Investing Basics

Category: Investing Basics

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Aug 9, 2022

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Real Estate Investment Strategies Every Investor Should Know

Many want to invest in real estate because of the industry's stability and potential. But not everyone has the time or capital to do so. If you've been considering getting into the game, you should know a few things that may help you do well.The real estate business has been on the rise in recent years. Many investors are taking advantage of the opportunity. But finding the right investment opportunities and then coming up with the capital to make those deals happen can be challenging. Several investment strategies work in today's real estate market. But it's essential to learn all the different approaches, including those with the best chance of success.  What to Note About Real Estate Investing Real estate investment is a big deal. This investment often demands time, research, and money. However, not everyone has the knowledge or resources to invest well. There's more to it than just purchasing a house to rent it out. This guide will help you make intelligent decisions about real estate. — Location  The most crucial element for real estate investing is location. Residential property valuations heavily depend on the status of the community, green space, scenic vistas, and proximity to amenities. When valuing commercial real estate, accessibility to markets, warehouses, transportation hubs, freeways, and tax-exempt regions is crucial.A crucial factor in choosing a site for a property is to take a medium- to long-term view of how the neighborhood's projection to change during the investment period. You can get in touch with government organizations in charge of zoning and urban planning to learn more about the prospects for the area around the property you are contemplating. Doing this will help you decide whether the long-term planning in the region is fit for your investment strategy.  — Potential Real Estate Purchases  Consider this: how long does it take to locate the ideal investment property? After that, become familiar with evaluation methods to decide whether a property is a good fit for your portfolio of investments. Usually, potential investors look at the properties in person, examine the surrounding areas, and carefully review the information in Comparative Market Analysis (CMA). — Be Careful with Leverage  Even real estate specialists face difficulties from overleveraging. Real estate ventures might fail due to a lack of cash and significant debt commitments.Although loans are helpful, they could be costly. You make a long-term financial commitment in exchange for service now at the cost of interest. Make sure you are familiar with handling these kinds of loans and that you avoid high debt levels. Take into account the following:Select the mortgage product that most closely matches your circumstances. You should carefully research different types of mortgages because each has a unique risk profile.Look around to find good deals with cheaper interest rates. Know the terms, conditions, and additional fees the mortgage lender may impose.— Pay Attention to Mortgage  Understanding the several types of mortgages available, including the associated risks and benefits, is critical to your success in real estate investing. To be eligible for an investor mortgage, you must have 20% of the property's purchase price. Compare mortgages to identify competitive interest rates and exercise caution when considering investment mortgages that require no down payment, adjustable rates, or balloon payments. — Your Credit Score  Your lender's terms depend on your credit score, which also influences your ability to qualify for a mortgage. You can access better terms if your credit score is higher, which might result in significant savings over time.The finest mortgages are available to you if you have a credit score of over 800. If necessary, find out how to improve your credit score. Real Estate Strategies Every Investor Needs to Know Investing in the real estate market is one of the surest ways to build long-term wealth and generate income. But it's a competitive field, and you need to know what you're doing to get ahead. First, housing values are significantly less erratic than the stock market and have a minor association with real estate. Multiple tax incentives are also available to property owners, which increases the return on investment. With that in mind, here are different investment strategies in real estate. 1. Wholesaling  Finding affordable investment properties is the business of wholesaling, after which you rapidly sell them for a modest profit. The key to this firm is finding good bargains by using your skills in marketing and negotiation.Wholesaling is not a passive investment strategy, just like flipping houses. Wholesaling, sometimes referred to as selling by assignment of the contract, is one of the options open to an investor with poor credit or limited access to finance. Being successful at wholesale investment requires various skills and abilities. Below is a rundown of wholesaling in real estate: Find a property, work out a deal on the price and other terms, then put together a purchase agreement. Identify a purchaser for the property. Sell the property under the conditions of the deal made with the buyer. The seller receives payment. The buyer is now the owner, and the wholesaler is due a finder's or assignment fee.Wholesaling is perfect for you if you're good at making sales. If you don't like the idea of making sales, you probably shouldn't use this investment strategy.  2. Rental Residences For anyone with DIY renovation skills and the willingness to supervise renters, owning rental homes might be a terrific opportunity. However, this tactic needs a sizable amount of funding to cover the void months and the upfront maintenance fees.Employing a property management company is crucial for those seeking passive income. A property management business will manage everything for a charge, including security deposits, tenant upkeep, and evictions.Additionally, knowing what amenities to provide tenants with and how to set rent appropriately with the market is crucial. A home could stay empty if it has insufficient amenities and excessively high rent. 3. Real Estate Investment Trusts (REITs) Real Estate Investment Trusts invest in a range of real estate assets, including office buildings, single-family homes, and everything in between, including data centers and apartments. REITs fund the running expenses for real estate assets.A common and highly liquid way to invest in real estate is through REITs, frequently traded on well-known stock exchanges like stocks. Investors who desire to put money into real estate without engaging in conventional transactions might choose a real estate investment trust.Usually an excellent source of consistent income, REITs are mandated to distribute 90% of their profits to shareholders as dividends. In contrast to a traditional corporation, REITs avoid paying corporate income tax doing this. Conventional corporations get taxed on their profits and have to determine whether or not to distribute their after-tax gains as dividends.Finally, every real estate investor must know the difference between equity REITs and mortgage REITs. Equity REITs are more convenient because they represent building and real estate ownership.Mortgage REITs are about income from real estate mortgage financing and dabble in Mortgage-Backed Securities (MBS).Unlike other investment strategies, REITs are truly passive. They are similar to mutual funds and allow you to own a piece of several bonds or stocks.  4. BRRRR Investing  BRRRR is an acronym for Buy, Remodel, Rent, Refinance, Repeat. It's an excellent method to begin your investment career without incurring losses while building a rental portfolio.Just like the acronym denotes, this strategy comprises carrying out the following actions: Purchasing a property below market value  Repairing it Locating tenants Refinancing Repeating the procedure utilizing the money saved from renting and maybe a cash-out refinance.When purchasing the property with short-term cash or financing, you refinance it with a long-term loan after it has been repaired and stabilized. If done correctly, you can withdraw the majority or the entire amount of your initial investment for the following agreement. 5. Property Flipping  Flipping properties requires significant real estate appraisal, marketing, and renovation expertise. House flipping involves money and the capacity to make or supervise repairs as necessary.Renovations for a long-term rental differ from flips because a flip involves renovations followed by a sale. The speed of sale of the property serves as a barometer for flipping success.One such example is the desire of real estate investors to quickly and successfully resell the undervalued homes they purchase.One drawback of this strategy is that flipped could get into difficult situations if they can't sell the property quickly. Losses may keep mounting if they don't retain enough cash in hand to cover the mortgage on a property over the long term. 6. Real Estate Investment Groups (REIGs) For those who want to own rental property without having to manage it, real estate investment groups (REIGs) are the best option. Groups of private investors pool their resources and expertise to make real estate investments using a variety of tactics.REIGs are flexible in their choice of organizational forms, membership dues (if any), and levels of participation. However, access to capital and funding is necessary for investing in REIGs.REIGs are different from REITs because they are not subject to stringent regulations. Rather than being subject to government laws, private contracts regulate REIGs.The investment group manages the marketing of vacant properties, rent collection, property management, and tenant screening in return for a portion of the monthly rental income. When the properties sell, investors in a Real Estate Investment Group profit from their shares of any equity growth and recurrent rental revenue. 7. House Hacking House hacking involves living in a house that generates revenue. Homes in this category include duplexes, triplexes, and other properties with additional rentable space (like a guest house, basement, or spare bedrooms).Another way investors house-hack is by getting a loan from the Federal Housing Administration (FHA) or the Veterans Affairs (VA). You're good to go with a small down payment to buy a small, multifamily building.This strategy aims to cut your overall housing expenditure by renting out a portion of your property. Savings from home hacking rentals are used as down payments on rental properties till funds are available.One disadvantage of investing in rental property is the potential need for a sizable down payment. However, the fact that you can learn about the rental market while residing in your rental makes house hacking an excellent method. After living there for a while, you can leave and turn the house into a long-term rental. 8. BURLBURL is an acronym for Buy Utility, Rent Luxury. The guiding principle of this strategy is that investing in real estate with a higher cap rate enables investors to recover their initial costs more rapidly and begin turning a profit.Paying attention to this rule is more crucial than ever if you want to enhance your lifestyle and net worth. With this strategy, an investor might be able to rent out luxury properties with a modest cap rate, recouping their original investment and starting to turn a profit gradually. Direct Vs. Indirect Real Estate Investment  Actual property ownership and management are considered direct real estate investments. Purchasing properties through collective institutions that hold and administer them, such as REITs or crowdfunding, is known as indirect real estate.Below are some of the implications of direct and indirect real estate investments. — Direct Real Estate Investment Direct real estate investment entails purchasing a specific property or a share in one, like a residential or commercial building. Rental revenue, property appreciation, and earnings from businesses that depend on real estate are how to direct real estate investors to profit from their investments.Increased control via direct investing—your control over direct investment in total. You can choose everything, including the venue, asset class, financing arrangement, financial strategy, exit strategy, and others.Direct investing has several drawbacks, one of which is that it takes time and effort. An additional drawback is financing. Investors frequently require a mortgage or loan to pay for their assets. There is a possibility that you could stop making payments on the loan if the market collapses or if you have trouble locating quality tenants. — Indirect Real Estate Investment On the other hand, purchasing shares of a fund or a REIT entails investing in the company's overall investment strategy, where the fund managers are in charge of all the choices. You would have very little to no influence over any investing decisions.Yet, it's easy to get started with indirect investing. Real estate investing requires money and effort. However, investing in REIT is similar to purchasing corporate stock. You open a brokerage account and are prepared to fund it with even a small investment amount.Additionally, indirect real estate investments provide better liquidity. Typically, you cannot just turn a rental property into its cash equivalent; you must prepare the property for sale, promote it, receive offers, negotiate the terms of those offers, and then enter escrow and close the deal. Finally, indirect real estate investments offer greater diversification. You can invest in several REITs with varied investment strategies that cover a wide range of asset classes in numerous geographic regions by purchasing shares of REITs.Most investors prefer diversification. To optimize their prospective returns, investors with high-risk tolerance can choose to focus all their investments. The Bottom Line There are many ways to penetrate the real estate market. And one strategy isn't strictly better than the rest. Your strategy choice as a real estate investor will depend on your business plans and objectives. Real estate investing will always need you to weigh your options and choose what is best for you. When you invest directly or indirectly, you must compromise on issues like liquidity, diversification, simplicity of entry, and control.
Big City Landscape

Jul 14, 2022

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How Much Does An Apartment Complex Cost?

