Month: June 2016

by Tim Herriage Tim Herriage No Comments

INVESTOR EDUCATION AND REAL ESTATE INVESTMENT CLUB? Part 3

Are real estate investment clubs the best source of investment education? Is the education they offer relevant to you and your goals? Again, are you the “main attraction” or the “main course” when it comes to encouraging your gaining of an investment education?
BUY LOW AND SELL HIGH?
Real estate investment is way more than this. First there are different types of real estate and investment strategies. Real estate investment is not “one-size-fits-all.” Then there are investor stages of beginner, intermediate and expert.
Let’s assume you are a beginner attracted by the idea of making “mad money” like the TV shows of celebrities flipping houses! Reality is that it is not that simple. Anyone that tells you “there are three easy steps to house flipping success” is delusional.
There is a reason they promote their classes this way so as to cut through the competitive clutter and get you into a carefully scripted “sales funnel” and upsell sequence guiding the would-be investor into their expensive education programs. Much of what is offered rushes the investor into specific investment strategies before a newbie investor understands what the industry is about.  Much of what is offered is also available at little to no cost. Google free advice on the subject.
YOU ARE THE MAGNET 
Many real estate investor clubs bring in investing experts and gurus as keynote speakers. The club organizer offers their members as an audience so the expert can offer to sell their education programs. The club takes some proportion of any sales revenues.
In cases like this it is fair to assume that the educator and the club organizer are more focused on their dollars versus your investing, in fact there is a dirty little secret. If you real invest in real estate this reduces the amount of revenues you can spend with them. Quite a contradiction.
INVESTOR SURVIVAL SKILLS
Before any thoughtful investor plunks down their hard earned money to buy a house, they have done some research on the market and the property. Learning to do that research is a skill in itself, and for many real fun. It is like finding a needle in a haystack, because all real estate available to buy is not necessarily a good buy. Knowing the difference is an investment survival skill you cannot afford to take lightly.
Many real estate investment clubs teach introductory investment courses that review these basic skills however there may be a bigger issue and a better way because not everyone has the time or the skills to invest directly, but they still want results.
“HANDS ON” OR “HANDS OFF/HEAD ON” INVESTING?
A couple of years back a study was done of guest attendees at a successful regional real estate investment association and National Real Estate Investment Association member. They wanted to know why guest to member sign-up and overall retention was ineffective.
The study concluded two things. Focusing at expert provided education on deep investment process or narrow investment strategies before providing basic investment education and a broad familiarity with investment, drove guests and members away.  They were effectively offering an advanced cooking class, when the student chefs had yet to understand the tools and ingredients found in a kitchen.
Secondly. Many guests were not interest in the work required to be a hands-on real estate investor, rather they wanted the results and now.  A class about a narrow process or investment strategy pitch just confused them.
An investment responsive audience wants to learn about results not practice, and in many cases was looking for genuine experts who understood the sacrosanct role of someone providing investment advice. This is why, for some, finding a trusted real estate investment adviser was preferable to joining a real estate investment club to get to the result by going the long way around.  Talk to us below.  We want to know what you think!
Full Disclosure: 2020 REI Companies operates the DFW Investors. This is a community for local investors in the Dallas/Fort Worth area that provides resources and discounted investment property listings available for purchase. It is open to anyone. Vendors can buy exhibit space and experts speaker slots. Attendance is free to anyone. For more information, receive emails or get meeting schedules, visit DFWInvestors.com.

by Tim Herriage Tim Herriage 2 Comments

HOW BIG IS THE SINGLE FAMILY RENTAL (SFR) HOME INDUSTRY? Part 2

HOW MUCH REVENUE DO SFR RENTALS MEAN? Part 2
Last week we discussed the size of the Single Family Residential rental business. We began with the CAPITAL INVESTED AND THE EFFECT OF ANY CUMULATIVE APPRECIATION. Using the U. S. Census Bureau median value of a 2015 house sale at $299,000 puts the cumulative value of these 23 million doors at $6.877 trillion dollars. Wall St fund analyst Kroll Bond Rating Agency identifies just 330,000 rentals, valued $89 billion in the hands of funds.
Using the U. S. Census Bureau vacancy rate of 6.42% it is estimated an added 1,476,000 homes and worth $442 billion giving the SFR category a total value of $7.480 trillion.
These numbers ignores two important aspects of the SFR industry, the annual income and expenditures to operate these rentals.
ANNUAL REVENUE AND EXPENSE
INCOME: In 2014 the U. S. Census Bureau found typical SFR rent to be $11,208 per year for the 23 million occupied rental houses. This gross rental income equals $258 billion a year.
EXPENSES: The expense side of owning and managing rentals involve goods and services or labor and materials. For this calculation we are going to assume the impractical position that all these rentals owned outright. We will address mortgage expenses and services revenues of SFR rentals later.
Direct expenses fall into a number of categories:

