Wall Street Is Taking an Even Bigger Bet on Rentals

The number of homes purchased by major investors in 2017 was about 29,000, up 60 percent from the previous year, according to Amherst Capital Management LLC, a real estate investment firm. That is also the first time since 2013 that investors purchased more homes on an annual basis. Investors are increasingly eyeing single-family homes over apartments. A rising number of apartments in recent years have increased vacancies and driven down rental yields. That has prompted investors to turn back to single-family homes for rentals. Investors are reportedly raising billions of dollars to purchase more homes this year, and they are targeting areas like Atlanta, Phoenix, and other metros with fast-growing economies. Pretium Partners LLC, an investment firm, announced Monday that it had raised more than $1 billion for its Progress Residential to add 26,000 rental homes to its portfolio. In markets where there is little inventory to buy, some investors are building new. Transcendent Investment Management LLC , a south Florida firm, has secured more than $250 million to build thousands of rental homes in Southeast Florida. "We're seeing a wider variety of investors coming into this asset class: sovereign-wealth funds, insurance companies, hedge funds, pensions, asset managers," Sandeep Bordia, Amherst's head of Research and Analytics, told The Wall Street Journal.

Could an Old Cruise Ship Provide Affordable Housing?

Local and federal officials continue to search for answers to the growing affordability crisis, as more people are priced out of housing and rental markets. And one official working for a nonprofit in Portland, Maine, believes he may have found the answer: Old cruise ships. Kenneth A. Capron, who runs a Portland nonprofit that provides support to older people with dementia, is applying for a $250,000 grant from the Robert Wood Johnson Foundation to study the feasibility of turning a used cruise ship into housing for low-income individuals. He believes a retired cruise ship that can hold up to 1,200 people could be a viable solution. He also wants to study offering transitional services on the ship, such medical care, job training, and drug counseling. The cruise ship would be docked in the New England port city. Portland has a waiting list of 1,123 families that are in need of low-income housing, according to its mayor, Ethan K. Strimling. "Pretty sure if we were to take any ship and use it for affordable housing we could fill it up in two days,” Capron told NBC News. For example, a pilot program in Denver is trying to help low-income homeowners build accessory dwelling units, or “granny flats,” in their yards to not only earn extra income but also address the city’s housing shortage. Other cities have drawn up proposals to house teachers in former schools.

7 Ways to Realistically Finance Your Next Fix and Flip

You’ll pay interest only on the amount you’ve taken out. Traditional Bank Financing Although many house flippers are skeptical about using traditional bank financing, that can be an option as well. However, if you feel more comfortable going for traditional financing and you qualify, this might be a preferable option. You’ll either pay them a certain interest rate or promise them a percentage of the profits. This can be a great way to finance your flip, but it’s difficult to find investors willing to put up this kind of cash. You usually need a steady track record of successful flips before investors will place their trust and money with you. The new loan will pay off the original mortgage, and, depending on the equity you’ve built into the existing property, you’ll have a little extra to put toward a new property. This can be a great option because rates are typically lower than the traditional mortgage, but this is only available to those who own property already and have substantial equity. Investors make money either by collecting interest or sharing the profits. Usually, you can get a loan worth 50 percent or $50,000 of your holdings, whichever amounts to less.