Most times when the question of how much an apartment complex costs comes up, the first thought that comes to mind is the monetary cost; how much does it cost to buy, build, rent or lease one. The other side to the story is the ongoing costs of maintenance, repairs, rehabbing, and countless other expenses tied into the asset. Getting into the real estate business as an investor or a developer can be a lucrative venture, though it carries significant risk and extensive upfront and ongoing cash injections.Even the cost to build an apartment is not a straightforward question. It involves many factors and questions that have to be considered, which we're going to explore in this article. We'll also look at how you can tap into the profitability of an apartment complex without the ludicrous upfront expenses in a way that's more palatable to individual investors. Apartment Complex vs Apartment Building  According to the Collins dictionary, an apartment complex is a group of buildings that contains apartments and is managed by a company. Apartment complexes are set up with property managers who ensure the proper running of the apartments.Apartment buildings, on the other hand, refer to a single building with apartment units. They are independent buildings, rather than multiple structures under common management comprising shared facilities such as a swimming pool, gym, or convenience store. Types of Apartment Complex  Despite apartment complexes containing several units of housing alongside other facilities, they are generally categorized into high, mid, and low rise.  High Rise  Just as the name depicts, high-rise apartment complexes are characterized by up to 50 floors of apartment units. These high-rise buildings often contain luxury units like penthouses and condos.Due to their structure, they are located in larger and more urban cities like New York, Los Angeles, and Chicago.  Mid-Rise These are apartment complexes with about 5-20 floors. Mid-rise buildings are usually the most common complexes, present in cities, suburbs, and even in schools. Low Rise  Predominately residential with floors ranging from 2 to 15 apartment units. They are common in suburbs and less populated towns.  Apartment Construction Costs BreakdownIt has previously been mentioned that the costs of an apartment complex go beyond the money. The costs involved in building a multifamily apartment complex are divided into different aspects. Hard Costs These are expenses that go into the physical aspect of apartment construction. This aspect of the cost accounts for materials, labor, equipment, utilities, and other physical activities that are involved in the construction process. The hard costs usually make up more than 60% of the entire construction budget.  Soft Costs These expenses are responsible for taking care of the technical and non-mechanical aspects of apartment building construction. They involve things like taxes, permits, legal fees, architectural fees and development fees, and other service charges.  Finance Costs  In some instances, real estate developers do not have all the funds required for apartment complex construction. When this happens, they are provided with the option of seeking investments or loans from financial organizations. These investments come with interests and financing charges, all of which are added to the total cost of construction.  Long Term Costs This aspect of the budget is as important as the apartment construction cost. Although it is not part of the construction cost, it includes the expenses that are needed to maintain the building systems and utilities. Altogether, in the breakdown of the development budget that includes the land purchase. Hard costs make up about 40% of the entire project costs; soft costs about 25% and 20% for land costs, and in instances where investors are involved the remaining 15% to equity returns. Investment Cost Of course, if you want to make money from a multifamily housing or apartment complex investment, you don't need to be positioned to sign up to a multiple-million dollar debt, or ongoing risky cash injections. With Holdfolio, you can own equity in a highly-profitable apartment complex, receiving regular dividends and capital appreciation with as little as $20k in the bank.Simply create an account, select the apartment building you want to invest in, and deposit your money to start passively investing in multifamily today. Get in touch with Holdfolio to learn how to get started. What is the Construction Cost of an Apartment Building? In the United States real estate and construction industry, the construction cost of building an apartment complex is calculated per square foot. This construction cost does not include many things, and should not be mistaken for total building costs. Due to variations in the price of building materials and other charges like sales tax, construction costs vary by location. They also vary based on the type of apartment; for example, the construction cost of a high-rise complex is considerably 'higher' than that of a mid-rise building.Similarly, the construction costs of a luxury apartment building are more than that of a regular apartment. Typically, in the United States, a mid-class apartment complex with 4 to 5 stories costs about $170 to $300 per square foot and varies greatly in total costs between about $5 million - $14 million. This is quite small in comparison to prices as high as $120 million for a luxury high-rise apartment complex containing up to 100 apartment units.  Costs of Apartment Complexes by Type As previously mentioned, there are three types of apartment complexes; which are different in the number of floors they have, and how high they 'tower'. The higher a building is, the more complex the construction of the same building becomes. Complexity in building an apartment equals more money per square foot. Building high-rise real estate involves more equipment, expertise, precision, and higher quality materials, all of which are considered in the cost estimates. High rise We will start with the big guns, the towers, the skyscrapers, the 25 to 50-story apartments, or as we generally call them, the high-rise apartment buildings. The price to build one of these ranges from $235 to about $500 per square foot. These types of complexes are subject to zoning laws that dictate exactly how high they can be. Also, developers make up for the presence of non-residential spaces such as corridors, gyms, laundry rooms, lobbies, and apartment managers' offices by increasing the price per unit cost..  Mid Rise apartments  Mid-rise apartments are more common and the average building costs are slightly lower than the high-rise buildings, at prices ranging from $190 to $280 per square foot.  Low-Rise apartments  The construction costs required to build a low-rise apartment are not far off from the costs of a mid-rise building. Lower but fairly the same, with prices ranging from $160 to $250 per square foot. How Much Does an Apartment Cost Per Unit? Another way to look at construction costs is to estimate how much an apartment complex costs per unit to be built. This better fits the needs of some investors or real estate companies rather than the per square foot billing. As of 2020, building a multi-family apartment complex would cost prices ranging from $64,000 to about $86,000 per unit. The flaw that arises with this technique of estimation is that in some apartment complexes there are different unit types. For example, you can have a combination of studio, one-bedroom, and two-bedroom apartments, all of which may not be the same size. Therefore, it can present a serious miscalculation in the budget and financing costs of the apartment complex.  What Affects the Cost of Building an Apartment Complex?Now that you have a fair understanding of what an apartment building might cost you, it is also important to note the factors that influence the variability of these costs.Interestingly, these factors relate to one another, meaning that one factor can influence another, and they do not only affect the cost of construction but also that of maintenance and the returns from the investment (how much and how often rent is paid). Location and Land Costs Location is arguably the most important factor affecting project costs. Just as with anything else, location determines the value of the real estate. For example, eating at a middle-tier restaurant in Upper Manhattan or New York would be more expensive than even a 5-star restaurant in parts of Ohio or Delaware. The same thing applies to the real estate and construction industries. Location affects land purchases, which usually make up about 10-20% of the proposed budget for the project.Areas with high demand and reputation would have land scarcer and be more expensive, both of which translate to higher rent prices. There would also be opportunities for rentals, a great means of real estate income. Compliance and Development Fees Compliance and development fees could quickly whisk away most of the building budget. The amounts to be spent on these depend strongly on the proposed location of the apartment complex. Location in terms of local, state, and federal laws and regulations guiding multifamily housing and real estate construction in general. These laws have provisions for charges, dues, and taxes to be paid by a developer before, during, and after construction. Getting building permits falls under this category and again, getting this is dependent on the location and type of building to be built. Building permits are easier to get in developing areas of the country, where commercial real estate is needed. While for already densely populated regions where land isn't readily available, and the purchase and demolition of buildings have to take place to create space for construction, getting approval to build in such areas might be strenuous. Affordability  Another important factor that determines the total cost of a project is the type of units to be built in that apartment complex. Are there going to be affordable units or high-end luxurious apartments, or maybe both?Although the building costs per square foot of any of them are relatively similar, how much you spend on a luxury apartment largely depends on how luxurious you need it to be. This is why the costs for site improvements have to be included in the initial budget. As much as many real estate developers would like to build an apartment complex with only luxury apartments, many states have inclusionary zoning laws. What Are Inclusionary Zoning Laws? These laws regulate housing costs and provide affordable housing to those who cannot afford a regular apartment. Different states have different zoning laws that state the number of affordable housing units to be included in an apartment complex. While the rent of these affordable apartment units does not correlate with construction costs, the government offers incentives such as tax breaks and subsidies to developers.During the planning stages of construction, it is important for every developer to do the necessary research regarding the zoning laws of the state and city, where they intend to construct their apartment building, and how these laws would affect their investment and eventual returns. Construction Materials and Labor In a way, the type of material you use in construction is dependent on the type of units you want to build. This falls under the hard costs and it includes expenses for construction materials such as steel, concrete pipes, and so many others. The tricky part about these materials is the high tendency for fluctuation in price, which can be a burden if adequate preparations are not made. Therefore, it is advisable to make provisions in the budget and give room for eventual price increases, considering inflation and all that is going on with the supply chain.Labor costs include the fees for hiring any personnel involved in the construction project, including structural engineers, architects, contractors and subcontractors, and others. Expected Occupancy This is dependent on the type of apartments in the complex. How many affordable units are therein? How many studio units, 3- bedroom, 2-bedroom, or even penthouse apartments are to be built? All of these are important to note because they would determine what the rent and income from the apartment would be and ultimately affect equity and the financing costs of the building.   Who is Involved in Building an Apartment ComplexGetting an apartment complex to translate from an idea to the actual building involves an elaborate amount of processes. However, amid these events, it is important to take note of the people who make them happen.  Architect The architect has the first major responsibility in apartment building construction. Their job is to design and draw plans for the proposed building. They even go as far as creating small models of the building. During this stage, the architect might be required to make adjustments to the model or the design of the building until the final plan is agreed upon. This building plan is created to give the contractor a picture of what the developers have in mind, and because most architecture firms want their design to be executed properly, they have contractors that they recommend to the developers. Usually, the architect acts as the project manager alongside the general contractor. Contractors We have two types of contractors based on their level of responsibility. The first type is the general contractor - the architect and the developer employ the general contractor, who is responsible for hiring and finding all the other subcontractors. They also handle and supervise the entire project. The general contractor is in charge of technicalities such as permits and compliance. It is important to carefully select a competent general contractor because they are in charge of everything and the success of the project depends largely on them. General contractor fees can be as high as 10% - 20% of the entire project cost.The subcontractors, on the other hand, are responsible for the different aspects of building an apartment complex, according to their specialty. From the carpenters to the engineers, masons, and others.Contractor fees differ from state to state because of differences in real estate sales tax laws in respective states. Real Estate Attorneys  Apartment complex costs run into millions of dollars, and investments such as these require formal and legal backing. Legal processes such as acquiring necessary permits, understanding zoning laws, and land acquisition documentation usually require the services and input of a legal officer. Accountant The amount of cash flow and exchanges that occur during apartment building construction is a lot, and all of these funds have to be accounted for during and after the completion of the project.Also, things such as payroll and disbursement of funds are the responsibilities of an accountant. Apartment Complex Cost Calculator    Some resources are available to support people in estimating project costs. Whether it is per unit cost or per square foot cost, or even the total cost of an apartment complex. These resources make use of algorithms that consider market costs of materials, the state and national average land price, the average contractor fees, architectural fees, and other construction costs; essentially all the factors listed above, and run the maths to give you an estimate.  Conclusion Finding out the cost of an apartment building complex might seem like an arduous task, but proper preparation takes away all the worries. As a developer or an investor looking to get into this space, it is important to make adequate consultations and ask all the necessary questions to get clarity on whatever you need to know. Building an apartment complex as an investment project requires a significant amount of capital, and that money should be put to efficient and good use. If you're an investor who is syndicating the deal or undertaking the project alone, it also entails a high level of risk. It's wise to ensure you have the skills, experience, and ability to do the project justice with due diligence before you more forward with the venture.If you're interested in investing in profitable multifamily real estate found in prime location without the risk, high capital investment, and managerial responsibilities, become a passive partner with Holdfolio today. Through your investment, you will receive quarterly dividends and capital appreciation without having to life a finger. Plus, you can invest with as little as $20k in the bank. Give Holdfolio a call today to learn how to get started.
Create a real estate investment timeline for your success!

Jul 6, 2022

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Real Estate Investment Strategies Every Investor Should Consider

