5 Reasons why I am Not Worried About the New Real Estate Market Correction

New real estate market correction happening now. So, the wise thing is to get aware of the change happening in the market. It is important to be alert from any blizzard that can happen to the real estate market. Put your all efforts it be ahead of every curve of the change in the real estate market.

Everyone still remembers the huge crisis of 2008.Nobody wants to face it gain. Manhattan property market has been in correction for a year. Some of the people think they spreading the news of correction because of the 2008 crisis.


You should know how to reduce risk if you are facing correction experience.

5 reasons you should not worry about market correction. I am sharing with you my tactics.

  • I buy on cash flow.
    I talk about myself. The real estate investing model of mine is to obtain income properties. I am not depending on flipping or gambling regarding appreciation. This situation seems especially dangerous right away. The numbers should work up front. I have to be able to hold it all. Recently, I moved up tonew multifamily apartments and it is even more flexible during tougher economic times.
  • I always pay attention on growth markets
    There are the markets that are growing like they have sufficient rooms for growth. But also, there are some markets that have peaked or have surpassed their recent peaks. Always remember do not invest in the unpleasant neighborhood like where the crime rate is high. Check out the place before investing. It may seem like low investing is good for income but it may give you worst results at the end. So always pay attention to the market where the possibility of the growth is high and you may able to get high return on investment.
  • I am selective in picking up the property.
    ATTOM Data analysis shows that over 30% of houses flipped in the first half of 2018. That were bought as distraint properties. It shows that most of the investors are picking up full-priced properties of the MLS. They are speculating on appreciation to sell them. You have to be more selective about picking up the property. I probably look at 185 to 220 properties before selecting to work on. Do the same.
  • I stick to the units of the apartment.
    The numbers do work. It is still hard not to fall in love with property business, but you cannot afford to do that. It is because you are not going to live there then what to do. So, the more profitable thing to do in buying is to buy on numbers.I do the same and advises people that 110-units apartment could be the best deal for you. Buy with the units of apartment.If you want to do property investment you can persuade to stretch numbers and sell the property.
  • I focus on services and management.
    Always focus on management first. When you are doing property business pay keen attention to management and its services. The thing you should do is to make apartments and communities. In case the rent drops you have an upper hand. In the community the rent is getting lower and you are providing them good services of that apartments then the low rent case does not apply on you. As the tenants will see the services you are providing them they will pay you a good amount.

Summary.

Housing correction may come at any time and it can be very deep. You need to be smart and make some adjustments to low down the risks. Follow these above-mentionedsteps and you will no need to worry about market correction.

Four Important Tips for Tapping into the Lucrative Niche of Student Housing

You want some lucrative investment then student housing would be the best option. If youthink about the investment point of view, investment near universities and colleges would be very fruitful. I have some experiences in my life through which I can assure you real estate investment can be lucrative near student housing.


Keep in mind one point, investment near student housing would not be as easy as you may think. It may come up to with different type of hurdles and barriers you must before jumping into it. Although it is very profitable investment. You may not disappoint by investing near student housing. Only the key is you may aware of some unforeseen dangers coming in your way.

Some of the steps you should follow if you want to make an investment in student housing.

Your first priority should be to pick up a non-commuter school or university.

The most important and first thing you think upon is to choose the school or university with large number of students. The universities which also work with other small universities. The larger number of students will able to make you earn more profit. That would be your first priority. Make sure you do not pick a commuter college or university. That would be a plus for your real estate investment.If you pick a commuter college or university for real estate investment the number of students may be very low. Students of commuter colleges do not choose to live nearby colleges or universities. They are daily scholars and they do not rent out homes for living. They daily go back to their own homes.So, the thing is very obvious the commuter students do not have any commitments for living nearby schools and universities. Then it does not make any sense for investing in student housing near commuter colleges and universities.If you are not thinking about student housing investment then these areas can be best fit for your real estate investment. The universities with large number of students are having full time students so, they commit to live nearby.

