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Five Reasons Why Your Real Estate Investments Aren’t Earning You Money

His responses were stable cash flow with some potential for appreciation, long-term time horizon of 5 to 10 years, not tolerant of high-risk investments and his real estate experience was limited to the purchase of his single-family residence. This means that he lost out on the last five years of cash flow and appreciation, and his money suffered from five years of creeping inflation — a poor outcome. Plenty of people desire to be in real estate, but consistently fail to invest successfully. No Clear Objectives The primary reason investors I meet do not make any money in real estate is because they have not taken the time to establish specific, clear objectives. Most investors have answers for the questions I asked our representative investor above and believe that is sufficient for moving forward. Lack Of Time A real estate investment must be viewed as a business. As with any business you have clients (tenants), vendors (property managers, contractors, utility providers) and possibly employees. We constantly acquire properties for our investment funds, and a key gating factor when deciding whether to pursue a property is if we have a quality property management firm in place to run it. Inability To See The Big Picture When buying properties across the U.S. and in many different markets, there are two critical factors we look for before considering an investment: net population increase and diverse economic base. How can you tell if you are buying the right property?

Should you invest in real estate or stocks?

Share this article In the long run, stocks have a higher return on investment than real estate. For that reason, here we’ll first use the averages for the past 10 years. The best source of primary price data for the residential real estate market is the Case-Shiller Home Price Index, a database begun by Nobel economist Robert Shiller and his associate Karel Case. If you’re looking it up online, the formal name is now “The S&P CoreLogic Case-Shiller U.S. National Home Price Index.” I’m using the index for the residential market because most individual real estate investors invest in rental housing. A return on investment calculator shows that the average annual ROI for the 10-year period is only 1.39 percent. Over a 30-year period, a time frame often chosen by retirement-minded investors, the stock market’s annual return of more than 8 percent on a $300,000 investment produces a retirement portfolio worth about $3,450,000. The residential market’s 6 percent return on the same investment produces a 30-year return of $1,720,000. But you might also consider investing in both. Index investing allows you invest in real estate without the labor and risk of investment in individual rental properties. Over the past 10 years San Francisco residential real estate — and therefore its price index — have outperformed all other regional markets.

Why blockchain will drive the real-estate revolution

Advances in blockchain innovation mean that the real estate sector no longer needs to rely on dusty documents and traditional sales processes, because property titles, insurance, ownership transfer and escrow processes are all moving onto the blockchain. While buying a property will not be as quick and easy as buying a book from Amazon, for now at least, the world of real estate from home buying to property investment is about to be transformed. Why change traditional house buying? With its many third parties, time delays and lack of transparency, the legalities involved in buying property will be drastically simplified with blockchain. For example, in the verification of property titles; a title record for a property could be used on the blockchain in the form of a smart contract. Smart contracts do not require a trusted third party and, when a property is bought and sold, the details are encrypted and added to the record. This is a radical new approach which is gaining momentum — being able to own units or tokens in residential real estate – and it opens up the market to people who would otherwise not be able to invest in this sector. But where does all this change leave the real-estate agents? Undoubtedly, their roles will change, but there is no sign of them disappearing any time soon. Blockchain not only will improve the current processes of buying and selling property, but it will also revolutionize our traditional attitudes towards real estate.

Can average investors take advantage of a new real estate development tax break?

There's a lot of talk about Opportunity Zones. Can anyone invest in them? Investing in an opportunity zone is not for everyone, but for the right investor, it could be a once-in-a-lifetime tax break. As a result of recent tax reform, opportunity zones have emerged as a way for distressed neighborhoods to attract needed real estate development and for investors in these projects to receive favorable tax treatment. A good fund, he says, are those established by a firm or real estate developer with a track record of investing, preferably someone already working in the opportunity zone. Alternatively, investors with the time (as well as a lawyer and CPA on hand to look over their shoulder), can create their own fund, since this could reduce fees and provide transparency. Tkaczuk says there is nothing to stop an investor from registering their own opportunity fund with Treasury and invest directly into qualified opportunity zone projects. "And there could be a lot of dead-end projects." "A lot of people are planning and exploring, but investments aren't being made yet." "I think it has a lot of potential as an investment, but I approach it with a healthy dose of skepticism," says Jeffrey Levine, CEO and director of financial planning with BluePrint Wealth Alliance.

