Real estate investing is one of the most lucrative investments you can make, whether it be as your primary source of income or secondary or passive income. Sure, mutual funds and index funds were all the rage at one point, but many investors still go back to good ole' real estate to make a good pocket piece, and new investors want in on the action.It’s fun and exciting but just like a small business, the risk is there. Not fully understanding all your options for investment is what creates hesitation. These days, new real estate investors can start investing in real estate with not much money at all. There are options for no down payment rental housing all the way up to commercial real estate for millions, resulting in a significant amount of income. But if you're somewhere in the middle and want to know how to invest 300k in real estate, here's a good list to start with.
Get involved in real estate crowdfunding.
Crowdfunding is a smart and affordable way to easily invest in real estate projects that are already underway. There are many different types of crowdfunding options, but they all share the same goal: to raise money for lucrative real estate projects from a pool of investors. The added advantage is that crowdfunding lowers your investment barriers and workload significantly more than a self-managed multifamily investment. There is also the opportunity for commercial real estate investing with crowdfunding, as well. Commercial real estate allows you to lease office or store-front space to small businesses, resulting in even more income for you and support for those businesses who need a place to thrive.When working with crowdfunding investment experts like Holdfolio, new investors can put their capital into profitable real estate projects with just a few clicks. Holdfolio consists of a property management team, investment firm, and development company, so they handle everything for you, allowing you to enjoy new streams of income, tax benefits, high returns, and capital appreciation, all in one simple hands-off investment.Creating a partnership with companies like Holdfolio makes it easy for you to build wealth with less risk. They do their due diligence and they understand commercial real estate. Buying property through Holdfolio delivers instant diversification of your portfolio and it's easy because it is multiple investors partnering to make these real estate projects come through. If you want to invest in real estate the easy way, give Holdfolio a call today!
Invest in a multi-family property in a less costly neighborhood.
This may seem like the obvious choice for a good real estate transaction, but it's important to note that you can't just buy any old building and expect to make money off it. You need to find properties that are in good condition and located in low-cost areas with plenty of potential tenants. House hacking is a popular method of investing whereby you purchase a multi-family property, live in one unit, and lease out the other units. The rental income from these other units is usually sufficient to pay the mortgage for the entire property. You can also have a property manager handle all the necessities for the tenants for you. Management fees are involved but they handle all the paperwork, background checks, payments to and from tenants, and anything else that may arise.
Buy fixer-uppers and remodel them for profit.
If you’re looking for an involved way to make money and invest in real estate, then this is the strategy for you. Fixer-uppers can be bought for pennies on the dollar and fixed-up to sell at market value for a profit or used as a rental property. Most of the time, they are a good deal, as long as you assess the risk involved in renovating the property. How much risk is involved depends largely on things like excessive costly repairs that could potentially decrease or eliminate a healthy profit. Try to avoid properties that carry more risk.The best part is that all of this happens while your cash flow is still high—you still have plenty of money coming in from other sources like rental properties or investments that don’t require much maintenance like stocks or bonds (these will require more effort).Once your fixer-upper sells, then you can use that money as seed capital for another investment property. This would be like buying two houses with one loan at once: instead of paying off both mortgages simultaneously, each house would pay off its own mortgage when it comes time to sell them both!
Purchase rental properties that may require no money down.There are ways to generate rental income even without an initial investment. If you want to make more money and invest in real estate, consider these options:
Look into buying rental properties that may require no money down.
This can be done by using hard money loans or private money lenders who will lend without requiring collateral or credit checks so long as the borrower has a good credit history. This means income verification documents including pay stubs or bank statements showing monthly deposits into an account over time with proof of employment from past employers.
Become a property manager.
Become a property manager who manages multiple properties for families willing to rent out their homes while they live there themselves. They may want someone else responsible for maintaining them remotely so they don't have any obligations towards maintenance.
Partner with another real estate investor.
This is a great strategy for bigger projects such as buying entire buildings instead of just one apartment unit. This could mean having control over all of them at once instead of having just one property left after buying out everyone else's shares.
Invest in real estate yourself.
You can then use this investment as collateral for your own mortgage so you can get approved faster than if you tried to do it alone.
Develop relationships with your bank to finance projects.
Your first step is to work with your bank to get a line of credit, which you can use for the down payment and closing costs on your project. Then, once you’re ready to buy the property, apply for a mortgage through them so that they can issue one as well.
Create wholesale relationships with other investors to find the best deals for buying and selling or renting properties.
This is a great way to get multiple offers on your property, as well as access to people who are looking for deals in your area. You can also use this active strategy when you’re looking to invest in other people's real estate investments so that they can help you out when it comes time for their own investment properties.
Buy and hold residential investment properties.
Buy and hold residential investment properties, like single-family homes and small apartment buildings, in an affordable market and then rent them out until the market improves and you can sell them for double the price you paid for them.This is a great strategy if you have the cash to invest but don't want to take on any debt or risk losing money on your investments.The most important thing to keep in mind when buying single-family homes is that you will be responsible for all the repairs and maintenance. If your property needs new windows, you'll have to pay for them. If your roof starts leaking, you'll have to fix it. If there's mold growing in the basement, you're on your own!If you've lived in your primary residence for over a year, you can start to either rent it out or sell it while you find another home for yourself. Your profits can help you begin flipping houses or any other real estate investing options.
8. Develop Real Estate Yourself
Hire local contractors who know the area well, have access to inexpensive materials, and are familiar with the city's building codes so they can position themselves as your go-to resource on everything from the demolition day forward!The best way to find contractors or real estate developers is through word of mouth. If you live in a small town or subdivision where everyone knows each other, this will be easy. But if not—or if you're looking for someone who has only worked on projects like yours before—you'll want to start by checking out what kind of reviews they've received from previous customers. A good sign that someone is credible is when their work meets high standards (which means it won't fall apart halfway through construction). Look at how many reviews there are for each person. One or two isn't necessarily bad but it does suggest potential issues down the road if something goes wrong (like leaks).If you're still not sure whether or not a contractor is right for you, ask them to send photos of their recent work. You can also ask to see some of their previous projects or talk to other people who have hired them for similar jobs in the past.
You can invest 300k in real estate using some of these methodsReal estate investing is a good way to grow your money, and if you know how to invest 300k in real estate, your money will grow exponentially. Real estate is one of the most stable investments you can make, and it can be one of the most liquid—you can sell some investments within days if you end up needing cash fast.There are many different types of real estate: single-family homes, commercial buildings, apartment buildings, and more. The key thing about investing in any type of property is that it needs some kind of income source for upkeep costs (either monthly mortgage payments or annual rent payments), so be sure that whatever property you're looking at will fit into those requirements before committing yourself financially!One of the best ways to invest in real estate is by crowdfunding. Online crowdfunding platforms are investment vehicles that own property, collect rental income from it, and then pass that income onto investors as dividends. You can get started investing online with just a few clicks!Crowdfunding is a great way to get exposure to real estate without having to deal with the headaches of owning property. Plus, you can still take advantage of tax benefits, passive income, capital appreciation, and a robust hedge against inflation without lifting a finger.
Now that you know how to invest 300k in real estate, it’s time to do some research and find the best opportunity for you. To get started, you need to know what kind of investment channel works best for you. If you want your investment to be more than just an investment but also a place for your family or friends to enjoy, you could consider buying a vacation home or rental property. Rental income can be a great way to cover expenses while still having fun during the off-season, provided you’re prepared to undertake landlord responsibilities!Also, never put all your eggs in one basket. The goal is always to have multiple streams of passive income. For example, this could come from crowdfunding, mutual funds, index funds, ETFs (exchange-traded funds), and other alternative investments. A financial advisor can guide you toward a good investment strategy that includes growth stocks that pay high dividends, index funds, real estate investments, including real estate investment trusts, and more to build your net worth through stable income.But if you’re looking for high returns in a completely hands-off investment, contact Holdfolio today. We will help guide any real estate investor through the steps necessary on their journey into passive real estate investment!