Real estate investing is among the oldest strategies in the book to build generational wealth. As one of the most effective methods for building long-term wealth, many of the world's most affluent and influential leaders attribute their financial success to strategic real estate investing.Real estate investing diversifies your portfolio since it has a low correlation to the stock market, reducing the overall exposure to risk. Investors can earn residual income streams from rental yield allowing more space and time in their daily life for family and other priorities. They also commonly build equity in steadily appreciating assets providing better protection against inflation than numerous alternative investment strategies.All real estate investment strategies carry varying degrees of risk and effort to manage. Before riding the one-way train to financial freedom and success, investors must consider their risk tolerance, current commitments, and financial situation to choose a game plan that will integrate comfortably with their investing prospects. This article will describe a few popular real estate investment strategies that can lead you to financial success. Questions To Ask Before You Begin Investing The best part of real estate investing is the flexibility it affords. Regardless of whether you want to build a couple of streams of residual income or overhaul your career entirely and enter this lucrative investment class. There is something in real estate for everyone!To determine the best strategy for you, here are a few helpful questions to ponder: What Are Your Investing Goals? Before you start investing, it's critical to consider what you hope to achieve in the end. Many people begin real estate investing to retire early, build generational wealth for their family, earn residual income and quit the nine to five, or save for their children's college education.The lifestyle you wish to maintain during your investment term is also an important consideration. Certain real estate investments entail hefty active involvement, while others require you to do little more than invest your capital.Whatever you choose to shoot for, ensure you have one overarching goal to begin with. Goals define your ideal outcomes and help chart the course to success by guiding strategic alignment throughout the investment. Dream big! What Is Your Investment Timeline? Once you have established a goal to strive towards in your investment, determine when you want to achieve it to keep you on track. Creating a timeline for accomplishing goals also includes benchmarks to reach along the way. For example, if you want to own a few rental properties freehold, at what point do you want to pay off your first mortgage? How many years before you leverage your equity to secure a second property? Do these timelines overlap, or are they sequential?Setting a timeline for your goals is a great way to ensure you steadily work towards the endpoint and helps visualize milestones and deadlines. Furthermore, being accountable and taking actionable steps towards achieving your goals is motivating and rewarding which generates more inspiration to continue achieving. What Is Your Risk Tolerance? Risk tolerance describes the degree of fluctuation an investor is willing or able to withstand on their returns. All real estate investments carry an element of risk, and all investors will be able to absorb different magnitudes of loss for a potential gain, depending on their financial situation.Investments with greater risk have the potential for more significant losses and better returns. On the other hand, a low-risk investment is considered safer but typically generates smaller returns. Therefore, any investor's risk tolerance can be influenced by their investment term. In general, the longer the investment term, the higher the risk an investor may choose to take on since they have more time to buffer the ups and downs of investing. On the contrary, if your investment term is short (say less than five years), capital preservation might be a higher priority than excessive gains.What one investor considers a minor inconvenience can equally be viewed as a devastating loss by another. The key is to consider your bottom line and stick to it throughout the investment term. Now, let's take a look at some popular real estate investment strategies and how to start investing fast. Real Estate Investing Strategies MentionedReal Estate Crowdfunding Platforms Rental Properties Real Estate Investment Trusts (REITs) Real Estate Exchange Traded Funds (EFTs) Real Estate Mutual Funds House FlippingReal Estate Crowdfunding PlatformsReal estate crowdfunding is an approach where individual investors pool together investment capital for the development, management, and operations of profitable multifamily and commercial real estate. The deals are handled by professional investment groups, offering investors access to lucrative returns from commercial real estate assets without having to pull the arrangement together themselves.Crowdfunding is a relatively recent addition to the world of syndicated real estate investments, and deals get advertised through online platforms. Many real estate crowdfunding platforms require investors to be accredited and have a minimum knowledge of proper due diligence on properties, real estate markets, and opportunities.Other platforms like Holdfolio allow you to invest with as little as $20k in the bank. Holdfolio has a vertically integrated construction company, property management company, and investment firm, meaning passive investors can access significant returns (currently averaging 19.76%) and capital appreciation in a low-risk investment. If you want to invest in real estate the easy way, call Holdfolio to get started today. Pros of Crowdfunding PlatformsCompletely hands-off model Opportunities for high returns Dividends get distributed quarterly Investment portfolio diversification to decrease the risk Access to large tax deductions and shields Low correspondence to the stock market Some platforms offer an accessible entry Simply, fast, and easy to investCons of Crowdfunding PlatformsInvestments are illiquid - better suited to a mid-long term investment Many platforms only partner with accredited investors Many platforms offer high minimums (upwards of $50k) Investors need to perform due diligence on new platforms You may have to pay management feesRental Property Investing Rental property investors search for, purchase, and manage residential properties, making a profit from the rental income. There is a range of property types to select from, including single-family homes, duplexes, condominiums, and townhouses. With decent tenants and the right property in an ideal location, a landlord can cover their monthly mortgage payments, grow equity in their appreciating asset, and access additional cash flow after expenses are accounted for.This real estate investment strategy requires a significant amount of capital upfront and ongoing expenses to maintain. Unless you outsource property management to a third-party company, as a landlord, you must solicit tenants, create lease agreements, perform maintenance duties, and eventually sell the property at the end of your investment term. Therefore, active rental property investment is appropriate for those with the time and money to handle the job.Moreover, the risks involved with rentals can be off-putting to some. For a start, covering the expenses while a property is vacant is costly. Additionally, the legal liability landlords carry can be stressful and cumbersome to manage. While property appreciation commonly increases the market value of your investment, if the local market is in decline, it means your property value will decrease as well. By working with a good real estate agent you're more likely to find a great rental suited to your goals.Rental Properties ProsOnce the property is rentable you can access semi-passive cash flow Landlords gain tax benefits, such as appreciation If your property is well maintained, you can usually expect property appreciation while the cost of owning the asset decreases When rental income covers your mortgage, you can gain equity using other people's money Debt can be leveraged to acquire additional properties If you're prepared to put in some hard work, you can rapidly appreciate the value of a distressed propertyRental Properties ConsManaging landlord responsibilities can be time and energy-consuming Rentals can produce unexpected maintenance and repair costs You are legally liable for any accidents that occur to guests, tenants, and contractors on your property Rentals require real estate knowledge, skills, and an active approach It's difficult to diversify because rental property investment is so capital intensive Funds are illiquidReal Estate Investment Trusts Similar to real estate crowdfunding, REITs are trusts and corporations that own and manage profit-producing commercial real estate properties such as data centers, apartments, and office buildings. This is another approach to real estate investing without owning real estate assets. Company shares get traded on the stock exchange, and investors purchase these shares to passively earn monthly or quarterly dividends from rental income.Law requires real estate investment trusts to distribute 90% of annual profits made from projects to shareholders. This regulation preserves its standing as an investment trust. Investment capital is highly liquid, meaning that no real estate agents or title transfers are required to cash out your investment if you need access to emergency funds.You can choose from two types of REITs. Mortgage REITs finance property loans and generate profit from mortgage financing. Alternatively, equity REITs own buildings and earn income from rental yield. Real estate investment trusts are typically easy to access, however, they charge high fees for their services which may cut into your profit margin. Real Estate Investment Trusts ProsHigh liquidity - you can buy and sell shares on the stock exchange easily Lower entry barriers than rental property investing Reduced risk compared to owning a real asset Less time and capital intensive than owning rentals or property flipping Easy to diversify your investment portfolio into real estateReal Estate Investment Trust ConsDistributions are not guaranteed You have no control over the performance of your investment Private, non-traded REITs can be illiquid You have to pay fees which can reduce your profit Less access to leverage than traditional real estate investingReal Estate Mutual FundsReal estate mutual funds are pooled investments managed by professionals that essentially invest in REITs and companies that manage or operate commercial real estate assets. With a small amount of capital, investors can access a well-researched and diverse range of real assets in the same fund. Mutual funds also offer flexibility to switch portfolios with relative ease.You purchase and sell mutual fund shares or units at the fund's current net asset value (NAV). This type of investment has the potential to strategically protect your money from inflation, seeing as the value of real estate tends to rise in conjunction with inflation. Investing in real estate is a passive strategy, comes with a low minimum number of shares to buy, and is easy to achieve. Mutual Funds ProsLess costly than investing in rentals or house flipping Very liquid investment Offers broad diversification in your investment portfolio Mutual funds are professionally managed and well researched No direct-ownership hassles tied to your assets Generally low fees Not capital intensive - low investment minimums Potentially hedges money against inflationMutual Funds ConsMore expensive to invest than REITs Susceptible to stock market volatility No advantages to property appreciation Some funds have lock-in periodsHouse Flipping House flipping, also known as real estate trading, has been recently popularized by television shows. The approach entails purchasing a distressed property below market value, then investing time and money into renovating it. This method can add almost instant and significant value to a property, which ideally gets resold at a large profit into the same market it was purchased from.Flipping is the most active of the real estate investing strategies mentioned in this list. Investors are required to have a knowledge of the local real estate market, as well as the skills needed to bring the property up to shape. The scope of work can involve interior design, repairs, and landscaping. Investors must have good negotiation and sound decision-making skills as well. It's possible to outsource the work, though hiring a third-party company can diminish your profits.House flipping is typically a short-term investment and can yield excellent returns. With that said, it can be easy to lose significant amounts of money if you're unable to resell fast or if the project requires more capital to complete than initially calculated. Real estate investors must be prepared for capital and time-intensive active method of real estate investing, which carries a significant amount of risk. Live-In FlipA live-in flip follows the same process as a regular property flip, except the investor inhabits the property while it is undergoing improvements. This approach can save you money on rent in your usual abode and keep your investment project easily accessible so that you can complete it faster.If you choose to live in the property you are rehabbing, it is considered your primary residence, which shields you from capital gains tax incurred in investment property resale. The catch is that you must live in the property for a minimum of two years before selling it. Associated risk comes from the potential for a market decline during this period or difficulty selling at the end of the term. House Flipping ProsPotential for large profits over a short timeframe A sense of achievement at the end of your investment term Property flipping is not correlated to the stock market High level of control and flexibility over the end resultHouse Flipping ConsVery high-risk investment Capital and time-intensive, particularly with unanticipated costs and issues Capital gains tax can significantly hinder profit prospects Hot markets can suddenly lose momentum Requires extensive real estate skills, knowledge, and competency Closing costs and real estate agent fees are pricey Financing is more expensive over the short term Location dependentFinal Thoughts Real estate investments are by and large one of the most effective and productive vehicles to grow your wealth. It's critical for investors to thoroughly examine their investment objectives, risk tolerance, and current commitments before weighing up their options.Luckily, the magnitude of options available to any investor - whether you're seasoned or embarking on a new real estate career - is variable enough to cater to a range of preferences, processes, and outcomes. Building a robust and well-thought-out strategy is significantly more likely to see you through to financial success.A common issue for investors who want to diversify their portfolio and access the lucrative opportunities of investing in real estate assets is a lack of capital, time, or knowledge required to get started. Holdfolio offers a simple, passive real estate investing solution that entails little more than creating an account, selecting an investment, and depositing your capital. To begin building equity and receiving regular dividends from low-risk real estate investing the fast and easy way, get in touch with Holdfolio today.
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Jun 29, 2022

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Best Passive Income Books For Financial Success

