Investing on real estate
Whether looking to invest in homes for multiple families as rental properties or purchase real estate to add value to your portfolio, we have a course to. Real estate investing involves the purchase, management and sale or rental of real estate for profit. Someone who actively or passively invests in real. 1. Real Estate Investment Trusts (REITs) · 2. Crowdfunding Real Estate Platforms · 3. Invest in Your Own Home · 4. Invest in Rental Properties · 5. UFC BETTING ODDS 1555
I just sort of understood almost instinctively and intuitively how to not only use the numbers, but how to get the lay of the land in a way where if you are from a more affluent place, you really don't know how to navigate maybe low-income environments the way I do, right?
It's something that's in your bones. It's in your energy. You were born into it. At this point the properties were paying for themselves and then some. Things were going great for Lisa and soon she felt a calling to help others like her. People who had been taken advantage of or simply ignored by the traditional real estate industry. That's when she created her consulting business, Affordable Real Estate Investments.
Lisa Philips: I was just struck that there's a lot of people in corporate America who were like me and we just don't fit in. I'm too good at what I do to not be lifted to higher heights because I don't know how to play the politics. And I knew there were people out there like that. But I have to tell them about this rental property strategy.
It's brilliant. And I was like, Do I go to the local library? Well, let me just go to YouTube and I'll tell people, this is what I have. I have like three properties. I'm not telling you I'm a millionaire, but I'm telling you if you're someone like me who wants to get started, there is a way to do it and you can do it safely. You can mitigate most of the risks, follow me. Lisa - YouTube: All right. If you guys are out there, go ahead and say hello and hi.
Okay I got a request to do a live on how to buy your first rental property. So we are going to go into that. Carla Harris: Lisa built an educational platform online, and through it, was able to find an engaged and loyal client base of middle income Black professionals like herself. She coaches them on every aspect of real estate investment, from how to navigate loans to tenant relations. James: I bought the house.
Lisa - YouTube: Oh my God. Round of applause. James: So wait a minute. So it was me and four other people were bidding on this house and I was like… Lisa Philips: The neighborhoods we tend to invest in, they can be any, but generally the majority are low income Black communities. So I actually thought it was a beautiful symbiotic circle of, you know, people who came from it, got some means. And then we go back to invest to make the life of the people who we resonate with better.
Carla Harris: Now, let's be clear: investing in low income communities is complicated. While these communities do need capital to be maintained and revitalized, too often large institutional investments instead go towards gentrification that raises the cost of living and pushes out longtime residents.
Lisa does her best to model a different approach. Lisa Philips: I come from this and I come from a working class background. Low-income does not mean everyone is out to not pay or to trick you or to scam you because that is a perception and stereotype. My decision is to make affordable long-term stable housing, and so I do have a really strong ethos about being very careful about coming in and pushing out people who don't have money versus getting long-term stable tenants.
I mean, we are definitely in here as investors to make a return, but also be very mindful about what you want your impact to be long-term. Carla Harris: Through her business, Lisa Phillips is sharing hard-earned knowledge so more Black professionals can benefit from rental income for years to come. Our next guest is empowering people to tap into returns that were previously only available to institutions.
While historically this industry has been about who you know and how much you can invest, Ryan sees a different future is possible. I talked with Ryan about his vision for lowering the barriers to real estate investing, diversifying commercial real estate, and bringing more capital to minority owned developers and banks. Carla Harris: Ryan. It's a pleasure to have you on the show. Are you ready? Can we jump in?
Ryan Williams: Yes, it is a pleasure to be here. Thank you for having me. Carla Harris: Alrighty. So let's talk about real estate. What was your exposure to real estate? You know, with respect to real estate investment, real estate ownership, as you were growing up in Baton Rouge, Louisiana?
Ryan Williams: Yeah. Well, I never owned a home. Never owned a house. My mom never owned her home or house. That's really how you build multi-generational wealth. But you know it was just an ambition, it was just an aspiration. And frankly, it didn't become more than that until I got to college. I went to Harvard undergraduate.