The economy has been in a state of uncertainty in recent years, leaving investors on edge. Nobody could have predicted the impact the global pandemic would have on any of their investments. While the real estate market climbed, stocks entered freefall as the journey unfolded. What’s an investor to do? Now as we transition into a state of recovery, the multifamily real estate market is a great asset class to consider as you work towards building long-term wealth. Companies like Holdfolio allow you to diversify your portfolio by investing in stable income-producing assets across different locations and price ranges, which can help reach your financial goals faster. In this article, we’re going to talk about some of the best markets for buying multifamily properties based on key factors like population growth, job growth, and affordability, and how Holdfolio can easily get you in on these lucrative investments .How to Choose A Good Real Estate Market for a Multifamily Housing InvestmentThere are many things to take into consideration when choosing the best market for your multifamily developments. For example, a few things to consider are:Market size
Cost of living
Quality of lifeFirst, you should choose a market that has strong population growth and a strong job market.Second, look for markets with low vacancy rates and strong rent growth. High demand from renters means higher returns on your investment.Third, find out if there is a reliable renter base in the area before you purchase any property. You want to make sure that this community will be able to support your property long-term. Here are a few promising markets to get you started.
Best Multifamily Markets to Invest in 2022Houston, TX
Houston is a great city for multifamily real estate investment. The city has many employment opportunities, a growing population, and the housing demand to back it up. If you’re looking for an area with solid economic growth that will allow your rental income to increase over time, then Houston may be right for you!
Boise is the capital and most populous city of the U.S. state of Idaho. It is located on the Boise River in southwestern Idaho. In a friendly tone, Boise is often referred to as the “Gem City” because of its extraordinary natural beauty, which surrounds the city.Low property tax rates are a benefit of investing here in Boise, as well.
Las Vegas, NV
Las Vegas is the largest city in the US state of Nevada, popular for its casinos and entertainment.Its low cost of living and warm climate attracts many new residents, and over the years, its downtown area has also attracted businesses, making it a growing hotspot for those looking to live or invest.
Dallas is a great market for multifamily investing, especially with the recent job growth and population growth. There are also many new apartments in the pipeline that should be completed over the next several years.The lack of affordable housing in the area continues to be a large problem for those who are not making high salaries. This is why many people are choosing to rent instead of buy, which has led to strong demand for apartments.
Tampa is a great place to invest in multifamily properties. The city is home to a number of new developments and its population growth has been climbing steadily over the last decade. This means there are plenty of opportunities for investors to make money by purchasing apartments, condos, and townhomes that are located near major employers and schools.Tampa enjoys year-round sunshine, and many beautiful beaches nearby, which means you'll always have plenty of tenants interested in your property. You can also take advantage of tax breaks that encourage people to own vacation homes or second homes in Tampa.
Atlanta has a diverse economy, which means that it offers many opportunities for growth and development. There is also a growing population of young professionals who want to live in the city, which will benefit you as an investor because they will be looking for multifamily properties when they need them.Atlanta is home to many Fortune 500 companies. That means there are plenty of people with disposable income interested in living in the hustle and bustle of the city. Atlanta also has a low cost of living compared with other cities around the country.
It's no secret that Raleigh/Durham is a great place to invest in multifamily real estate. The population has grown by more than 50% in the last 10 years and this growth shows no signs of slowing down. It's also home to several Fortune 500 companies, as well.It has a strong economy with more than 1 million jobs supported by a diversified economic base of high-technology manufacturing, finance, insurance, and other service industries. The area is also known for its beautiful parks, beaches, and mountains nearby.
You may be familiar with Charlotte as the second-largest city in North Carolina and home to Bank of America and Wells Fargo. It boasts a very strong job market, a great climate, and a low cost of living. No wonder many people relocate to this beautiful city.This makes for a strong candidate for a lucrative multifamily housing investment.
Salt Lake City, UT
Salt Lake City is the capital of Utah and the largest city in the state. Located in the Salt Lake Valley, it's surrounded by mountains on every side. The population is 189,360—and growing!This city is a vibrant place that has something for everyone. It is home to many large corporations meaning new jobs are being created all the time, and it is also a popular tourist destination thanks to its many ski resorts, hiking trails, and beautiful parks.
ConclusionThe best way to invest in a multifamily real estate project is to find and invest in the best market. This means looking for partnerships with companies that invest in strong markets exhibiting positive job growth, salaries, and housing price trends. You can also look at market data such as median home prices or average rental increases for apartments in those cities to help you make the right choice for your investment portfolio.Investing in multifamily developments in the right market can be lucrative as long as you calculate the cost and return of your projects taking all things into consideration, such as financing or loan costs, improvements, land development, and rents. Consider locations near great schools, hospitals, and retail centers. Contact Holdfolio for the right guidance on lucrative multifamily developments for investment. They have already done the research so you don’t have to, making it the best option to diversify your portfolio through passive investment.
Everyone wants to make money and keep it. To make money, you must invest. To keep your money, you must invest wisely. There are many options, from gold to stocks, Bitcoin and cryptocurrency. This article provides a road map to investment opportunities in 2022. The world is changing fast, and with the next year comes some great investment opportunities. Unlike many investment opportunities, some options on this list—such as real estate investing and ETFs—offer passive income and tax benefits. The thing about the stock market is its unpredictability. But that doesn't mean you can't prepare for unforeseen events. The best investors have anticipated the future for decades and prepared accordingly. According to experts like Warren Buffett, the best time to invest is when things are going bad -- and we're in that sweet spot right now. Following the COVID-19 disaster, the economy is slowly getting better. Even though nothing is quite back to normal yet, there are plenty of opportunities for investors to make money.
Why Should You Invest?
The main benefit of investing is that it increases your wealth, which will eventually enhance your purchasing power and help you reach your financial goals. Additionally, investments can help with your retirement, provide a solution during emergencies, and create an extra source of income. It's always a wise decision to let your money work for you.You can amass wealth through investing, but you must weigh the risks and rewards. And you'll want to accomplish that financially, which means you'll need to have reasonable debt levels, a sufficient emergency reserve, and the ability to ride out market ups and downs without using your money.
Best Investment Practices
As we move into the following year, it's crucial to think about what you want to accomplish. It's also essential to consider what you want to accomplish in the future. What kind of investments do you want to make? Do you want to put money down for a rainy day? Do you want to pay down debt? Do you want to invest for retirement? Safe investments can help you accomplish all of these things, but you have to do your research and take specific steps to ensure you're making the right decisions. Understanding your risk appetite, time horizon, and different types of account is crucial before investing.
Create a Savings Account / Emergency Fund First
Unexpected medical costs or job loss are two examples of the unexpected twists life might bring. Most personal finance experts advise establishing a 6-month worth of expenses emergency fund before making any capital market investments.It is wise to keep these savings separate from your regular investment portfolio. High-yield savings accounts are a wise choice for storing an emergency reserve. Should something unexpected happen, an emergency fund can prevent you from selling investments prematurely just because you need cash.There is no better time to invest if you have some cash on hand and have taken care of your high-interest debt. But before investing, ensure you set up your emergency fund to prepare for emergencies.
Decide Whether You Want To Invest Actively Or Passively
There are lots of approaches you can take to investing. Many busy professionals don't have the time for actively managing investments like stocks and rental properties - particularly when they lack the experience or knowledge to make their ventures successful. Fortunately, plenty of lucrative passive investment options are around today, allowing investors to earn strong returns without the hard work. So, consider how much time and experience you are willing to put into your investments and select a strategy accordingly.
Read. Research. Study
Some of history's greatest investors were also keen readers. Consuming news, opinion, or instructional content can help you see things from a broader perspective and make you aware of new or existing but unknown trends.Another excellent technique to develop good investment habits and stay current on the available options is to discuss with like-minded people. Even the most experienced investor cannot monitor all the activities taking place on the stock market. Numerous people keep an eye on different investment opportunities and can share important information with you irrespective of expertise or experience.
11 Best Investment Opportunities Right NowWhile you work on building your wealth and future, you need to know if you're making the right investment decisions. The economy is constantly changing, and next year will be no exception. People often think of investing in stocks or bonds, but many other options could significantly improve your financial future. Here are the best investment opportunities you should capitalize on in 2022.
