3 Reasons You Should Consider a Duplex as Your First Home Purchase

When most people think about buying their first home, a nice little brick house with a white picket fence comes to mind. And while there’s nothing wrong with this, maybe you should actually be thinking about a duplex. Duplexes are everywhere, and they can be extremely wise investments in certain situations. While you probably don’t want to buy a duplex if you have a family with kids, it’s perfect for someone who is young and single (or newly married). Here are a few of the benefits you’ll get to enjoy. Mortgage Benefits Before you can even consider buying a duplex, you have to get your financing squared away. Early in your search, you can work with a mortgage professional to get prequalified and search for homes within your wants, needs, and budget.” What you’ll find is that a duplex may actually help your mortgage situation, if you plan on renting out the other half. For example, let’s say the mortgage on a duplex is $1800 per month, but you can rent out one half for $1,000. Give Yourself a Financial Headstart When it comes to buying your first house, perspective is key. Think about the pros and cons, weigh them against each other, and determine whether or not a duplex will work in your situation.

The #1 Little Known Way I Find Cheap Real Estate Deals

I was able to acquire all of the properties using various strategies, but one in particular that I really like to talk about is using Craigslist. In 2014, over the span of about five months, I was able to acquire 34 properties, and I did it by stalking Craigslist every single day. How to Find Deals on Craigslist Now, what you have to do is first have enough capital to acquire a property with cash because a lot of the properties listed on Craigslist are very distressed, rundown, and may have back taxes or a tax lien. Within your zip code, you should know what un-renovated properties are selling for, what renovated properties are selling for, the prices that wholesalers list properties for in that area, who the top performing real estate agents in the area are, and who the top real estate investors flipping deals in the area are. Your network equals your net worth, so make sure you immerse yourself with the numbers and surround yourself with the right people so you truly become an expert in that particular area or zip code. Related: The $30k Rental Property: How to Finance & Profit From Cheap Real Estate So, first, we have the capital, meaning we’ve got the cash to acquire the properties. Once they pop up, because you are a true expert in that particular area, you’ll know if it’s a good deal. That is how I was able to acquire 34 properties in 2014. I knew the numbers in the area, I had the cash to make the deals happen, I was good at negotiating, I worked hard, and I stalked Craigslist every single day. A deal popped up, I was on the phone, I inspected the property, I committed the down payment, I called the title company and signed the contracts, and I closed on the contracts within seven days.

The One Critical Question Investors Forget to Ask When Shopping for Rentals

The numbers matter more than anything, but location will determine whether or not the projected numbers will hold up. Well, you can probably rent it out, but will you have to dramatically decrease the rent or take on subpar tenants just to do it? I believe there are two factors that are absolutely crucial for a rental property to continue to cash flow: The numbers The tenants The market itself plays a role in this too, but numbers and tenants are the most direct impactors in my opinion. However, get this: The only tenant I could find for it was a Section 8 tenant. If you are shopping for a rental property and you’ve run the numbers and the market and neighborhood look good, then these are the rentability questions you need to be asking. A real estate agent may also be able to answer these questions, especially the one who is trying to sell you the property, but typically real estate agents aren’t constantly dealing specifically with rental properties day in and day out for years at a time. Why You Should Enlist the Help of a Property Manager Property managers are truly in the grit of rental properties in a certain area. It isn’t usually kosher to call an agent or property manager up and ask them for an assessment of something without offering to pay them for their time. If you want to know how much a particular property is likely to garner rental income, an agent or manager can run the rental comps in the area and make a best guess based off of those on what a particular property may be able to realistically get. A property manager is likely going to have a general numbers feel for you, even outside of a CMA.

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!

5 Ways to Land Financing After the Traditional Bank Cuts You Off

Maybe you’ve attained several mortgages from them already, and you’ve been buying up real estate left and right, building your portfolio. You might not see it coming, but once you own a set number of mortgages in your own name, the traditional bank will likely cut you off, refusing to lend you another cent. Find an investor-friendly bank or mortgage broker. Little did I know that there were investor-friendly private lenders out there looking for deals. Personally, I’m not a huge fan of commercial loans that require me to personally sign or that are eligible to recast in, say, five, seven, or 10 years, since now my other assets are at risk in a default (not just the property loaned against) or I may not qualify for the loan to continue if there was a dramatic change in property value or in my personal income or credit. There are also ways to get the deal without the bank. Better yet, you could find a money partner who would either put up all the money for the deal or sign on the loan. Become the bank. At some point, possibly after you’ve grown your real estate portfolio, you may start thinking about becoming the lender, as opposed to the borrower. If so, what are some of your favorite, creative strategies for financing your deals?

