Category Archives: Real Estate Tips

How to Stop Paying Too Much for Multifamily homes

It’s common for people to scale from single family rentals to other investments, but many times, multifamily investments are too much, and if you’re not ready for it, you don’t have to do it.


The perfect investment isn’t perfect for everyone, and that’s because demographics and faux pas that happen with regulations that create long-, healthy investments on multifamily homes, multifamily are great, but the prices are a lot all over the place. The duplexes alone that are about 200+ in terms of units are getting cap rates around the 5-6% range, and brokers are surprised when their initial pricing is blown away.

Properties that are being sold for about 6 million usually care to cap out at about 8-9 million. This shouldn’t be happening, and you shouldn’t’ be paying these inflated prices for this.

If you’re counting on continual cap rates, not looking at cash flow, and counting on appreciation to work, you need to stop it. If you’re working with interest rates and hoping that they level off every time you have to refinance, you need to stop. If you think that the rent will increase 3-5% a year to hel[p facilitate your huge deal, you’re going to need to stop it.  If you feel that inflation doesn’t equally impact the rent increases and that the rents will rise steadily at 5% when you hold steady, you’re going to need to stop it.

If you believe you have a great off-market deal from a broker that you don’t know and is shady, and you’re not aware of the value, you should ask yourself why every seller would take this much, then you need to stop it.

Finally, if you’re willing to overpay for any reason, ignore investment greats and instead are just accepting these exorbitant rates, then you’re going to need to stop it.

Many places are demanding a lot of money, and many times, investors get suckered into spending so much more than they should. You will see that deals like this are usually like this, and you don’t need to spend a lot of money to just go multifamily.

The smartest ones in the business aren’t running towards every deal that they see, hoping that they can spend too much on this, but instead they’re waiting for the next time a downturn happens, get those assets for half the price, and hoard cash in the meanwhile.Will you be the seller of the assets at that time? Well, you shouldn’t be, and instead of having to sell it for less than you bought, you should wait, make the right decision when you need to, and don’t give into the same things that others do. Instead, you need to make these smart decisions that will ultimately affect your income as an investor, and in turn, you’ll be able to create a better and more rewarding situation from this as a result of your actions and the endeavors you take.

Is Buying a Rental Property with Negative Cash Flow Ever OK?

Investments are made to get a return, no one in his right mind would invest in something he knows is going in a loss in the future. However, there may be businesses or investment who in their current position are going in a loss but with the right changes can make a good profit in the future. Some properties might look very good but they don’t give constant or proper returns in the future based on the structure of the building, climate change or any other political or environmental factor. On the other hand, you might find a building which in its current state is giving negative cash but might give good returns in the future. Cash flow in case of rental property means the amount of money the generated from the property.

There may be much reason as to why a rental property might be giving negative cash flows. Some of the reasons are as follows:

  • The property requires maintenance but the current owner doesn’t have enough money to further invest in the building.
  • The management of the rental property is not doing a good job thus people don’t want to use the property.
  • The property doesn’t have proper utilities i.e. electricity or heating.
  • People living in the property are not paying their rent on time.
  • The property was hit by a natural calamity and people are afraid to use it. Unless there is something that can’t be fixed, there will always be a way to convert negative cash flows into positive. There are some ways a property giving negative cash flows may lead to a winning situation in the future. Determining cash flows cash flows can be either positive or negative. Positive cash flows from a rental property means when your earning is more than the expenses you occur each month. In simple words when you are getting profits. Negative cash flow means when you spend more on the property then you earn. There may be two reasons why properties giving negative cash can end up giving you profit, these are:
    1. Appreciation
    2. Long-term gain

    Appreciation
    Appreciation is the increase in net worth of the property. This is associated with a lot of factors.  Appreciation in the value of the property can be due to increased demand for such properties in the area or when more people are looking to get a property and there are limited properties available on sale. Changes in interest rates and inflation also cause a rise in the value of the property.

The appreciation in the value of the property is different in every area. Some states and regions have a higher rate of appreciation in terms of values.

Long-term gain

There are certain area where people don’t easily vacate a property, if you find a property in such an area it’s a good choice to buy it because currently, it might be giving negative cash flows but in the long run when people will be interested in getting a property in that area you will have the option to sell / rent the property when other wont. Similarly, some properties currently might not have a good value but with the development going around that area it might become the center of attention due to its location therefore giving the positive return in the longer run.