1. Real Estate Crowdfunding
Real estate crowdfunding platforms, like Holdfolio, allow investors to access portfolio diversification and residual income streams through commercial and multifamily property investment. All deals are managed from start to finish by experts, meaning investors can enjoy monthly or quarterly dividends and capital appreciation, without lifting a finger. Investors can also enjoy capital appreciation and additional hedging against inflation as they undertake ownership in income-producing real estate assets.Most investors struggle to produce steady cash flow. We ensure our interests align with partners by investing our capital into projects alongside yours. Accredited and non-accredited investors can access and manage investments securely and easily via our online investor portal.To access high-return, stable, and passive investment opportunities the easy way, contact Holdfolio right away.
2. Stock Market
One popular active investment option is buying stocks. Buying your preferred stocks involves investing in a publicly-traded company's shares, which is like investing in the future success of that company. As the stock price increases, you gain money and as it decreases, you lose money.However, stocks tend to become quite confusing very quickly. Other than selling a stock for more money than you paid for it, there are other ways to generate money. Many stock investment opportunities exist, including dividends, growth, and value investing.Additionally, investing in individual stocks or a combination of both is one investment opportunity that stocks provide. The fluctuation of indexes like the S&P 500 and the Dow Jones Industrial Index can gauge the stock market's overall performance.One of the most varied investment opportunities at the moment is investing in growth stocks. There is good variety among businesses and industries to create a well-diversified portfolio and increase your wealth.
3. Treasury Bonds, Bills, and Notes
Government bonds are your best first option if you want to earn a little more interest than a savings account without taking on a lot more risk. As of September 2022, they offer yields ranging from 2.46% for one month to 3.58% for 30 years.The American government fully guarantees the U.S. Treasury's debt obligations. As a result, if you require access to your money before the debt matures, you can purchase and sell government debt with greater confidence on alternative marketplaces.However, because of this stability, treasury bonds' yields may be lower than what you may receive from corporate bonds, with a lower likelihood of debt repayment.
4. Savings Accounts With High Return
Certain online savings accounts produce high yields and interest when you deposit money. These high-yield savings accounts are some of the most accessible vehicles for your money, just like a savings account at your local bank.Anyone who anticipates needing access to money soon should open a savings account. A high-yield savings account is ideal for risk-cautious investors who wish to reduce their chances of losing money. Since the FDIC insures banks that provide these high-yield accounts, all your deposits will be safe. While high-yield savings accounts are considered secure investments, much like certificates of deposit (CDs), you may lose purchasing power due to inflation if rates are too low.Online banks often provide substantially higher interest rates than traditional banks since they have less overhead. Additionally, the funds are often accessible by swiftly moving them to your primary bank or perhaps even using an ATM.You can find the most nuanced high-yield savings accounts on Bankrate. The only other option is a savings account, which banks and credit unions offer, but you might not obtain the best return.
5. Corporate BondsHigh-grade corporate debt may be wise if you don't mind taking on a little bit more risk in exchange for a higher return. These bonds, issued by reputable, thriving businesses, often provide greater returns than those of Treasury securities or money market accounts.The St. Louis Federal Reserve has stats that show that the 10-year high-quality bond average interest rate is 4.57% as of August 2022. In some situations, investing in high-grade corporate bonds may result in losses even though they are generally safe. Below are some of those situations.
Rising Interest Rates
Higher rates won't help your money since bond interest rates are frequently set for a predetermined period. You might also need to sell your bonds for less money than you paid for them if interest rates increase. If you let your bonds mature, you will receive the face value of the bonds plus interest.
Issuer becomes Bankrupt
Bonds are less secure than money kept in bank accounts, despite being often considered relatively safe assets. Focusing on debt issued by respectable companies that are most likely to pay you back is essential. Organizations with lower ratings may offer higher interest rates, but you are also at greater risk of losing money.
6. Exchange-traded Funds (ETFs)
Exchange-traded Funds provide the best investment opportunities for people who wish to invest in stocks but lack confidence in selecting certain companies. Without choosing individual stocks, ETFs are a fantastic investment.When you purchase an ETF, you invest in a group of businesses, frequently with a theme. As an illustration, a 12-company airline ETF might contain shares of each of them. The firms with the most robust growth prospects may be spread over an ETF that invests in growth stocks.There are ETFs available now for practically every sector and topic. Buying an ETF entails using the fund vehicle to acquire the financial assets of various companies instead of individual stocks. You can choose the market, approach, or industry you wish to invest in, but not the specific stocks.ETFs are very efficient both financially and tax-wise. Most ETFs charge very little, while some are free. ETFs can be a terrific tool to manage risks and are excellent investment prospects for those with moderate risk tolerance, despite providing more risky inverse and multi-asset choices.
7. Rental Property
Renting out space can be a terrific investment opportunity if you're capable of managing your properties. To pursue this action, you must choose the right property, finance it or purchase it outright, maintain it, and deal with tenants. Making wise purchases can help you grow wealth and produce passive income.Rental property is a wise option for long-term investors looking to maintain their homes and produce consistent cash flow. However, it isn't as straightforward as making a few clicks and buying a cryptocurrency, ETF, or shares on the stock market. Since you will have to deal with tenants, you must prepare for calls, inquiries, and complaints virtually any day. Additionally, the real estate market is unpredictable nowadays, and mortgage rates are rising. But it is still a lovely time to finance the acquisition of a new rental property. When it's time to retire, you'll probably have a strong cash flow if you keep onto your investment properties, steadily pay off debt, and increase your rental income.Furthermore, you'll need to partner with a real estate broker to find rental housing. Alternatively, you can try to develop a network of people who might be able to find you the best deals once they become available.
8. Money Market Mutual Funds
Money Market Mutual funds are open-ended funds that make investments in short-term securities. Even the most excellent money market funds often have low rates. As of mid-September 2022, the best were above 2%, which outperformed the average savings account annual percentage yield (APY).These funds give investors absolute liquidity, unlike Treasury instruments and corporate bonds: You may withdraw your money at any time, and there is essentially no volatility in the funds.Several banks also provide money market mutual funds. These funds may still be available for investment through your bank if you don't have a brokerage account or don't want to open one.
9. Natural Commodities/Precious Metals
Many stores, businesses, and organizations pay for gold and other precious metals because they are valuable. The supply of gold, silver, platinum and other precious metals is limited, just like it is for real estate. And since they are not based on national currency, their value remains intact.Although you can purchase gold and other natural commodities in the form of bullion, investing in a commodity-backed index is considerably more practical.While gold and other precious metals are considered commodities and are linked to the stock market, they are pretty autonomous. If traditional equities lose value, the price of commodities such as gold will increase. Therefore these commodities provide some of the best investment opportunities to hedge against a stock market slump.
Cryptocurrency is an electronic-based currency that serves as a medium of exchange. Particularly in the last several years, it has grown in popularity as many investors poured money into the asset, driving up prices and luring more traders to the market.Bitcoin is the most popular cryptocurrency. It attracts many traders. Bitcoin shot up to almost $30k per coin in 2021 from about $10K at the beginning of 2020. After that, it rocketed significantly above the $60,000 benchmark before declining in 2022.Cryptocurrency is an ideal opportunity for investors ready to take on a little risk in return for the potential for much higher profits. Investors who avoid taking risks or require any safe investment should avoid it. Cryptocurrency is not supported by the FDIC or by the authority of a firm or a government. The only factor influencing its value is what buyers are willing to pay.
11. NASDAQ-100 Index FundsNASDAQ-100 index funds provide excellent investment opportunities for investors who want exposure to some of the biggest and greatest tech giants without picking or evaluating specific companies.These funds are based on the top 100 Nasdaq companies, making them some of the most prosperous and reliable businesses. These businesses include Apple, Meta, and Microsoft platforms, each of which accounts for a sizable fraction of the entire index.This option is excellent for stock investors seeking growth. Investors must prepare to put up with high volatility and make a long-term commitment of at least three to five years.These stocks have the potential to decline as with any publicly traded company. While some of the most influential tech businesses are represented on the Nasdaq-100, they are also frequently some of the most expensively priced.Because of their high valuation, they are probably susceptible to a swift decline in an economic downturn, yet they might have a swift ascent in an upturn. You also get rapid diversification with a Nasdaq-100 index fund, protecting your portfolio from the demise of any one company.
