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The Benefits Of Developing A Multi-Use Property

The Benefits Of Developing A Multi-Use PropertyRenovations that create a multi-use property or the development of a new multi-use project can be a very attractive investment especially in urban areas that are undergoing redevelopment. The concept of multi-use is to make the most of the site that is revitalized or developed.

Multi-Use Projects

Typical multi-use projects have a mixture of retail space, restaurants, offices, and/or living spaces. They may include parking areas. Large multi-use projects can also become destination locations that are core improvements, which create a momentum for the gentrification of an entire area. Waterfronts, boardwalks, and walking promenades are successful as multi-use projects in many cities.

The advantages for investors in these projects include the ability to design the use of the space to maximize the return on investment (ROI). Depending on the area for the project’s construction, there may also be tax advantages.

Tax Advantages

Under the new tax laws, Opportunity Zones all across America have been created to stimulate redevelopment in areas that are distressed. The federal tax advantages include either delaying capital gain taxes or avoiding them altogether if investors hold the investments for more than ten years.

It is also possible to sell a project in an Opportunity Zone for a profit and then reinvest the proceeds under a tax exchange transaction into another investment in an Opportunity Zone and avoid paying the capital gains. Check with a competent real estate and tax attorney to learn how to set up an Opportunity Zone Fund to maximize the tax advantages.

Additionally, the financial basis used for calculating any profits on the second transaction is raised, thereby locking in the tax savings on the profits from the first transaction. This is a very effective strategy for build-to-suit developers who organize a multi-use development project in an Opportunity Zone with the intent to sell it.

State, County, And Municipal Support

Depending on the location, there may be state, county, and/or municipal support in terms of tax abatements and contribution of the land and funds for the development of a multi-use project.

Lack Of Basic Services

Another key consideration is that many Opportunity Zones lack sufficient basic services. Some neighborhoods do not even have a grocery store. A multi-use development, in a distressed neighborhood, which offers services and stores for these basic needs, is likely to experience an immediate consumer demand for the offerings.

Loans And Investment Funds For Multi-Use Projects

Lenders are more attracted to multi-use projects because of the possibility of higher average rents per square foot that will cover the monthly mortgage payments. Multi-use projects can be successfully funded by crowd-sourcing techniques as well.

Opportunities For Real Estate Agents And Brokers

REALTORS® have commission-earnings potential in the sale/acquisition of the properties for a multi-use development, leasing out the properties when developed, and selling a project upon construction completion or after being leased out.

Conclusion

The advantages of multi-use approaches as a development project are significant. There is plenty of support available in many parts of the country for these projects. REALTORS® benefit from many opportunities for commissions on each project as the development begins, the project is leased out, and then potentially sold.

Be sure to partner with a trusted real estate professional if you are interested in purchasing and developing a multi-use property.

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How To Find Motivated Sellers In Your Real Estate Market

How To Find Motivated Sellers In Your Real Estate MarketBargains in real estate may come from identifying motivated sellers who are willing to let a property go for less than it is really worth. Real estate investors who acquire properties at a discount from current market value enhance their success by increasing their profit potential. Real estate agents who list properties owned by motivated sellers increase their chances to sell a property quickly and have happy sellers who might refer them in the future.

Here are some tips on how to find motivated sellers:

Distressed Discounts

A property that lists for a long time and then the listing shows a discount is a clear sign the owner is becoming motivated. However, just because a property shows a discount from the original listing price, it still may not be a bargain. It is important to learn if the present owner has an unreasonable expectation. Check the recent comparable sales (comps) and then offer no more than 25% less than the sales price of the lowest comp.

Track Foreclosures

For real estate investors with the liquidity to do all-cash deals, tracking foreclosure dates creates opportunities. Properties may be bought just before the final foreclosure date at a large discount because the owner knows that the house will soon be lost anyway.

Short Sales

Another all-cash deal is the short sale. In this type of sale, the lender is driving the deal. The lender is willing to accept a steeply-discounted price to avoid an expensive legal foreclosure process. These homes almost always sell for way below market price and the seller is highly motivated.

