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Is a Rental Property the Best Way to Grow Your Wealth?

Owning a rental property in addition to your primary residence can be a way for you to build wealth, especially if you may be averse to investing in the stock market. With a rental property, someone else pays your mortgage, and over time your equity grows. So, before you decide to invest in a rental property, consider calculating the return on your investment to see if investing in a rental property is really the deal you thought. How to Calculate the Return on Investment of a Rental Property Like any investment, you need to understand the expected return on investment (ROI). Before you can calculate the true ROI of a rental property, you have to factor in all the costs associated with holding that property, not just the purchase amount. And remember, property taxes don’t typically stay the same each year. In addition, this calculation should be done for every year you anticipate owning the property, as your return will change over time. Conclusion Rental properties can generate income, but the return on investment doesn’t typically happen right away. As with any investment, rental properties should be viewed as a long-term investment, not an instant cash cow. Paul Sydlansky, founder of Lake Road Advisors LLC, has worked in the financial services industry for over 18 years.

Why More Real Estate Companies Are Becoming Venture Investors In Tech Startups

Legacy commercial real estate firms that spent decades focusing their investment on physical properties have begun launching venture funds to invest in technology companies, aiming to solve problems in their portfolio and bring in big returns. Most of those companies focus on commercial office and retail properties and invest in tech companies that solve problems in those sectors, but one of the nation's largest affordable housing developers is now getting into the space. Enterprise Community Partners Vice President of Innovation Matt Hoffman tells Bisnow the nonprofit plans to launch a fund next year to invest in early stage technology companies addressing housing affordability. “We would like to see the housing sector get exposed to a disruptive technology platform much like Uber was to the taxi industry or Airbnb to the hotel industry.” New York-based Rudin Management Co., a 93-year-old real estate firm with roughly 15M SF of office and residential properties under management, in 2015 launched a venture fund to invest in real estate-related technology companies. Gilbert, who also serves as chief technology officer, said the first thing Rudin looks for in a potential investment is the problem it solves. The majority of the well-funded PropTech companies focus on the commercial office sector rather than residential, Hoffman said, and the investment in multifamily-focused technologies isn't addressing the issue that Enterprise sees as its primary mission: housing affordability. The financial returns startup tech companies have the potential to generate can be as attractive to commercial real estate companies as the underlying problems they solve. Strategic Property Partners is doing that with its $3B Water Street Tampa project, a 50-acre development planned to include 9M SF of commercial, residential, hospitality, retail and other space. SPP Senior Vice President of Digital Innovation and Technology Steven Fifita said the developer is planning to utilize a variety of technologies at the development. "I think it is an evolution we're seeing in many industries, especially in commercial real estate, where it's an industry that's comfortable with investment to begin with and the notion of risk," Fifita said.

Where The Next Real Estate Bubbles Are Inflating

In real estate, pricing is relative. It would surprise no one that the most expensive real estate markets in the world are the most densely populated. There are simply few, if any, places to build, so prices stay high and keep rising. Of course, that doesn't mean that prices in the most-expensive markets are fair. In a recent survey, the Swiss-based bank UBS compiled a list of the most expensive cities in their Real Estate Bubble Index. While Hong Kong, for example, may qualify as one of the most densely populated an exciting cities in the world, it would take you more than 20 years to be able to afford an average-priced apartment, according to UBS. How does Hong Kong compare to the last city on its list (Chicago)? It would take you about five years to buy a place in the Windy City. So it's easier to buy something in Chicago as opposed to Hong Kong or Toyko. "Prices continue to soar," UBS notes, "but in half of the cities in the study, housing markets are booming with inflation-adjusted prices rising at least 5% in the last four quarters.