Investing is exciting, but it is a tricky business. If you make the right moves, you can watch your investments grow in value. If things go wrong, you can lose a lot of money, but that's a risk you have to be willing to take. There's no pressure or rush, but you must get things right. It would help to consider certain vital things before choosing an investment option. It would help if you thought about your risk tolerance, timing, investing knowledge, creditworthiness, and the amount of money you have available as you choose investment options.Once you've made a few successful investments, it'll become easier to invest more and more since you have more money to put towards your portfolio. If you are looking for exceptional yet accessible investment opportunities to increase your cash flow, diversify your portfolio, and earn truly passive income, contact Holdfolio today.
Now more than ever, we need to be smart with our money. As the economy struggles, investors everywhere seek opportunities to build wealth and diversify their assets. If you're an investor, real estate investments offer the lucrative potential you want. If you haven't looked into the rental income potential of investment properties, now is the time. Make the most of the real estate industry through passive income, tax shelter, and inflation hedging, today.
The Awesome Benefits of Real Estate Investing in 2022
Whether you have just a small nest egg or millions of dollars for real estate investing, the right real estate investments can be lucrative. Given the proper tools, knowledge, and investment partners, sound property investment can become a robust cash flow for life.It doesn't matter if you're investing in industrial projects, commercial real estate, or residential realty. A good investment in real estate can outperform many other riskier and more volatile investments, such as stock market investments like mutual funds.There are many reasons why you should invest in real estate and properties today. The market is yours to seize if you're ready. Avoid the pitfalls of investing in real estate and become a successful real estate investor in 2022.With the guidance of leading real estate investors, anyone can capitalize on the real estate market.Real estate investment opportunities offer many exciting benefits.
Predictable and Consistent Cash Flow
Although cash flow may vary significantly depending on the types of properties, all sound rental properties can deliver consistent, robust income. Ideally, your real estate investment portfolio should include every type of physical property, including vacation rentals, office buildings, retail spaces, single-family homes, and more.The profit potential of any investment real estate will also depend on the tenants. Some tenants are unreliable, leading to inconsistent rental income. Other tenants will make your real estate investment completely worthwhile!Work with an investment specialist to diversify your real estate portfolio through a business model that works.
Inflation is really bad, and we all know it. Fortunately, real estate is a well-known hedge against inflationary pressures. As every seasoned investor knows, typically as the prices of goods and services increase, so too do house values and rents. This makes real estate a particularly attractive investment opportunity in 2022.The last thing you want to be doing is watching your hard-earned money go to waste. Whether sitting on a single-family home for appreciation or investing in short term rentals, new investors have many reasons to invest in real estate.
Secure, Lasting, and Powerful Returns
A diverse portfolio includes physical real estate for both the short term and long term. Some investors choose to 'flip' their realty investments following a period of renovation. Other investors prefer a rental property that delivers long-term cash flow.Owning physical property provides many benefits. If properties are not rented, they can still undergo price appreciation. Depending on the housing market and real estate values, a real estate project may increase significantly in value.In some cases, investors will outright sell a rental property after years for a profit. Lower and higher prices vary across different locations, so an investor should consult a seasoned market expert for guidance.A good return on investment (ROI) is always a top priority.
Crucial Tax Benefits & Advantages
All seasoned real estate investors know the importance of tax benefits. Real estate investing provides various deduction opportunities that other investments do not. When owning property, you can deduct the following expenses to help offset or cover costs:Mortgage Interest Rates
Maintenance & Repair Costs, and
Marketing and Advertising ExpensesUsing a 1031 Exchange under the IRS code, investors can even defer capital gains taxes on an investment property indefinitely. Overall, when you invest in real estate, there are many ways to protect and build lasting wealth. Tax benefits are one of the top reasons so many people start investing in real estate.
Significant Portfolio Diversification
In today's tumultuous economic times, many investors are looking to broaden and deepen their portfolios. Given the stock market volatility of other forms of investments, real estate continues to provide much-needed protection. If a mutual fund is performing poorly or has a poor future performance outlook, a real estate investment may compensate.Consistent income from rental properties is one of the best ways to offset losses from other investments. Every strong portfolio will encompass multiple asset classes.
Passive Income Potential
As you earn income from investing in real estate, your level of activity can vary. Some investments, like rental properties, are almost entirely passive. It all depends on the properties and real estate investors involved.Do you want to be more hands-on or detached? Do you have a management company to handle your properties? Are you a co-investor taking on minimal responsibility? Do you prefer to be an active landlord, managing rent collection, maintenance, and tenant relations?Your level of involvement will affect the passivity of your income. Nonetheless, rental incomes are often considered passive because they do not require consistent, daily working hours like sources of regular income.So sit back and collect the monthly checks!
Although you can reap many financial rewards when you invest in real estate, not all benefits are monetary. Real estate investors are also investing in their communities. Vacation rentals provide a much-needed escape for families and friends. Commercial realty investments help provide critical services for consumers. Rental units and home investments offer a living space for individuals and families.Investing in real estate also affords investors many opportunities to gain exposure. You may meet real estate developers, agents, brokers, contractors, lawyers, and more. If you do your due diligence, you can even leverage these connections to finance projects for the future.In short, real estate can benefit you, your loved ones, and the community at large.
Top Real Estate Investments for Maximum Wealth CreationOf course, you wouldn't be investing in real estate if it was only for the non-monetary benefits. At the end of the day, this venture is about making money. You want to accumulate wealth, diversify assets, and enjoy a life of freedom.Why let your money stagnate when you could invest it, multiply it, and pursue your dream life because of it? Whether you're an individual investor or one investor among many co-investors, you have various reasons to invest in properties.
Maximize Your Earnings through Residential Real Estate Investments
Although commercial properties may have a high ceiling for profit, residential real estate is equally attractive to investors. Residential realty investing carries numerous benefits. Firstly, residential investments have the lowest barriers of all real estate types, often requiring less capital and risk. An apartment unit is far less costly than many commercial properties!Secondly, residential properties can also contain many tenants. Depending on the vacancy rate, a multi-unit complex will often offset lost monthly income on vacant units.Thirdly, if you're investing in residential properties, you'll also find the zoning laws, rules, and regulations to be less stringent. This cuts the bureaucratic red tape and allows you to move along doing what you love - making money!Finally, residential property ventures are full of opportunities. Everyone wants and needs a roof over their head. Homes, townhouses, apartments, duplexes - you name it - are always in demand. This cannot always be said for commercial and industrial properties, especially in a bad economy.Given our current economic crisis, residential properties and real estate represent the least risky real estate investment ventures. Because residential leases are shorter than commercial leases, tenants are more likely to remain for the duration of the lease.
Long-Term Profit from Residential Real Estate
Whether purchasing a century-old townhouse in San Francisco, coffin apartments in New York City, or a sprawling ranch in Montana, residential investors have many ways to profitably diversify their portfolios.With large crowdfunding efforts, co-investors can significantly increase their earnings.Crowdfunding investments are increasingly popular in 2022. A multifamily real estate crowdfunding platform, Holdfolio makes lucrative residential investing significantly easier.Without the knowledge, time, and capital, most residential investors struggle to succeed. Fortunately, Holdfolio handles all the hard work. With exclusive access to high-return residential investments, multiple investors can kick back and enjoy a completely passive real estate investment opportunity.Through just a few clicks in a simple online portal, investors can capitalize on the vertical integration of a property management company, development company, and investment firm.So don't delay. Don't go it alone. Join Holdfolio and enjoy an innovative residential investment model that works. Top income-producing properties are waiting. Make the move today and realize your completely passive income potential.