Divorce Proceedings

A couple going through a disputed divorce may be forced to sell a home in order to be able to divide the assets owned by them. These are highly motivated sellers who may simply want to get rid of the home fast as part of the process of being finished with the relationship.

Estates

Another reason why a home may need to sell is if the person who owned it died. An estate sale may be a good deal if the executor of the estate is motivated. This happens if there are multiple family members who are impatient and have claims to a portion of the assets as their inheritance.

Will Pay Cash For Houses

A simple sign or flier posted many places with “Will Pay Cash For Houses” and a telephone number on it actually may work in some areas to find motivated sellers.

Personal Networking

Ask everyone if they know of someone who needs to sell a home quickly.

Summary

Finding motivated sellers is a useful thing to do for investors looking for great deals and real estate agents wanting faster-selling properties to list. Ask a homeowner why they want to sell to learn their motivation. Property owners who experience troubles create opportunities for others who are ready to help them sell a property fast and when the need is urgent.

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4 Reasons Millennials Should Buy A Retirement Home First

4 Reasons Millennials Should Buy A Retirement Home First There’s an idea running through marketing and business circles that anything that is popular, the opposite will likely be popular as well.

Consider that sugar and caffeinated beverages such as Coca-Cola have seemingly opposite products like Coke Zero. That product, in turn, is offset in the marketplace by high-sugar, high-caffeine energy drinks such as Monster and Red Bull.

In the housing industry, reverse living homes enjoy popularity. Basically, the bedrooms are downstairs while the kitchen, living room and other gathering spaces are upstairs. This concept of doing the opposite brings us to the idea about buying a first home.

The vast majority of potential buyers focus on starter homes as they build financial success. Some think about how that first home could be expanded to grow a family or sold when marriage and young ones come along. But Millennials enter the housing market may want to consider doing the opposite. What if you bought your last home first?

Consider these reasons for starting with your retirement home.

1: Lifestyle Suits Renting First

Millennials are flooding the job market and beginning to earn wages that prompt them to make major life purchases. But Millennial jobs tend to be different from the traditional ones of previous generations. Tech companies are trending in hip cities across the country and places with excellent weather. That means these first-time home buyers would either find themselves commuting through rush-hour traffic from the suburbs or paying urban real estate prices. Young Millennials may be better off renting and investing in property elsewhere.

2: Rent Out Your First Home

By taking your initial down payment and investing in a rental property, Millennials can make money or maintain a zero-expense real estate buy.

By purchasing your future retirement home in a vibrant community with a relaxed environment, it can pay for itself while strengthening your economic portfolio. The equity building in that first property will position you for a second home to live near work or build a family. That retirement rental may even put a few extra dollars in your pocket.  

3: Pursuing Career Opportunities

Whether you are fresh out off college, completed military service or rising in a company’s ranks, Millennials on the younger end of the spectrum can benefit from agility. Being able to seamlessly relocate to pursue emerging career opportunities or take a promotion in another city or state can help maximize your earning potential. Having a home is certainly nice, but you will be faced with a decision to sell and buy a new one or pass on an opportunity. Those are not necessarily the best considerations during prime earning years.

4: Downsizing Matters

The trend of valued elders is to downsize family homes as the enter their golden years. Ironically, many purchase the same type of starter homes all over again. The value of buying a retirement home first is that you will be able to cash out of any other property and apply that revenue to living expenses. In all likelihood, the initial real estate buy will be paid off. In the end, doing the opposite of common trends can prove to have improved long-term benefits.

If you are looking to buy a home to live in or for a long term investment, contact your trusted real estate agent to help you find your dream property.

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Myths About Buying A Vacation Home

Myths About Buying A Vacation HomeAre you thinking about buying a vacation home? Maybe owning two homes is part of your retirement dream. Maybe you’d like to have a second home in your favorite holiday locale.

If you are thinking about taking this step, you might have talked to family and friends about it. Unfortunately, many people give well-intentioned, yet poor advice when it comes to buying a vacation home. Here are some myths — and the truth — about buying a second home straight from leading real estate experts.

You Can Buy A Vacation Home With No Money Down

You have probably seen advertisements about buying a vacation home with no money down. However, this is simply not the case and those advertisements are misleading. Unlike buying a first home, you will need a sizable down payment to purchase a second home.