TEDxEvansville is back, here are this year’s speakers, topics

— Tickets remain available for TEDxEvansville, scheduled for 1-5 p.m. Friday at the University of Southern Indiana Performance Center. Eight speakers are featured at this year's event, which has a one-word theme: "Connect." This year's event is the fourth in Evansville. She is also the mother of an only son who passed in 2017 from complications due to a substance use disorder. Hall is a student at Butler University studying history, political science and Spanish who is from Evansville. His undergraduate research has focused on the importance of public memory and how communities like his hometown remember and commemorate historical events and actors. Caballero holds a Master of healthcare administration from the University of Southern Indiana and is an account executive for Medical Services of America. Caballero has served the needs of the poor through international medical missions, developing multidisciplinary strategic population health plans in the Evansville community and improving Alzheimer’s Dementia care in Southwest Indiana. An Evansville native, Johnson is the founder and executive director of a nonprofit organization called Young & Established, created in 2013. Prior to moving to Evansville, Philip worked for the City of Indianapolis where he managed community and economic development projects in coordination with the city’s Quality of Life Planning initiatives.

How Real Estate Investors Can Make The Most Money Flipping Houses

To make the most money flipping houses, the simpler a flip is, the better. How much money can you make on a house flip? But ATTOM also notes that this is most likely not an accurate number to use for what professional flippers make on each deal, as the figure takes into account all houses (flip properties or not) bought and sold within the year, and only factors the purchase price minus the selling price. Why does a massive remodel usually not pay off for house flippers? Big remodels take more time, more money and more resources. • Time is money. It can cost you as little as $50 to $100 to own a house flip. • The longer you hold a property, the more you are at risk to a changing market. A house that is over-improved may get a contract that justifies all the work done, but the appraisal could make all that work for naught if it comes in low. Some of the most profitable houses may be minor rehab projects because they have lower expenses.

Should you use home equity to delay Social Security?

For some time, reverse mortgage lenders touted a strategy that involves obtaining a HECM early on in retirement in order to delay taking Social Security, therefore maximizing the benefits you can receive. For every year that you can delay taking Social Security from 62 to 70, you can get as much as 8% more. According the CFPB report, the expense of taking a reverse mortgage means that by age 69, the cost of the loan exceeds the cumulative lifetime benefits of a reverse by $2,300. “For consumers whose main asset is their home, taking out a reverse mortgage to delay Social Security claiming may risk their financial security because the cost of the loan will likely be more than the benefit they gain. “The CFPB’s analysis, misrepresentations, and inaccurate conclusions fail to provide a comprehensive review of potential benefits of Social Security deferral and proper use of home equity,” Hopkins wrote. “Using a HECM to fund Social Security delay does not create greater risk for retirees experiencing spending shocks or needing to move later in retirement, because reduced distribution needs from the investment portfolio and the subsequent reduction in sequence risk offset the reverse-mortgage costs and preserve overall net worth,” Pfau wrote. “We found that while financial advisors are interested in the idea, they have a very, very, very difficult time persuading their clients to defer their benefit,” Dickson said. I can tell you that there are situations where the reverse mortgage loan would make sense. There are many factors that need to be considered,” Holland said. Ultimately, Holland said issuing broad statements about financial planning strategies is problematic, because it all depends on individual circumstances.

Institutional Investors Plan to Up Their Allocations to Real Estate in 2019

Institutional investors plan to dedicate more of their funds to real estate next year, continuing a trend that has been seen since 2013, according to a new research report. Global institutional investors’ average weighted target allocation to real estate is expected to tick up in 2019 to 10.6 percent from 10.4 percent in 2018, according to results of a survey administered by Cornell University’s Baker Program in Real Estate and Hodes Weill & Associates, a real estate advisory firm. “We’re still in a very low interest-rate environment and investors are still hungry for yield,” says Jim Costello, senior vice president at real estate data firm Real Capital Analytics. Real estate is also seeing strong returns for institutional investors, Weill says. In 2017, the average total return for these real estate portfolios was 9.2 percent, up from 8.7 percent in 2016. The target for 2018 is 8.2 percent, the Cornell/Hodes Weill report found. The report found that investors based in the Americas on average expect target real estate allocations in 2019 to be at 9.9 percent—flat with this year’s target. Weill says this is something he expects will continue: “If you look at conviction, the institutions in the U.S. have the least favorable view of real estate, and I think it’s driven by a general view that real estate is late in the cycle,” Weill says. But institutions based in the Americas were closest in 2018 to their targets; their actual allocation of 9.0 percent to real estate was 90 basis points shy of their target. In the Americas, 95 percent of institutions indicated they are actively targeting value-add investments compared to 50 percent that target core strategies.