Continuous Income from Commercial Real EstateCommercial real estate is highly coveted for a reason. Although arguably more complex than other types of real estate projects, commercial investments offer many benefits. The potential for lucrative returns, consistent cash flows, and diversified assets makes commercial realty an alluring prospect for investors.Generally, commercial real estate includes businesses and corporations leasing the properties These lease agreements come in various forms, including triple net leases, full-service leases, absolute net leases, and more. Each lease agreement specifies the rent, tenant and owner responsibilities, and timeframe.Commercial leases include properties such as hotels and motels, offices, warehouses, general stores, restaurants, medical businesses, gas stations, and more.
Key Reasons to Invest in Commercial Real Estate
The key takeaways from commercial realty are that it has lucrative earning potential and low tenant turnover. Because the lease agreements are more complex, tenants and investors are more likely to work out differences and disputes than back out once the agreement is signed.These commercial leases are also often long-lasting. Many of these leases exceed a decade, which causes commercial tenants to maintain better care of the properties. After all, the business is concerned with reputation through presentation. Properties in poor condition may hurt the companies' bottom lines.Some commercial lease agreements, such as triple net leases, even put the burden of properties' expenses on the lessees. The investors pay the mortgage while the lessees pay the monthly rent, the properties' taxes, the properties' insurance, and the properties' maintenance expenses.Commercial property values are also directly tied to the business's revenue. More successful businesses can increase these values significantly. Given their quality of tenants, lease durations, returns on investment, and appreciation rates, commercial realty investments can be lucrative.
Profiting from Industrial Real Estate Investments
When most people think of industrial properties, they think of commercial properties. However, there are certainly distinct differences. Typically, commercial properties provide a level of connection to the public. The most salient example is through businesses such as restaurants, doctor's offices, general stores, gas stations, and so on.In other words, industrial properties are a type of non-public commercial property. Industrial real estate investing typically targets manufacturing facilities, storage and distribution facilities, data centers, chemical plants, multi-purpose spaces, and more.Businesses and companies that use industrial properties are not concerned with presentation or public appeal. They simply require space and location. Under industrial leases, tenants assume most of the control and responsibility. This is particularly appealing to investors who want to play more passive roles in their investments.
Key Advantages of Industrial Investment Properties
Like other commercial properties, industrial properties are usually secured through long-term leases. This generally ensures durable, predictable rental incomes. Because down payments on industrial properties can be substantial, long-term leases are critically important. With time, the returns can be very healthy.Due to the size, location, and use of industrial properties, tenants are also more inclined to pay substantial amounts. Just imagine sprawling warehouses, high-tech data centers, or crucial chemical plants. The high rental income potential is very promising.Because many industrial properties are focused on space availability, aesthetics don't matter. This means these properties typically require minimal maintenance. The tenants typically handle these costs anyway, often leaving just the mortgage up to the investor.Given the ever-growing need for industrial facilities, such as supply and storage spaces, industrial real estate remains a very stable investment. In our troubling economy, investors can rest assured knowing that industrial properties remain in high demand. In fact, with the increase in remote services and online retail since the pandemic, distribution facilities are booming.
Capitalizing on a Real Estate Investment Trust (REIT)
Real estate investment trusts are unlike other types of real estate investment ventures because they are not, themselves, real estate properties. Rather, REITs are companies that own or finance income-producing real estate. Real estate investment trusts usually trade on the stock market and can cover a wide range of property types and sectors.Currently, real estate investment trusts collectively own over $3.5 trillion in gross assets across the country. Some REITs focus on specific types of properties while others have widely diversified portfolios. Assets include retail real estate, apartment complexes, office buildings, infrastructure, data centers, luxury hotels, and more.Because many REIT shares are publicly traded, they are regulated by the Securities and Exchange Commission (SEC).
Main Reasons to Invest in REITs
A REIT generates income by leasing space and collecting rent. The REIT pays this income to shareholders as dividends. REITs are required to pay out at least 90 % of taxable income to shareholders. Some types of REITS, such as mortgage REITs (mREITs), earn income from interest on investments.Historically, REITs provide investors with steady dividends and lasting capital appreciation. They are also dissimilar from many other assets, which contributes to strong portfolio diversification. Compared to the rest of the stock market, REITs deliver better total return performance.An investor can buy REIT shares as they would any public stock. Private REITs have potential too. Interested individuals should consult a seasoned investment specialist before beginning.
Start Your Investment Future Today
Whether you're investing in massive projects via online real estate platforms, or simply want to purchase a modest townhouse, you have so much to gain from real estate investing. Any property type has the potential for strong, predictable returns. The right investment property is waiting.But you shouldn't go it alone.Without the support and guidance of sterling professionals, you may flounder. You may miss opportunities, squander capital, and prevent the future of your dreams. Don't let your wealth stagnate or diminish. Don't invest in volatile markets or unpredictable projects.You deserve a rewarding and simple real estate investment opportunity. Partner with top experts and enjoy the high returns you want from the historically profitable real estate properties you can trust.At Holdfolio, we are fully integrated. Collectively, our property management company, construction company, and realty investment firm have helped numerous investors secure the passive income they desire.See what our portfolio has to offer. See what your future holds. Consult our investment experts and begin your journey of long-term wealth creation today.
Financial freedom is one of the most sought-after goals in the world. But what is financial freedom, exactly? And how can you achieve it? Financial freedom is an elusive concept for many people. It's a goal shared by many people, but most of them never actually achieve it! Why is that? It's because there is a lot of misinformation out there about how to achieve it.It can be hard to sift through all the information to find the right path and even harder to fulfill. That's why we're going to give you practical tips on ways to achieve financial freedom.One of the best ways to escape the rat race is to invest in real estate. You can build or buy a home that will appreciate over time and could someday be worth thousands or even millions of dollars. But most people cannot afford to purchase a house and manage it independently. That's where multifamily crowdfunding investments come in.Financial freedom is one of those things that we all want. You can't put a price on it, but you still want it and want it now. We know that real estate is an excellent way to get there. So we're diving into the world of multifamily investing to show you how it can help you become financially free.
What Financial Freedom Means
Taking charge of your personal finance is the first step toward financial freedom. A consistent cash flow enables you to lead the life you desire. You don't stress about how you'll cover unforeseen expenses or debts, and you don't have a mountain of debt.However, it's okay to say financial freedom means different things depending on who you ask. According to some, being wealthy enough never to have to worry about money is the key to achieving financial freedom. However, numerous variables, such as your objectives, way of life, region, and age, will define what financial freedom means to you.But, having financial freedom means you have options. It means you can take a trip to that place you love, take care of all your needs and desires, or pursue your passion and create a profitable business.
Financial Freedom vs. Financial Independence: What's The Difference?
Although "financial freedom" and "financial independence" are frequently used interchangeably, they have different meanings. Understanding the difference is crucial to work toward true financial freedom. The core concept of "independence"—the capacity to take care of your financial requirements without depending on anybody else—makes financial independence possible. When you have a steady cash flow, you can pay all of your debts, handle all your expenses, and still have some money set aside for savings. You can even begin your investment journey. But while you've achieved financial independence, that doesn't necessarily mean you have financial freedom.Financial freedom involves a healthy work-life balance, numerous possibilities, and enough income to work only when you choose to. And while there are several ways to build passive income, one of the great ways to gain financial freedom is by investing in real estate. This option is a tried and tested method that has been used for decades. It has stood the test of time.
Actions That Can Help You Gain Financial FreedomFinancial freedom is not something that can be attained overnight or by just anyone. You'll need to put in a lot of effort if you want to have any chance of quitting your day job. Starting with a strong foundation will allow you to gain the momentum necessary to reach financial freedom. Additionally, you can take the following actions to tip the odds in your favor:Learn Financial Control One of the essential steps to financial freedom is taking charge of your finances. To do this, you must start spending less than you make. Although it seems easy enough, many people get buried under debt.You must take charge of your finances and manage your costs effectively before considering being financially independent. You need to create a budget and then follow it religiously!
Eliminate Excessive Spending
You can track your spending by using a 50/30/20 budgeting formula, which allocates 50% to necessities, 30% to "wants," and 20% to savings. After that, you need to cut any unnecessary spending. You must examine your budget and identify ways to reduce expenditure because no one generates money by spending excessive amounts.