  1. Management costs: These vary by market and property but equal about 10% of monthly rent. This means $95 a month or $1,140 annually. It is not valid to assume all 23 million of these rentals are managed for a fee by third parties. Industry practice suggests this is just 35% of total rental inventory. This means 8,500,000 doors generate $9.177 billion in annual property management fees. The other 65% are likely do-it-yourself owners and a significant yet to be conquered market for property management.
  2. Turnover expense: Tenant turnover is a rental reality. A cost is incurred by the vacancy, then the duration (lost rent) times the frequency of vacancies, plus the amount of work needed to successful re-rent the property.
    1. Renovation and refresh: Materials and labor ranges from $500 for normal wear and tear to $1000’s for undue property damage. Using $1,000 and a conservative 50% rental turnover estimate, this activity generates $11.5 billion in renovation and rental refresh fees just in single- family rentals.
    2. Lease-Up: These commissions can run two months rent plus 8% (one month’s loss of rent.) $11,208 multiplied by 8% = $897 times 35% of the market (half of 8,500,000 doors) = $3.812 billion in lease up fees to finding tenants.
  3. Maintenance: Reserves are theoretically set at five percent of the capital value of the property. This is a notoriously underestimated and underfunded cost. Fannie Mae suggests a property owner allocate 2 percent of the property value annually. For a property worth $150,000, a landlord should reserve, though not necessarily spend, $3,000 for maintenance costs. Assuming half of this number translates into maintenance for 50% of the SFRs in the U. S., this is an added $17.25 billion in annual repairs.
  4. Insurances: Estimated at around $500 a year per door generating total premiums of around $1.2 billion a year for basic investment property insurance.
  5. Taxes: Any taxes due on the property are location specific. Estimated at between 1% and 3% of capital value, rental investors pay billions to local governments and they want more.
  6. There can be other rental analysis fees we are ignoring for the purposes of this discussion.

IN SUMMARY
The capital and revenues contributed to national economy (parsed out as local expenditures) are massive.  Capital Invested is $7.4 trillion in 2016 values.   Annual Expense categories for single-family residential rentals summarize as follows:

  • Management fees – $9.2 billion for just 35% of rental properties
  • Turnover Expenses
    • Renovation and Refresh expenses – $11.5 billion
    • Lease-up commissions – $3.8 billion
  • Property Maintenance – $17.25 billion
  • Insurances – $1.2 billion
  • Local government taxes and municipal fees – tens of billions……

$35 BILLION+ ANNUALLY TO MANAGE $7.4 TRILLION
This $7.4 trillion dollars worth of single-family residential rentals is responsible for at least another $35 billion in direct expenses we can conservatively estimate however do-it-yourself investors contribute unaccounted for billions in direct effort to manage 65% of these rental houses that are individually owned.
This market grows at about 4% per year. Of the 1,090,000 homes sold for investment in 2015, RealtyTrac reports only 189,778 were “flips,” meaning 910,000 probably became rentals. We will look at the fix and flip market value in Part 3.
SFR investing is a successful investment provided you buy wisely in sustainable markets. For more information, contact us here, or comment below.

by Tim Herriage Tim Herriage No Comments

GREAT RENTAL PROPERTY RETURNS REQUIRE HAPPY PEOPLE

As simplistic as this sounds, if tenants are not happy, employed and living comfortably, your rental investment risks go up and your rental returns go down.

DS News quoted Tim Herriage CEO of 2020 REI Companies as saying “focus… on economic fundamentals when it comes to deciding where to invest. I have always focused on jobs and schools as the main driver for my investment decisions,” he said. “Chasing high rents, without understanding the important underlying fundamentals: leads to poor investment decisions.”
What are these underlying fundamentals that lead to wise rental property investment?

