And in another two days, we’ll see another good friend, Brandon Turner. To Preface This Discussion In the world of real estate investing, we have two main hurdles to clear: finding deals and finding money to finance those deals. How to Raise Money This is where I tell you that I am not a licensed professional and cannot offer specific legal advice. Well, asking for money is solicitation. What is general solicitation? General solicitation is you asking for money from people with whom you do not have a standing relationship. Now, since you don’t really know the person you are speaking to, this relationship should most likely be considered general. Related: 7 Life-Changing Lessons I Wish I Knew as a Real Estate Newbie Remember, what gets you in trouble is the “General + Solicitation.” You can have general conversations without soliciting, and you can solicit from pre-existing relationships. But, next time you are about to ask, or about to make that post on a social network, just remember—what gets you in trouble is general + solicitation. Any questions about general solicitation?

What’s a better investment, stocks or real estate? If each asset requires $20,000 in cash to purchase it, then it takes a lot of money to build a broad, diverse portfolio. But residential real estate? For everyone who didn’t like the look of how real estate returns have compared to stock returns over the past few decades, consider that the Sharpe ratio for real estate has only grown stronger over time. Another way of looking at it is return per unit of risk – here’s how equities have compared to real estate in each of the 16 countries studied: Returns & GDP Advanced economies tend to have slow economic growth, right? On average, equities and real estate perform several times better than GDP growth. But Wealth Wise Wendy, who’s not nearly so average as Joe, invests as much money as she can in equities and real estate. Want a few reasons why rental properties are better investments than bonds? Should I Stop Investing in Equities and Just Buy Rental Properties? Residential rental properties offer excellent returns with low volatility.

According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), the inventory of homes for sale this year compared to last year has increased for the last four months, all while sales of existing homes have slowed compared to last year’s numbers. A decade’s high mortgage rates are preventing consumers from making quick decisions on home purchases. Fannie Mae, Freddie Mac, the National Association of Realtors, and the Mortgage Bankers Association are all in agreement that rates will continue to increase to about 5.2% over the next 12 months. “The rise in [mortgage] rates paired with this very strong price appreciation absolutely is slowing housing,” said Fannie Mae’s Chief Economist Doug Duncan. Even though rates are higher than they’ve been in a decade, they still remain below the average for the 1970s, 80s, 90s, and 2000s! Mismatch of Inventory Elizabeth Mendenhall, President of NAR, said it best, “Despite small month over month increases, the share of first-time buyers in the market continues to underwhelm because there are simply not enough listings in their price range.” Prices of starter and trade-up homes have appreciated faster than their higher-priced counterparts. Over the last 5 years, the lowest-priced homes have appreciated by 47% while the highest-priced homes have appreciated by only 24%. This means that supply (inventory) has finally caught up with demand and buyers are in the driver’s seat when it comes to negotiations. Natural Disasters Although not fully to blame for the national shortage in sales and inventory, natural disasters like Hurricane Florence, Hurricane Michael, and the wildfires on the West Coast have certainly had an impact. Members: Sign in now to set up your Personalized Posts & start sharing today!

When you buy a newly constructed home instead of an existing home, there are many extra steps that must take place. These inspections are important because the inspector will often notice something that the builder missed. If you are an out-of-state buyer, will you receive weekly pictures of the progress via email? Look for builder’s incentives The good thing about buying a new home is that you can add the countertop you need, the mudroom you want, or an extra porch off the back of your home! Schedule extra time into the process There are many things that can impact the progress on your home. Rain can delay the pouring of a foundation as well as other necessary steps at the beginning of construction, while snow can freeze pipes and slow your timeline. Most builders already have a one-to-two-week buffer added into their timelines, but if you are also in the process of selling your current home, you must keep that in mind! Visit the site often As we mentioned earlier, be sure to schedule time with your project manager at least once a week to see the progress on your home. If you are ready to put your current home up for sale and find out what new construction is available in your area, call a local real estate agent who can help you with the sale of your current home and the search for your new one. Members: Sign in now to set up your Personalized Posts & start sharing today!

When my husband and I bought our first home 11 years ago, we knew it needed some work. We loved our neighborhood, and we wanted to stay. Figure out exactly what you want before you start At the outset, we'd met with our building contractor about a bathroom remodel and possible extension—because that's all we thought we needed. That way, we could have done just one building plan rather than two. Make as many decisions as you can early in the process, and that will give you a better idea of how much the project will cost. However, the neighbors a few doors down, whom we didn’t even know, would let their daughter, who was maybe 6 or 7, play on our construction site. In our build, the quote for doorknobs included the wrong count, and the window quote listed windows with the wrong grid pattern. My advice: Start contacting them early in the process, verify what they tell you, and follow up a lot. Work with your partner, as best you can The stress of building a house can’t be emphasized enough. But that meant having to relay information back and forth and then having to delay actual decisions until I could talk to him.