The Best Way To Profit From REITs In 2018

I’ve spoken to a lot of investors who are still scared of real estate after the housing bubble burst in 2008. Note how RWR outperformed SPY both before and after the financial crisis? Look at FFO. When you look at the last four quarters of FFO, you can compare it to a REIT’s annual dividend payouts to get its dividend coverage ratio. Since Realty Income pays out $2.54 a share in dividends per year, its dividend coverage ratio is 119.7% (3.04 ÷ 2.54 = 119.68). This tells us that the REIT is earning more in rental income than it’s paying out in dividends—the dividend is safe. Rule #2: Look at the Portfolio The other neat thing about REITs is that they’re easy to understand. Realty Income even breaks down its top 20 tenants and how many properties those tenants are renting: Knowing the quality of tenants and their occupancy rate is key; these are the two factors that will predict future cash flow and stock price. Rule #3: Look at the Price The final step is something a lot of REIT investors overlook. By carefully looking not only at how much FFO a REIT is producing but also at how much you’re paying for a piece of that FFO, you can save yourself from big price drops like the one Realty Income suffered last year.

As 2017 Ended, Rents Rose

The median national rent rose toward the end of 2017, contrary to the predominant trend for the year, according to the November Zillow® Real Estate Market Report. “After about a two-year slowdown, rent growth is starting to pick back up across the nation,” says Aaron Terrazas, senior economist at Zillow. “The slowdown in rental appreciation, combined with consistent income growth, gave renters some reprieve from worsening rental affordability over the past few years.” However, “As rental growth begins to catch up with income growth, affordability will deteriorate, placing a squeeze on budget-constrained renters,” Terrazas says. At the time, Zillow expected a 1 percent rise for the year. The challenge is intensified in markets with rapid rent raises, according to the report: Sacramento, Calif., where the median has gone up 7.5 percent year-over-year ($1,829); and Riverside, Calif., where the median has gone up 6.2 percent ($1,847). The cost could prod renters, says Terrazas. “More widespread rent growth could mean home-buying demands stay high, as renters who can afford it move away from the unpredictability of rising rents toward the relative stability of a monthly mortgage payment instead.” For more information, please visit www.zillow.com. Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

Deedcoin launches private virtual token sale

Deedcoin, a digital currency startup that wants to disrupt real estate commissions by paying agents partly in digital currency tokens, last night began a private pre-sale of its tokens priced between $1.50 to $3.00. The company says these tokens, based on the Ethereum cryptocurrency standard–a popular alternative to Bitcoin with some extra features–can be used by prospective property buyers and sellers to hire real estate agents across the country. Deedcoin says in a document on its website that the private sale will “conclude on either June 30, 2018 or when 40 million tokens have been sold, whichever comes first.” The company claims that it has partnered with registered real estate agents in 28 states who have agreed to accept Deedcoin tokens as part of their payment, in addition to drastically reduced commissions paid in U.S. dollars—as low as 1 percent, according to the company’s launch website. Inman has asked Deedcoin for names of specific participated agents and will update when we receive a response. According to Deedcoin, buyers and sellers will be able to log into its website and list or find properties for sale where agents would accept Deedcoin. Participants in the private sale were instructed to visit the portal site, agree to the terms, enter the amount of Deedcoin they want to order, and click “pay now” to pay with a credit card or digital currencies ether, bitcoin or litecoin. Buyers could expect their purchased Deedcoin to arrive in one business day to their Ether Wallet address, the message said. The company plans to hold an Initial Coin Offering (ICO) on January 25, when it will open its tokens for sale to all members of the public. Deedcoin specifically says it’s complaint with U.S. securities law, noting in its email announcing the private sale: In compliance with SEC regulation, U.S. Deedcoin purchasers are limited to 1,500 Deedcoin ($2,250) plus bonuses, UNLESS you are an accredited investor. Deedcoin is just one of a growing number of real-estate themed ICOs planned for the month and year ahead.