They say the more you read, the more you know. The more you know you can grow. And this is especially true when it comes to your passive income. Earning hands-off income streams is one of the best things you can do for your financial future, and it's by definition one of the simplest as well.Unfortunately, simple ventures don't always make for easy ones. With the multitude of options available for you to earn passive income streams and build generational wealth, it can be challenging to weigh the risk score versus the benefits of your investments - particularly when it comes to projects managed by a third party.So what's an investor to do? We've got a simple solution: start reading. In this article, we've compiled a list of some of the most powerful, insightful, and illuminating books on building passive income streams. With these literary gems, you can expand your knowledge base and enter the game armed with more strategy and tact than ever! How Do I Start Earning Passive Income? If you're unfamiliar with the process, earning residual income is one way to get money with little to no effort in maintaining the source. This means you can grow wealth in your sleep! As all of the best passive income books explore, there are a variety of ways to get started.With a diverse pool of options, you'll likely find that some are better suited to your skills, goals, risk tolerance, and lifestyle than others. Gaining a solid foundational knowledge and understanding of passive income ideas that have led to successes and failures is a fantastic place to start. For that, we need some good books. The Essential Concepts of Passive Income Most of us have some familiarity with the notion of quitting the nine to five with pools of money at our sides and sailing off into the sunset. While it sounds like a pipe dream to many, a few authors of the books in this list have literally been there and done it.We're all here to show you how you can do it too. But that doesn't mean there isn't some serious work involved to achieve financial freedom. Here are a few principles that will help guide your journey to achieving your passive income lifestyle:The concept of passive income is simple. Achieving a passive income lifestyle is not necessarily easy. It will require some effort and groundwork to get started. Long-term residual cash flow is a product of sound decision-making and commitment to your goal. You can make passive income in two ways: acquiring it or building it. Automation and outsourcing are where residual cash flow transforms into pure passive income.These four pillars set the tone for a realistic approach to getting a truly passive income. Keep these in mind as you build your perspective and mindset around financial success. Now, let's dive into the best passive income books to help guide your way to the future of your dreams. Estate Syndication - By TJ LokbojTapping into one of the simplest ways to make a passive income, TJ Lokboj has created an accessible e-book to guide you through every step of multifamily and commercial investing. Lokboj is an entrepreneur and pioneer of lucrative multifamily real estate investing through the power of digital platforms. As the managing partner of Holdfolio, a real estate investment firm that leverages online crowdfunding, and cofounder of Syndication Pro, a SaaS solution for syndication management, he knows a thing or two about successful investing for passive income.In this book, you'll learn everything you need to enter into multifamily syndication, including discovering the right property type, building a legal team, investor management, leveraging debt and equity, and a comprehensive assessment of the risks involved. Like any passive investment strategy, syndicating will take some work to set up. Although armed with Estate Syndication and Lokboj's expert guidance, you have the opportunity to tap into a booming and fruitful passive income future.If you prefer a faster and simpler way to start earning passive income streams, you could consider becoming a hands-off syndication investment partner instead. Holdfolio offers a 100% passive investing solution that provides above-average returns, as well as investment portfolio diversification benefits and tax shields that can only be achieved by income-producing real estate investing. To earn recurring effortless money streams and gain equity in profitable real estate assets the easy way, give Holdfolio a call today. Passive Investing Made Simple: How To Create Wealth And Passive Income Through Apartment Syndication – By Anthony Vicino, Dan Krueger, and Gina BarbaroBecoming a real estate investor and drawing residual income from a portfolio of income-producing properties managed by a third party has long been the bread and butter of passive income earners. However, many people fail to understand how it's more effective than earning distributions from index funds in their retirement portfolios. Passive Investing Made Simple is here to clear the air.This book explains that while the prospects of actively crowdsourcing and managing a multifamily real estate syndicate sound (and typically are) rather intimidating, there are opportunities for passive investors to partake in the ride without putting in any effort. The book provides a step-by-step guide to building a passive income with multifamily syndication.If the prospects of partnering with a non-professional investor make your eyes water a little, you can always become a passive partner with Holdfolio quickly and easily with as little as $20k in the bank. Simply create a profile on our online portal, select your investment, and deposit your money to receive quarterly passive income fast.  The Lifestyle Investor: The 10 Commandments of Cash Flow Investing For Passive Income And Financial Freedom - By Justin DonaldJustin Donald is a financial consultant and entrepreneur who has spent over ten years of his career focusing on real estate investing, rehabbing, and marketing. After personally investing heavily in real estate and successful operating companies, he has developed a series of original investment strategies to support the lifestyle you choose. These are known as lifestyle investment strategies.The main idea discussed in the book is to replace your job with residual income streams by constructing an investment portfolio that produces sufficient cash flow in the present to fund your life. This is a direct contrast to the practice of investing in the stock market, for example, in hopes that your investment value will increase in the future.This strategy allows you to choose whichever lifestyle you desire to live. According to the author, the lifestyle investor usually covers three stages: funding the bare minimum, funding your current lifestyle, then funding the lifestyle of your dreams. Passive Income, Aggressive Retirement: The Secret To Freedom, Flexibility, and Financial Independence - By Rachel RichardsCould you imagine quitting your job and thriving off passive income streams at the age of 27? That's what author Rachel Richards achieved, and she wants to teach you how you can get there too. Yes, even if you're 27+.The book details over 20 effective passive income strategies that can empower you to leave your job and start making consistent long-term passive streams to support you and your family in the future. Richards emphasizes reducing psychological barriers such as stress and anxiety many of us tie to money. She encourages reaching a state where you have the flexibility to work when and where you want to.In addition to drawing from her own experiences, Richards reaches out to other experts in the passive income spheres and tells relatable stories showing that the passive income streams are actually achievable. There is a level of risk that is not articulated in the book, which would be recommended to research and ensure you fully understand before embarking on any venture. Additionally, the book is not a step-by-step guide for generating passive income. Fire Your Boss: How to Quit Your Job, Stop Selling Your Time, and Start Making Passive Income While Your Sleep - By Jonathan GreenThe labor market is one of the factors that keeps so many of us strapped to our desk job, dreaming about another way. Whether you want to achieve more freedom and flexibility in your lifestyle or create additional income to support your family, Fire Your Boss is an excellent book for those new to building a passive income. As the name suggests, it's also been a hit among those who want to escape their workaholic lifestyles.Green begins by working through the limiting beliefs that prevent us from moving in that direction, from not understanding where or how to start to learn how to find the time to build a passive income stream.You are then given a set of strategies and techniques to begin earning a passive income stream. The book also delineates a few common mistakes made by those first entering business. Green endows the possibility of reaching emotional and financial freedom, as well as the possibility of firing your boss and retiring on an island in the tropics as he did. The 4-Hour Workweek - Escape 9-5, Live Anywhere, and Join the New Rich - By Timothy FerrissAs the name suggests, The 4-Hour Workweek is about making more money and working fewer hours. Ferriss describes his personal decisions, recounting his transition from the nine to five lifestyle to a more desirable work-life balance and explaining the concepts and philosophies that led him there.The general idea discussed in the book is to take a passive income idea and turn it into an online business that you eventually remove yourself from by hiring remote workers or creating automated systems to do the work for you. Ferriss states that people should be effective rather than efficient. Drop shipping was one concept introduced by the book to illustrate this. In a nutshell, the idea entails getting your supplier to ship products directly to customers under your brand name to render inventory-keeping redundant.The book discusses other notions such as the futility of gauging productivity by the amount of time spent working, as we tend to waste a lot of time. It also stipulates that something unimportant done well does not necessarily increase its value. A best-seller among passive income books, Ferriss introduces vital concepts and ideas to create a fertile ground for the passive income mindset. Rich Dad, Poor Dad - By Robert. T. KiyosakiRich Dad, Poor Dad is an international best seller, still as relevant to passive income aspirants today as when it was first published over 20 years ago. It has been translated into multiple languages and recommended by the likes of Oprah Winfrey and Donald Trump.Rather than offering a step-by-step guide to building a passive income, or a compilation of passive income ideas that can lead you to your desired future, this book focuses on nurturing an expansive mindset around wealth building. To transition from worker to wealthy, it's necessary to deconstruct and challenge the ingrained beliefs and habits we have learned from traditional thought about money.One key conviction discussed in the book is how to make money work for you rather than working for money. While certain critics have proclaimed the book unrealistic, it'll certainly offer a fresh perspective on wealth building if that's the direction you want to pursue. The Unemployed Millionaire: Escape The Rat Race, Fire Your Boss, And Live Life On YOUR Terms - By Matt MorrisAuthor Matt Morris found himself unemployed, riddled with debt, and living out of his car at age 21. Only eight years later, he was generating multiple millions of dollars passively while traveling to more than 40 countries.The book discusses Morris' journey to success and details the life decisions he made to achieve it. He overviews several principles that led him to the top and describes how you can adopt them to get there too. If you have a great passive income idea and seek a formula to build it into a multi-million dollar business, this book is worth checking out.Matt demonstrates to readers that you don't have to have a huge amount of investment capital to start making money passively, and it's possible to achieve mammoth success without grinding at the office. The message advocates that you don't have to be particularly intelligent, rich, or lucky to achieve the dream. He engages in regular public speaking gigs and supports young, passionate entrepreneurs on their path to success. Passive Income Freedom: 23 Passive Income Blueprints - By Gundi GabriellePassive Income Freedom is widely accepted as one of the best books on passive income, offering 23 tried and true, practical ideas to achieve financial freedom through residual income. If you're looking for some simple ways to earn $5,000-$10,000 monthly passive income from home, this is a great place to begin.That's not necessarily to say that there isn't any work involved to start making passive income. Coming from a realistic school of thought, Gabrielle does not inspire a "get rich quick" or "beat the system" attitude. Instead, she offers a methodology and clear instruction on how to create passive income streams regardless of where you are starting.Gabrielle presents valuable business tips and overviews of a range of risk factors involved in each project. She also provides additional resources to readers for further follow-up. With that in mind, these resources have been considered useful by some readers to understand the full scope of what's involved in each passive income method. The Power of Passive Income: Make Your Money Work For You - By Nightingale ConantNightingale Conant is well known in the spheres of self-improvement and has broken into the entrepreneurial scene by partnering with Entrepreneur Media. Together they have created an inspirational instruction guide to liberate you from the rat race.Unlike other books on passive income, The Power of Passive Income tends to focus on the individuals' strengths and weaknesses to identify opportunities to earn passive income from your own source of skills and resources. The author teaches you how to recognize your capabilities and how they match passive income models. She then instructs how to derive strategies to help you reach your goals.The idea of escaping the office and living your best life on your terms is not dissimilar to the messages denoted in many of the other books on passive income. However, what sets this apart is the internal approach to finding passive income opportunities: identifying within yourself where opportunities for cash flow lay, rather than scouring the external environment for cues. Final Thoughts Creating a passive income is one of the best ways to earn money. Whether you're working towards your dream lifestyle, working fewer hours, or want to retire early, residual cash flow is one of the most effective ways to accomplish this.A great place to start building your passive income is reading books written by those who have done the hard yards and designed new ways to achieve the dream. They teach us about principles and concepts involved, risk mitigation, and how to overcome challenges so we may use their learning and carve our own way to our dreams.Building a passive income lifestyle is not necessarily easy, though. It takes a combination of time and dedicated effort to get to the end goal. If you're looking for a head start on your passive income lifestyle, Holdfolio crowdfunding investments offer a simple solution to begin your journey today. By becoming a passive partner, you can access the lucrative returns of multifamily real estate straight away. With entry as low as $20k, passive income is accessible to any investor. Get in touch with Holdfolio to learn how to make hands-off income the easy way.
rental property on a sunny day

May 21, 2022

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How Much Profit Should You Make On a Rental Property

A rental property's prospective revenue differs from one house to another. Investors that have unreasonable earnings expectations might be in for a rude awakening. Investors who evaluate cash flow and precisely determine the possible return from an investment home, on the other hand, are more likely to be effective in the long term.We'll show you how to assess the possible revenue from leasing and address questions about what a decent return on a rental home may be for you in this post.Contact us and check out Holdfolio's exclusive deals to get started on your rental property investments. What is the profit from a rental property? The revenue from a rental home is the amount of money left over at the end of every month.It's crucial to understand that investment property revenue differs from taxable net earnings. This is because property investors employ non-cash deductions like depreciation to lower their pre-tax earnings.Property tax exemptions are also one of the reasons why certain rental landlords might pay relatively little in taxation while yet having a large amount of cash on hand. How to Calculate a Rental Property's Profits The cash flow that an investment property creates is what most property investors benefit from. Among the elements that influence cash flow are:The cost of buying a home Payment on a house (principal and interest) Rental revenue, gross Number of vacancies Managing real estate Costs of operation (such as repairs, maintenance, CapEx, and landscaping) Taxes on your homeMake a statement of cash flows for your business. A very basic statement of cash flow for calculating prospective cash return from an investment home looks like this:The purchasing price of the property is $100,000.$25,000 as a down payment.Gross rental income is expected to be $900. Vacancy loss of 5% is $45 Gross income effective = $855 Repairs at a rate of 5% = $45 At 8%, property management equals $72. Other costs (property tax, insurance, HOA dues, and so on) = $180 Mortgage payment = $320 (principal and interest alone) Monthly cash profit (pre-tax) projection = $238How to Calculate the Profits from a Rental Property There are four primary methods for calculating rental property profitability. Regularly monitoring every one of these measures will assist keep your rental property's financial performance on track and guarantee that your lengthy economic targets are accomplished: Cash Flow Upon covering all of your operational expenditures, including the mortgage, cash flow is the amount of cash you have left over as income on a monthly basis.It's crucial to remember that cash flow isn't always consistent from month to month. Repair costs may be more or lower in some months over others, or the building may be empty for longer than intended as you hunt for a suitable renter. Capitalization Rate The capitalization rate (cap rate) is a rate that equates the annual net operating income (NOI) of a property to the purchase price. Because various investors utilize varying degrees of leverage, NOI does not include the monthly mortgage payment (resulting in higher or lower mortgage payments).Generally speaking, the greater the cap rate, the more beneficial an investment may be since more revenue is created relative to the purchase price of the property. Because cap rates vary by market, the cap rate estimate is only used to compare properties within the same market or submarket.The cap rate is determined using the information from the financial statement above:NOI = $238 monthly cash return + $320 mortgage payment (included again in to estimate NOI) = $558 each month x twelve months = $6,696 yearly NOI NOI = $238 regular income profit + $320 loan payment (added later in to determine NOI) = $558 per month x twelve months = $6,696 yearly NOI Property price = 0.067, implying a cap rate of 6.7 percentReturn on Investment in Cash The yearly cash return from an investment is comparison to the number of cash invested in a cash on cash returns ratio. The mortgage payment debt service is included in the cash on cash return calculation, unlike the cap rate.The cash on cash return is 11.4 percent if an investor puts in $25,000 and makes a cash profit of $2,856 annually:2.856% yearly cash return / $25,000 down payment = 0.114 percent annual cash return. Return on Investment (ROI) Return on investment (ROI) is a metric that compares the total amount of money gained to the entire amount of money invested.Let's have a peek at how to figure out your return on investment. In the real world, gross rental revenue and running expenditures might fluctuate from year to year, but for the sake of our example, we'll suppose they stay constant.The home is sold for $150,000 five years after it was purchased for $100,000 with a $25,000 down payment. The cash returned throughout the 5-year holding period was $14,280, which included the net cash gains from leasing ($238 each month x 12 months x 5 years) plus the $50,000 gain realized when the residence was sold.The return on investment is as follows:(20.79 percent annualized ROI) = ($14,280 lease net cash income + $50,000 gain on selling) / $25,000 down payment. The 1% Rule This is a simple and quick tool for investors to assess a property's potential. According to the one percent guideline, monthly rent should equal at least one percent of the total property purchase price.A $300,000 house, for example, should lease for at least $3,000 per month. If this doesn't seem realistic or doesn't match market values, the investment is probably not worth it. Again, issues such as property location and size must be considered.What is a Profitable Rental Property? Because a good return for one property investor may be awful for another, there is no single right answer to this question. Nevertheless, there's a few factors to consider in determining what a decent residential property income could be for you.How much profit should you make on a rental property? Well the answer to that is profoundly personal and you are the only person competent enough to answer it. Consider the following questions to help yourself figure out how much profit you should make on a rental property.What kind of return can I anticipate from a different type of investment? Historically, the stock market has returned 7-8 percent every year. Alternative investments: How safe are they? What level of authority do you have above them?So, if you can somehow make 8% in the stock market, which many consider volatile and difficult to control or manipulate, and 3% in the government bond market, which is frequently hailed as one of the best investments available, what kind of return should you anticipate or require from a property investment?Real property is not quite as passive as stock or bond trading in the beginning. As a result, you may want a bigger return than they can provide.However, because there are so many various investing techniques that are out, there are assets that may suit everyone's needs.If you're willing to accept lower cash-on-cash returns than the share market because you trust in the market's long-term gains, go ahead and invest in those assets. Final Thoughts The amount of money you earn from property investment is only as significant as how much money you make. If you're dead set on maximizing your cash-on-cash returns, go out and buy properties that fit your requirements.If you prefer appreciation, concentrate your efforts on industries that are receiving, or are expected to experience, maximum appreciation soon. It's crucial to remember that a year in property investment is like a single glance — it goes by quickly and has no impact on you as an investor or your property.Real estate investment is a journey, not a sprint, so set a strategy, adhere to it, and don't get frustrated if your target cap rate is 8% but your properties only achieve a 7% cap rate.Things don't always go as planned in real estate investing so investing alongside a knowledgeable and experienced investment company, like Holdfolio, can help you.Here at Holdfolio our tactics focus on generating high profits without relying on guesswork. This suggests that we don't need a fast-appreciating real estate market to get above-average profits. The income-producing homes we buy create cash flow month by month and perform well throughout the real estate cycle. We place a premium on long-term wealth while enabling our business to succeed in any market environment.Contact us today and start making a profit with our exclusive real estate investment deals!
A nice looking property situated in a great location