I give you an example UMKC university. This university is having more than 17000 students. Some of the students are full time students and some are part time students. Night shift classes are also happening in this university. Some of the students are taking night classes and would not able to go back home timely. So, they use to live nearby. They rent out homes and this is the best place for your student housing investment niche.

Now the main point is you have to discover the campus is overbuilt or commuter. The best and only way is to find out the solution is to visit that area. Talk to the people living nearby. Go to the local property brokers and talk to them, ask them about campuses are overbuilt or commuters.

Seek out the right zone.
You should make zones according to the student’s need.
There may be different zones: Zone 1 can be for the students who want their homes at walking distance.
Zone 2 can be for the students who have bikes to ride.
Zone 3 can be for the students who have their own cars to drive and can easily reach home if that is at some distant.

Rent out as per bedroom.
The best part of renting out the homes to students would be you may not need to rent out the whole house. Rent out the bedrooms you have in the house. The more bedrooms you have to more you can earn the profit. Students usually don’t seek the whole house. They have limited money to expense out and choose a bedroom over the whole house. This would be beneficial for you. You can double your price. For example, you have 3-bedroom set. You rent out per bedroom for $600 and can earn $1800 per month. And if you rent out the whole house you only able to earn $1200 per month. The profit is now very obvious to you.

Student housing is one of the best way to earn more profit by investing in real estate. You only have to be smart and take the right decision.

Growing your 401k VS Liquidating it for Real Estate investment

What is most profitable.
The question is if you are having 401k you should liquidate it to start investing in real estate or not.

You heard from the older folks and some financial advisor to invest it. It would be the best decision according to them. On the other hand, the younger folks want to pursue early financial freedom and dubious of this advice. They may be right so.


The young folks think that they are in their 20s now and they pursue their financial freedom, there is more likely a chance that they will be financially strong at the age of 60. However, the amount you are having 401k doesn’t matter. As a young man I agree with the young folks but at the same time I totally want to take advice of the elders on.To figure out solution,I did an analysis which will give you a sense and you able to explore other options as well.

The first part of the article will give you the analysis: if you invest 401k at the age of 25 what would be your return. You will come across some better option to liquidate the 401k. So, do not take decision at first glance. To explore some other options stick to this article till end. I did this analysis just because I want self financially independent.

Presupposition.

  • Age:25 years old
  • 401k Balance at Year 0:$15,000
  • 401k Return:7% assumes 401k is held in stocks, bonds, mutual funds, etc.
  • Income Tax Rate:30%
  • Capital Gains Tax Rate:15%
  • Withdrawal Penalty:10%
  • Annual Contribution to 401k:$3,000 pre-tax
  • Annual Contribution to Other Liquidated 401k Investments:$2,100 because you save 30% less after the assumed 30% tax
  • Tax Savings from Reducing Income by Contributing to 401k:invested and earning 7.0% annual

Final analysis.
At the age of 25, you are probably taking your first steps in your journey towards financial independence. Age 60 is likely to be very far away, so you are likely tempted to take that out now and use it to accelerate your journey towards financial independence.

If you invest 401k at the age of 25, you will receive at the age of 60 an amount of $489,545.35.

Formula.

You can do your own calculations with the formula:

(Investment balance * tax rate) + w2 savings – tax paid on gains.

With this formula annual return would be 8.50000% at the investment of 401k.

Calculations would be (investment balance- annual contribution) * capital gains tax. For the rate of return 8.50000%

You have to keep in mind the assumptions I have mentioned above, at the age of 25 you invest 401k the annual return would be 8.50%.

Now it is time for 2nd opinion. Some other things to ponder including your reserves, as well as some other creative ways to enjoy high rate of return.

Best of both options.

In the above analysis, I assume that the amount of 401k is handled by a financial advisor. it is diversified amongst an excessive amount of mutual funds, index funds, bonds, stocks, etc. that will give a return of 7%. The analysis clearly suggests that despite of the tax-deferred earnings, there is a high chance that you can avail a better annual return on liquidation of 401k (8.50%+) by investing it on your own.