PICKING PROFITABLE INVESTMENT RENTALS
Investment analysis in the stocks, bonds and funds world is a rigorous discipline does not have the respect it should be in single-family residential rentals. There are many different opinions as to what these criteria are that are then heavily affected by the position of the opinion source.
Unsurprisingly the criteria for successful rental SFR selection are almost identical to as those a homebuyer uses to pick a house to buy for their family. The common element is that people have to be comfortable living there.
STOCK-PICKING HOUSES
In the Wall Street world the details to be analyzed fall into analysis “fundamental” and “technical” categories and have specific meaning that can be reasonably applied to making a house choice.
Fundamentals for a house choice are essentially the details or description (size and price) of the house, a 2,200 square foot house with 3 beds/2 baths and a two-car garage. In stock picking this is the company statistics, what they do, size, revenues and profitability.
The technical considerations are similar to those used in the analysis of a corporate security, comparing this house and its performance, price/appreciation and rent-ability as compared to other houses in this market.
GETTING PERSONAL
However securities analysis never gets quite as personal short of examining management, as it does in determining how a the house suits a family and the individuals that make up that family. These are the market economics and demographics of a market and the ability of this area to meet personal/individual requirements of the family members.
Ignoring these criteria can completely upend a spreadsheet analysis that appears to look like a good investment.
HINDSIGHT ADVANTAGE
2020 REI Companies believes this experience and hindsight should be turned to their investment client advantage buying houses, investing with SFR funds or just learning about this. We will interview Tim Herriage to learn the good the bad and the indifferent of this analysis in future emails, for now, ask us questions below.

by Tim Herriage Tim Herriage No Comments

EXPECT MORE SINGLE-FAMILY RENTAL INVESTORS?

There are a number of trends and cross currents that give wise single-family residential rental investing a consistently bright future. What are they and how could they affect your investing?
IS THE COMMERCIAL AND APARTMENT SECTOR OVERHEATED?
The Wall Street Journal (6/22) warns that too many dollars may be chasing Millennial renters in downtown luxury apartments. Builders are finding it harder to find banks to fund construction because of concerns the sector is overbuilt.
Investors already attuned to real estate in commercial and apartments may find investing in single-family rentals no longer the leap of investment faith it once was. Blackstone, Cerberus and Colony American Capital have proved this.
STARTER HOUSES, NON-STARTERS?
Builders face a dilemma. They cannot make money building starter homes and they are finding first time buying Millenials don’t want them.
This is important. Historically this age group is 32% of house buying public. If affordable homes don’t produce margin builders choose to build Move-Ups and Luxury Residences. In select markets, where infill land is available, a few builders have elected build-to-rent, but this is limited so a chicken and egg situation exists. Our “Quotes of the week” affirm this.
Part of the dilemma is Millenials expect more than a starter home but are not yet in a position to pay for more. Builders cannot monetize delayed demand, especially public companies, so they build where the margins are.
Fannie and Freddie are struggling to find alternative credit scoring models to create more mortgage eligible buyers but with limited home inventory that suit this demographic, this is simply “fiddling around the edges.”
Any delay in millennial house purchase decisions, maintains a sustained SFR tenant demand. If you are a family and you cannot buy the house of your dreams, the next best thing is renting it near jobs and schools.
DEMANDING DEMOGRAPHICS
Two numbers drive housing demand, rental or purchase; people and incomes. Nationally weak job growth remains and is primarily in middle-income and service jobs. There are regional markets in Texas and other Southern markets that are doing better than this national trend.
Tim Herriage CEO of 2020 REI Companies said in DS News, “focus… on economic fundamentals when it comes to deciding where to invest. I have always focused on jobs and schools as the main driver for my investment decisions,” he said. “Chasing high rents, without understanding the important underlying fundamentals: leads to poor investment decisions.”
High rents tend to be cyclical and in high priced markets that tend to punish investors who try to time purchases and sales. Job creation and meaningful school quality require long lead-time economic and infrastructure investments, thus are found in sustainable and less trend driven markets.
Wise SFR rental investment in these markets benefit from three factors; sustained demand by well paid employees who aspire to rent properties they would be happy to buy if the opportunity presented itself. Property appreciation follows.
In this job/school/lifestyle environment a wisely bought rental investment offers a blended return of both rental income and sound house price appreciation, versus just pursuing higher rent.
So if commercial real estate and apartment investing cannot generate the returns you desire as an investor, are single family rentals the next real estate investment class? See how our group can help!  Comment below or click here.

by Tim Herriage Tim Herriage No Comments

HOW BIG IS THE RENTAL HOME (SFR) INDUSTRY? (Part 1.)