Apr 6, 2022

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18 Best States for Real Estate Investing

Ask the average person for some passive investment ideas and ten out of ten times, they’ll list real estate in their top three. Why? Real estate is part of our lives. Everyone lives somewhere. It’s quite easy to think that your mortgage provider or landlord must be earning lots of money. Well, most times they are, especially if you're residing in a real estate hot spot.Here, you’ll learn about 18 of the best states for real estate investing in 2022. Uncover why each of these states is a great housing market to invest in. See current housing market statistics for every state and what makes each of them stand out. Best States for Real Estate Investing in the US Before we head into our rankings of best real estate markets, there are some things you'll need to know.Unless otherwise stated, recent housing market data used here is from Zillow, Census Reporter, Data USA (2019 census data), redfin, and November 2021 statistics from Apartment Guide for rent trends. These rankings are in alphabetical order. These are the 18 best housing markets in America.Arkansas Arkansas provides a great real estate investment opportunity, with promises of a high quality of life for homeowners and real estate investors in 2022. The average home here sells for $159,714, with a median increase of 15.3%year-over-year. Of all housing units 84% are inhabited, with tenants occupying 35% of that number. The average rent here is less than you’d find in most other states, sitting at $914 per month. When compared to the previous year, the average rent reduced by a massive 15.3%.What’s more? Population growth in "The Natural State" was up by 0.13%, pushing the numbers to 3 million residents. The property tax rate for the largest households is below $800, putting Arkansas alongside the lowest property tax states in the US. Notably, Arkansas is expected to come out strong as a seller’s market in 2022 with buyer's and rental demand greater than there are available properties. California Also known as "The Golden State", California is the most populous state in the country with 40 million residents. The median price for a home in California is $772,406, with a year-over-year increase of 21%.  Nine out of every ten houses in CA are occupied, with renters inhabiting half of the housing units.The average rate of rent increase year-over-year in CA is 19.0%, with single-family properties increasing by 22.3%. The median rent in this diverse economy goes for $3,123 per month, amid a job growth rate estimated at 1.37% last year. Taxpayers with the largest share of households pay $3,000 in property taxes. Georgia Georgia’s median price for a house is $269,441 according to Zillow, with a year-over-year increase of 18.9% in December according to Redfin. Intending sellers had to wait for an average of 26 days, with 36% of the housing units occupied. Again, single-family units account for the biggest percentage of housing units in the Peach State's housing market.Property taxes are, on average, less than $800, with the average rent at $1,666 per month. Home to more than 10.7 million people, Georgia ranks sixth in the US for net immigration. The state added 284,541 people in 2019, consequently increasing the diversity of its population. Furthermore, the real estate market is expected to follow suit in increasing potential and dynamism.Florida Many millennials (and consequently, young professionals) are moving out of big cities like Chicago and Los Angeles for less noisy suburbs. Helpfully, Florida's housing market presents an attractive alternative with its welcoming beaches, coastal cities and warm year-round weather. The average home in the state sells for $328,576, and is increasing year-over-year by 23.9%. Median rent is at $2,271 per month, with an average year-over-year rent increase of 37.56%. Per employment opportunities, job growth is at 2.57% against a population growth of 0.84%. Of houses, 82% are occupied, while the average taxpayer (with the largest share of households) pays $3,000.Experts believe that interest rates will rise in 2022. Generally, the figures are favorable for potential investors, with single-family homes holding the highest promise. Idaho Next on this list of best real estate markets is Idaho. Home to one of the hottest real estate markets in the nation (Boise), Idaho has a median home value of $446,550. The average home’s worth increased 38.2% year-over-year with a total of 87% of its houses occupied. The average rent in this state comes in at $1,429 per month, with an average year-over-year rent increase of 21.72%.Employment chances in Idaho grew by 4.32% in the last year, against population growth of 1.87% bringing the total population to 1.7 million. Per the property tax rate, the largest households in Idaho will pay between $800 and $1,499. Illinois The average home in Illinois' housing market sells for $243,355, growing by 13.6% year-over-year. While 90% of housing is occupied, about 34% of total housing units are renter-occupied. Reasonably, with the relatively small amount of vacant total housing units, the prospects of successive investment properties and new real estate portfolios are bright. Population slightly declined by 0.5%; while jobs grew by 0.84% in the previous year. Median rent in "The Prairie State" goes at $1,619 per month, increasing by 15.05% year-over-year. Per the property tax rate, the largest share of Illinois households pays over $3,000. According to data from Illinois REALTORS®, Oak Park and Schaumburg have the highest monthly rental growth rates, both up 4.8%. Aurora and Chicago are close behind, with a 3.3% rent increase each.  Indiana Homes sell in Indiana for $197,767 on the average—a 17.4% year-over-year increase from the previous year. With an occupied housing rate of 89% in Indiana, 31% of its occupants are tenants. Job growth rate in the state is at 1.53% against a population increase of 0.6%. Renters pay an average of $1,208 per month, with a 7.15% year-over-year increase. On the tax front, the property tax rate (for the largest household share) is pretty fair at less than $800 per month. More specifically, realtor.com singled out Indy-Carmel-Anderson metropolitan area at #4 in its rankings of housing markets across America in 2022. According to the report, the area hosts healthy local economies and reasonable job growth rates, both of which are expected to continue into the New Year.Iowa Iowa offers her residents ample opportunities to enjoy outdoor living. Its top cities include Des Moines, Cedar Rapids and Davenport, with the largest share of households paying over $3,000 in property taxes.The average home in "The Hawkeye State" sells for $174,916, with a median value increase of 111.1% year-over-year. 91% of properties in Iowa are occupied, with tenants taking up 29% of the total housing units. Housing prices across the state were up 7.8% year-over-year in December according to Redfin. During the same period, the number of homes sold fell 10.8%, while the number of homes for sale dipped by 19.8%. Kentucky The average home in "The BlueGrass State'' today sells for $178,523, with a 13.9% year-over-year increase. About 87% of housing units are currently occupied, with 33% of those houses having tenants. Tenants, on average, part with $1,082 each month, a 6.8% increase from the previous year. Per the property tax rate, Kentucky residents have a more modest property tax rate of less than $800, for residents with the largest share of households. Evidently, the housing market offers affordable investment opportunities, with regards to both rental markets and property sales.Kentucky's housing market is set to remain a seller’s market in 2022, with more people looking to buy than there are sellers. Notably, the trend is largely the same all across the US, as the country seeks to master the reins of the recalcitrant pandemic. The state’s population dropped by 0.02%, now standing at 4.5 million residents. Maine The median price for a home in Maine goes for $326,024, with a 0.67% month-over-month increase. Her current 30-year mortgage is at 3.14% of a median sale rate of $304,000. Investors in Maine's housing market can expect to sell their investment property on the average in less than two months. What’s more? The average income in the lobster hub of America is $49,469.Across the nation, home prices are up by about 18%, and getting relief in the property market might take a few years. With its 1.3 million people, Maine's real estate markets bear a deficit of around 25,000 housing units, making it predominantly a seller’s market. In one word, Maine remains a hot real estate market for potential investors with mortgage rates expected to increase even more. Michigan Over the last year, houses sold for $218,051 on the average, with a 17.4% year-over-year increase. About 86% of houses are occupied, with 28% of the housing occupied by tenants. Median rent in Michigan is at $1,318 per month, up 12.63% from the previous year. The population in Michigan dipped slightly by 0.09% to stay at 10 million residents. The state’s property tax rate is near the highest in the U.S., with the largest households having to pay $3,000. High housing demand and low supply led to high sale prices of homes in Michigan last year. Notably, The Great Lakes State's housing market is expected to remain a seller’s market in 2022.Nebraska The average home in the Cornhusker State is valued at $217,232 while increasing year-over-year by 14.4%. Average rent is at $1,316 per month, with an average year-over-year rent increase of 9.29%. Housing market statistics from Redfin show that home prices statewide increased by 7.1% year-over-year in December, 2021. During the same period, the number of houses rose 8.1% while the amount of houses available for sale reduced by 28.7%.Per employment opportunities, jobs growth in Nebraska is at 1.17% against population growth of 0.27%. About 91% of houses are occupied, with renters living in 34% of all available units. Lastly, the average taxpayer (with the largest share of households) parts with $3,000 at tax time. New Mexico The average home in New Mexico sells for $259,771, growing by 18.7% year-over-year. While 84% of the housing market is occupied, about 32% of total housing units are renter-occupied. The population slightly increased by 0.07%, while jobs grew by 5.59% over the previous year. New Mexico has a population of 1 million people.That said, median rent in The Land of Enchantment is at $1,619 per month, increasing by 15.05% year-over-year. As for the property tax rate, the largest share of New Mexico households pays less than $800.  New York New York’s real estate market has continued to thrive without any signs of slowing down in the New Year. The median home price in NY is $850,000, trending flat year-over-year. Data from Redfin says that the average price of a home was $780,000, increasing by 7.6% from the previous year.New York’s housing affordability index decreased by 3.7%, implying that home prices have gone northward. According to NYSAR.com, NY’s total active listings fell by 12.3% in December, 2021. Despite being one of the most hard hit by the pandemic, NY remains a favorite destination for long-term real estate property investment. North Dakota The average home in North Dakota today sells for $257,423, with an 8.3% year-over-year increase. About 85% of housing units are currently occupied, with 39% of those houses having tenants. Renters part with $1,006 each month the average in ND, a 6.8% increase from the previous year. On ND's property tax rate, residents pay about $3,000. Job growth over the last year was at 3.01%, against a slight population rise of 0.26%. One of the least populated in America, the population in North Dakota sits at 774,948 inhabitants. Investors looking to ply their trade here might want to consider markets in Fargo--ND's most populated city--or Bismark. Ohio Ohio’s median home value is $190,984 with a home value increase of 16.4% year-over-year. The current average rent is at $1,213 each month, with a year-over-year median rent increase of 9.06%. About 9 out of 10 Ohio homes are occupied, with 34% of that occupancy made up by renters. Jobs here rose by 0.67% in the last year, with the largest earning household paying $3,000  in property taxes.That said, a study by some researchers reveals that Ohio properties are among the most overvalued in America. Ranked the fifth hottest housing market in 2022 by realtor.com, Ohio’s looking to stabilize and increase its potentials for investors. Pennsylvania According to this report, limited inventory and an increasing median sale price are the most notable metrics in PA for December 2021. Homes in the Keystone State have a median home value of $245,153. The average home’s worth increased 15.9% year-over-year with a total of 89% of its houses occupied. Median rent in this state comes at $2,060 per month, with an average year-over-year rent increase of 24.75%.Job opportunities grew in Pennsylvania by 4.32% in the last year, against a slight population dip of 0.04% to 12.8 million. Per tax rates, residential properties within the largest household share in PA will pay property tax of  about $3,000.  Utah If you have a real estate investment property in Utah, your tax should be between $800 and $1,499. Average home prices in Utah are at $505,789, which increased year-over-year at 29.6%. Utah boasts an employment growth rate increase of 4.14%, inviting businesses and professionals.Top-rated in economic rankings, Utah ranked #1 for economic outlook in the country according to the American Legislative Exchange Council. With its scenic beauty and nearby top-rated ski resorts, Salt Lake City (Utah’s capital) readily offers tremendous opportunities and prospects for real estate market investors. What Makes a Good Real Estate Market? The truth is, in the marketplace, sentiment doesn’t decide what a good deal is—facts do. But here, you want the best returns on investment from your portfolio. So you need to know what metrics determine a favorable real estate market in America. The following factors often determine which housing market is best—or better—for real estate investing. Job Growth RateJob market growth is one of the main reasons why people and businesses migrate across states. For starters, employment gains are part of why states like Utah and Maine remain hotspots for real estate investing. Increasing Property PricesStates which have a long history of rising property prices are strong contenders for better market ratings. New York State, for instance, has seen properties rise in value steadily since 2010. Moreover, the trend looks to continue in the New Year, further strengthening the state’s real estate market profitability. It’s the same story for similar states with rising home prices. High Occupancy Rates of Rental PropertiesIf a high number of rental properties in a state are occupied, it’s a good indicator of a virile market. I mean, who wants to invest in a city with most of its apartments currently vacant. In our list, California and Nevada stand tall with renter-occupied housing rates of 45% and 43% respectively. Increasing Share of Renter-Occupied HouseholdsYes, we’ve seen that high rental occupancy rates motivate investors. It’s also worth adding that a growing share of renter-occupied households helps improve a market’s viability for investment. Why? The metrics further accentuate how attractive the real estate market is for renters. Low Property TaxesThe states with lower property taxes help reduce the cost of living. Invariably, it means that the investor or real estate business owner gets more cash in hand, after all necessary deductions, at the end of the day. On our list, Indiana and Georgia have among the lowest  property taxes (below $800). Consistent Population GrowthAn increasing number of residents means that there’s more demand--home sale and rental demand--for real estate in the market. Idaho and Nevada show the highest population growth indices here—1.87% and 1.51% respectively.Of course, usually, it’s a combination of these factors that tip a state as a favorite destination for America’s real estate pros. The Hot Passive Investment Option If you’re considering investing in the housing market or starting up a real estate business , you want to know the best markets out there. As you probably already know, location is one of the topmost priorities when planning to invest in the market. What are the best states for real estate investing? What makes these states the “best” for real estate investing?Most real estate stats predict that the market will get more relief from the turbulence of the last two years. These predictions alone make great news for intending or current real estate investors. Moreover, experts believe that both fixed mortgage rates and home sales will rise later in the year. It’ll remain a seller’s market— and that’s largely good news for current or intending passive investors. In Summary While this article covers the best states for real estate investing, it's still imperative to conduct thorough research and investigation before staking your hard-earned money. Some other parameters to watch out for are how prone an area is to natural disasters or crime. That said, why lose your sleep over an investment decision when a real estate expert can guide or manage your portfolio? The volatility of the market, an unstable economy, and taxes are among the biggest headaches for intending investors.Holdfolio offers top-notch property management services, having developed proven proprietary technology that assists non-accredited investors in navigating the commercial real estate market.That is, you don’t need to own $50,000 as an accredited investor to enjoy the benefits of passive real estate investing. Holdfolio deals have a lower barrier to entry and engage in high quality perfect for the average person seeking a consistent and passive monthly cash flow from real estate.We’re talking about having a trusted, experienced, and proven investment partner by your side, throughout your investment journey. You’re not just assured of predictable cash flow to grow your savings for your retirement. Holdfolio's property management services ensure you receive current industry knowledge on finding the best investment, and subsequently on the progress of your portfolio.Book a call with TJ Lokboj, Managing Partner at Holdfolio, to explore your options!
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Apr 2, 2022