That opened up a whole new world for me in that I saw all this wealth around me. And the more I probed and the more I asked, the more I realized a lot of folks had made their money through ownership of real estate. Why aren't there more folks from working class backgrounds, folks that in Black and brown communities, like the one I grew up in who can also own real estate? Carla Harris: You know, Ryan, I want you to connect the dots for me to help listeners understand why that first step of owning a home is so important to being able to build wealth going forward.
So can you connect some of those dots? Ryan Williams: Yeah, absolutely. You know real estate, like single family homes and the like, are one of the most commonly owned properties or assets through multiple generations. Real estate has historically appreciated over long periods of time meaningfully.
There's unique tax benefits to owning real estate and people generally buy from an emotional perspective because they want somewhere where they know they can be grounded and hold over much longer periods of time than a lot of sectors or asset classes. And so it's a long-term investment in many ways, but it's a personal investment. And so if you can own a house and you can pass it onto your kids and your children's children, you know, you have the opportunity to create long-term wealth.
Now, if you don't have that access you have the same challenge with building long term wealth. Carla Harris: Yeah. And if I can add on to what you said, a house is an asset and it's an asset that can generate and create other revenue — i. So with an asset, you can sell the asset and get cash, or you can leverage the asset — i.
And you can borrow money to then invest in other businesses or to create a business or to buy other assets. And once those other things start making money for you, you can then pay off the loan that you've used, still own the asset, and now you have all these other things that it has now given you access to.
Ryan Williams: That's right. It's equity and it's that ability to build long-term equity, and then utilize that equity to multiply that equity and that's what I saw early on. Carla Harris: I hear that. Now you said being at Harvard at the same time you were there the housing crisis was starting to unfold. So how would you say that that impacted your perception of the housing market and how it might've been connected to the inequity or racism in the country?
Ryan Williams: Yeah, so between my first and second semesters. I went down to Atlanta, Georgia, and visited my roommate who was from Southwest Atlanta, predominantly Black community within the Atlanta Metro area. And I had been there the year before — street was almost pristine. When I went down this time though, I looked and it was every two, every three, homes that looked like they were being boarded up or people were moving out.
So it was like night and day. And I asked him what was going on. And so I bet there are a lot of folks who are losing the wealth that they had tried to create and build over generations. Because a lot of the communities that were suffering the most were the ones that were most prone to predatory and subprime lending.
So give our listeners two or three examples of some of the discriminatory policies that are out there that helps to institutionalize this problem. Ryan Williams: Yes. Well, one of the ones I saw firsthand was just discriminatory lending practices and policies. Underwriting certain potential prospective homeowners differently based off of everything from where they're from, to their ethnicity and their race.
And I was told I was a risky borrower. And so from a lending perspective you know, there were a ton of discriminatory policies frankly still exist and you still hear about those today. There's also a lot of red lining you know associated with with those discriminatory policies.
And so those were just a couple of the examples that we saw firsthand and frankly, many have not been addressed. But even if they were addressed, the multiple generations of these kinds of policies add to the wealth gap that we're seeing today.
And when you have institutions who aren't invested in being fair and leveling the playing field and individuals who take that same approach, there are people that suffer and oftentimes, the people that suffer the people that look like you and I, and the people that came from the neighborhoods and community that I grew up in and my roommate grew up in Atlanta. Carla Harris: So let's talk about launching Cadre, because you are clearly positioning yourself to be part of the solution.
So, basically I started Cadre you know as a result of my initial real estate investing experience. I ultimately ended up buying dozens of homes throughout Atlanta. When I graduated, I kind of kept that business as my night job. My day job was being able to pay off my student loans by working in investment banking at Goldman Sachs, which I did for a couple years. And then I got contacted by Blackstone in They knew that I had a real estate business in single family investing.
They were just getting started with theirs and despite the fact I had no institutional real estate underwriting experience, they extended me an offer to join their real estate private equity group. And so that's what I did.
I joined their team in and I got to see firsthand how what many believed was the gold standard for private real estate investing worked firsthand. And the more time I spent there, the more I realized that there was an exorbitant amount of wealth being created. But it was being created for a very small part of our global economy.
And maybe I went in naive thinking I'd be able to go in and replicate a lot of what I had done personally within that institution and help more people own their homes and their financial futures, but that wasn't the case. And so I said look, I'm going to take this learning, that it's going to take an outsider to change this insider world.