Why one of America’s richest states is also its poorest

If you were to ask most Americans which is the poorest state in the nation, they might say Alabama or Mississippi, with their low average incomes and concentrations of African-American poverty. So two institutions in the state, the Public Policy Institute of California and the Centre on Poverty and Inequality of Stanford University, created their own California Poverty Measure (CPM). Most of the poor have jobs: 80% of those living below the CPM’s poverty line are in households with at least one person in work. By the time they are 18, estimates Mr Flood, half the children of the Golden State will have made use of food stamps or food banks. California is not only America’s poorest state. California’s poor are far beyond that. California’s development and impact fees are about three times higher than the national average. Between 2013 and 2017 the median rent in California rose by 32%, more than twice the national average, and far above the growth in average state incomes. No wonder California has twice as many homeless people as the national average. The problem is not that the state locks up an unusually large number of people.

Watch real estate for first signs that passive investing has grown too big

The future of passive investing is facing one of its biggest tests yet. And surprisingly the challenge is coming from a handful of relatively obscure real-estate companies. Funds that track indexes are coming increasingly close to owning a majority of shares in eight property owners and managers, according to a report from Bloomberg Intelligence. That makes these companies potential bellwethers for the impact of benchmark tracking as the funds grow. “For firms with high passive ownership, you have lower reaction to company-specific news,” said Itzhak Ben-David, a finance professor at Ohio State University who’s studied the topic. Variously described by active managers as being akin to Marxism or financial weapons of mass destruction, indexed funds are poised for another year of inflows as actively managed products hemorrhage cash, data compiled by Bloomberg show. Tanger Factory Outlet Centers Inc., which owns and operates out-of-town retail parks, could be the first stock to test passive’s tipping point. Indexed funds own 46.9 percent of the real estate investment trust, which has a market capitalization of $2 billion, the data show. It’s owned by dividend strategies, funds that buy mid-cap or small-cap companies, and investors in real estate or REITs. Bloomberg Intelligence also found little correlation between Tanger’s stock price and flows into the largest fund that owns it.

How to climb the investment ladder in real estate

"People think that to start investing in real estate, you need a lot of money, but you really don't," he said. "Once you can find the deal and understand the formula for making a profit," he said, "you bring a deal to someone like me now, and if it makes sense, I will partner with you." As a young real estate agent he worked with investors, finding them properties to flip. "They were making $50,000 or more in profit," he said, "and I would make my little $5,000 commission." "I took Lucky to the auction and showed him what people were buying and what they were making," said Fuentes. Plus, now there were too many investors. Using these kind of high-interest lenders, Fuentes is able to put less down and put more money toward buying properties and renovations. Now Fuentes funds and runs his own real estate investments, flipping about 15 homes a year, in addition to being a real estate agent and owner of three RE/MAX offices. "Perhaps your first deal is a 30% cut for you, maybe less," he said, "but you'll learn from the process and you'll make some money. If you have a 20% or 10% drop you're not making any money."

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Why Venture Capitalists Are Investing Billions Into Real Estate Technology

Last year, Softbank launched the Vision Fund, a nearly $100 billion venture capital fund with a mission to invest in technology entrepreneurs solving the world’s most focal challenges. While the founders' investment hypothesis was to provide long-term capital across a wide array of sectors, the largest venture fund in history provides an overwhelming amount of capital to startups revolutionizing real estate. New VC firms have raised hundreds of millions of dollars to invest solely in real estate tech. Last year, Softbank launched the Vision Fund, a nearly $100 billion venture capital fund with a mission to invest in technology entrepreneurs solving the world’s most focal challenges. While the founders' investment hypothesis was to provide long-term capital across a wide array of sectors, the largest venture fund in history provides an overwhelming amount of capital to startups revolutionizing real estate. New VC firms have raised hundreds of millions of dollars to invest solely in real estate tech. Real estate technology is boundless. It touches property data and analytics, modular building, construction robotics and home security. Growth in this sector will continue to increase. If you're an entrepreneur, funding in this space is ample and the market size potential is huge.