Number of US renters declines for first time in 13 years

The nation’s population of renters, a third of American households, decreased modestly for the first time in 13 years as declining foreclosure rates and steadily rising rent helped reduce the number to 43 million in the first half of 2017, down by about 500,000, according to a report by apartment listing service Abodo. The decline, ushered in by first-time homebuyers and historically low mortgage rates, comes as the national median rent for a one-bedroom apartment increased by 2.4 percent in 2017, to $1,040, according to an Adobo. Two-bedroom apartments, similarly, increased by 3 percent, to $1,252, according to the report. Overall, rent spiked in 28 states, with New Orleans, Reno, Honolulu and Seattle all experiencing increases of more than 2 percent, and New Orleans, in particular, seeing a 4-percent bump. “Two-bedroom rents exhibited similar stability through the first quarter before more sharp increases in the second,” according to the authors of the Abodo report, released on Wednesday. “After a pause in the late summer and early autumn, two-bedroom rents, like one-bedroom rents, saw their greatest hikes in the last three months of the year.” Foreclosure rates, meanwhile, hit an 11-year low in the third quarter of 2017, an indication that fewer homeowners were moving — reluctantly, perhaps — to rental units upon losing property. Despite rising rental rates, the decline in renters in 2017 may be an anomaly, according to a separate report issued Tuesday by the Joint Center for Housing Studies of Harvard University. Rental households are projected to grow by 13.6 million between 2015 and 2025 as aging baby boomers and millennials drive new growth in the market, according to the Harvard study. “Over the next 10 years, the younger half of the millennial generation — the largest generation in U.S. history — will move into their 20s and 30s, the age groups most likely to rent,” wrote the authors of the study. “In addition, minority households are expected to account for nearly three-quarters of household growth in 2015–2025 and fully 90 percent in 2025–2035.” Email Jotham Sederstrom.

8 Steps to Take Before Listing Your Investment Property for Sale

From assessing the state of the property and cleaning it up and getting it ready to list to speaking to your tenants so they aren’t blindsided by the sale and gathering up all the pertinent information about the property and any tenants, the work you do before the sale directly impacts how much money you make at closing. Know what’s going on in your property ahead of time so you can make the repairs you’ll be asked to make anyway. If your home inspection report turns up little or nothing, you can present it to potential buyers as a “pre-inspected home,” further providing proof that the property is a solid investment. Addressing the big issues before the buyers even see the home can help bring in a higher selling price because the property presents itself as solid, so buyers aren’t asking for larger-than-necessary repair concessions—or worse, canceling the contract because they have no confidence in the property! So does the inside of the property, but if you’ve got tenants, you’ll need to coordinate with—and probably incentivize—them to clean it and keep it clean. A clean property sells faster (and for more money) than one that is less-than-tidy. You can even contract with them to clean the home after it’s sold and the new owners have moved in. If you don’t already have a great investor-minded agent, start looking for one right now. Again, if you’re selling a rental, you’ll need to coordinate with your tenants to have pictures taken of the property. In her new book How to Sell Your Home, agent and investor Mindy Jensen takes you step by step through the process, from preparing your house to sell and choosing an agent that’s right for you, all the way through the closing procedures and beyond.

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38 Addendums Every Landlord Needs for a Battle-Ready Lease

My battle-ready lease is one of the best tools I have created to make me a successful, self-managing landlord. One of the biggest mistakes I made was not having a strong lease that provided a great backbone for success–one I could refer to when the times were challenging or when I needed that written agreement, since everyone’s memories were differing. Over the years of learning the ropes of self-management, I have found that the biggest tool in my arsenal was my lease. Having a tight lease has been a huge reason for my success, as it prevents “let’s talk about it” or “that’s not what we discussed” or “I didn’t agree to that.” I have a 16+ page lease that is very extensive and is added to as things come up. I review the lease ahead of time with the tenant. At the same time, since it is a written contract that everyone has agreed to, I am no longer the “bad guy.” It keeps feelings out of the business deal. While none of this information is legal advice (since I am nothing other than a jaded landlord of 10 properties), I personally have found (as always, most of the time the hard way) that if it doesn’t specifically state in the lease or the law and it happens, you are out of luck. For example, a problem child was mad that I wouldn’t let her terminate her three-year lease at month 13. I have not had a tenant let a maintenance issue go because they didn’t want to pay the deductible. The issue is not when people are in love with your house.