The $30k Rental Property: How to Finance & Profit From Cheap Real Estate

To help you with your real estate investing journey, feel free to download BiggerPockets’ complimentary Tenant Screening Guide and get the information you need to find great tenants. I can also say, now that I know the neighborhoods to buy in, I haven’t bought a house recently at this price point that wasn’t safe, that wasn’t a solid house, that was in a “bad” area of town, and that didn’t make a great return on investment. Understand: it’s $30k… Not $300k or $3m Guess what, I don’t put granite in my $30k rental houses! I can’t buy a house with a bad roof and a broken basement in this price range; it doesn’t make finance sense. Know that Paying $30k Doesn’t Mean You Should Buy in Bad Areas My properties are in areas where I have driven, chatted up neighbors, walked, and spent a lot of time doing the “homework.” Understand the demographic who lives in the surrounding blocks of the subject house you are interested in and what the ebb and flow of the neighborhood is. Sometimes it’s simple: it’s families in the neighborhood, and they don’t make a lot of money. It’s a great house, and we have done “x,y, and z” to make sure that all the systems in the house are working. Make sure you are in the property a few times a year, and make sure you are communicating with the tenants about what is going on. Explain to them it is not a bad thing for them to call you; you want to know if there is an issue. Maybe the bank doesn’t want to fund the deal until the property is fixed and rented.

Landlords: These Are the 4 Types of Insurance You May Need

Consider insurance. But what types of policies do you really need as a landlord? 4 Types of Insurance to Consider There are many types of insurance that you should consider: Building and property insurance. First, you’ll want a policy that protects your building and property from unexpected damage. This type of insurance may also help you secure rental income from tenants who are unable to pay. Landlord Insurance If you’re looking for a comprehensive policy, you may be able to find a provider who offers collective “landlord insurance,” which offers coverage in several areas, including the four listed above. For the most part, these insurance policies are flexible; you’ll be able to pick the types of coverage and extent of coverage you need, so you can protect yourself from the majority of threats and still stay within your budget. For example, if leaky plumbing causes water damage to a tenant’s television, your insurance policy may not cover the damages (though it may cover you, if it offers liability coverage). At a minimum, make sure you have property insurance to protect your house and a liability policy to protect yourself in the event of tenant-related damage. As a landlord, what types of insurance do you use?

Why You Should Stop Looking for an “Investor-Friendly” Real Estate Agent

In my research through the Forums of BiggerPockets attempting to understand the needs of potential future clients as a new real estate agent, I have come across countless threads looking for “investor-friendly” real estate agents. Let’s start with the term “investor-friendly.” This implies there are agents out there who are investor-unfriendly, and if the posts on BP are any indication, they seem to be out in great numbers since every newer investor seems to be searching for the friendly ones with no luck. In life, if we wander around every day not being able to find a friendly person, at what point do we start looking in the mirror? Are You Looking for a Friend or a Professional? That being said, even though all agents are required to perform these duties for all clients, a true professional will exceed in every category. Why is it Difficult to Find a Professional Who Will Work With Investors Consistently? Now that we know a professional is what we are looking for, let me share some of the reasons straight from the BP Forums as to why agents shy away from working with some investors. There may be agents out there who will write endless offers, drop everything to get information off the MLS, and be willing to perform whatever duties are required by an investor with the hope of closing a single transaction, but in my opinion, these will not be the most professional agents or have extensive knowledge of the market. If either an agent or an investor finds it difficult to work with the other, there may be a need for one or both to step up the game to a professional level. Actionable Advice for Getting Started, Discover the 10 Most Lucrative Real Estate Niches, Learn how to get started with or without money, Explore Real-Life Strategies for Building Wealth, And a LOT more Sign up below to download the eBook for FREE today!

5 Tips for Buying a Foreclosed Home

The home is sold as-is, and it’s up to the buyer to pay for repairs. While you’re looking for a real estate broker who works directly with banks that own foreclosed homes, get a preapproval letter from a lender. You might find the acronym REO, which means “real estate owned.” This signifies that the property has been foreclosed on and the lender now owns it and is selling it. The goal of combing through foreclosure listings is not to find a house; it’s to find an agent. “The problem is, buyers want to find the house first, and then they think they’ll work out the financing,” Jensen says. They need to work that out first.” Zimmerman says some first-time buyers make the mistake of assuming that the bank selling the home will also finance the mortgage as part of the deal. Just as with any other real estate purchase, you have to look at the recent sales prices of comparable properties, or “comps.” “You really have to look at the comps in today’s current market conditions and write a competitive offer based on that,” says Jensen. “Sometimes the bank prices the homes really low, and the home will have multiple offers over list price within hours. A lot of times, buyers will come to me and say, ‘We want to write offers for half price.’ It just doesn’t work that way.” Bid the higher price if homes are selling quickly. All the other ones were in the same condition, and they sold for $200,000.” Jensen further advises finding out how quickly comparable houses are selling.