Establish an Emergency Fund
Creating a savings account or emergency fund is one of the smartest financial moves anyone can make. On your journey to financial freedom, you never know what life will throw at you. Before making any capital market investments or significant financial decisions, ensure that you build a savings account with enough money to cover costs for six months.An emergency fund should be kept in high-yield savings accounts. If something unforeseen occurs, having this fund can keep you from being in the lurch. No matter your financial plans or moves, establish an emergency fund first to prepare for crises.
Boost Your Productivity and Earnings
You can only avoid extra costs until they become unavoidable. Therefore, the next obvious step is to enhance your revenue and productivity after you have cut out any superfluous spending. Eventually, finding strategies to make your money work for you is best. While there are many powerful tools that can assist your journey to financial freedom, you must find various strategies to boost your net worth. True financial freedom appears to be an unrealistic goal for many. The state of the economy is erratic, it can be daunting to invest, and most people today work longer hours and earn less money. But the only way out is to accept responsibility and implement a few adjustments. And real estate still provides a reliable way out. So let’s take a look at exactly what financial freedom is, and how real estate investing can get you there. How Can You Achieve Financial Freedom Through Real Estate Investing Although there are many strategies to become financially free, many investors have found one wealth-building strategy superior to all of the others. Real estate is one of the most acceptable methods to achieve financial freedom. You won't need to depend on a 9-to-5 if you can build adequate passive income from a portfolio of real estate investments. Various real estate investment options are available, including multifamily buildings, single-family rentals, and duplexes. Another choice is to put money into commercial real estate or REITs, which enables investors to adopt a hands-off approach while diversifying their investment portfolio.
Multifamily Crowdfunding Investing
The term "real estate crowdfunding" describes combining funds for a syndicated investment. Therefore, multifamily crowdfunding refers to numerous investors pooling their resources to purchase multifamily properties jointly.Multifamily crowdfunding provides a unique chance to invest in apartment buildings you can't purchase alone. An experienced investor will locate passive investors, perform due diligence on the property, and assess it before purchasing.Think of multifamily crowdfunding as a partnership or a real estate syndication project. A multifamily crowdfunding deal consists of:General Partners or professional investors
Passive Investors or partners Each party has distinct roles and tasks. The professional investor is responsible for overseeing the entire transaction. Following the close of a transaction, the professional investor will find and oversee the exchange.Pooling the funds required to purchase a property is the responsibility of the partners and passive investors. In exchange for shares of the multifamily property, passive investors contribute a portion of the required cash upfront.Investors can utilize an agreement for a variety of property categories. However, because of its minimal risk and potential for passive income generation, multifamily investing is a favorite among investors.General partners may be companies or individuals who find deals, attract investors, and make effective decisions. As professionals, they have a wealth of real estate experience and are skilled at performing due research on prospective sales. If you’re looking for a way into the world of passive multifamily investing, Holdfolio offers all the advantages real estate investing offers without you having to worry about managing your money. That way, you can concentrate on the things that matter while your money grows. Schedule a call to get started.
What A Multifamily Deal Looks Like
Investors in multifamily properties make money from the rental income generated by the rental revenue of the property as well as from any potential upside benefit from a future sale of the property.Usually, passive investors receive payments of 6% to 9% of rental income ahead of the general partner.Additionally, many crowdfunding platforms require you to invest minimum amounts of $50,000. With Holdfolio, investors can access highly profitable multifamily deals for as little as $20,000. You can use small amounts of capital to increase your investment power and provide passive income. Long-term, compounding provides a fantastic opportunity to earn significant returns on your investment.
Income from Multifamily Real Estate Investments
Real estate crowdfunding and passive investors primarily in the following ways:Property value appreciation
Rental incomeInvestors receive multiple streams of rental income from the property’s tenants. Usually, this distribution takes place monthly or quarterly. Passive investors benefit financially when a property's value rises over time, as well as with scheduled rental increases, and any property development plans that take place over the life of the investment. Investors usually pay some fees for property acquisition and operations.
Advantages of A Multifamily Crowdfunding Finding multiple investors to contribute to a deal's financing is essential to multifamily crowdfunding. We'll highlight just a few of the many advantages of a multifamily crowdfunding deal.
The less space a residence has, the less financial impact vacancy will have. Large multifamily complexes are profitable even with several vacant units because of their size and low vacancy rate.
You're investing passively because you and other investors pool money. Therefore, if you take part in crowdfunding, the risk is dispersed across all investors and the company operating the deal.
Multifamily crowdfunding deals require less time investment than other real estate ventures. The professionals often handle loan paperwork, transaction research, and property management to give you more time to pursue other interests while reaping the benefits of your investment.
Real Estate Crowdfunding Requirements
Participating in real estate crowdfunding deals is pretty straightforward. But you must meet specific basic requirements to be a part of a deal. These requirements often differ depending on whether you’re investing in a crowdfunding platform, or a private syndicated project of similar caliber. Here are those basic requirements to consider:
Basic Knowledge of Real Estate Investing
Even though real estate crowdfunding is similar to a syndication deal, there is a significant difference between them. Each investor interested in real estate syndication should have a solid understanding of real estate investing and its ramifications, risks, and anticipated returns. For crowdfunding, the benefit is that you don't need knowledge of real estate investing. Experienced investors manage your investment for you and ensure the best possible returns.
To invest in multifamily syndication, an investor must partner with a general partner or syndication company. If you’re entering into a private partnership with investors from a group or society, it’s important to do your due diligence and ensure they have the competency, knowledge, and trustworthiness to manage the deal effectively. With crowdfunding, it also pays to ensure the company you invest with is reliable and experienced. Though usually it’s much easier to determine whether you have found the real deal or not. For example, you can check their success rate, transaction volume, and average returns on their website, or speak to current partners.
Accredited Investor vs. Non-Accredited Investor
While allowing crowdfunded real estate investing, the law controls several parts of the operations. The federal government, for instance, continues to distinguish between accredited and non-accredited investors.Most investors must be accredited investors to take part in multifamily syndication. A person or couple must earn more than $250K annually to qualify as an accredited investor. Alternatively, they must own assets worth at least $1 million in addition to their main house.Accredited investors satisfy the predetermined yearly income or net worth requirement. Accredited investors can participate in syndicated projects with higher-risk, and higher potential gain, since the accredited investors are considered to have the financial muscle to shoulder potential losses. Non-accredited investors who don't meet the SEC's annual income or net worth requirements can participate in some real estate syndication deals. However, the sponsor may have to cope with additional paperwork.
Other Real Estate Options
Investing in Real estate is an excellent way to build wealth towards achieving financial freedom, but it can be difficult for beginners. Here are some other opportunities you might consider.
Your long-term investment plan could include owning rental property. In addition to immediate income flow, a rental home provides long-term gains as the asset's value (hopefully) rises. Additionally, as you or your tenants pay off the mortgage, you can see your equity rise.It's possible to get a good return on your investment by owning a conventional rental in some regions. The downside is that you’ll also be responsible for managing tenants, as well as property repairs and maintenance.
Commercial Real Estate
Retail structures, industrial facilities, and office buildings are examples of commercial real estate. With this kind of investment, there might be good financial returns, but there is a lot of risk. During a recession, this kind of property is frequently affected particularly hard. Due to the higher responsibility associated with these assets, you should make sure that you have a strong insurance plan in place for them.
Real Estate Investment Trusts (REITs)
Businesses that manage properties that generate income are known as real estate investment trusts. These are excellent alternatives for confident investors because they need less capital outlay than traditional real estate, making it simple to diversify your real estate holdings.
While short-term rentals like Airbnb can be profitable investments, they also come with many risks. As we saw during the pandemic, stay-at-home orders may be fatal to the travel sector. And situations like these are generally terrible, especially for short-term vacation rentals. Due to the seasonal nature of these assets, you should ensure that you have accounted for more excellent vacancy rates. Additionally, various laws govern these rentals that differ by state and city, so ensure you keep up with them.