Opportunity Zone sales jump 80 percent in New York City

With interest in these opportunity zones increasing rapidly, the report notes, it is not surprising that, on a national level, sales of development sites in opportunity zones spiked by 80 percent in the first three quarters of 2018 when compared to the same period last year. As detailed in the report, the program will defer and reduce or eliminate taxes on capital gains invested in opportunity zones, in an effort to bolster development in these historically distressed neighborhoods. By putting their capital gains in a Qualified Opportunity Fund – which is required to have 90 percent of its assets invested in opportunity zones – and investing at least the purchase price in capital improvements, developers are able to reap significant benefits and avoid or reduce their tax payment on those capital gains. “While the increase in investment was expected – and was indeed the objective of the program – the fact that activity increased so dramatically before details of the program were even finalized is clear indication of the appetite investors have for these tax incentives,” said GFI Realty Research Analyst Justin Fitzsimmons. Market participants who have already created Qualified Opportunity Zones include RXR Realty and Youngwoo & Associates, each of which has launched a $500 million fund; Viceroy Equities, which launched the B’KOZ Opportunity Fund with a $75 million investment and plans to invest solely in Brooklyn projects Notably, the program is significantly more broad than the 1031 exchange; while 1031 exchange tax deferments only apply to investments of “like-kind” capital gains, any capital gains can be invested in qualified opportunity zones, including gains from the sale of stocks. “Many opportunity zones in New York are situated in neighborhoods that were either recently rezoned or have been pegged for rezoning. With the combined benefits of these two programs, we can expect to see developers enhance a wide range of neighborhoods in all five boroughs, which will benefit local residents and businesses alike.” Some areas poised for revitalization due to opportunity zones and rezoning include: Central Harlem and East Harlem have recently been rezoned, and are already hotbeds of development that have attracted new retail options, including a Whole Foods. In the coming years, opportunity-zone investment will likely combine with the existing new development pipeline to continue the area’s path to full revitalization. Far Rockaway – In its recent Far Rockaway rezoning, the city focused its efforts on the area’s commercial district, but Far Rockaway’s growth has extended to residential development, including several large multifamily buildings that are currently under construction. With the opportunity zone tax incentive, an increasingly strong downtown and added transportation, Far Rockaway is primed to reach unseen heights in the near term.

The 6 Real Estate Trends to Watch in 2019

So, what does 2019 have in store for real estate investors? They will affect everyone, driving up costs for home buyers and creating more demand for rentals. Single-story homes will increase in value as demand rises. Millennials are finally ready to purchase their first homes despite headlines saying they “can’t afford them.” But because they are largely seeking affordability and quality of life, they are having to trade in the urban life they crave and head out to the suburbs. Investing Is A Lifestyle Many people want to be successful real estate investors. The problem is that the average person starts at the last step of the investment cycle rather than at the beginning. The property. For instance, if your personal investment philosophy were to invest for monthly cash flow, it would make no sense invest in a number of properties with an aggressive, highly leveraged debt ratio that allowed for no cash flow. As rich dad said, “Business and investing are team sports.” In order to be successful in any market, especially ones that you don’t live in, you need to have the right team. So, if you’re looking into becoming a real estate investor, 2019 could be a great time to do so.

Investing 101: 10 Essential Tips For New Real Estate Investors

What I've learned over my career may help you in your real estate investment journey and hopefully provide the impetus new investors need to take the first exciting step. In order to find the vehicle, you need to do your fair share of research. Find out what problem currently exists in the market or what service is lacking. People want to make sure you know what you’re talking about. After taking a few real estate classes, I decided to begin with basic residential investment. If you don’t have much experience or an extensive track record but you do have a good deal at hand, investors will come regardless. A good deal is one that makes sense, is the right price and has the potential to provide a good return on investment. So, if you’re armed with just the right tools and knowledge, you’re an honest person and, most importantly, your deal makes sense, then investors will flock to you. This step is integral to the process as it consolidates everything I‘ve mentioned so far and can be a make-or-break moment when it comes to potential investors. After a while, you might get some friends of friends to invest through word of mouth or simple marketing, and slowly but surely, you’ll begin to build your network of investors.