The other options for you would be to liquidate your 401k to a self-directed inter revenue agencies or a solo investment to take financial freedom. On these accounts you can almost invest in anything.Also, you can go with the real estate business. The best way to use your 401k is to go self-directed or take a loan against the funds and invest in real estate. This all depends upon your personal goals.

 

How to create Asset Protection

Real estate asset protection is what the rich real estate investors do. They don’t take the same risks, but instead, they use the law to ensure maximum advantage. It’s not sleazy, but instead, it’s using the rules that are available to ensure that you get the most advantageous situations. Here, you’ll learn how to create the best leverage in a lawsuit, and how to protect yourself.


Many people don’t realize that there is a tool that is not used, which is a contract that will favor you if a deal goes sour and litigation may happen. We don’t want that to happen because it is expensive, but instead, we form a contract that gives insane amounts of leverage to settle a lawsuit quickly. The way for you to protect yourself in the event of any lawsuit, whether you’re the one suing or you’re being sued, is an LLC. These are what will protect you, and we’ll tell you how.

First, you should make sure any remedies are in the document. This prevents you from having to use complicated legal remedies. If you’re buying the real estate, and it goes bad, do you want the property or the money. If you want to get the property, you should make sure there is a “specific performance” clause there. Otherwise, you’re left with the suit for damages and money, and you have to prove the damages.

Unless you were getting a lot on the property through the way you show this is liquidated damages, which is a clause that states that the number of damages in the case of the breach of the contract, especially if the other side backs out. For example, you could say in this that if the seller refuses to execute this sale after the buyer gets financing, then the seller is liable for the liquidated damages up to $40,000. This should be one-sided so that the buyer is the only one with rights, and you can get more leverage over the seller since they have more to lose. Many may balk at this, but you can counter with this by asking them if they have any intention in backing out of this deal after you’ve put all this money into it. This clause will ensure that they won’t, and it gives you much more confidence if they know that you’re serious. It also opens the door to negotiation about what amount of damages are agreed upon between the two of you. If litigation does happen, it will really help the attorney.

Remember that every time you feel a deal is about to go bad, be prepared for lawsuit. Even if you don’t believe anyone will sue you, an LLC is used for protection. You may not be sued either, but you may have to sue someone, and you put yourself at risk. In the US, the prevailing party will get attorney fees, and you’d be surprised that the damages could be only a dollar, but since the other side did prevail, they could get up to 30K in attorney fees, so it can bite you.

The LLC is essentially the plaintiff instead of you. Since the LLC is the plaintiff, they get the attorney fees and damages, and they only look at the LLC. The cost for a new LLC is much cheaper than paying off a judgment, and remember that if a judgment is filed against you, it does appear on the credit report, thereby harming the score, so in essence you’re in the borrowing business to leverage the dollars with the bank, and if done in a personal sense it does hurt us.

You shouldn’t ever really do anything without having an LLC. The LLC is a way to help protect your assets in business dealings. You should only sue if it’s a last resort, and you can only sue if you’ve interacted with someone, so if you want to insulate yourself from lawsuits, you have to act like a business, and by creating an LLC that has little to no assets, it creates a shell. Since the LLC is made of the communications and the contracts, that’s the only entity people will go after. So if a lawsuit does happen, the worst case scenario is a destroyed LLC, which is not as bad as you may think.

LLCs can save you, and it’s the best means to employ asset protection.

Asking The Property Manager

Property managers play a key role in the successful running of a real estate business. Real estate investors try to find efficient property managers for them to handle the property and its matters. The beginners who have a few properties tend to manage them by themselves but with the increasing number of properties, it is difficult to manage them by a single person. There is an option of hiring a management company but there are many options then how we find a good one. It is recommended for beginners to manage by themselves in the beginning so that they the know the potential issues that may arise in handling a real estate business. Let’s take a look what we should ask the property management companies when thinking of hiring one.

