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multifamily_investing

Jan 27, 2021

The Pros and Cons of Investing in Multifamily Real Estate

Investing in multifamily real estate is a smart way to diversify your portfolio. Investors find multifamily real estate attractive because it lends itself to a slow and steady return on investment. Between Covid-19 and rapid changes in politics, today’s economic outlook is uncertain and rookie and seasoned investors alike are looking for investments that will grow their capital. Multifamily real estate is less complicated than other commercial real estate opportunities and can generate a strong cash flow. Keep reading to explore the key pros and cons of multifamily investing.  What is multifamily real estate? A multifamily property contains more than one rentable unit - like an apartment complex or high-rise. Investing in rental properties, like multifamily units, is a preferred strategy for investors who want to generate an additional monthly income at a relatively low cost.   What are the pros of investing in multifamily real estate? Investing in a multifamily property holds its fair share of advantages. Large demand = lower risk. Multifamily investing is considered a safer investment than other real estate assets. Even in the face of economic uncertainty and poor job markets, people need a place to live. During an economic downturn, rental properties may see a boom as people sell their homes, relocate, or move into a rental.  Grow your portfolio faster. Investing in multifamily real estate is a unique opportunity to expand your portfolio in a short period of time. It’s a lot easier and timelier to acquire 30 apartment units than to acquire 30 single-family homes. Avoid the headache of multiple loans, sellers, and inspections by investing in a multifamily property.  Streamline your property management. Investing in a multifamily property improves daily efficiencies in your property management. By managing one property with multiple units, you save time and money traveling between properties to perform maintenance duties. Also, it makes more financial sense to hire a property manager for a multifamily property rather than a string of single-family homes.  Increase your cash flow. One of the biggest advantages to investing in multifamily real estate is the ability to significantly increase your cash flow. Investors are attracted to multifamily properties because of the predictability of income each month. In both bull and bear markets, rents are collected each month, and units are easily turned over for new leases leading to a steady cash flow. From lower risk to higher rewards and increased efficiencies in your property management, put your investment capital to work with multifamily real estate. View open investments with Holdfolio.  What are the cons of investing in multifamily real estate?  Despite the strong advantages of investing in multifamily properties, we wouldn’t be doing our due diligence if we didn’t share some of the drawbacks of this investment strategy. Increased competition. The advantages of multifamily real estate draw attention from new and experienced investors alike, creating strong competition in the market. This can pave the way for more experienced investors to crowd out the market because they may be more likely to pay in cash or appeal to sellers. Newbie investors may find luck partnering with experienced investors or joining a real estate crowdfunding platform like Holdfolio.  Higher upfront cost. Depending on where you’re investing, multifamily properties can be extremely expensive, much more expensive than a single-family home. Cost tends to be the biggest barrier to new investors, even for seasoned investors. Most banks look for investors to put down at least 20% as a down payment. However, banks are more likely to grant loans for a multifamily property than a single-family because there is less risk involved. Despite the higher upfront costs and competition, avenues like real estate crowdfunding platforms have become attractive to multifamily investors. Crowdfunding platforms allow investors to put a small amount of capital into a property to become a shareholder. Diversify your portfolio and increase your cash flow with multifamily real estate in 2021. Assess the pros and cons and seek the best investment for your wallet. Start investing with Holdfolio today. 
real_estate_investing_2021