[et_pb_section admin_label=”section”][et_pb_row admin_label=”row”][et_pb_column type=”4_4″][et_pb_text admin_label=”Text” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]
The Great Recession, followed by institutions buying houses to rent, gave visibility to the formerly cottage industry of residential investment.
It was suggested investors had helped push the economy into recession and are now allegedly profiting on the backs of renters?
True or not, understanding the influence rental acquisition and rental activity has begins with understanding how big this segment is, and then explaining the essential value?
IMPRECISE DATA
Data on real estate investment is generally imprecise. It is not a formally defined profession or industry. This is changing but in the meantime many people participate, meaning renters, owner/investors and suppliers.
We can imply size from consistent but unrelated annual studies: two are the annual the National Multifamily Housing Council (NMHC) Report and the National Association of Realtors (NAR) Investment and Vacation Home Buyers Survey. These reports provide various data points that can be cross-referenced to arrive at decent guidance on market size.
RENTAL HOUSEHOLDS
NMHC data on the number of U. S. rental households is a so starting point that also identifies the residential structure in which families are housed:
6-17 How big is the REI Industry (1)-image1
As a rule, residential buildings fall into two classes, single or multi-family. For lending purposes the Federal Housing Finance Agency classifies any rental less than five units is defined as single family. The SFR, 2 to 4 unit segment is most likely owned by small investors, whereas five and into the hundreds of units per building, are more likely to be corporately owned especially as the apartment buildings get bigger.
By adding single-family homes with two to four units, this chart says there are most probably 22,972,468 households housed by small investors and small investor owned LLCs. And this is just the rent-to- own investment segment.
There is no allowance given for fix and flip, private money or note investment, each of which are significant economic segments in their own right. More on this later.
ANNUAL HOUSING SALES TO INVESTORS
The NAR reports that in 2015 Investment-home sales were an estimated 1.09 million. Then there were the 3.74 million owner-occupied purchases. This is the highest level since 2007 when 3.93 million homeowners purchased houses. This NAR study excluded institutional investment activity (Wall St. funds), which although visible, is in fact a relatively small, as only about 18 companies own 1,000 SFRs or more….PERIOD!
It is fair to imply these one million sales ended up in the hands of small rental operators or fix and flip entrepreneurs.
HOW BIG IS THE INVESTOR MARKET
Buy-and- hold or Buy-to- Rent Investors: If there are 23 million rental households in SFRs, du-, tri- and four-plexes, the next step is to determine how many investors hold these assets?
If individuals own around 2.6 “doors” each* these 23 million households means around 8.8 million investors (small, medium and large) participate in this market. This door count does not include a count of vacant properties.
We know from various sources, (Kroll Bond Rating Agency, that follows institutional SFR investors – 1,000 homes or more,) that this institutional class of investor “only owns around 330,000 homes of a 23 million count SFR pool. This is a tiny percentage of the total.
WHAT ARE THESE HOLDINGS WORTH?
The U. S. Census Bureau places the median value of houses sold in 2015 at $299,000 per house. A simple multiplying of doors and median value puts the cumulative value of these 23 million doors predominantly held by individuals like you at $6.877 trillion dollars. The institutions hold an additional $89 billion in SFR assets.
Then there is the ongoing value of property management and the maintenance aspects of buy-to- rent. We will look at these numbers in a future blog as well as the Fix and Flip effect on the 1,090,000 resales to investors in 2015.
Clearly there is more to this discussion we will follow up on in Part 2 next week.
*The Invaluable Investor Study sponsored by The Home Depot and authored by Real Trends and Personal Real Estate Investor Magazine with polling assistance from Harris Interactive.
[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row admin_label=”Row”][et_pb_column type=”4_4″][et_pb_contact_form admin_label=”Contact Form” captcha=”on” email=”info@2020rei.com” title=”Contact us” use_redirect=”off” input_border_radius=”0″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” custom_button=”off” button_letter_spacing=”0″ button_use_icon=”default” button_icon_placement=”right” button_on_hover=”on” button_letter_spacing_hover=”0″]
[et_pb_contact_field field_title=”Name” field_type=”input” field_id=”Name” required_mark=”on” fullwidth_field=”off” /][et_pb_contact_field field_title=”Email Address” field_type=”email” field_id=”Email” required_mark=”on” fullwidth_field=”off” /][et_pb_contact_field field_title=”Message” field_type=”text” field_id=”Message” required_mark=”on” /]
[/et_pb_contact_form][/et_pb_column][/et_pb_row][/et_pb_section]

by Tim Herriage Tim Herriage No Comments

WHICH REAL ESTATE INVESTMENT CLUB IS BEST FOR YOU?