The question still persists that is buying a property that is giving a negative cash flow ok? I say yes! It is ok but only if you make careful decisions taking into account the broader picture of appreciation and long term gain and only if you have enough to stay afloat and are able to wait. However if you looking for a very short term benefit or if you don’t have bigger pockets then it is not a good idea. For futher consulation, you may contact sAn jose ca real estate to get more specific advice to deal with your real estate situation.

The appreciation in the value of the property is different in every area. Some states and regions have higher rate of appreciation in terms of values.

Long term gain

There are certain area where people don’t easily vacate a property, if you find a property in such an area it’s a good choice to buy it because currently, it might be giving negative cash flows but in the longer run when people will be interested in getting a property in that area you will have the option to sell/rent the property when other won’t. Similarly, some properties currently might not have a good value but with the development going around that area it might become the center of attention due to its location, therefore, giving the positive return in the longer run.

The question still persists that is buying a property that is giving a negative cash flow ok? I say yes! It is ok but only if you make careful decisions taking into account the broader picture of appreciation and long-term gain and only if you have enough to stay afloat and are able to wait. However, if you looking for a very short term benefit or if you don’t have bigger pockets then it is not a good idea. For futher consulation, you may contact real Estate to get more specific advice to deal with your real estate situation.

Becoming A Better Investor

Real estate investors have a lot to skim from this lucrative business of everything is done with planning and clear state of mind. It is not easy to be an investor as putting your capital in just another deal is not wise.  A number of things should be kept in mind while investing in a property. If the investor is positive about everything and still remains in doubt, there is not enough profit coming. Investors should learn the process of allocating their precious capital before entering into the business and signing a deal blindly.


When to avoid investment
There is one golden rule to follow that if you don’t understand the deal it is best to leave it and move forward. It is not necessary that because you went through the deal you have to invest now. Don’t let others convince you for a deal you are not comfortable about. Even if the investor cannot explain the hesitation to others, just let go the deal. No deal is the last deal. It may take a little time but more deals will be offered soon so one should patiently wait for them. The person with whom the deal is being done or the one who will be managing the money should be able to explain all aspects of the deal in detail. If he is not able to do so, there is a problem. The deal may generate cash initially but eventually it will prove to be dangerous game.  A lot of bad days can be avoided by doing so.

Market value and intrinsic value are different
For new investors it is imperative to know the market values and the intrinsic value are different. The beginners might not be familiar with this fact but they will know this as they proceed. If the investor has a significant stake in the a very well running business and is receiving a handsome cash periodically, a durable competitive position that makes it problematic to overthrow in its given sector or industry, and a board of directors that is shareholder-friendly, it shouldn’t cause any distress let the affluences decline by 50 percent or more in documents.

Net present value should be calculated
Average investors thinks that that it is the net present purchasing power that is important but actually the net present value should be given prime importance. The value of currency fluctuates every now and then. The spending and investing should be done keeping in mind that the market can vary at any time. Money is a tool in real estate. If used wisely this tool can generate loads of cash. If this is not considered seriously our short term desires can create long term problems.

Taxes should be given due importance
Every small thing matters in real estate. All possible strategies should be applied to t keep the capital in the right place. The asset placement is also equally important in all types of business. The taxes and costs should be calculated accurately and precisely so that the number game remain strong and no issues is faced due to taxes and costs. Spending time on this task is worth all the time and energy because with this we will be able to calculate the profit and plan for future ventures. If enough capital is saved, new opportunities can also be availed. The expenses and costs should be calculated correctly. These should include the self-employment taxes that has to be paid periodically. Even if the company is going in loss, the taxes should be paid timely to avoid any complications in the future.

 

Investing in Real Estate without Cash

There are more ways to invest in real estate than you might think since you can do it for short-term profits or cash flow from rentals for the long term. Many want to be real estate investors, but the idea of having the cash for house flipping and buying and holding just isn’t realistic. But, can you still be a real estate investor? Yes, you can and here’s how you can invest in real estate without cash.