I want anyone to be able to invest in a Blackstone-like real estate property. To be successful, real estate investors must manage their cash flows to create enough positive income from the property to at least offset the carry costs. Fundrise was the first company to crowdfund a real estate investment in the United States.
Net operating income is the sum of all profits from rents and other sources of ordinary income generated by a property, minus the sum of ongoing expenses, such as maintenance, utilities, fees, taxes, and other expenses.
Rent is one of the main sources of revenue in commercial real estate investment. Tenants pay an agreed upon sum to landlords in exchange for the use of real property, and may also pay a portion of upkeep or operating expenses on the property. Some tax shelter benefits can be transferable, depending on the laws governing tax liability in the jurisdiction where the property is located.
These can be sold to others for a cash return or other benefits. Equity build-up is the increase in the investor's equity ratio as the portion of debt service payments devoted to principal accrue over time. Equity build-up counts as positive cash flow from the asset where the debt service payment is made out of income from the property, rather than from independent income sources.
Capital appreciation is the increase in the market value of the asset over time, realized as a cash flow when the property is sold. Capital appreciation can be very unpredictable unless it is part of a development and improvement strategy. The purchase of a property for which the majority of the projected cash flows are expected from capital appreciation prices going up rather than other sources is considered speculation rather than investment.
One source of investment returns is AirBNB rental arbitrage. This is the process that focuses on buying properties or leveraging other peoples properties by sub-leasing and then renting them out on websites such as AirBNB. There are pros and cons to this investment type.
You have to find properties in high destination areas to ensure that you will have enough bookings to cover the recurring costs and initial investment. There is potential to make a much larger return when compared to simply renting out a property for a long term stays. However, there is much more upkeep and much more potential for damage and unwanted costs when doing short-term rentals due to the large amount of different people using the home constantly.
Main article: Foreclosure investment Some individuals and companies focus their investment strategy on purchasing properties that are in some stage of foreclosure. A property is considered in pre-foreclosure when the homeowner has defaulted on their mortgage loan. Formal foreclosure processes vary by state and may be judicial or non-judicial, which affects the length of time the property is in the pre-foreclosure phase.
Once the formal foreclosure processes are underway, these properties can be purchased at a public sale, usually called a foreclosure auction or sheriff's sale. If the property does not sell at the public auction, then ownership of the property is returned to the lender.
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|Too faced born this way ethereal setting powder review||The areas that are shaded in light grey indicate U. Flippers buy properties with the intention of holding them for a short period—often no more than three to four months—and quickly selling them for a profit. And I had been there the year before — street was almost pristine. Real estate investment trusts REITs provide indirect real estate exposure without the need to own, operate, or finance properties. Indirect real estate involves investing in pooled vehicles that own and manage properties, such as REITs or real estate crowdfunding.|
|Relativizing motif investing||The Bottom Line Real estate can be a sound investment, and one that has the potential to provide a steady income and build wealth. There you go. Ryan discusses what inspired him to create the fintech platform and how it aims to democratize real estate investment. These include white papers, government data, original reporting, and interviews with industry experts. And in Ohio is where I really learned when you get out of the west coast, that there are properties and locations that aren't expensive to live in. Any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of acceptance given after the date of qualification by the SEC. While investing in your own home can help you build wealth over the long term, average annual returns are less than you might expect.|
|Online sports betting that accepts mastercard||So it was me and four other people were bidding on this house and I was like… Lisa Philips: The neighborhoods see more tend to invest in, they can be any, but generally the majority are low income Black communities. These types of real estate investments are usually done by having a private or hard money lender. Then a college senior in Raleigh, North Carolina, she planned to attend grad school locally and figured buying would be better than renting. And you will get credit as well when that takes off for us. Learn more about how Buildium can help you. Our next guest is empowering people to tap into returns that were previously only available to institutions. If you hold a fixed-rate mortgage, as inflation rises, your fixed monthly payments become effectively more affordable.|
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|Apple wont approve cryptocurrencies||That's right. The ability to make money without dedicating a certain amount of time to your real estate investment provides freedom for investors. In comparison to the aforementioned types of real estate investment, REITs afford investors entry into nonresidential investments, such as malls or office buildings, that are generally not feasible for individual investors to purchase directly. Flippers try to buy undervalued real estate, fix it up, and sell it for a profit. Is Real Estate Crowdfunding Risky? You take out a mortgage, make your monthly payments and gradually build ownership in your home.|
|Investing on real estate||Much like regular dividend-paying stocks, REITs are appropriate for investors who want regular income, though they offer the opportunity for appreciation, too. One source of investment returns is AirBNB rental arbitrage. Ryan Williams: Yes, I do think that the biggest challenge that we've had and will likely have is around awareness and is around education. I have like three properties. It provides a streamlined, easy-to-use platform to manage every aspect of your investments, including screening tenants, managing maintenance requests, accepting rent payments, and communicating efficiently with residents.|
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This unique strategy involves securing a property under market value and assigning an end buyer to purchase the contract. Wholesalers never own the property and instead make money by adding a fee to the final contract. The key to wholesaling lies in creating a strong buyers list. This is essentially a list of investors who may be looking for their next deal.