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How to Become an Investor in 2022

It's no secret that becoming an investor can be a great way to secure your financial future. In fact, many people become investors in order to achieve long-term stability and growth for their money.If you're interested in becoming an investor but don't know how to get started, don't worry! In this blog post, we will discuss the different investment opportunities available to you and how you can get started in 2022.If you are thinking about investing in real estate, contact us today to check out our exclusive deals. How to Become an Investor? To begin with, becoming an investor entails, well, investing. You are an investor if you utilize your money to purchase an asset with the potential to rise in value. Obtain the Appropriate Investing Resources Let's get this party started. The first step is to locate the appropriate investment resources.The advantages and disadvantages of being an investor are that no formal schooling is necessary. This implies that the entrance hurdle is low—anyone can learn this subject, and there is no one-size-fits-all approach. As a result, there is a great deal of misinformation floating around.You'll have to sift through the terrible in order to uncover the good. Learn the Basics of Investing Once you've obtained the necessary finances, you can begin to understand the fundamentals of investing.Before you can become an authorized investor, you must learn certain phrases, understand the foundations of the stock market, and complete certain tasks.To become an investor, you must master the business language, just as you must study the language of code to become a developer. Get Rid of Your Bad Investing Habits You undoubtedly had some preconceived notions about investing before you came here today, and you may have even made some investments.Even if you're a new investor, you may already have certain negative habits that you need to recognize and eliminate.Bad investment habits include short-term investing, investing without studying what you're investing in, and investing at the wrong time because you don't know what's going on in the world.Even your thoughts may become negative habits, such as believing you'll get wealthy quickly or that a TikTok influencer understands what they're talking about.Recognize these habits, then toss them aside and continue reading for tips on how to replace them. Adopt Beneficial Investing Habits You must embrace positive habits that will help you become a great investor, just as you must abandon poor behaviors.For one thing, reading a lot is an excellent investment habit. The more you read, the more you'll learn, and the more you learn, the better your investments will be.In reality, most of the negative investment behaviors outlined above may be avoided just by reading. Read about current affairs, news on firms you're interested in buying, or articles about topics you're passionate about—the point is to read anything.Real Estate Investments Real estate investments have been very popular with both new and seasoned investors. The reason for this is that real estate is considered to be one of the safest investment decisions.There are different real estate investments that new investors can choose from. Multifamily Investments Multifamily real estate is a type of housing that includes numerous units in a single structure. The word multifamily real estate, often known as multi-dwelling units, is generally used to describe apartment complexes, as each structure has numerous rentable living areas. However, the term "multifamily" can be applied to duplexes, triplexes, townhouses, and other structures that are built to accommodate many families in distinct apartments.New investors, by no fault of their own, are automatically stigmatized when they hear the words multifamily real estate investment. They are certain that their lack of expertise will prohibit them from creating a reputation in the multifamily market.After all, the term implies a level of intricacy that only seasoned investors are capable of. Investing in multifamily real estate is no more complex than implementing the most basic real estate exit strategy. Multifamily real estate investment is the finest method for new investors to get their feet wet.Multifamily real estate investing is anything but daunting, despite its menacing moniker. For a variety of reasons, it continues to be one of the greatest ways for new investors to get started. Let's look at some of the most compelling reasons why novice investors should pursue multifamily real estate:Tenants can assist investors in paying off their own debt. It allows investors to reside in one property while renting out the remaining units.Many facilities are shared across multifamily rental homes, lowering possible maintenance expenses. Investors can reduce vacancy risks by having many tenants. Because multifamily properties are seen as less risky than single-family houses, they often have better financing options.For starters, multifamily real estate investing allows astute entrepreneurs to reside in one apartment while concurrently renting out the others. If you own a two-unit structure, for example, there's no reason why you can’t live in one half while renting out the other.In the correct market, the rent you earn might be enough to cover your mortgage debt and then some. It's logical to believe that if the numbers add up, you'll be able to live without a mortgage while your renter pays down your principal. It's almost too good to be true: you might be able to have your renters pay off your first rental property's mortgage. REITs REITs (real estate investment trusts) allow you to invest in real estate without really owning it. They're similar to mutual funds in that they own commercial real estates such as office spaces, commercial shops, residences, and hotels. REITs are attractive retirement investments because they pay out large dividends. Dividends may be automatically reinvested to raise the value of an investment for investors who do not need or seek monthly income.Is it wise to invest in real estate investment trusts (REITs)? They might be simple, but they can also be complicated and varied. Some, like stocks, are traded on a stock market, while others aren't. Because non-traded REITs are difficult to sell and value, the type of REIT you buy can have a major impact on the amount of risk you take on. In general, new investors should stick to publicly traded REITs that may be purchased through brokerage companies.You'll need a brokerage account for this. If you don't already have one, it takes less than 15 minutes to get one, and many firms don't demand any upfront money (though the REIT itself will likely have an investment minimum).Flipping Houses House flipping is only for those with broad knowledge in real estate assessment, renovation, and marketing. House flipping necessitates money and the skill to do or supervise repairs as needed.As they say, this is the "wild side" of real estate investing. Day traders and buy-and-hold investors are similar to real estate flippers and landlords who buy and rent. Real estate flippers, for instance, usually try to sell the properties they buy at a discount in less than six months.Property flippers seldom spend time renovating their homes. As a result, the investment must already have the inherent value required to earn a profit without any changes, or the property will be eliminated from consideration.Flippers who are unable to quickly sell a home may find themselves with problems since they often do not have enough uncommitted cash on hand to pay a property's mortgage over time. This might lead to a downward spiral of losses.Another type of flipper is the investor who earns money by purchasing low-cost houses and refurbishes them to increase their worth. When investors can only afford to take on one or two homes at a time, this might be a longer-term investment. Rental Properties Individuals with do-it-yourself (DIY) and remodeling abilities, as well as the patience to manage renters, may find that owning rental properties is a terrific option. This technique, however, necessitates a significant amount of money to cover up-front maintenance expenditures and unoccupied months.According to data from the United States Census Bureau, new house sales prices (a rough measure of real estate values) grew steadily from 1940 to 2006, before dropping during the financial crisis. Following that, prices began to rise again, eventually approaching pre-crisis levels. The long-term impacts of the coronavirus epidemic on real estate values have yet to be determined.Stock Market The stock market has been a hot topic of conversation, especially in recent years. You would believe that stocks like Gamestop, which have gave consumers 10 times their money in a matter of days, are the best place to start. It is vital to recognize, however, that the financial industry has been thrust into a new regime.A lot of money has been pursuing equities as a result of government stimulus programs. A lot of money has gone into stocks and low-interest rates on bonds have encouraged consumers hoping for positive returns to hunt for assets like stocks. However, if governments raise interest rates and sell bonds (as in the US), part of that money will be removed from the market, potentially causing stock values to rise.The equities that will be affected are the growth stocks that have made investors a lot of money in the previous two years, as outlined here. Cathie Wood's ARK Innovation ETF (ARKK), one of the top growth ETFs, lost 22% in 2021, its worst yearly performance since its launch in October 2014.However, if you stay invested for the long term (decades), high-quality firms that will be there for a long time will still provide excellent returns.Mutual Funds and Exchange Traded Funds (ETF) You may also put your money into a mutual fund, which is basically a pool of money collected from various sources and invested in a predetermined vehicle. A group of people or corporations, for example, can pool money to acquire stocks in numerous energy firms.An ETF, or exchange-traded fund, is a mutual fund that is traded on a stock exchange, such as the Vanguard S&P 500. They can payout anything from 1% to over 30% per year, depending on the performance of the assets in the fund. Mutual funds are able to invest in a wide range of assets. Bond ETFs, stock ETFs, and, more recently, cryptocurrency ETFs are all possibilities. Brokerages are where you can purchase mutual funds.In conclusion, there are various investment types that new investors can choose from. Starting your investment journey can be stressful but with enough studying and working with reliable investment companies like Holdfolio you can have a steady start.Contact Holdfolio today to start your investment journey by checking out our exclusive multifamily investment deals!
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Mar 31, 2022

