Investing in real estate is a smart way to build an investment portfolio while also bringing in steady cash flow. There are many ways to invest in real estate, some taking more time and energy than others. Depending on the level of commitment, there are many types of investments to choose from:
Renting out a multifamily property brings in multiple sources of income. With so many units in one place, if someone were to move out there are still other units to bring in money. This leaves less of a risk of a $0 income. Another benefit of investing in a multifamily property is the exit strategy when it comes time to sell. Investors of the choice of selling the home, converting the units into condos to sell them off individually for much more money or finding partners with capital to partially cash them out.
Another smart investment is a single-family home. Unlike a multifamily home, there is only one source of income, but it comes with much less maintenance. This makes it the best kind of investment for first-time investors. Investing in a single-family home is cheaper than most investments, easier to manage, and even easier to sell. When an investor chooses to sell a single-family home, it’s easy to find a buyer. Most of the time, the current tenants will be interested in buying the property. If not, a single-family home is always an easy sell in the real estate market.
Although choosing to flip a house takes a bit more time to see a profit than other investments, it can sometimes offer a much bigger payout. After restoring and upgrading the property, the only thing left to do is sell it. Renting out the property will take much more time and maintenance over what could be years. Flipping a house can take a year max, depending on the number of repairs, and an upgraded property is much easier to sell. Be sure to find the right kind of property to sell in order to get the most out of the profits.
There are ways of investing in real estate without searching for a property to rent out or flip. An investor should consider investing in REITs (Real Estate Investment Trust) for a very much hands-off investment. Through this type of investment, a company that owns, operates or finances income-producing properties will use an investor’s contribution and give the investor a share of the income. These properties will range from apartment complexes, offices, shopping centers, or even hotels. It’s the perfect way to invest in real estate without taking on too much of the risk.
Los Angeles has been in the driver’s seat for about a decade now when it comes to being an ideal seller’s market. However, things are shifting fast in 2019. The City of Angels has fallen from grace as far as real estate values go today. The latest trends show a slow down with home prices leveling off and the number of overall sales significantly down from the average.
Affordability and rising mortgage rates are a couple of reasons for the softening market. In addition, realtors say that Millennial buyers are not hot for home hunting like they were in recent years. Would-be buyers have become shut out of the game because home values in L.A. have skyrocketed. The city is also known for wages that lag considerably behind housing costs. For example, lower-earning residents would need to shell out more than 83 percent of their yearly incomes just to meet the monthly mortgage payments on an average home purchased there.
Mortgage rates are expected to hit 5.5 percent by the end of 2019. Potential move-up buyers are also staying still and keeping their existing homes. Instead, they will make renovations and be satisfied with their current low mortgage rates.
Those who rent are also feeling the struggle and having to set down roots in the cheapest neighborhoods of L.A. or get a roommate just to meet the rising housing costs. That means that renters who desire becoming homeowners are finding it almost impossible to gather enough funds for a downpayment.
For example, looking nationwide, the median price for a two-bedroom apartment is $1,180. That is nearly 33 percent below the L.A. price.
This is Los Angeles’ reality; the rate of homeownership there is one of the lowest in the country. In L.A., 64 percent of households rent instead of own, and even that poses a hit to the wallet.
If one is a seller with a great property, the house will probably go but not at the crazy pace before. L.A. sellers have to be aware of the competition, especially for more expensive properties.
If one’s an L.A. buyer, there is less buyer competition and more inventory in that respect. Buyers don’t have to rush and can take time to find the home that fits into their budget.
Networking events are an important way for investors to find like-minded people who can help them achieve their goals. Unfortunately, many real estate investors do not get the most out of networking events because they make some common mistakes. Knowing what to avoid will help investors have successful networking events.
Only Going to Networking Events Occasionally
Keep in mind that it is necessary to go to more than one networking event. Regularly attending events is how people get to know each other and build trust with each other. Taking the time to attend as many events as possible is essential to launching partnerships.
Ignoring Strangers at Events
Of course, it is tempting to just stick with friends at a networking event, but this goes against the whole purpose of networking. It might be intimidating, but remember that everyone else is probably a little nervous too. Going out of one’s way to introduce oneself to strangers can have very promising results.
Not Listening to Others
Of course, it is important for a person to talk themselves up during a networking event, but always focusing the conversation on themselves can make a person look selfish. Instead, try to ask people about who they are, what they do, and what they like. Remember to truly listen to people instead of just being quiet while they talk. This helps build stronger relationships that may be useful one day.
Skipping the Follow Up Stage
Even the most exciting conversation at a networking event will not actually result in any investment opportunities unless a person follows up. Not following up after a person says they will is particularly problematic because it makes it seem like the person is unreliable or flaky. Follow up can be as simple as sending an email to thank someone for their time or say it was nice to meet them.
Attending Events Without Offering to Organize
Those who only bother with the attending part of a networking event are missing out. Volunteering to help organize future events is a good way to get really involved in the local investment community. Being part of the organizing committee is a good way for people to draw attention to themselves and make it look like they are a pillar in the community.
Shopping for a new home is one of the most important things someone will do in their adult life. Not only are they finding a place for the whole family to live for the next several years, but they are also buying an extremely important and expensive investment. There will come a time when the new home gets put up for sale, and this process will be a lot easier if it increases in value over the years. There are a number of things that alter the real estate market, but nothing has a bigger impact on the overall value of a house than the local school districts.
School districts have a major impact on the real estate market because parents are willing to do anything to help their kids succeed. Attending well-respected schools as a child makes getting into an elite college a lot easier. This makes the houses in areas with great schools extremely desirable among parents. This high demand drives up the prices of the homes. A good school district can potentially increase the value of a home by as much as $300,000.The opposite is also true. Homes in bad school districts will be considerably cheaper than similar homes in an area with good schools.
Luckily, it is very easy to take advantage of this information when buying a new house. Finding an area with an up-and-coming school district is a great way to maximize the value of a newly purchased house. As the school district starts to get more recognition over time, the house will only rise in value. This allows the homeowner to pocket a lot of money the next time they move.
It is also possible to use the knowledge of the area’s school districts to find excellent deals on spectacular homes. Finding a dream home in an area with slightly underachieving schools will cost a lot less than moving to a different part of town. This is the perfect way for someone without children to save money. It is also an effective buying strategy for anyone looking to stay in their new house forever or someone that is planning on sending the kids to private schools.
School districts will always have a huge impact on the local real estate market, so it is vitally important to keep this in mind when buying and selling homes.