Pro TipEnsure you are in charge of your financial situation before investing in real estate. Your chances of being approved for loans increase with solid credit and little debt. Many people do not know the significance of credit. Avoid relying solely on your own money unless you have a lot of money in your bank account and can pay in cash.A strong credit score will enable you to access better financing alternatives that demand little to none of your cash. Most individuals just getting started in real estate do not have the cash to finance an investment alone, so consider improving your credit score.
The Bottom Line
Real estate is one of the best wealth-creation options and is often the best way to secure a stable, long-term financial future. A simple investment can move you away from wondering “what is financial freedom?” to seeing how it feels for yourself! If you are proactive, the path to financial freedom will get easier. A good start is understanding what it will take to reduce your reliance on a typical job. But if you're serious about discovering how to be financially free, you should consider Investing in real estate that generates passive income.If you've ever considered purchasing a property but are unsure if you're ready, you might wonder what your options are. There are many different real estate investment options, and it can be hard to decide which is the right fit. But with professional guidance, you'll be on your way to greater financial freedom. You can profit from multifamily real estate without the stress of managing properties. Join thousands of investors on Holdfolio's investment platform to invest in real estate with excellent profits without the hassle of maintaining tenants or properties. Contact Us Today!
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.
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. If you want to ensure that you're making a good investment, consider working with a property manager in the target city. They will help you study different neighborhoods and make an informed decision about which property is right for you.
— 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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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
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.
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.
- 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.
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.
THE PURCHASE OF LLC INTERESTS IS SPECULATIVE AND INVOLVES SIGNIFICANT RISK, INCLUDING THE RISK THAT YOU COULD LOSE YOUR ENTIRE INVESTMENT. THE PURCHASE OF LLC INTERESTS IS SUITABLE ONLY FOR INVESTORS WHO FULLY UNDERSTAND AND ARE CAPABLE OF BEARING THE RISKS. SOME OF THE RISKS ARE DESCRIBED BELOW. THE ORDER IN WHICH THESE RISKS ARE DISCUSSED IS NOT INTENDED TO SUGGEST THAT SOME RISKS ARE MORE IMPORTANT THAN OTHERS.
SPECULATIVE NATURE OF REAL ESTATE INVESTING:
Real estate can be risky and unpredictable. For example, many experienced, informed people lost money when the real estate market declined in 2007- 2008. Time has shown that the real estate market goes down without warning, sometimes resulting in significant losses. Some of the risks of investing in real estate include changing laws, including environmental laws; floods, fires, and other acts of God, some of which may not be insurable; changes in national or local economic conditions; changes in government policies, including changes in interest rates established by the Federal Reserve; and international crises. You should invest in real estate in general, and in the Company in particular, only if you can afford to lose your investment and are willing to live with the ups and downs of the real estate industry.
NO GUARANTY OF DISTRIBUTIONS:
When you buy a certificate of deposit from a bank, the Federal government (through the FDIC) guarantees you will get your money back. Buying an LLC Interest from the Company is not like that at all. The ability of the Company to make the distributions you expect, and ultimately to give you your money back, depends on a number of factors, including some beyond the control of the Company. Nobody guarantees that you will receive distributions.
INABILITY TO ATTRACT AND/OR RETAIN TENANTS:
Our success depends on our ability to attract and retain tenants in our Rental Properties. The risks we face include the following:
Competition from other landlords could keep us from raising rents.
Changes in economic conditions generally, or in the Indianapolis, IN and Dayton, OH areas in particular.
Existing tenants might not renew their leases.
Our Rental Properties could remain vacant for extended periods.
A tenant could default on its obligations, or go bankrupt.
Certain of our properties may be specifically suited to the needs of a certain type of tenant and we may have difficulty leasing such properties in the event of a vacancy.
Any of these circumstances would hurt the Company financially. If a vacancy continues for a long period of time, we may suffer reduced revenues resulting in less cash available to be distributed to shareholders. In addition, the resale value of a property with vacancies could be decreased because the value of a property may depend on the value of the leases of such property.
NEED TO RENOVATE PROPERTIES:
We might need to renovate our Rental Properties to make them competitive in the market. The more we have to spend to renovate our Rental Properties (assuming we can find the capital to do so), the lower the returns to our investors.
PROPERTY VALUES COULD DECREASE:
The value of the Rental Properties we own could decline, perhaps significantly. Factors that could cause the value of our Properties to decline include, but are not limited to:
Changes in interest rates
Competition from new construction
Changes in national or local economic conditions
Changes in zoning
Environmental contamination or liabilities
Changes in local market conditions
Fires, floods, and other casualties
Undisclosed defects in property
Incomplete or inaccurate due diligence
ILLIQUIDITY OF REAL ESTATE:
The Company might not be able to sell Rental Properties as quickly as or on the terms that it would like. For one thing, we cannot predict how long it will take to find a willing and able buyer. For another thing, we might be required to expend significant amounts of money to correct defects or make improvements before a property can be sold. The overall economic conditions that might cause the Company to want to sell Rental Properties are generally the same as those in which it would be most difficult to sell.
The costs of operating real estate – including taxes, insurance, utilities, and maintenance – tend to move up over time. We have limited control over some of our operating costs, and if our costs increase it may reduce the amount available for distribution to investors.
REGULATION AND ZONING:
Like all real estate, our Rental Properties are subject to extensive building and zoning ordinances and codes, which can change at any time. Changes in these laws and regulations could affect the Company adversely.
A fire, hurricane, mold infestation, or other casualty could materially and adversely affect the operation of the Company, even if the Company carries adequate insurance.
The Company will maintain insurance against certain kinds of losses, such as losses from fires. However, there are certain types of losses which either cannot be insured at all or cannot be insured for a reasonable cost.
LIMITED WARRANTIES FROM SELLERS:
In most cases, the Company will be required to purchase a property in “as is” condition, with few if any representations or warranties by Seller. If we learn that a property has defects after closing, we may not be able to look to the seller for reimbursement.
LIABILITY FOR PERSONAL INJURY:
As a landlord, we might be sued for injuries that occur in or outside our Properties, e.g., “slip and fall” injuries. Although we expect to carry insurance against potential liability in amounts we believe are adequate, it is possible that we could suffer a liability in excess of our insurance coverage.
We will conduct typical environmental testing on the properties we acquire to determine the existence of significant environmental hazards. However, it is impossible to be certain of all the ways that the properties have been used, raising the possibility that environmental hazards could exist despite our environmental investigations. Under Federal and State laws, moreover, a current or previous owner or operator of real estate may be required to remediate any hazardous conditions without regard to whether the owner knew about or caused the contamination. Similarly, the owner of real estate may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination. The cost of investigating and remediating environmental contamination can be substantial, even catastrophic.
The Americans with Disabilities Act of 1990 (the “ADA”) requires certain buildings to meet certain standards for accessibility by disabled persons, and we may be required to comply with its terms. If our Rental Properties are not compliant with all requirements of the ADA or if additional requirements are imposed in the future, whether pursuant to the ADA or otherwise, we would need to make modifications to those Properties, potentially at significant expense.
THE COMPANY IS A NEW BUSINESS WITH A LIMITED TRACK RECORD:
The Company is a new business with a limited track record, making it difficult for Investors to gauge our investment strategy. Like any new business, we face challenges on a number of fronts, including:
Developing a reputation and brand identity
Attracting, retaining, and motivating qualified executives and personnel
Implementing business systems, including technology systems
Responding effectively to the offerings of existing and future competitors
Managing growth and expansion
Implementing adequate accounting and financial systems and controls
There is no assurance that we will be successful on all (or any) of these fronts.
INCOMPLETE DUE DILIGENCE:
We intend to perform “due diligence” on each Rental Property we buy, meaning we will seek out and review information about the property. However, due diligence is as much an art as a science. As a practical matter, it is simply impossible to review all of the information about a given piece of real estate and there is no assurance that all of the information we will review will be accurate or complete in all respects. For example, sometimes important information is hidden or simply unavailable, or a third party might have an incentive to conceal information or provide inaccurate information, and we cannot verify all the information we receive independently. It is also possible that we will reach inaccurate conclusions about the information we review.