More Americans became homeowners in the summer months, fresh evidence of a housing market that’s finding some stability after several rocky years. That’s a half-percentage point higher than a year ago. At the same time, many Americans who would ordinarily become buyers were locked out of the market by stringent lending rules, a lack of affordable inventory and a challenging economic backdrop. All that has made the post-crisis housing market not just less accessible, but less dynamic. It’s possible the moderation in home prices over the course of 2018, which some analysts believe came from would-be buyers pushing back against hefty price gains, helped many of them finally become owners. The homeownership rate can be controversial. Some analysts believe that government policies that helped enable ownership more broadly were responsible for the housing crisis, although many others believe there’s blame to go around. Still, the meager recovery to this point puts the homeownership rate only back to 1995 levels, well before the run-up to the bubble. That suggests it may be possible for many more Americans to become owners, if housing market conditions ease further. The vacancy rate for owners was just 1.5% for the second month in a row, tighter than the 1.6% it averaged throughout 2017.

According to Zillow’s September index, the median price for a single-family home in the state — $549,000 — is high, but house prices are even higher in its four biggest cities: Los Angeles: $898,949 San Diego: $848,500 San Jose: $1,099,990 San Francisco: $1,400,000 In the majority of major American cities, you’d pay less for a house. And in many, you could buy several houses for the cost of a single home in a California city. According to Zillow, the median price for a single-family home in Texas is $277,062 — half of what the same home would cost in California. But when compared to its California counterpart, San Francisco, the average price of a home in Dallas is a drop in the bucket. For the price of a single-family home in San Francisco, you could buy three houses with money left over, perhaps for a detached apartment or garage. When comparing San Francisco to, say, San Antonio, the difference in home prices is even more absurd. Cost Of A Home In California vs. Florida Florida is ever popular. Even Florida’s pricier major cities, like Miami, the median price is still only $499,000. Compare that to San Diego — the cheapest of California’s three largest cities for homes — has an average price of $848,500, which is once again just shy of being double the cost. See the full report: The Best Place to Buy a Home in Every State for 2019

Imagine if for every $10,000 you invested in your 401(k) $4,000 was lost to fees. Beyond that, your returns depend on the day, month, year, political climate, rumors on Twitter and Facebook and so on. If she had $500,000 in her retirement account, that would be a loss of $200,000 in retirement savings because of factors largely beyond her control. After you factor in fees, you could be netting as little as 5-7%. If you placed that same $70,000 and put it into a self-directed IRA or Solo 401(k), where you have more control and can direct your funds to be invested into a turnkey rental property, you could leverage those funds to purchase up to $280,000 in real estate. Even if you used all cash to purchase real estate for a total of $70,000, your return after 10 years would be approximately $219,000, nearly double what you would have in your mutual fund account — much better. Even better yet, with a self-directed IRA, you already have the ability to invest in real estate. Again, a 401(k) or IRA can be a great tool when it’s efficient. With real estate, you’re the owner of a tangible asset. Although traditional investments like a 401(k) and IRA can be great additions to your portfolio when used and monitored wisely, real estate investing offers a tastier, bigger piece of the American apple pie we all love.

The Great Recession of 2008 left its mark on many aspects of our society, from real estate investment to job numbers. SIVs were similar: They were pools of investment assets, borrowing money from investors (short-term) and investing on long-term things like subprime mortgages. I spoke to my team about this sort of financial engineering, and though we were worried, we still thought that perhaps the damage would not touch real estate equity. Stay Away From Public-Private Transactions Another valuable lesson I learned from the recession was the value of public-private transactions, in which previously public assets are spun off and sold to private investors. We used short-term corporate financing (two-three years), rather than the typical five-to-seven year, property-based mortgage financing. Unfortunately, this strategy relies much more on the type of financing rather than the amount of financing. To be sure, this was a perfect storm of events, but in retrospect, everything was wrong about the strategy. Real Estate As A Financial Instrument The most important lesson of all was this: If real estate was to be treated as a financial instrument (subject to manipulation and creative engineering that was morally and legally questionable), then it would become overused and incredibly vulnerable. Twenty years before the recession, there were very limited opportunities for real estate exposure; by 2007, this was obviously not the case, given the real estate instruments available at the time. Either way, we’re certainly much more cautious now, especially where it concerns financing.

Yet we learned significant lessons about risk management in joint ventures that changed the way we think about how to invest in real estate — lessons I believe can benefit other property investors. But the deal also included an equity partnership with a local operator that owned other student housing complexes in the area. Furthermore, the partner would have skin in the game — a 10% equity stake. At the same time, we learned that our partner had hired his own companies to work on the property. We lined up a management company to take over onsite maintenance and leasing. The joint venture was never going to be a productive partnership. Service divisions such as in-house construction, property management and maintenance are always susceptible to conflicts when investors are involved. Have expectations and responsibilities clearly written and defined in the business plan, including deadlines and when progress is tracked and reported. These steps don’t have to appear punitive; all parties in a deal bear responsibility for its execution. Perhaps the best feature of a performance management framework is understanding each other’s objectives and what each brings to the table as a partner.