Tag Archives: homeownership

Building An Empire: Your Real Estate Investing Options

Real estate investing has become a sexy topic for many real estate channels, blogs and books. There are those who say buying a home is a great financial step. However those who want to go beyond the typical goal of homeownership, there are a wide variety of options.

Direct vs Indirect vs Hybrid

When you first decide to put money into real estate, you have to ask yourself how much you would like to be involved in the process. For those who want to buy or manage property directly, there is direct real estate investing.

If you don’t want any part in the investment process you can consider the real estate indirect investment options. These are things like REIT (Real Estate Investment Trusts) and syndicated real estate funds.

The hybrid between indirect and direct investing is partnerships. With a partnership you find someone to either provide the money and credit or do the more involved part. Basically you only are require to take part in part of the real estate investing process, whichever you decide as partners.

Step 2: Picking your strategy

If you decide to invest indirectly into an REIT or syndication you will need to do research and decide on one. For those who determine on either a hybrid or direct investment approach exploring strategy is your next step.

There are many strategies out there like flipping, buy and hold, BRRRR method (Buy, Rent, Repair, Refinance, Repeat), property development, house hack and a few others.

Finally: Choosing your Property Type

After picking which strategy to deploy, you have to determine which kind of property you’d like to buy. Examples include single-family, multi-family (duplex, triplex and four-plex), commercial office, commercial retail, industrial, commercial residential (apartments)

Funding

The last step in acquiring property is deciding upon a funding method. There are a few ways to do this. You can either buy the property cash, which of course is less common, or you can buy one using other people’s money (OPM).

Funding a property using other people money can either come from a bank or somewhere else. If you’re using a bank to buy residential property there are two basic kinds of loans that are usually deployed, either a conventional loan or an FHA loan. The FHA loan is basically a loan that requires less of a downpayment in exchange for paying (PMI insurance).

With an unconventional funding source there are usually two places to get it from: the seller (called seller-financing) or outside places. Seller financing can be fairly straightforward but let me explain that the other outside sources of financing can come from friends, acquaintances, or private lenders.

Conclusion:

Whichever form of real estate you decide to buy, whatever strategy you decide to employ, ¬†and whatever funding method us use to buy them, real estate remains a solid investment option. Real estate can be consider a reputable option up there with stocks and business ownership. Next time you’re thinking you want to invest use these steps to uncover your own real estate path.

3 Factors to Look at When Determining Where to Live

As a financial blog, I have dealt a lot with individual personal finance issues, like what to invest in, how to budget, and what to do in different areas financially. Here I want to step back and cover 3 financial factors that you should think about when considering a city to live in. While these three aren’t the only things to think about, they certainly will cover the broad range of financial determining factors:

Job and Career Potential

Here you’re just trying to get an idea as to how easy or hard it will be to have employment, and sustain employment in your chosen career field. Two of the things to consider are the unemployment rate, which is a good indicator of how many people who want jobs have them, and job growth. With job growth you want to look at the number of new jobs being created, specifically in your career field, over the last decade.

Cost of Living

Housing costs will be broken down into to two big areas: housing and everything else. When looking at housing, there are usually two broad options available. You can either rent or you can buy. You are going to want to compare the costs of rent vs the rest of the country. Pay special attention to the rent increases. For example maybe your area currently has slightly higher rents than the national average, but over the last couple years the rents have been skyrocketing. You want to be mindful of areas in which the costs of living, including rents are rising quickly.

The second housing option to look at is homeownership. What is the average costs of a home in the area. This can vary greatly from one neighborhood to another. For example one neighborhood might costs $300,000 but just across the road might be $250,000 for a similar house. Find the area you’re thinking about and start comparing prices.

After paying for housing there are the rest of the general costs associated with living and breathing. These costs can include food, insurance, transportation, recreation, and especially taxes. Taxes are a huge part of your yearly expenses. There are income taxes (both federal, state and sometimes city), as well as sales tax and property tax. Look at these rates for you area.

Long-Term Stability

The last thing you want to look at after job potential and cost of living is the general stability in the area. The stability of the area is both the economic factors and the political factors.

For example look at one of the leading factors of growth for cities: population growth. Take a look at the recent trend in population. For example are massive amounts of people entering or leaving the area? This might be a sign that things are changing. With the change in demographics and population comes changes in political preferences.

Maybe these changes will lead to political leadership upheaval in the local government. Think about how these changes could potentially impact your life in terms of local taxes, regulations, social programs, and building projects in the future. Are you okay with these potential changes and the uncertainty that comes with them?

Conclusion:

Overall, these three factors can paint a pretty clear picture of the financial concerns about one area over another. After going through them, you should know whether this area is something you would want to consider moving to. Naturally though, there will be others things of concern, like climate, education, health and other issues. While these concerns might not directly impact your finances, most of them should be looked at closely for the effects they could have down the road.