be given thirty day notice to move out and be moved out before closing if that is what the buyer wants. In fact some buyers may include as part of their offer the requirement that the owner have the house vacated prior to closing so the buyer can move in after closing. If the tenant is on a long term lease then the owner does not need to make changes to the lease but should have a conversation with the tenant if they would be open to a lease buyout. With a lease buyout the owner is offering some money to the tenant to cancel the lease early and move out. The owner needs to know ahead of time if the tenant...
Real Estate Investment Scams To Be Aware Of
With interest rates as low as they are and mortgages easy to obtain to buy real estate many people are considering real estate as an investment. While many invest successfully in real estate when they work with the right team there are others who are not so fortunate and may end up losing quite a bit of money due to scams that seek to steal money from real estate investors. This article looks at some of the common real estate investment scams and provides advice and guidance on how to avoid them.
One of the more common scams involving investment real estate are lending scams. Due to higher requirements for down payments and limited ability to finance investment properties that need rehab with conventional mortgages many real estate investors turn to alternative lending resources in order to seek financing. Many of these alternative lenders may do not have the same standards for property condition as a conventional lender would and are willing to offer lend additional money with the loan for which the investor can improve the property and thereby improve the value of the property as well. Often times these loans come with higher interest rates and shorter payback periods than conventional mortgages will offer.
Scams with these types of loans are more frequent since a majority of these lenders do not have to be licensed and are not vetted by any state or national agency since the money they lend is not a conventional mortgage loan that has licensing requirements. Sometimes called private money lenders or hard money lenders these lenders use money from private individuals to fund the loans they are making. While...
Tips For Dealing With Problem Tenants
So you decided to rent out your home or purchased a residential multi-family building with the goal of earning some extra income from real estate but somehow ended up with tenants who are either not clean, always late on their rent or something else. What are some of the more effective ways to deal with the problem tenants so that they don’t leave your rental house or rental unit in a total disaster? This article explores how to best deal with problem tenants and protect your investment.
Spot Problem Tenants From The Start
One of the easiest ways to deal with problem tenants is not rent to them from the start. Property owners who are managing properties on their own should be thoroughly screening tenants based on the rental applications they submit to you. Full credit checks should be done, criminal history background checks, and even checking out the potential tenant’s current living situation. Is the potential tenant living in a clean apartment or does it look like a tornado went through their home? Trash in the wrong places, dirty clothing, not cleaning up after pets who made messes indoors all can attract pests that can lower the value of your investment and make it more costly to fix once the problem tenant leaves. If a tenant is not living cleanly in their current home chances are they will not be any cleaner up just because they move into your rental.
Credit checks can be important since it shows a tenants ability to handle money. If a tenant has a low score due to too many credit card accounts, too many late payments...
Pros and Cons Of Different Types Of Investment Real Estate
When it comes to investment real estate there are a number of different options to choose from. Real estate investors can buy single family homes, multi-family homes, and residential properties classified as commercial in order to build an income stream to meet their investment goals. Each type of real estate investment has associated with it different positives and negatives and this article will explore those in detail.
Single Family Residential Home
One of the most common building types available and usually the easiest to purchase is the single family home. A majority of the residential properties on the market today are single family homes. With a single family home an investor is getting a property where generally one family will live and pay rent for. Some larger single family homes can be converted into multi-family homes in order to increase the amount of renters in the property but for this to happen the investor will need to comply with local zoning and building codes. Some areas may only allow single family residences and would refuse to authorize any segmenting of the home in order to add rental units.
The biggest advantage of buying a single family home is the fact that if an investor decides they no longer want to be in the residential investment business they can easily sell a single family home to another investor or to another buyer who is looking to live in the home themselves. Provided there are no tenants in the home, a single family home can appeal to both investors and owner occupied...
Why Investment Property Owners May Want to Consider Selling Their Investment Property
With real estate prices increasing all over the United States many investors are seeking lower costs investment properties in a number of cities in Ohio. Notable cities in Ohio that these investors are looking at include Cleveland, Columbus, Dayton and Cincinnati. These investors are looking for lower costs properties with a good history of rents in order to better invest their money than they can in high real estate cost areas like Los Angeles, CA; New York, NY, Seattle, OR, Las Vegas, NV and more. As a result investment property prices in the Cincinnati, Ohio area are at multi-year highs and Cincinnati investment property owners might find it advantageous to sell their properties now while the prices are high.
What Are Some Of The Reason For High Investment Property Prices In Cincinnati, Ohio?
Cincinnati has long been known as having great overall affordability. In fact in 2017 US News & World Reports rated Cincinnati as the 14th most affordable city to live in the US. Not only is the cost of living low in general the real estate in Cincinnati is more affordable than in many other major metropolitan matters. As a result for out of state real estate investors looking to buy properties for a good price and still get a good rate of return, Cincinnati has become one of the go to markets and the prices have gone up as a result. Even with the cost of property management deducted from rents it still makes sense for out of state investors...
Tips For Selling A Multi-Family Home
Many out of state buyers are looking to make a purchase of a multi-family building here in Cincinnati, Ohio and Northern Kentucky due to the lower cost as compared to other states. With the lower cost and higher Return on Investment (ROI) out of state investors are lining up to purchase great cash flowing properties and as a result Greater Cincinnati multi-family properties are at 5-7 year highs. While demand is high that does not mean multi-family building owners can expect a cake walk when it comes time to sell. Multi-family building owners still need to prepare their buildings so that they attract buyers who want a ready to cash flow building as opposed to those buyers looking for a bargain. Bargain hunters will only be interested in a building if the price is in the bargain range.
A multi-family home is a building that allows for two or more families to live together in separate apartment/living spaces but generally under one roof. Conventional mortgage financing can be used for multi-family buildings when there are no more than two to four units in the building. Anything more than four units requires commercial lending products in order to purchase. Due to the allowance of conventional mortgage financing for 2-4 family buildings buyers can actually buy one of these buildings as owner occupied and pay a lower amount for down payment (anywhere from 0% to 5% depending on the loan program). If a buyer does not intend to occupy the building then down payment requirements...
5 Smart Tips For Buying An Investment Property
Whether you want to buy a home that doubles as an investment property where you live in one unit and rent out the others to reduce your mortgage payment or you want to strictly buy a property for investment property to earn income from it, these tips are for you. Many are realizing the benefits of buying and holding investment properties for their rental income potential. The tips in this article will help you make sure your investment is a sound purchase that provides you with income for years to come.
1. Get Pre-Approved Or Have Your Cash Ready Prior To Buying An Investment Property
Buying a multi-family with four or fewer units allows buyers to use conventional mortgage financing, whereas investors wanting to buy buildings with more than four rental units will require the use of commercial financing. Commercial financing usually comes with more restrictions and less favorable terms compared to conventional financing. With conventional financing borrowers can get 30 year fixed loans and only need to put at most 25% down for a non-owner occupied property. With commercial financing borrowers will be required to put 30% or more down and may have loans with a 20 year or shorter term. Additionally commercial loans will have higher credit requirements, may be stricter with the requirement of showing actual investment management experience and/or offer variable rate loans only.
If a buyer is wanting to buy a multi-family home and live in one of the units then the requirements can be even lower than a non-owner occupied mortgage. Investors who intend to occupy the building they buy can only use conventional mortgage financing...