Nov 20, 2020

The Impact Of The Coronavirus on Real Estate Investing in 2021

It’s been more than six months since COVID-19 hit the country, and ever since then millions of Americans have been affected by the financial, economic, and social implications of the pandemic. From national lockdowns to financial insecurity, the real estate industry has been dramatically impacted. But, what does real estate investing look like in 2021 as we begin to gain more certainty on the path forward? Keep reading to learn about investing in real estate in 2021. The Impact Of Coronavirus On Real EstateWhen the coronavirus shut down businesses and schools across the country in March, the effects of the pandemic on real estate and investing were felt almost immediately. Tenants fell behind on rent, mortgages went into forbearance, vacation rentals were canceled, and property sales decreased. Despite the effects of a national lockdown, the real estate market has seen a rebound in the second half of 2020. In fact, home prices were up 15% year over year at the start of November and Zillow predicts that home values will increase 4.1% in 2021 due to renewed market optimism and spikes in sales this summer and fall. While the long-term effects of the coronavirus on real estate are still uncertain, rebounds in the market this fall have given investors and buyers hope for 2021. Real Estate Investing Opportunities In 2021New and experienced real estate investors may be unsure where their best investing bet lies in 2021. While there are housing booms in cities across the country, many Americans still find themselves in precarious financial situations and may not be in a position to buy a home. This poses a unique opportunity for house flippers. With lower demand in some areas, prices are driven down and the opportunity to flip houses is valuable and lucrative. Access to capital and loans may be an issue for some investors with lenders slower to give out loans at a time when many people’s finances are in a sensitive position. This positions real estate crowdfunding platforms at the forefront of real estate investing in 2021. Crowdfunding platforms allow investors to invest in real estate in a low-risk high-reward model. The initial investment is low, it’s mainly passive, and is a simple way to diversify your real estate portfolio. Learn more about real estate crowdfunding platforms for accredited and non-accredited shareholders like Holdfolio. Vacation rentals also provide a way to make some extra cash on the side. With people in between jobs or considering relocation, the demand for short-term living arrangements is on the rise. Rental platforms like Airbnb and VRBO can also be more lucrative as you charge guests more for a short-term stay versus traditional renting. Lastly, the value of apartment complexes continues to rise. With cities converting office spaces into apartments and young people looking to rent instead of buy due to job insecurity, expect multi-family investing to be on the rise in 2021. Real estate investing in 2021 may seem uncertain. But, there are many unique opportunities to diversify your portfolio with real estate in the new year. Assess your options and seek the best investment for your wallet. 
Big Buildings

Dec 28, 2021

Multifamily Real Estate Investing: Reasons Why You Should Start Investing in This Asset