[et_pb_section admin_label=”section”][et_pb_row admin_label=”row”][et_pb_column type=”4_4″][et_pb_text admin_label=”Text” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]
YOUR SUCCESS OR THEIRS? (Part 1)
PART 1 dated 6/10/16 asked:

  • What’s the goal of the club?
  • How does the club fund events?
  • Who’s making money?
  • Who’s Agenda?
  • Do you feel like the main attraction or the main course?

 
PART 2 – WHO’S BEHIND THE CLUB?
The next question to ask is who is the owner, entity or promoters behind the club you are about to attend? This will help set expectations.
These clubs fall into a number of types: benevolent networking clubs, lead generation clubs, bird dog clubs and sham real investment clubs typical of network marketing enterprises.
Benevolent Networking: These are typically formed by an individual who desires to help members and business members build their investment businesses. The stated goal is member and peer success. The leadership typically does not invest with members, but simply organize the club, hold meetings, sell sponsorship and provide free and paid educational programs. Few clubs are organized like this, as they are costly to build and maintain.
Lead Generation: The more likely model is the lead generation club where networking is designed to generate leads for the members, business members and the club organizers. Like the benevolent networking club, these are expensive to build and maintain regular meetings, however the business developed from prospects, subsidizes the operation. They also may sell sponsorship and provide free and paid educational programs. Education fees are usually split with organizer.
Bird Dog Clubs: This is a club organized by an investor(s) to attract would-be investors to help them grow their investment businesses. The members are set up to “bird dog” discount housing opportunities. They may also sell provide paid educational programs. They typically limit educators to those that split fees with the organizer.
Network Marketing Investment Clubs: These are typical of the network marketing companies that sell investment education through a multilevel marketing scheme. You have seen the bandit signs “seeking real estate investment assistant,” apprentice, etc. These are a sham as they generate leads to a free seminars only to try and upsell attendees into expensive educational programs that seldom include actual real estate investment.
What’s Membership Cost?
The test before associating with any of these groups is to ask what it will cost you to attend the second meeting?
As a guide the pure networking groups charge an annual membership fee of somewhere between $150 and $300 a year. Lead generation clubs maybe free and offer extensive attendance benefits. The Bird Dog clubs may also be free, but only as long as they find you have value. The Network Marketing Model typically offers a second meeting only if you pay to attend.
Novice real estate investors need be aware of what they are getting into as the real estate education space has a history of indirect and even predatory vendors. Part 3 follows next newsletter
Full Disclosure: 2020 REI Companies operates the DFW Investors. This is a community for local investors in the Dallas/Fort Worth area that provides resources and discounted investment property listings available for purchase. It is open to anyone. Vendors can buy exhibit space and experts speaker slots. Attendance is free to anyone. For more information, receive emails or get meeting schedules go to http://dfwinvestors.com/
[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row admin_label=”Row”][et_pb_column type=”4_4″][et_pb_contact_form admin_label=”Contact Form” captcha=”on” email=”info@2020rei.com” title=”Contact us” use_redirect=”off” input_border_radius=”0″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” custom_button=”off” button_letter_spacing=”0″ button_use_icon=”default” button_icon_placement=”right” button_on_hover=”on” button_letter_spacing_hover=”0″] [et_pb_contact_field field_title=”Name” field_type=”input” field_id=”Name” required_mark=”on” fullwidth_field=”off” /][et_pb_contact_field field_title=”Email Address” field_type=”email” field_id=”Email” required_mark=”on” fullwidth_field=”off” /][et_pb_contact_field field_title=”Message” field_type=”text” field_id=”Message” required_mark=”on” /] [/et_pb_contact_form][/et_pb_column][/et_pb_row][/et_pb_section]

by Tim Herriage Tim Herriage No Comments

WHERE TO INVEST DEPENDS ON YOUR PLAN?