Wholesalers will often run a lead generation campaign to identify potential buyers. This involves marketing their business, often through emails, social media, or direct mail, and then building a list of interested investors. What makes wholesaling great for real estate investing for beginners is that it does not require significant capital to get started. While investors may need capital for successful marketing or payments of good faith, they will not be actually purchasing properties.
Furthermore, wholesaling allows investors to build a reliable network and form a strong understanding of their market area. Investors will typically enhance a property just enough to entice other investors visually. Rather than making dramatic changes, prehabbing consists of improving a property through sweat equity. A few prehabbing projects include: Cleaning: Taking the time to remove trash and debris from a property, including general cleaning, can have a powerful impact on its appeal.
Painting: At minimal costs, painting provides an affordable way for beginners to improve the appearance of a property. Believe it or not, curb appeal goes a long way in real estate, at very little cost. Investors hoping to choose this strategy should know that not every property will be well suited for a prehab.
Additionally, always keep location in mind when searching for prehab houses. Research your market and identify popular or up-and-coming neighborhoods. The allure of prehabbing should be easy to see when learning how to invest in real estate. Not only does it involve minimal risk and minimal work compared to other investment options, but it will also produce a quick return on investment.
Remember, the aim of prehabbing is learning how to sell the sizzle, not the steak. Equity REITs, which are the most common type, are essentially companies that own income-generating real estate. Investors purchase shares in these companies and generate income through regularly paid dividends.
REITs are perfect for beginners who cannot pursue real estate full time because they can generate steady, passive revenue streams. To get started, try researching publicly-traded REITs and evaluate their records yourself. It can be a good idea to discuss with a financial advisor when selecting a REIT to invest in.
A variety of investors use REITs as a way to diversify their existing portfolios, they still serve as an excellent gateway to the real estate industry. As a whole, REITs are well suited for beginners because they allow investors who may not be ready or able to purchase properties the chance to benefit from real estate. Although there are variables that can influence the performance of REITs, this investment option is known for offering solid returns with relatively low risk.
Online Real Estate Platforms Online real estate platforms, also called real estate crowdfunding platforms, help connect borrowers with investors. Developers will post deals and projects that they need financing for, and investors can then finance these projects through debt or equity.
This creates a mutually beneficial arrangement; investors can enjoy the benefits of real estate investing without having to deal with ownership or labor. The developers can get the financing they need for projects. Keep in mind that financing real estate deals can be just as risky and speculative as directly investing in real estate yourself. Always do your homework before you strike a deal.
Investors benefit from receiving monthly or quarterly distributions, and they can choose to invest in standalone projects or a portfolio of projects. Potential downsides to using a real estate platform are that the funds can be illiquid with lockup periods, and investors have to pay platform membership fees. Purchasing Rental Properties Ready to become a landlord? Investing in rental properties can be a great way to secure a fixed monthly income. If you think you can handle the responsibilities of being a landlord, you will definitely enjoy earning income consistently.
If you buy a rental property at the right time and in the right market, you might even be able to cover your mortgage, maintenance, and repair expenses with your rental income. Even better, you might even have some profit leftover!