LACK OF DIVERSIFICATION:
We will own a limited number of Rental Properties in a select market and in a concentrated geographic location, or to put it another way, our portfolio of real estate will not be “diversified.” The diversification of a portfolio reduces both volatility and risk, which means that our portfolio is likely to be more volatile and more risky than if we had purchased a greater number of properties, purchased properties in geographic locations outside of Indianapolis, IN and Dayton, OH, or invested in properties outside of residential market (e.g.,commercial properties).
UNRELIABLE FINANCIAL PROJECTIONS:
We have prepared financial projections reflecting what we believe are reasonable assumptions concerning the conduct of our business. However, the nature of real estate development and investment is such that at least some of our assumptions are likely to be mistaken, either for better or for worse, so that the actual results of investing in the Rental Properties are likely to be different than the results reflected in the projections, possibly by a wide amount. Investors should be skeptical of financial projections in the real estate industry, not because developers intend to be misleading but because the industry is so volatile and difficult to predict.
PRICING OF ASSETS:
The success of the Company and its ability to make distributions to Investors depends on its ability to gauge the value of real estate assets. Although the Manager will rely on various objective criteria to select properties for investment, ultimately the value of these assets is as much an art as a science, and there is no guaranty that the Company and its advisors will be successful.
RISKS ASSOCIATED WITH DEVELOPMENT AND CONSTRUCTION:
We might renovate or repair our Rental Properties from time to time, as needed and if consistent with our overall investment strategy. Development and construction can be time-consuming and are fraught with risk, including the risk that projects will be delayed or cost more than budgeted.
RELIANCE ON MANAGEMENT
: You will not have a right to vote or otherwise participate in managing the Company, except on very limited matters. Instead, the Manager, along with its affiliate Sonder Homes (our property manager), will have full control over the business and management of the Company. As a result, the success of the Company – and its ability to make payments with respect to your LLC Interests – will depend almost exclusively on the skills of our Manager and its principals. Therefore, you should purchase an LLC Interest only if you are willing to rely on the ability and judgment of management and these third-party operators. If the principals of our Manager resign, die, or become ill, the Company and its Investors could suffer.
RISKS ASSOCIATED WITH LEVERAGE:
The Company may borrow money from banks or other lenders to refinance Rental Properties, purchase assets, or to finance development costs or other expenses. Borrowing money to purchase assets is sometimes referred to as “leverage.” While using leverage can increase the total return on the borrower’s equity, it also increases risk because the amount borrowed has to be repaid in accordance with a schedule. To repay its loans, the Company might have to sell assets at a time when values are low, for example.
BREACHES OF SECURITY: It is possible that our systems would be “hacked,” leading to the theft or disclosure of confidential information you have provided to us. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until they are launched against a target, we and our vendors may be unable to anticipate these techniques or to implement adequate preventive measures.
NO MARKET FOR THE LLC INTERESTS; LIMITS ON TRANSFERABILITY:
There are at least three obstacles to selling or otherwise transferring your LLC Interest:
There will be no public market for your LLC Interest, meaning you could have a hard time finding a buyer.
The Operating Agreement prohibits you from transferring your LLC Interest without the consent of the Manager.
By law, you may not sell your LLC Interest unless it is registered under applicable securities laws or the transfer is eligible for an exemption from registration.
Taking all that into account, you should plan to own your LLC Interest indefinitely.
NEED FOR ADDITIONAL CAPITAL:
The Company might need more capital, whether to renovate one or more Rental Properties, to acquire additional properties, to carry the Company through periods when our rental income is insufficient to cover our operating expenses, to pay for uninsured losses, or otherwise. We might seek to raise additional capital through debt (borrowing money) or through equity (selling interests in the Company) or both. However, there is no assurance that additional capital will be available at the time it is needed, and if the Company needs but cannot obtain additional capital it is possible that the Company could fail. Even if additional capital is available, it could be on terms that are adverse to the interests of the Investors. A loan, for example, could bear a high interest rate or other onerous terms, while raising additional capital in the form of equity could dilute the interests of the Investors.
SUBORDINATION TO RIGHTS OF LENDERS:
The right of Investors to receive distributions from the Company is subordinate to the rights of the Company’s lender(s). In the event the Company were to default in its obligations to the lender(s), the Company might be prohibited from making further distributions to the Investors until the default had been cured.
LACK OF CASH TO PAY TAX LIABILITY:
The Company will be treated as a partnership for tax purposes. Consequently, your share of the taxable income from the Company (if any) will be reported on your personal income tax return. We will try to distribute enough money for you to pay your personal tax liability on your share of the income, but we might not have enough money to do so. In that case, you could have a net cash deficit from owning an LLC Interest.
NO REGISTRATION UNDER SECURITIES LAWS:
The Company and the LLC Interests will not be registered with the Securities and Exchange Commission (“SEC”) or the securities regulator of any State. Hence, neither the Company nor your LLC Interest is subject to the same degree of regulation, scrutiny and disclosure as if this offering were registered.
INCOMPLETE OFFERING INFORMATION:
The LLC Interests are being offered pursuant to Rule 506(b) issued by the SEC. Rule 506 does not require us to provide you with all the information that would be required in some other kinds of securities offerings, such as a public offering of shares. Although we have tried to provide all the information we believe is necessary for you to make an informed decision and we are ready to answer any questions you might have, it is possible that you would make a different decision if you had more information.
LACK OF ONGOING INFORMATION:
The Company will provide you with periodic statements concerning the Company, but it will not provide audited financial statements or other detailed information that you might receive in a securities offering registered with the SEC.
CONFLICTS OF INTEREST:
Your interests as an Investor could conflict with our interests in a number of important ways, including these:
Your interests might be better served if our management devoted its full attention to the Company. Instead, the principals of our Manager will be managing a number of different projects concurrently with the Company.
The principals of our Manager are also the principals of Sonder Homes, our property manager, which will receive fees from the Company. Although we will always seek to establish terms that are fair to the Company, the terms of any compensation or other agreements with Sonder Homes were negotiated between related parties, and therefore may not be as favorable to us as if they had been negotiated at arm’s length.
The principals of our Manager may be involved from time to time in other real estate ventures outside of the Company, and may be involved in purchasing and managing residential real estate projects in the vicinity of the Company. Therefore, they may be competing directly with the Company.
The lawyers who prepared this Confidential Investor Disclosure Document, the Operating Agreement, the Purchase and Investment Agreement, and the other documents related to your investment in the Company represent JB Holding Company LLC – our Manager – not Investors or even the Company. You must hire your own lawyer (at your own cost) if you want your interests to be separately represented.
DETERMINATION OF FEES:
The Manager and its affiliates may receive significant fees and distributions from the Company. Although we believe that the fees are consistent with the types and amounts of fees for other real estate development funds, the fees were not determined through arm’s-length negotiations with the Investors, but were established by our Manager.
LIMITATION ON RIGHTS UNDER OPERATING AGREEMENT:
The Operating Agreement limits your rights in several important respects, including these:
With a few exceptions, the Operating Agreement may be amended without your consent.
The Operating Agreement significantly curtails the right of Investors to bring legal claims against the Manager and its principals. Among other things, the Operating Agreement eliminates (to the extent allowed by law) the fiduciary obligations that the Manager would otherwise have to the Members.
The Operating Agreement limits your right to obtain information about the Company and to inspect its books and records.
The Operating Agreement restricts your right to sell or otherwise transfer your LLC Interest.
LIMITATIONS ON RIGHTS ON INVESTMENT AGREEMENT:
To purchase an LLC Interest, you are required to sign our Investment Agreement. The Investment Agreement would limit your rights in several important ways if you believe you have claims against us arising from the purchase of your LLC Interest:
In general, any legal claims brought against the Company or its principals must be brought in State or Federal Court in Indiana, which might not be convenient for you.
You would not be entitled to a jury trial on your claims.
THE FOREGOING ARE NOT NECESSARILY THE ONLY RISKS OF INVESTING.
PLEASE CONSULT WITH YOUR PROFESSIONAL ADVISORS.
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