[et_pb_section admin_label=”section”][et_pb_row admin_label=”row”][et_pb_column type=”4_4″][et_pb_text admin_label=”Text” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]
A 6/13/16 DS News headline “Deciding Where to Invest in the SFR Market,” asked if it pays to emphasize markets offering the highest single family rents? The article heavily quoted Tim Herriage who highlighted a key to profitable and sustainable SFR investment.
“Typically (New York, Miami, and San Francisco) are markets with higher home prices,” said Tim Herriage, CEO of 2020 REI Investment Companies. “I think there’s a correlation between the price of housing, whether it be to purchase or to rent. That is why you look for markets like Dallas, Atlanta, Charlotte, and Jacksonville. These markets offer a relatively low home price, coupled with strong rental demand.”
DOES YOUR INVESTING MATCH YOUR LIFE NEEDS?
This response focuses on the need for an investor to know why they are investing, having a clear goal and a path to get there. With this developing generation of investors who are considering real estate, their goals and the suitability, and appropriateness of the investment to attaining these are vital and refreshing. The blanket “any real estate is good” guru mantra is fading fast. Flipping or Notes can be good if you know why this strategy and class of investment works for you and you have a plan to get there.
Wisely bought real estate can benefit an investor in a number of different ways, generating different financial benefits on differing timelines. These can be income, asset appreciation, tax benefits, a personal dwelling or even a career transition. Understanding this and then matching the investment strategy to markets and a particular property is a series of specific questions and responsive answers not typically available from the vendor of specific education (how to flip properties) or a particular property. Clearly the sales strategy could be in conflict with your investing strategy. A satisfied and recurring customer may not be relevant to what they are selling. 2020 REI believes satisfying investors is required for recurring customers necessary for a growing business.
How about your plan? If you have questions about matching your investment strategy to suitable investments, 2020 REI invites your investing questions and comments at Tim@2020rei.com
For full DS News article: http://www.dsnews.com/news/06-13-2016/deciding-where-to-invest-in-the-sfr-market
[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row admin_label=”Row”][et_pb_column type=”4_4″][et_pb_contact_form admin_label=”Contact Form” captcha=”on” email=”info@2020rei.com” title=”Contact us” use_redirect=”off” input_border_radius=”0″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” custom_button=”off” button_letter_spacing=”0″ button_use_icon=”default” button_icon_placement=”right” button_on_hover=”on” button_letter_spacing_hover=”0″] [et_pb_contact_field field_title=”Name” field_type=”input” field_id=”Name” required_mark=”on” fullwidth_field=”off” /][et_pb_contact_field field_title=”Email Address” field_type=”email” field_id=”Email” required_mark=”on” fullwidth_field=”off” /][et_pb_contact_field field_title=”Message” field_type=”text” field_id=”Message” required_mark=”on” /] [/et_pb_contact_form][/et_pb_column][/et_pb_row][/et_pb_section]

by Tim Herriage Tim Herriage No Comments

U. S. HOUSEHOLD NET WORTH EXCEEDS PRE-GREAT RECESSION HIGHS

[et_pb_section admin_label=”section”][et_pb_row admin_label=”row”][et_pb_column type=”4_4″][et_pb_text admin_label=”Text” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]
But the critical element in any asset accumulation is holding on to this.
6-17 Household Wealth (1)-image1
Are you investing your wealth in income generating assets?
What does SFR investing mean to you and the security and sustained growth of your savings, children’s education fund and nest egg?
Consider rentals where wisely bought rental properties
Produce income,
Appreciation growth, that are both
indexed against inflation.
Offer depreciation and other tax benefits.
Where tenant rent payments help pay off any mortgage.
The capital value of the asset can be insured against physical loss, and
title insurance helps insure dispute free ownership of the asset.
We challenge any other asset class to offer these types of benefits
For more on how to use rental properties in desirable markets go here.
[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row admin_label=”Row”][et_pb_column type=”4_4″][et_pb_contact_form admin_label=”Contact Form” captcha=”on” email=”info@2020rei.com” title=”Contact us” use_redirect=”off” input_border_radius=”0″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” custom_button=”off” button_letter_spacing=”0″ button_use_icon=”default” button_icon_placement=”right” button_on_hover=”on” button_letter_spacing_hover=”0″] [et_pb_contact_field field_title=”Name” field_type=”input” field_id=”Name” required_mark=”on” fullwidth_field=”off” /][et_pb_contact_field field_title=”Email Address” field_type=”email” field_id=”Email” required_mark=”on” fullwidth_field=”off” /][et_pb_contact_field field_title=”Message” field_type=”text” field_id=”Message” required_mark=”on” /] [/et_pb_contact_form][/et_pb_column][/et_pb_row][/et_pb_section]