Charges of the company
The first thing to inquire about is the charges of the company. It is common to charge seven to twelve percent of the property, but one can negotiate to a lower percentage according to the situation.

Numbers of properties the company is managing
It is also important to ask them about the number of properties they are managing at a time. Out of all the properties, how many of them are long term and short term. Both are different business types and the focus should be on the long-term rentals.

Work experience and staff responsibilities
One should also ask them about their work experience and for how long have they been in the industry. This will give an idea if they will stay in business for some time or not.  It is also imperative to ask about the staff, the number of people that work for the company. The jobs of the staff should also be inquired.

Property checking schedule
The investors should also ask about the schedule of the property manager to visit the property. Does the property manager visit the rental property regularly or only on the tenant’s call?In the later case, some tenants may not notify the needs and just leave. That’s bad!

Damage deposits
It is recommended that the investor should get the management company to work with the bank account at the investor’s financial institution instead of using their account.

Tenant selection
The management company should tell their criteria of selecting the tenant. They should specify their methodology of running a background check on the tenants. The management should also specify the type of tenants they would prefer to select.

Handling tenants call
The management company should also be asked about their first-hand response towards the tenants calls for repair. The company should also be asked about the amount that they will specify for repair and why.

Philosophy on repair and replacement
The investor should also inspect about the company’s philosophy on repair and replacement. It should be known if the company prefers a long-lasting solution or the least expensive one. The investor needs to find a company that has the similar philosophy as the investor has.

Conclusion
While searching for a property management the investor should consider all possible situations that might occur when the company is handling the rental property. The investor should inspect about how the company charges for evictions. We all hope that such a situation never occurs, but one should be ready for all types of circumstances. The company should also make it clear if they will prefer to advertise the property while it is occupied, or they would want to wait for the property to be vacant to do so. All of this will help in finding the fittest management company.

 

Trump administration set to dominate U.S. housing finance

Speculations
Trump organization set to command U.S. lodging money
There will be an initiative vacuum to fill
September 5, 2018 Jacob Gaffney

September 6, 2018, marks the 10-year commemoration of the Federal conservatorship of Fannie Mae and Freddie Mac. By the start of one year from now, the Trump organization is probably going to wind up the overwhelming power administering the whole country’s lodging account framework.

What’s more, here’s the secret.
For one, Congress underneath the Obama Administration needed political will to attempt to exert any change in our space. This isn’t an issue with the Trump organization.


At the point when Mel Watt, the executive of the Federal Housing Finance Agency, which administers Fannie Mae and Freddie Mac, completes his term (or is constrained out sooner) in January, President Trump can designate his substitution.

In addition, the pioneer of Fannie Mae, Tim Mayopoulos, will leave toward the year’s end. Also, now, Freddie Mac’s CEO Donald Layton has affirmed he’ll be venturing down one year from now.

This gives the present organization a significantly bigger extension to direct the terms of lodging change. Also, what might such change resemble? The political disruption in between the white house and trumps delegations forgoing further orders.

As we’ve canvassed in Housing Wire, Trump expects colossal lodging change sooner rather than later. Concerning the legislature supported undertakings, the organization is against proceeding with the outsized job they played in the nation’s home loan back framework and supports substantially more rivalry in the home loan advertise.

And keeping in mind that it might be contended that picking the substitution to Watt would be sufficient, it positively doesn’t hurt that Fannie and Freddie appear to get new administration.

Layton and Mayopoulos were both kind enough to consider me a few times each year amid their rules. We never talked about legislative issues and both asserted they work completely under the protection of the FHFA.

In any case, upon more critical look, as in my Housing Wire magazine profile (paywall) of Mayopoulos, there is a lot of progress every effect at their organizations.

On the off chance that there is at last a president willing to consider lodging change important, as I trust the present president seems to be, at that point having the ear of everybody in control will place Trump in the most grounded position ever to leave an enduring imprint on lodging account.