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The Best Ways to Invest One Million Dollars in 2022

When it comes to investing, there are a multitude of options to choose from. You can invest in the stock market, bonds, real estate, and more. So, how do you decide which option is right for you?In this blog post, we will explore several different investment options and explain the pros and cons of each one. Let's get started! Before Investing Regardless of how much you have saved up for investing there are a couple of things to consider before you do. Determine Financial Goals If you've already surpassed the $1 million mark, you'll need to think about your long-term financial objectives. Do you wish to amass a fortune of $2 million, $10 million, or even more? Or do you want to relax and take it easy? There are numerous tools available to assist you in achieving your financial objectives. Pay off Personal Debt Paying off debt provides the best return on investment. Pay off any high-interest loans, such as credit cards, first. A vehicle loan or school loan debt makes no sense if your net worth is more than $1 million. Invest in an Emergency fund If you have a million dollars, it may seem absurd to talk about an emergency fund, however, all emergency funds are relative. You'll need one regardless of your financial situation. In your emergency fund, you should have enough money to cover three to six months' worth of living expenses. This will protect you against unforeseen emergency bills and short-term income problems. Between you and your investments, an emergency fund functions as a buffer. A large portion of your emergency cash should be kept in a high-yield savings account.Invest Towards Your Retirement Plan Before you start making alternative investments, make sure your 401(k), IRA, or SEP-IRA retirement accounts are properly filled. Contributing the maximum amount to your retirement plan each year can provide you with a sense of security that there will be money there when you need it, as well as additional tax-free cash for real estate investment through a self-directed IRA. Determine Your Investment strategy What are your Investment Goals?It is much easier to achieve your financial objectives if you have a clear aim in mind. You could wish to retire at a particular age, earn a certain amount so that you can reduce your working time, or quadruple your money in five years, for example.What will be your investment timeline?How long do you think it will take you to achieve your objectives? You may take greater risks with your investments if you have a larger scope, such as 20 or 30 years. This is because you'll have more time to recover from any short-term losses.If your investing horizon is shorter, such as five or ten years, you should be extra cautious. You may want a particular level of investment growth. However, capital appreciation may be your primary goal.What is your Risk Tolerance?Your risk tolerance refers to your readiness to take a loss in return for a bigger prospective profit. Younger investors, on the whole, are more ready to accept risks because they have more time to seek prospective rewards.However, investment advice that is appropriate for someone else may not be appropriate for you. Understanding your personal risk and return tolerance will aid you in selecting the best investments for you. In this case, you should seek advice from your own adviser. Real Estate Investment Properties Some investors feel that owning rental properties is one of the finest things to buy if you have $1 million to invest and want diversity as well as excellent risk-adjusted returns. You can produce income and expand your investment money in real estate in three ways:Recurring cash flow generates passive income. Equity appreciation occurs when the value of a property rises over time. Deducting operations and business expenditures, as well as depreciation expenses, can help you lower your taxable net income.You may invest in a variety of asset classifications, including residential, commercial, industrial, and land. Remote real estate investment is also possible with today's technology, and it's a wonderful alternative for investors who live in cities with a high-cost-of-living like New York or San Francisco.If you invest in real estate online, you may identify low-cost property in locations with greater yields while leaving the day-to-day minutiae of property management to your local real estate team.Because real estate may be leveraged or funded, your one million dollar investment might theoretically go further and create better profits while spreading out the risks.Instead of spending $1 million on a tiny apartment complex in one location, you might invest in a far bigger portfolio of single-family homes in a number of high-growth cities throughout the country.Real Estate Crowdfunding Crowdfunding is when a big number of people pool their money to support a new business initiative, such as video game development, electric automobiles, television programs, or real estate ventures. One of the most appealing aspects of crowdfunding is that you may invest tiny amounts of your one million dollars in various industries and asset classes.Real estate crowdfunding platforms, like Holdfolio, allow you to participate in high-quality assets like condominium buildings and new residential subdivisions, as well as debt investments through developer mortgages.Accredited investors are frequently excluded from the most profitable crowdsourcing initiatives. The good news is that if you have $1 million to contribute, you'll most certainly qualify as a high net worth accredited investor, allowing you access to crowdfunding investments that others don't. While most crowdfunding platforms do not allow non-accredited investors to partake in crowdfunding deals, Holdfolio helps both new and seasoned investors to participate in exclusive crowdfunding deals.Keep in mind, too, that many crowdfunding deals promise a large return in exchange for a high amount of risk. There's no way of knowing when or even if a new building project will begin construction. Crowdfund investments may also be illiquid, meaning you won't be able to purchase and sell them like you would stocks, bonds, or even traditional real estate. REITs Compared to crowdfunds, real estate investment trusts (REITs) are a safer and more secure alternative to invest in real estate.REITs are funds that own and operate income-producing real estate such as office buildings, retail shopping centers, apartment buildings, and single-family homes. REITs are publicly traded on major stock exchanges and are established as funds that own and lease out real estate such as office spaces, retail shopping areas, apartment complexes, and single-family residences. You may also focus on specialty asset types like mobile phone tower locations, data centers, and self-storage sites with some REITs.Because 75 percent of a REIT's capital must be invested in real estate and 90 percent of net income must be returned to shareholders as dividends, buying shares of a REIT might be the next best thing to owning real estate directly.REITs, on the other hand, do not have the same advantages as physically buying real estate, such as the ability to deduct investment business expenditures from taxable net income. Furthermore, because real estate investment trusts are shares, they may have a stronger link to broader stock market returns than direct property ownership. As a result, if the stock market falls, REIT share values may fall as well. Stocks Dividends and share price increases are two ways that stocks can create income. Diamondback Energy, The Williams Companies, and ConocoPhillips, according to Kiplinger.com reports from October 2020, have the highest dividend yields, with payouts of 4.9 percent or more. Keep in mind that certain high-yielding investments might also be high-risk.Even without the aid of a Betterment Robo-advisor, investors who acquired shares in the S&P 500 four years ago have experienced gains of over 80%. The stock market, like any other market, may be extremely volatile. Over a four-year period, shares of the S&P 500 were acquired in 2016 and sold when the market bottomed out in March 2020 yielding a total return of only 3%.Bonds Many financial advisors feel that a classic balanced portfolio should contain 60% equities and 40% bonds. While specific equities like Amazon can give good growth (more on that later), buying bonds is mostly about capital preservation, particularly in today's low-interest-rate climate. Bonds come in a variety of shapes and sizes, including corporate, municipal, and treasury bonds.Bonds pay interest and have a full face value at maturity, but their price might fluctuate due to interest rate fluctuations. Bonds are frequently considered safe and secure investments, but they can lose value if you sell them for less than you bought them for or if the issuer fails to make  their payments. EFTs Vanguard, for example, offers a wide range of exchange-traded funds (ETFs). They're a wonderful way to get access to equities and bonds without needing to make particular investments.ETFs invest in stocks, bonds, or index funds based on prominent indices such as the S&P 500, Nasdaq 100, or Russell 3000. You can also invest in certain industrial sectors such as software, medical, precious metals, foreign corporations, and real estate by purchasing shares of an ETF.When you add an ETF to your investment portfolio, keep in mind that exchange-traded funds are meant to mirror, rather than beat, the performance of the market sector in which they invest. Private Lending Online platforms make private or peer-to-peer (P2P) financing extremely simple, while the risk is substantially greater than standard real estate transactions. However, depending on your risk profile, the potential gains from private lending may be enough to balance the risk if you invest small sums and don't devote too much of your own resources to private and P2P lending.Consumers can get private short-term loans for debt settlement or home improvements, while small companies can get private short-term loans to grow their firm, buy equipment, or buy real estate.Yields can be significantly greater than those of traditional equities and bonds, making them a viable alternative to these traditional assets. Private loans, on the other hand, are less liquid because your money is typically locked up for several years.Unless the loan is secured by an asset such as real estate, you also risk losing your money if the borrower fails. That's why discussing the amount of money you plan to set aside for personal loans with your CFP or financial adviser is a smart idea.CDs Certificates of deposit (CDs) and money market accounts are two of the safest methods to generate a return while keeping your money accessible.CD and money market account annual percentage yields (APY) are nearly equal to inflation, which means you won't make any money on your savings.On the bright side, they're similar to having a deposit account and may be an excellent method to secure your money while keeping it liquid. Invest in a Business Purchasing stock or ETF shares is one option to invest in a company. However, many investors with a million dollars to invest choose to bypass the public market and invest directly in a company. Buying a business may be one of the most beneficial ways to invest your money if done right.There are two primary methods for investing in a company. You may either acquire or create your own firm, or you can become a partner in an existing one. Starting your own company might be risky, but it can also pay you handsomely. Investing in an existing firm is less risky because the company already has a track record, but you must have total faith and confidence in the company.In either case, purchasing and investing in the appropriate firm may outperform traditional assets like CDs, annuities, bonds, and stocks for a one-million-dollar investment. Fixed-Rate Annuities Fixed-rate annuities are a form of the insurance contract that offers to pay a set interest rate on the payments made to the account. They are sold by insurance companies.They are not connected to the success of other assets and are meant to offer a reliable fixed-income source when payments commence.Fixed annuities may be recommended by your financial advisor as a crucial allocation component of your retirement portfolio, but you'll wind up paying an insurance company a premium for the risk reduction. Yields are higher than those offered by a US Treasury bond or CD.However, the rates on A-rated or better-fixed annuities are roughly equal to the rate of inflation, which indicates that investing in a fixed rate annuity is effectively breaking even. Final Thoughts A diversified portfolio and hedging against economic volatility such as inflation are two crucial factors when learning how to invest a million dollars securely. As a result, we recommend that you invest in real estate.Real estate investments provide you with a tangible asset that grows in value over time, therefore safeguarding your money from inflation. Real estate also has a low connection with the stock market, so if you're already invested in stocks, adding real estate to your portfolio can help you diversify your portfolio during economic downturns.Holdfolio is a private online real estate investing platform based on the idea of forming partnerships to invest in multifamily properties. Holdfolio, like any other crowdfunding platform or site, allows a group of people to pool their money to invest in a single project.Call us at 866-206-8933 today to start investing in exclusive real estate deals and grow your wealth! 
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Feb 14, 2022

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How to Invest 500k: Investment Mediums to Consider for Maximum Returns in 2022