More money? We could all do with some of that. Investments made simple? Check. Multifamily assets? I'll take three, please.Investors, old and new, are constantly searching for smarter, more efficient ways to grow their capital with real estate.If you want to secure your financial future, leave the hamster wheel in the dust with a passive cash flow stream, or escape the volatility of trading stocks, investing in multifamily properties is the way to go.Whether it's your first acquisition or you want to scale an existing real estate portfolio, buying a multifamily home is a low-risk alternative for you to grow capital passively and easily. But What is Multifamily Real Estate Investing? Buying multifamily homes for investment is a great strategy for those who want to benefit from a passive flow of monthly income, while their portfolio assets slowly and steadily appreciate.Residential building ventures involve purchasing real estate assets with multiple single-family units under one roof. Investors benefit from a higher revenue stream, greater flexibility with their investment strategy, and better property management alternatives, than single-family home owners. Single-family VS Multifamily Home Real estate investment properties are divided into two categories, each with distinct investment opportunities and advantages.On the one hand, traditional single-family homes are single-unit properties designed to accommodate one family. Investors can inhabit the property themselves, or transform it into a rental unit for profit.On the other hand, there are multifamily properties. What is a Multifamily Home? Multifamily property is any residential complex with more than one unit, separated by shared walls within the same structure. On the small scale, low-rise duplex, triplex, and four-plex homes respectively lodge two, three, and four families. Tenements with more than five units are considered commercial real estate, and can scale up to high-rise apartment buildings with hundreds of individual units.Multifamily assets are valued higher than single-family and require larger capital upfront.Investors often partner with other buyers to share holding payments, expenses, and property management, making the venture more accessible to individual investors.Another popular approach is to invest via multifamily crowdfunding platforms like Holdfolio, because entry minimums are low, and property management is undertaken by the syndicator.This means investors can enjoy a passive monthly cash flow without worrying about tenant acquisition or handover, maintenance, and other hassles associated with the process. Ah, stress-free investment at its finest!Here are our favorite six reasons to start your multifamily real estate investment journey today. Cash Flow and Passive IncomeIn real estate, cash flow is the amount of money that goes directly into an investor's back pocket each month, after accounting for operating expenses.With multiple rental units in commercial real estate, investors gain multiple streams of cash flow. Rents are predictable in strong markets and your income will be too.Passive income is any revenue stream that doesn't require active involvement. Because multifamily properties entail heavier maintenance and management responsibilities, it's important to secure property management for your income to be passive.That's why so many people opt for Holdfolio crowdfunding investment: their vertically integrated property management company takes care of the ongoing daily responsibilities so investment partners can enjoy hassle-free passive dividends. What is the 2% Rule in Real Estate? The 2% rule is a tool used by real estate investors to tell whether or not their investment is worthwhile.This real estate rule of thumb indicates whether property investments are fruitful by calculating the ratio of revenue to initial expenditure. If the rental yield is equal to or greater than 2% of the total investment value injected into the asset it's considered a healthy investment. For example, if you invest $50,000 in an asset, your monthly dividends should be $1000 or more. A Lot Easier to Finance Banks and financiers tend to base commercial real estate loan approvals on the asset's profitability because they generate higher revenue than single-family homes.For the average investor, this means multifamily loans are far more accessible than single-family home loans, simply because the individual's finances and employment situation are more lightly weighted.Moreover, commercial real estate requires fewer loans per unit than multiple individual home loans. Typically crowdfunding investment minimums are around $50k. Holdfolio undercuts this barrier to just $20K, so regular people can profit from the same opportunities as pro investors. SimplicityThrough basic reasoning, we can deduce that obtaining and managing one ten-unit property is simpler than ten individual properties. For example, if you purchase ten single-family homes, you need to negotiate with ten vendors, perform ten separate inspections in ten locations, obtain ten home loans, pay ten transfer fees, and manage ten properties.With multifamily, you only need to do this once. All units are in the same complex, so procurement and labour are simpler and easier.Property management in multifamily investing can be a full-time job. High-density housing provides greater flexibility to outsource professional management so you can enjoy passive revenue without lifting a finger, and without cutting into profit margins.This strategy is particularly attractive for those with little experience in managing rental properties.Insurance can become more complex as the number of investment units increases (particularly those with higher risk amenities like pools and rooftop terraces). However, most insurance providers are well versed in multifamily assets and assemble comprehensive policies with ease.As your portfolio grows, it's usually possible to get a blanket insurance policy encompassing all of your assets from the same provider. Lowered Risk People need somewhere to live. That's never going to change.Because multi-unit rental structures are more affordable and generally more centrally located than individual homes, there will always be a high demand for these facilities. Further, housing demand is relatively inelastic, meaning that when other economic factors change - such as local rental costs - the need for housing remains stable.Of course, occupancy rates can affect any property. But if three units of a 100-unit apartment are left vacant, the owners foot less cost than three unoccupied single-family homes.Buying multifamily homes for investment has a lowered risk, so it is considered a safe investment. Tax Benefits Multifamily real estate investing comes with a wealth of financial benefits and tax deductions.For example, if you have a mortgage to finance the property, you can take a deduction from the mortgage interest paid during the fiscal year. This tends to be higher in the first few years as the loan begins to amortize.Mechanical systems in multifamily properties, such as electrical, plumbing, and roofing are expensive and durable. But their condition naturally deteriorates over time with use and exposure.Depreciation is a concept that allows the property owner to account for the annual deterioration of these structures as an "expense." The depreciation span for multifamily properties is 27.5 years. So, for example, a property worth $1 million could depreciate $36,364 (1,000,000/27.5) per year, even if the property value is technically appreciating.Asset components devalue at different rates. For example, personal property can depreciate over five to seven years, and sidewalks can depreciate over fifteen years.Cost segregation is the process of assessing separate physical assets -personal property, land improvements, structures, and land - and calculating their depreciation rate over a shorter period. By splitting individual expenses, you can accelerate the year-on-year depreciation rates of property components, and gain additional tax savings.It's critical to have a professional top-to-bottom inspection of the property and leave the calculations to your accountant. This process can be complex, and costly if not done correctly. Potential Scalability If you're looking to grow your investment portfolio, multifamily takes considerably less time to scale than a single property. For instance, acquiring a 20-unit apartment building is much easier and more time-efficient than purchasing twenty separate properties.Plus, if you plan to buy more rental units in the same building in the future, you can continue to scale your portfolio with less work.Investors who can occupy a unit within their complex can potentially live expense-free while the other rental units in the property pay off the mortgage, rates, and utilities. Meanwhile, they plan their next multifamily purchase from revenue and equity built in their first investment. How to Buy a Multifamily Property?Let's be honest: the process can take some time and energy.First, you need to select and inspect your desired property. You choose your financing strategy, then make an offer. Afterward comes renovations to ensure the property is habitable for tenants. The last step is to assemble a management plan. If you wish to outsource to a property management company, make sure you account for this in your expenses.To many, this process can feel overwhelming. Don't fret–you still have options. If you want to avoid the menial steps in this operation, opt for crowdfunding.All you need to do is create an online account, select your investment, and deposit your money. If you prefer a simple and 100% passive investment (and want to skip out on property management responsibilities) sign up with Holdfolio to make the most of the advantages of multifamily real estate investing. How do you Value Multifamily Real Estate? Multifamily properties are valued using a simple formula:Value = Capitalization Rate / Net Operating Income (NOI).Let me explain:To determine the NOI, add all the gross rents and other forms of income generated by the property, then subtract annual expenses. In this case, expenses could be renovations, maintenance, property management, depreciation, insurance, and taxes.The remaining value is the NOI.A building's capitalization rate (also known as cap rate) is determined by 'Purchase Price / NOI.' Cap rates are variable because both the purchase price and NOI are variable.Location and local market performance determine the market cap rate, calculated by averaging all the cap rates for comparable properties in the area. To get an idea of what your cap rate should be, ask local brokers, appraisers, and commercial real estate lenders. Conclusion The benefits of investing in multifamily properties are undeniable. Assets come with low risk and high demand, scalable portfolios, slow and steady appreciation, and you spend less time dealing with multiple properties in multiple locations.However, a lot of work goes into selecting and acquiring investments, not to mention the ongoing management and maintenance expenses required to manage the property yourself.Don't be discouraged! Do you want to enjoy all the benefits of multifamily investment without lifting a finger? Holdfolio crowdfunding opportunities provide you with high-level investment latitudes without the day-to-day hassle.All you have to do is create an account, select your property, and make a deposit. It really can be that simple, so join Holdfolio's team of thriving investors today.
Real Estate Syndication vs REIT: Which One Is Better?