Millennials would rather invest than buy a house, survey finds

Play Video Play Loaded: 0% Progress: 0% Remaining Time -0:00 This is a modal window. Foreground --- White Black Red Green Blue Yellow Magenta Cyan --- Opaque Semi-Opaque Background --- White Black Red Green Blue Yellow Magenta Cyan --- Opaque Semi-Transparent Transparent Window --- White Black Red Green Blue Yellow Magenta Cyan --- Opaque Semi-Transparent Transparent Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Default Monospace Serif Proportional Serif Monospace Sans-Serif Proportional Sans-Serif Casual Script Small Caps Defaults Done Don't count on those millennials for another homebuying boom — at least no time soon. When asked what they'd do with a $100,000 cash windfall, buying a house wasn't at the top of millennials shopping list. Spending the money on a house was tied with paying off student loans and other debts as their second mostly likely use of the money, according to a new survey by real estate investor Clarion Partners. Saving the money for a house down payment was last on their wish list, according to the survey. The new data on millennial attitudes is part of a broader study in U.S. rental property demand. About 65 percent of Americans own their homes. The rest either rent apartments or single-family homes. "Multifamily housing will likely thrive most in markets and submarkets where for-sale housing is prohibitively expensive." While Dallas-area homes sell for much lower prices than in other big-city U.S. markets on the West and East Coasts, median home sales prices in this area have gone up by more than 40 percent in the last five years, outstripping wage increases.

How to Invest in Real Estate Without the Headaches

This piece will examine many of the common pitfalls that investors in physical properties deal with, and take a closer look at the alternative offered by real estate investment trusts (REITs) and real estate limited partnerships (LPs). What investors get wrong: Valuation and aggravation The first and most obvious evaluation of whether a real estate investment will be successful involves the economic relationship between the purchase price of a property and its capacity as a cash generator. Hassles in negotiating with tenants and the time commitment and cost involved with property management should also be primary considerations. Real estate securities as a viable alternative Real estate can be — and historically has been — an asset class capable of delivering more than satisfactory returns. Enter the real estate security, which can be simplified into two basic forms: (1) real estate investment trusts and (2) real estate limited partnerships. Publicly traded REITs are listed on the public markets and are freely accessible to any investor interested in gaining exposure to the sector. Real estate limited partnerships, or “RELPs,” also provide investors with passive exposure to the commercial real estate sector. Limited partnerships, because of their pass-through tax status, are also incentivized to distribute most, if not all of, their earnings to investors. These vehicles are true proxies for real estate, with real properties, real rents and real appreciation to boot. Investors should consult their financial adviser on the strategy best for them.

Cash-out refis haven’t been this prevalent since the financial crisis

The volume of cash-out refinance loans hasn’t been this high since 2008, but experts say when put into context, there’s no cause for alarm. A blog by Washington, D.C. think tank the Urban Institute said that while on its face the growing share does seem worrisome, there is no cause for concern when you break it down. For one, home price appreciation and rising interest rates play a major role. Home values have been rising an average of 6 to 8%, giving homeowners a major incentive to tap that growing source of wealth. Second, the percentage of refinances in the overall number of mortgage transactions is the lowest it has been in years. “Refinance loans make up such a small share of total loan production – currently below 30% for Freddie Mac – so the cash-out refinance share of all loans is still within a reasonable range and below the dangerous levels of the crisis years,” the authors stated. Also, other forms of equity extraction – including HELOCs and HECMs – are not experiencing major borrower uptake. Finally, borrowers are taking less equity than before when they cash out, thanks in part to regulations limiting the loan-to-value ratio for cash-out refis. “While cash-outs make up the highest share of refinances they have since 2008, this is no reason for alarm,” the authors write. “In an environment of home price appreciation, people commonly tap into their home equity.”

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The number of Utahns worried about housing costs is rising, particularly...

The ranks of Utahns worried about affordable housing have grown dramatically since 2015 and conditions appear to be the worst for renters living in Salt Lake County, according to a new study. The nonprofit Utah Foundation reports that of 20 measures in its yearly Community Quality of Life Index, public perceptions on housing affordability have seen the largest declines in recent years. Statewide, about 12 percent of respondents to Utah Foundation surveys said their personal housing costs were not affordable this year. That number hovered between 7 percent and 8 percent in Utah, Weber and Davis counties, and at 6 percent for Utah’s rural counties. But in Salt Lake County — home to a third of the state’s population — that number was at 20 percent, or one in five residents. "That's a big difference," Utah Foundation President Peter Reichard said in an interview. "That indicates the sore spot is Salt Lake County." Housing advocates with Salt Lake City estimate a gap of at least 7,500 apartments affordable to low-income renters making $20,000 or less. And one in four renters told the Utah Foundation their housing was unaffordable, compared to 4 percent of homeowners. Foundation analysts said that contrast was probably due to a relative stability in costs in recent years for homeowners with fixed-rate mortgages, while rents have risen much faster than the cost of living, especially in Western states and those enjoying rapid economic growth, including Utah.