$500,000 is a lot, and investing such an amount paves the way for generational wealth — if done right. However, it's easy to lose this sum, thanks to the countless investment opportunities at your fingertips.So, what do we advise? A diversified portfolio consisting of widely proven investment vehicles. In this piece, we'll recommend twelve vehicles in which you can invest your half a million dollars in 2022 for the best results. However, before we proceed, let's consider the possibilities of keeping this money instead of investing it.  The Basics of Investing $500,000 - Just Before You Take That Huge Leap Before you invest 500k, it's essential to consider the reason why you're making this decision. Since $500,000 doesn't come out of the blue, it's possible that you obtained such a large sum through savings or inherited it from a rich relative.If you take a cautious look at things, you'll realize it's possible to live off $25,000 a year for 20 years, or if you'd like to go farther, $20,000 yearly for 25 years. This plan sounds great for settling your monthly expenses, but there won't be a dime left after this period elapses. On the other hand, did you know that you could invest 500k in something tangible and turn it into 700k, 900k, or even a MILLION dollars? While it might seem like a long shot on paper, it's possible. By making suitable investments and not putting all your eggs in one basket, you can enjoy positive results in almost no time at all. With the proper investment decisions, you can convert your $500k into legacy wealth, which can benefit your family tree significantly.In a nutshell, spending this $500k over a year can ensure you'll live a comfortable life, while investing it wisely helps ensure your kids (and even their kids) enjoy it too. What's your preference?Suppose you choose the latter option. Here's another equally important question: what mediums are available to invest 500k to yield bountiful rewards? We'll see below. How to Invest 500k: 12 Viable Alternatives for Investors Looking Towards a Breakthrough in 2022 Defining the ideal investment strategy is a challenging task. Why? Risks are a constant theme in investments. Consequently, we advocate a portfolio with low-risk assets (for some security) and high-risk vehicles (for higher profits). Such an approach will likely keep your investment profitable even when some assets fall in value. Considering this possibility, the following are investment vehicles that have performed profitably in recent times.  Real Estate InvestingOver time, real estate has become a hotspot for investors looking for low-risk investment vehicles with significant returns.Properties have high demand levels, particularly in the right locations. Even better, the industry now offers numerous diversification options. You can now become a real estate investor without performing the duties attached to a traditional property owner. As such, the real estate market is an excellent vehicle to invest part of your $500k, notwithstanding your investment preferences.The following are four common ways to earn decent ROIs through real estate. Real Estate Crowdfunding Crowdfunding brings numerous small-time investors together to foster sizable real estate investments they'd probably never be able to make alone. Although 500k is enough to invest in good rental properties, this technique helps to "test the waters." Thanks to crowdfunding, you can invest less and earn well.While crowdfunding was for the select few in the past, the Jumpstart Our Business Startups (JOBS) Act passed in 2012 marked a change in proceedings as advertising and marketing barriers were removed, allowing more investors to get in on the action. Thanks to this increased accessibility, online platforms, such as Holdfolio, now offer investors ease of access alongside decent profits. Holdfolio is an online multifamily crowdfunding platform where anybody can sign up with as little as $20,000 and start investing in significant real estate deals and grow their wealth. What's more, the interest rates are client-friendly, and there's a package to suit everyone! Real Estate Investment Trusts (REITs) Real estate investment trusts oversee real estate investments and other similar structures. With REITs, rather than spending a large chunk of your 500k to secure a real estate property, you can invest half or less.What's more, REITs guarantee steady income without any effort on your part. Just find a trustworthy company to trust with your funds.However, you may consider publicly traded alternatives featured on stock markets like the New York Stock Exchange (NYSE) if you have reservations about REITs.REITs are growing in popularity as over 145 million Americans made a sizable investment via a 401k, pension funds, and Individual Retirement Accounts (IRAs) in October 2020. Two years on, we expect this value to increase due to the profit margins. Raw Land Raw land refers to a piece of undeveloped real estate. While developed real estate might come off as expensive, raw land is a great investment alternative due its relatively low cost.So, with 500k, you can secure a parcel of land and have a decent amount of money remaining. You have two options when you acquire raw land. First, you can develop the land and sell it off for a profit. Alternatively, you can lease it out to farmers looking to bolster their agricultural produce.  House Flipping House flipping is when an investor purchases a home, makes some renovations, and sells it for a higher price. For some investors, this approach has been a medium for fixed income over the years, so it's no surprise people are turning towards this alternative.The vehicle comes in several formats. For starters, you could hire a building contractor for the renovations. Besides the hands-off experience, you get to execute decisions without doing anything daunting.On the other hand, you could flip a home while living there. While this might sound weird to some, investors on a tight budget prefer this method as they can buy a home, live in it, and make renovations at their own pace. By incorporating this strategy, investors don't have to worry about rental payments.  The Stock MarketWith great power comes great responsibility. When you have $500,000 at your disposal and don't want to risk losing money in a flash, it's possible to cast your mind to trendy and profitable companies like Tesla, Microsoft, Apple, Google, and more. However, these giants shouldn't be your sole area of focus as financial advisors recommend smaller companies to achieve astronomic profit margins.Irrespective of what part of the divide you land on, the stock market has several advantages and disadvantages. If you're able to seek out companies with decent growth percentages, you'll be able to receive a decent ROI. Nevertheless, making the right choices isn't a constant as you can make a wrong decision that could adversely affect your financial situation.Despite its "topsy-turvy" nature, one of the best ways to invest $500,000 is through the stock market. We advise creating a brokerage account. Although it doesn't offer you the tax advantages for regular retirement plans, you can trade stocks here without encountering a penalty. Due to this provision, funds stored here are more liquid. Exchange-Traded Funds (ETFs) and Mutual Funds Exchange-Traded Funds (ETFs) are highly recommended for stock diversification. Fortunately, diversification doesn't require anything too detailed, as you can get it done in a single transaction. For context, Exchange Traded Funds can track the market in one go since the stocks attached are diversified.It's worth noting that ETFs work like regular mutual funds. A mutual fund, like an ETF, brings several investments together, regardless of their form or size. Although both index funds look the same, investors favor mutual funds due to their rewarding nature. While this preference has seen the prices of mutual funds skyrocket. They're easily accessible. Despite the pros of ETFs and mutual funds, you have to understand that they pose several risks. For instance, you can get a market value less than the purchase price when you redeem the shares on these index funds. As such, you're better off investing 10 - 20% of the entire $500,000 on these assets. Annuities Annuities are a decent way to invest and get something rewarding long-term.These are insurance contracts you can enter to gain a fixed amount of money over the rest of your life. It gets better! There's practically no risk involved in buying one!Investors planning their retirement might want to consider fixed annuities as long-term investment vehicles. Engaging the services of a top-notch financial advisor is critical for effective portfolio management. High Yield Savings Account While it might seem convenient to get $500,000 and put it into a savings account, it's possible to get more profits through high yield savings accounts. High-yield savings accounts accrue 20 - 25 times the average returns on regular savings accounts. However, what high yield savings account should you choose? According to several financial experts, the "Savings Builder account" by CIT Bank is an excellent high yield savings account. For context, investors that enter this plan are eligible for an Annual Percentage Yield (APY) up to 40%.You need to have a $25,000 minimum balance or make a $100 deposit at least once every month to get these returns. Devoid of account opening and maintenance fees, CIT Bank's Savings Builder account ranks as one of the best high yield savings account alternatives countrywide. Hedge Funds A hedge fund is pooled from the contributions of numerous investors. The fund is then invested in certain assets to increase investors' ROI  and minimize risks. Hedge funds, unlike mutual funds, are more aggressive with their returns.  The name "hedge fund" came about due to the trading techniques used by fund managers. If they expect a rise in market value, they'll decide to go long. On the flip side, when there's a drop on the horizon, they resort to "shorting stocks."While a hedge fund's goal is to eliminate risk, the aggression on this investment strategy increases the stake, resulting in huge risks. With some hedge funds requiring huge buy-ins reaching amounts of $500,000 and above, it's necessary to research thoroughly before investing in this vehicle.  Emergency Funds The COVID-19 pandemic took everyone by surprise. However, while some people were looking towards where their next meals would come from, others lived in comfort and affluence. The difference between these sets of individuals? Planning.As such, you may consider investing in an emergency fund with a sum of $500k. Life is full of uncertainties, and you'd need to be able to counter adverse conditions with relative ease.When you're investing in an emergency fund, you can either diversify your investments or choose a specific medium known for its positive dividends. You don't have to invest $500,000 in one go. You can start out slow. Whichever you do, you'll appreciate this strategy as it protects you from inflation and other adverse economic conditions. Treasury Bonds With $500,000 in hand, you might want to secure some treasury bonds. Over the years, this investment class has become popular due to its exceptional stability. Unlike corporate bonds released by private entities, governing authorities issue treasury bonds. These bonds are outstanding for those nearing retirement and looking for a stable income, and it’s decent for young investors seeking to make good ROI values. However, due to the varying forms of bonds in the United States, things can become confusing for beginners.  Let's take a look at the four primary forms. Treasury Bills Treasury bills (T-bills) are short-term securities that mature in less than a year. However, note that these bills have varying maturity timelines on each. Besides the 52 week variation (one year), consider those ranging from four to twenty-six weeks. Treasury Notes These securities aren't long-term or short-term. Instead, they're in the middle and get to their maturity in periods from two to ten years.  Treasury Bonds Tagged T-bonds, treasury bonds mature after 10 to 30 years. Your financial advisor might recommend these bonds to you if you're looking towards a functional and beneficial retirement plan. Treasury Inflation-Protected Securities Also classified as TIPS, treasury inflation-protected securities are other treasury bonds. The only difference? Their valuation follows inflation trends.  Max Out Retirement Accounts Is maxing out your retirement account a valid way to invest 500k? Yes. You can invest in both mutual and index funds with your retirement account. Suppose the company you work for offers a 401(k) retirement account that matches your contributions, and you see that you aren't contributing enough. In that case, your 500k at hand is instrumental in bolstering your input.Alternatively, you can decide to put these contributions into a traditional IRA account. Nonetheless, there's a limit on these accounts. As directed by the Internal Revenue Service (IRA), you can only make a yearly $6,000 contribution (this value increases to $7,000 if you're above 50).With these limits, combining different index funds is instrumental in preparing for your retirement journey. By investing 500k in these funds, you stand a greater chance of receiving a decent ROI upon maturity. Buy a Business With your personal finance reaching the $500,000 threshold, you'll probably have numerous business ideas running through your head. You can decide to engage a franchisor or invest in online platforms with a proven track record.Nevertheless, understand that buying a business doesn't yield earnings from the get-go. In the beginning, you'll have to implement a groundbreaking idea to ensure the company has a solid foundation. As you continue, you won't need to put in those long hours as you can finally hire people and run affairs at the comfort of your home. Running that entity successfully for years to come is feasible when you get to this point. If you'd like to leave the reins of power, you can put the business up for sale and receive astronomic profits when the purchase agreement goes through. Invest in Gold While other precious metals are available for financing, many people turn to gold as a "hedge" to fight inflation. Gold's market value tends to skyrocket when there's an economic downturn. So, if you want to invest $500,000 on a recession-proof medium, you might want to secure gold ASAP. You can head towards web-based platforms like Oxford Gold Group, Goldco, and Lear Capital to enable seamless transactions.  Invest in CryptocurrenciesCryptocurrency has undergone significant growth in the last decade, with several institutions now looking to invest in this decentralized blockchain vehicle.Some industry experts believe that Bitcoin's value will rise 400% in the foreseeable future. With primary forms like Bitcoin going for almost $50,000 at the moment, investing a decent amount of your $500,000 could see you on the receiving end of decent profits.Regardless of Bitcoin's potential, other crypto currencies are making waves in the market. By diversifying, you ensure that you don't get the short end of the stick if things go haywire.However, it's noteworthy that cryptocurrency is arguably the riskiest venture on this list—approach with extreme caution.   Your Investment Style or Risk Tolerance The investment alternatives listed above all have a decent reputation amongst seasoned investors. However, risk tolerance is key to success in all investments. Therefore, you must consider this variable before making decisions.  Some people are willing to invest more money than they're afraid of losing, while others would rather not risk anything at all. However, no one can predict what will happen with an economic forecast or political climate change - which means there isn't "one" perfect strategy for everyone!As you commence this process, you might want to answer the following questions:What timeline do I have for this investment? What's my risk tolerance level in times of uncertainty? Will I need my money back in five, ten, or fifteen years? Am I techy enough to engage modern forms of investment? Do I need assistance to make a suitable investment?You'll be asking these questions to one person you can trust — YOURSELF. If you have $500,000 lying around and are scared of losing the funds to some financial misstep, it might be time to seek advice from experts in real estate or any other investment form that catches your interest. For those who prefer the DIY (Do It Yourself) route, you have the leeway to do what you think will yield decent returns in the long run. Major Takeaway There are numerous ways to invest $500K in 2022. Some are high-risk, others are not so risky. As such, the smart thing to do is to diversify your portfolio. Take your time to assess the 12 investment classes we've discussed. Answer the above questions to define your risk tolerance level and find the ideal vehicle for your objectives (short or long-term).Would you like to start with real estate? Holdfolio offers multiple investment types from as low as $20k that could help you reach your financial goals.There’s the ideal package for everyone at Holdfolio — whether you want to invest with other people in a syndication project or prefer to purchase a property independently. It's financial freedom for EVERYONE.