There are some strategies that involve investing without cash or even a small amount of cash. You can begin with a few hundred business cards. There are ways to get started with some legwork. It isn’t easy, but it does create cash for you.  You can look into gurus who have taught many of the methods, or even going to real estate websites. don’t pay for super expensive courses or mentoring, but instead look for ways to learn it that fit you.  Bird-dogging, assignments, lease options, sandwich leases, and back-to-back closings are great.

Bird dogging is actually a great way to start. Essentially, the job is to find homeowners that haven’t been able to sell or haven’t been able to handle the mortgage they have. It doesn’t require cash, just business cards, and effort, and it allows someone to help. It is a great way to find deals that investors can work with. The bird dog essentially brings the investment to the investor, and you can make a lot of money, up to 10,000 when the deal closes.

Assignments allow you to sign the contract to the buyer without the consent of the seller, and essentially, it allows you to do these kinds of deals, and you are essentially assigning the investor to the job, but you get a fraction of the money.

Lease option is when you have a lease with monthly payments, and you give them the option to purchase at the end. If you’re in a rental that you want to et, but don’t have enough for the payment, you can actually lease this, when you have the money buy it, flip and then make a profit.

Sandwich leases involve two lease options with the investor right in the middle, which allows for the investor to purchase at the end, and finding a tenant who wants to purchase, but can’t due to credit or down payment. You should try for a lease purchasers on this.

Finally, there are back-to-back closings, which is essentially double closings where one is used to fund one deal, and the other allows for you to do multiple closings without losing money. You can from there make a decent profit.

These are some of the ways to make some money with investing without having to fork over a ton of money to do this. It takes a bit of work, and you’ll need to team up with investors, but it’s completely possible for you to do and to achieve as well too.

Is Real Estate A Good Retirement Plan?

Is real estate worth the effort? Is it really that great of an investment?Yes, indeed it is and if you are looking for a retirement plan, real estate investment is the way to go. Though, it isn’t all a piece of cake, one needs to possess finance skills, intuition, knowledge and a little bit of luck. I won’t lie to you, real estate is tricky business but if you can sail through, it’s an amazing investment.


Increase Your Real Estate Knowledge
Just like you do every time you’re about to jump into something new, it is great if you increase your knowledge on real estate and all aspects surrounding it. Having information on the subject will give you an upper hand, save you from potential scams and what took people years to learn, you will already know.I recommend reading books likeThe Challenge by Robert G. Allen, Building Wealth One House at a Time by John SchaubandRich Dad, Poor Dad by Robert Kiyosaki and Sharon Lechter. If you aren’t into reading then head to YouTube and watch some informative videos on real estate.
EvaluateYour Skills

There are various methods that can be resourceful in the wonderful world of estate! Many just plunge into the waters; they leave it all to their luck hoping the deal will play out in profit. While others chose to spectate; carefully analyzing the consequences of the land plot they can work out, or a house they can rebuild and rapidly move in a growing business sector. Others reliably search for money making properties; either office spaces or private homes they can rent.

Evaluate your skills and abilities to decide on how to plan to approach your options and dealings in real estate. A lot rides on your first investment, so try not to mess it. If you aren’t too confident on your abilities or think it’s too soon for you to be making big decisions. Go to a real estate consulting agency, it may cost you a bit but it will definitely be worth it. Make sure to do your research before going to a real estate agency, one Google search will really save ya!

Tax Benefits

Investing in real estate will offer you quite a lot of advantages and one of them primarily being “tax benefits.” A lot of us aren’t very informed on the matter, thus before jumping into investments, its best if you start understanding tax and mortgagedeductions. For instance, the income generated by rented property is totally tax free!

Sometimes, You Gotta Take a Leap of Faith

You’ve probably heard the saying “real estate takes deep pockets,” There will be times where you will have property or land, but exactly know what to do with it. That’s where the leaping comes in, you’re going to have to sell, rent or hang on the property all on a whim, okay not entirely but partially. Income might come in slow sometimes, it could be stable at one times and everything may completely fall apart the next moment when renters begin to move out. As I mentioned above a lot of real estate investment relies on luck.

All in All

Real estate can be a worthwhilegamble if you go about it the correct way. If you are going to use real estate as a means to gain a stable income or as a retirement plan. Here are three things you have got to keep in mind; Preparation,patience and research. If you’re serious about real estate investing then it will surely pay off.