Maine Real Estate Market to Expected to Slow but Not Stall

Rising mortgage rates that are expected to be spurred by the Federal Reserve actions will slow but not stall Maine’s red hot real estate market read more

What is a Good Cap Rate for an Investment Property?

When considering any type of investment, including real estate, it’s important to have a plan and do your research. Research for real estate investment opportunities may seem simple enough on the surface, but there’s more to finding a worthwhile property than just looking for homes in a nice area. Instead, you’re encouraged to dive deeper and analyze cap rates in real estate properties under your consideration. Taking this additional step is just one of many involved in building a solid portfolio.

What is a Cap Rate?

A cap rate is the capitalization rate of an investment. It is the measurement of much money you stand to gain or lose through an investment. When you analyze cap rates in real estate, it’s important to note that the figures you arrive at will only be estimations. Therefore, a cap rate alone is not sufficient in determining whether to invest in a property. A cap rate figure is, however, usually necessary when comparing properties under consideration for investing.

How to Get a Cap Rate

To get a cap rate, you simply divide net operating costs by the current market value. The sum of this equation is usually expressed as a ratio, so you may consider multiplying this by 100. The basic breakdown of this equation is that you’re taking your costs and measuring them against the value of a property. This can give you an idea as to whether you’re going to spend more than the property is worth over time.

What is a Good Cap Rate?

In general, you’ll want to aim for a cap rate between 5% and 10%. This will depend on the property, however, since some real estate deals will involve more or less initial purchase costs. Keep in mind that a cap rate serves as a risk evaluation. Therefore, the cap rate you feel comfortable with may not be the same as another investor. It really comes down to how much risk you are comfortable being exposed to and what your goals are for the property.

Read a similar article about how to evaluate a real estate investment here at this page.

How to Generate Rental Income

A fourplex is made up of four units. Buying a fourplex is a wise investment because it continues to bring in money. There are some things you will need to do to make this happen. Here are the steps you need to take if you are wondering how to get a loan for a fourplex.

The Benefits of Purchasing a Fourplex for Rental Income

The benefits to purchasing a fourplex to generate rental income are creating positive cash flow, you can use an FHA loan to purchase a fourplex, a fourplex is easier to maintain as opposed to four single family homes, and a fourplex is a wise investment.

These are the steps you need to take to purchase a fourplex:

1. Conduct an investment property search. You can conduct a property search on your own, but a real estate agent can help you find a variety of the most ideal properties according to your specifications.

2. Next, you need to evaluate how profitable each investment property would be to you. This involves an investment property analysis per property. It’s essential to hire an inspector to discern whether the building is suitable for habitation. You will need to determine the vacancy rate, property management costs and determine what the potential income from the property will be. A rental property calculator can help you figure this out easily.

3. You will need to look into financing options unless you are planning on making a cash investment. You can look into getting a conventional loan or an FHA loan. A conventional loan requires 10 percent of the down payment while an FHA loan only requires five percent. You can only get an FHA loan if you are planning on living in one of the units.

4. The last step involves making an offer and closing the deal once your offer has been accepted. However, getting to this point requires a title company that has experience with fourplexes and other types of multi-unit deals. You will also need to get title insurance. If there are existing tenants while purchasing the fourplex, you will need separate trust accounts for each tenant.

Get Help With Purchasing Your Fourplex

Any of these steps can trip you up if you don't have the right help. Jake and Gino can help you learn how to get a loan for a fourplex, and they can help you with other real estate investment matters.

Read a similar article about real estate investment loans here at this page.

Key Reasons to Invest in Real Estate

The benefits of investing in real estate are numerous. With well-chosen assets, investors can enjoy predictable cash flow, excellent returns, tax advantages, and diversification—and it's possible to leverage real estate to build wealth read more

Tools You Need to Start Investing In Real Estate

Investing in real estate is one of the best and quickest ways to build personal wealth. If you want to get started, there are a few essential tools you’ll need to get started first. According to experts, here are some of the best real estate investing resources you’ll need to be successful.

Knowledge of financial concepts and formulas

Before you begin your real estate venture, it’s wise to gain a well-rounded understanding of important financial concepts that will help you be successful. Partnering with an established real estate mentor is an excellent way to get started.