As a rental property owner, you can decide how active or passive you want this income stream to be. Some rental property owners choose to outsource just the maintenance and repairs, and others might do everything themselves to cut costs and maximize income.
When investing in rental properties, you might also consider something called house hacking. This means you will occupy one of the rooms in a property and rent the other rooms out. Alternatively, you could buy a multi-unit property and inhabit one of the units. This can help you qualify for a residential loan, even though you plan to earn rental income off of the property. Real Estate Syndication Real estate syndication is a partnership between real estate investors, with the common goal of identifying and buying properties.
Typically, the responsibilities are split between a sponsor and other investors. The sponsor is in charge of searching for potential investments and securing the contract. They may also be tasked with managing the property. Sponsors typically do not contribute capital to the investment, and instead, add value with skills and time.
Investors in a syndication deal fund the acquisition and cover any additional costs needed to renovate or repair the property. Investors play more of a passive role, and receive payment over time through monthly or quarterly returns. The syndication aspect of the deal is completed after the exit strategy is accomplished. For example, once the property is renovated and sold. Sponsors will be paid an agreed-upon amount for their work in the deal.
In essence, you identify a home that is being sold under market value. It usually needs some rehabbing and renovation. Once the property has been renovated, the property is then sold for a profit. Investors who want to flip houses should understand the risks and be very careful in conducting their financial analyses. Several things can go wrong. For starters, if you spend too much on your renovation budget, you may not make any profit. It pools together investor money to buy multi-unit housing and commercial properties.
They might even choose to buy, renovate, and sell properties for profit. They may change their investing strategy and leverage various strategies to diversify their sources of capital. So if you want to know how to invest in real estate, you have to learn your options, like these: Homeownership Our culture needs a mindset shift. The goal is to own the place. Connect with an investing pro who gets this stuff. See up to five for free. Homeownership is the first step in real estate investing—and a huge step toward having financial peace.
In fact, paying off your home is the best way to invest in real estate. You can stay calm regardless of the ups and downs of the real estate market. Not having a mortgage also frees up your budget to save for other investments.
Plus, owning your house outright is a huge boost to your net worth. Remember, your net worth is what you own minus what you owe. Since the point of investing is to increase your net worth, start by getting out of debt first. Then, any real estate you buy is gravy! The bottom line? Pay off your house before investing in any other real estate.
Rental Properties Rental properties are a great way to bring in extra cash. They can add thousands of dollars to your yearly income. And if you decide to sell, you could earn a nice profit depending on the type of property and how you managed it. That said, rental properties come with renters. And being a landlord has challenges.
You also have to consider the expenses of maintenance, repairs and insurance. When the toilet busts at 2 a. But if you want quick wins, you might prefer the next option. House Flipping Flipping a house means you buy it, make improvements, and then sell it—all within a fairly quick amount of time. In a matter of months, you could get the house back on the market and hopefully turn a nice profit. If you love hands-on work, then have at it! And either way, budget plenty of time and money for the process.
Renovations almost always cost more and take longer than you think they will. Before you jump into house flipping, talk to a real estate agent about the potential to successfully flip houses in your area. Remember, your first investment property should be your primary home. Here are six steps on how to invest in real estate—beyond your primary home: Step 1: Pay in cash. Yep, you read that right!
You should always pay in cash—in full—any time you buy or renovate investment properties. Housing market took a nosedive right when you wanted to sell the house you flipped? You can afford to wait for the market to pick back up. Paying in full also sets you up to make money sooner. Instead of repaying a lender, you get to keep all the profits. Which brings us to.
Step 2: Diversify. That wisdom applies to your investments. Your real estate investing funds should be separate from your retirement savings. Step 3: Stay local. But you—and only you—are the property owner. So stay close and keep tabs on your investments. Step 4: Be prepared for risks. And even in the best situations, appliances still break and roofs still leak. The best way to prepare for risks and cover unexpected expenses is with a fully funded emergency fund.
Step 5: Start small. Not sure real estate investing is for you? Test it. Maybe you can rent out a space above your garage or an extra bedroom—even for a few nights at a time. Step 6: Hire a real estate agent. How to Make Money in Real Estate Investing You can make money from real estate properties two ways: appreciated value and cash flow from rental income. The key to buying real estate that appreciates is location, location, location!
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