The minimum amount down that you will need to buy a second home is 10 percent. In order to qualify for the lowest down payment, it would also have to be a single family residence and not an investment property.

So, if you plan to use it as a vacation rental, then you will need more money down – usually at least 20 percent due to the property being considered an investment property.

Renting Out Your Vacation Home Is Easy

Sites like VBRO, HomeAway and Airbnb have made renting out vacation rentals much easier. However, renting out a vacation or second home is not as simple as it seems. While renting out your vacation home is a great opportunity, you must run it like a business.

And remember, there are more expenses than just the mortgage payment and possibly HOA dues. Utility payments and amenities like internet and television services add to the monthly expenses and are desirable features to prospective renters.

Take some time with your trusted real estate professional and pencil out the total costs of maintenance. Then you will have a great idea of what it will take in rent to cover the costs.

You Don’t Have To Worry About Your Vacation Home When You Are Not There

Many people think that they can buy a vacation home and then forget about it when they are not using it. This is simply not the case. Vacation homes are often targets for thieves, so you’ll have to plan for a way to protect your home when you are not there.

Fortunately, the newer smart alarm systems make it easy to monitor a property from anywhere. Many smart home systems also include flood detection monitors so that you can be immediately notified if you have a water leak.

Owning a vacation home can be a very rewarding investment and a great addition to your long term financial plan. Once again, take your time and get your trusted real estate and mortgage financing professional involved to help you make the best decision possible.

 

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How To Manage Investment Property While Working Full-Time

How To Manage Investment Property While Working Full-TimeIn 2017, upwards of 75 percent of independent rental property owners in the U.S. reportedly worked another job on top of being a landlord. That means the overwhelming majority of landlords are attempting to juggle more than they can handle at times. However, there are organizational and strategic concepts that can maximize efficiency and profitability.

Consider the following tips that bring property management tasks under three basic headings: organization, automation and outsourcing.  

Organization Matters

One of the things that tends to overwhelm landlords is thinking about the rental properties as an extension of home ownership. The rental seems like it involves many of the same tasks such as maintenance and repair.

By rethinking rentals in terms of a small business, the way these and other tasks are approached can become radically different. If this were a Mom and Pop store or a corporation, the necessary resources would be brought in to handle niche labor. Organize all of the tasks that the rental unit(s) require under categories that may include the following.

  • Rental Advertising
  • Applicant Interviews
  • Background Checks
  • Legal Documents (leases)
  • Maintenance and Repairs
  • Rent Collection and Bill Paying

Accounting

With a defined set of tasks organized under specific headings, it becomes much easier to visualize the breadth of work involved and what supporting resources would be needed.

Automation Matters

Industries across the globe are moving to automation as a way to increase productivity and lower costs. There’s no reason landlords working other jobs cannot do the same.

While fixing a burst pipe may not be a good candidate for automation, there are numerous tasks property owners undertake that no longer require valuable time.

  • Advertising: Consider a process where an online advertisement is pre-written and posted when a lease expires.
  • Rental Payments: Consider automatic withdrawal from tenant accounts or having them direct deposit.
  • Bill Payment: Consider auto pay for every possible facet of the property, including utilities, taxes, insurance, mortgage and others.
  • Maintenance and Repair: Consider an online form for tenants to fill out that provides real-time notification.

These and other tools can streamline the amount of time required to manage a rental property without incurring significant expense.

Outsourcing Matters

People who work regular jobs and also manage rental properties are entrepreneurs by nature. That go-getter personality leads many to take on more tasks than there is time in the day. That’s why outsourcing is so important.

Outsourcing things like accounting or legal services are no-brainers because they require specialized knowledge. But other tasks such as applications, background checks and maintenance may be good things to put on someone else’s plate as well.

As noted in the beginning of this article, if a small business mindset were applied, many of these tasks would be assigned to a designated resource. Consider operating rental units in this fashion by running a cost analysis and outsourcing. Roll in the labor costs that make sense and take some time to binge watch a Netflix series while your investment turns a profit.

If you’re ready to invest in a rental property, contact your trusted real estate professional who can point you to the hottest markets in your area.