by Tim Herriage Tim Herriage No Comments

4 Questions to Ask Before You Advertise to Buy Houses

[et_pb_section admin_label=”section”][et_pb_row admin_label=”row”][et_pb_column type=”4_4″][et_pb_text admin_label=”Text”]
2020rei-post5-image
Ready, fire, aim! First-time real estate investors often rush to troll for investment properties: they run ads in newspapers and online, send out post cards, distribute flyers. They worry about creative wording and headlines.
Don’t make this mistake.
“A few good decisions up front can set you up for success as a new real estate investor,” says Jason Riney, president of 2020 REI Companies. It’s not difficult. It’s not complicated – but it is essential.”
Here are 4 key questions to ask – and answer – before you think about advertising for investment property:

  1. Who will answer your phones?
    When a home seller calls, a real person, preferably one with knowledge and the ability to act, should pick up the phone. “Someone looking to sell quickly may be facing any number of difficult issues, financial problems, divorce, a military move, an estate sale,” Riney says. “Recorded messages and voicemail will delay or even derail a deal.”

    • Staff: With deep pockets, you can hire dedicated staff members to answer the phones on demand at any time of the day.
    • Out-sourced call center: Many startup house-buying companies choose this option, but it’s not perfect. Distressed sellers will call around until they receive immediate response.
    • Do it yourself: As the owner, there will never be a person who cares or respects your business as much as you do.
  2. Who will evaluate properties and negotiate your purchases?
    The person who shows up on the seller’s doorstep to evaluate a house and set an offer price can put a deal on the fast track to closing. “You want someone who completely understands your target market and has good people skills,” Riney says.

    • Do it yourself: Will you evaluate all the deals you buy? Will you attend and negotiate all house purchases yourself?
    • Outsource to a construction pro: Look for an individual well versed in general construction and qualified to inspect all the structural and mechanical components of a home.
    • Outsource to a remodeling pro: Look for someone with training and a background in remodeling homes purchased for investment use.
  3. What are your goals for the houses you buy? 
    Define a specific model and metrics for your real estate investments and keep your eyes on the prize. “There are many ways to run a real estate investment business and many metrics for determining what’s a good deal. Riney says. “Pick your focus and stick with it.”

    • Long-term hold for rental income: Use surplus income or retirement funds to purchase rental homes and operate them in order to build retirement income
    • Leveraged hold for cash-on-cash rental return: Use borrowed funds to purchase rental homes, especially effective when rental rates and property values are on the rise. Cash flow from the rental properties covers mortgages and provides profits.
    • Fix and flip for a fixed profit: Locate a distressed or run-down property, purchase it for an attractive price, restore it to market standards and sell it ­quickly, and for a profit.
  4. How will you fund the transactions?
    Even for well-heeled investors, borrowed funds are the lifeblood of a real estate investment company. “Know where you money is coming from,” Riney says. “And understand how to deploy it quickly.”

    • 100 percent cash purchase: invest your own hard-earned cash
    • Bank line of credit: A home equity line of credit (HELOC) at 3 to 4 percent, a loan against the equity in your current home, can provide capital to invest in rental property
    • Hard money bridge loan: Use physical assets, such as property you own, as collateral to receive capital for rental home purchases. Rates are typically higher than conventional loans, and are limited to a few months.

Answer the important questions that will set you up for success as a real estate investor. There’s no need to run an ad looking for property until you do.
[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row admin_label=”Row”][et_pb_column type=”4_4″][et_pb_contact_form admin_label=”Contact Form” captcha=”on” email=”info@2020rei.com” title=”Contact us” use_redirect=”off” input_border_radius=”0″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” custom_button=”off” button_letter_spacing=”0″ button_use_icon=”default” button_icon_placement=”right” button_on_hover=”on” button_letter_spacing_hover=”0″] [et_pb_contact_field field_title=”Name” field_type=”input” field_id=”Name” required_mark=”on” fullwidth_field=”off” /][et_pb_contact_field field_title=”Email Address” field_type=”email” field_id=”Email” required_mark=”on” fullwidth_field=”off” /][et_pb_contact_field field_title=”Message” field_type=”text” field_id=”Message” required_mark=”on” /] [/et_pb_contact_form][/et_pb_column][/et_pb_row][/et_pb_section]