These professionals can help you determine what types of properties you should be looking for, which properties are worth investing in, and the basic formulas and terms you should be familiar with, such as:

• Net operating income (NOI)
• Effective gross income
• Cap rate
• Cash flow
• Cash-on-cash yield

Otherwise, online financial calculators like IRR Calculator, Return on Investment (ROI) calculator, and Roofstock Cloudhouse Rental Calculator can help you gain an understanding of a property’s overall potential.

Ways to research properties

Finding properties that align with your investment properties can be difficult. Fortunately, there are many resources and tools that can help.

• For data research, you can use DealMachine and CRS Data to thoroughly analyze properties.
• To find properties for sale, use Realtor.com or Zillow. You may also need to work with a licensed real estate professional to get the most out of these tools.
• To find popular areas for renters and estimate rent trends, Rentometer and RENT Café are very helpful tools.

Property management

Professionally managing your investment property will help ensure that it is profitable and becomes a viable source of passive income for you. Without proper property management, you’ll have a whole lot of headaches and the property may  become more of a burden for you than anything.

Some investors choose to manage their properties themselves, but if you own multiple multifamily properties, that can quickly become an overwhelming (if not impossible) task for you to take on. For this reason, many investors hire a property management company to take care of things like rental listings, tenant screening, rent collection, maintenance, and more.

Some of the best real estate investing resources for property management include:

• AppFolio
• TenantCloud
• Stessa
• Apartments.com

Bookkeeping tools

To keep track of your property’s income and expenses, the following bookkeeping tools are absolutely essential. By ensuring you do this accurately, you can maximize every tax deduction and benefit you’re entitled to. Here are some of the most popular and effective options for real estate investors:

• FreshBooks
• Buildium
• Property  Matrix
• Stessa

Where can you find more of the best real estate investing resources?

If you’re searching for more resources, the best place to find them is by consulting with a multifamily real estate mentor. These professionals have lots of experience investing in multifamily properties and have typically learned very important lessons through their own experiences. They can guide you through the process with essential tips, tools, and resources that will help you avoid common pitfalls.

Read a similar article about real estate investment videos here at this page.

REITs vs. Real Estate Mutual Funds: What's the Difference?

Real estate investment trusts (REITs) and real estate mutual funds both offer diversification and an easy, affordable way for individual investors to invest in various segments of the real estate market. They also represent a more liquid vehicle for investment in this sector than owning or investing in real estate directly read more

How to Expand Your Real Estate Knowledge

There's no denying that real estate is brimming with opportunity. It's one of the smartest ways to invest your money and set yourself up for a more secure future. All that said, it's also a dynamic industry that continues to evolve at every turn.

Whether you're a newbie or an investor who wants to ensure they don't get left in the dust, here are some ways to expand your real estate knowledge and learn all that you can about investing.

Books, Blogs, and Podcasts

Do one quick search, and you'll find countless resources to learn more about real estate. If reading is your preferred way to consume media, check out some books! Digital and physical books are ripe with information about unique investment techniques.

The same goes for personal blogs. Real Estate gurus are always available to give you tips, tricks, and guidance on the current state of the market.

Podcasts are a great way to stay abreast of current news and developments. Like a radio show exclusive to investors, they can provide you with information about trends and forecasts to ensure that you're always ahead of the game.

In-Person Events

From apartment investment events to brokerage seminars, there are many ways to meet like-minded individuals and learn something new. In-person events give you the chance to deepen your real estate knowledge while networking with potential investment partners. These are life-changing events that serve to inspire and motivate.

Hear from real estate professionals and pick up valuable tips to turn simple investing into your ticket to financial freedom.

Social Media

Of course, you can't forget about social media! Platforms like Twitter, Facebook, and LinkedIn offer a lot in the way of education. Follow your favorite real estate gurus for a daily dose of inspiration and news. Or, keep in touch with local investors to share information about the latest developments in your area.

You can even find groups and dedicated communities that focus on the types of investments you prefer.

Broaden Your Real Estate Knowledge

They say that knowledge is power, and there's no better way to realize that truth than to get into real estate. This industry constantly changes, and your success largely depends on being one step ahead of the curve. Read up on the latest development and participate in apartment investment events to take your investment game to the next level!

Read a similar article about apartment management here at this page.