How to save $9,000 on your mortgage

The general rule of thumb is to aim to have your monthly housing costs add up to less than 30% of your monthly before-tax income. The better your score, the more likely you are to get a lower interest rate, which means you will be paying less over the life of your loan. Home buyers with credit scores below 620 tend to have very high interest rates and risky features on their home loans, according to the Consumer Financial Protection Bureau. "It means that for a couple years before you really want to purchase a house, you start working to get your score as high as possible, said Nicole Theisen Strbich, a certified financial planner and director of financial planning with Buckingham Financial Group. That means paying an extra $9,000 over a 30-year mortgage. Put down a large down payment The larger your down payment, the less you need to borrow and the smaller your monthly mortgage payments will be. If you can put down at least 20% of the home price, you can also avoid paying private mortgage insurance — which protects the lender in case you default — saving thousands of dollars a year. Think shorter The 30-year fixed rate mortgage is the most common home loan, but there are other options available. "The extended maturity on the loan gives buyers a lower monthly payment, but it may in reality cause them to buy more of a home than they can afford." A 15-year mortgage comes with higher monthly payments, but also has a lower interest rate, which can bring significant savings.

How (and Why) I Offer on Properties BEFORE I Ever Step Foot in the...

If all looks good and it’s a bank foreclosure, I make an offer. “How would you know what to offer? Why I Make Offers Before Looking at the Property I realize that to newer investors, making offers sight-unseen probably seems crazy. Based on my conversation with the seller, I estimated the rehab to cost around $25,000. The funny thing is my offer was made in such a way that didn’t sound like an offer at all! Will I get the property? Now, let’s look at another quick example — this time, a foreclosure listed by a real estate agent. And because I want to flip this property, I used that 70% Rule of Thumb again and determined that: ARV = $130,000 x .7 = $91,000 – $30,000 = $61,000 So I officially offered them $60,000, with a five-day inspection contingency, using my real estate agent to do all the paperwork. I told him to make the offer. — So, should you make real estate offers sight-unseen?

Millennials Are Skipping Starter Homes for Their Dream Homes

A new trend has begun to emerge. What’s a Starter Home? “Prices vary widely by market but starters on average cost $150,000 to $250,000 while trade-up and premium homes cost upwards of $300,000.” Finding Their Forever Homes Now A recent CNBC article revealed that there are many factors that delayed older millennials (ages 25-35) from buying a home earlier in their lives. As the dream of homeownership comes closer to reality, many millennials are saving for their forever homes. Diane Swonk, Chief Economist at Grant Thornton weighed in saying, “They rented for longer. Increased competition in the starter home market has also been a driving force in waiting to afford their dream homes. This has driven prices up and has led to bidding wars. Bottom Line If you plan on purchasing your first home this year, work with a local professional who can help you determine how much house you can afford. You may be pleasantly surprised. Members: Sign in now to set up your Personalized Posts & start sharing today!

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How I Accidentally Landed My First Seller-Financed Deal

I’ve been working on diversifying my real estate investment strategy. The house being small wasn’t a issue. The rural area was not the complete issue either. We acquired the property, subsidies were awarded to us to complete the majority of the rehab, and of course we had county approval. Here’s the problem: During this time, there were county elections, and politics got in the way. We had a property with a $20,000 note. I knew the tenant pool would be small, and most likely they’d have some credit issues, but we had to take a shot. We agreed to decrease the purchase price of the house rather than replacing the garage (part of the money from the fire to pay off the note and repair the vinyl siding). Although the seller financing was completely accidental, I was not closed minded when it came to finding solutions to turn the acquisition around. Free eBook from BiggerPockets!