Dec 20, 2021

Real Estate Syndication vs REIT: Which One Is Better?

The real estate market has been on the rise for a few years now. It is no surprise that there are many different ways to invest in real estate. One of the more popular methods of investing is through real estate syndication. If you have never heard of this method, don't worry, we'll break it down for you!In this article, we will be going over what real estate syndication is and why it may be better than REITs. What is real estate syndication? Real estate syndication is when a real estate investor pools their money with other individuals in order to purchase real estate. You can use the money you've worked hard for to invest in this very lucrative market and hopefully make some good returns on your investment!How does real estate syndication work? When it comes to real estate syndications there are two types: passive and active syndications. Passive real estate syndication With passive real estate syndication, the investor is not involved in the day-to-day operations of the property. The property is managed by a professional management company that takes care of everything for you.This can be a great option if you want to get involved but don't have the time. You will still be responsible for taxes and any real estate-related fees, so keep that in mind when deciding if this is the right investment method for you. Active real estate syndication In active real estate syndication, on the other hand, there are more responsibilities placed on the investor who purchases a share of a real estate syndication. You will be involved in the real estate company that is managing your real estate investment, which means you'll have more of a say on how it's run and managed.This can be great if you're looking to get more hands-on with your real estate investment or learn some valuable skills while building equity at the same time.What is REIT? REITs, or real estate investment trusts, are another popular method of investing in real estate. A REIT is a company that owns and manages real estate assets. They may own office buildings, apartments, shopping centers, and more – all with the goal to increase their stock value for shareholders. It's not uncommon for real estate companies like real estate syndication to also be a real estate REIT.When it comes to real estate investment, there are pros and cons of each method that you should consider before deciding which one is right for you. What Type of Real Estate does a Real Estate Investment Trust Own? The real estate that a REIT typically owns can be broken down into three categories:Commercial real estate: This is property used for business purposes, such as an office building or warehouse. Mixed-use real estate: Property with both residential and commercial tenants. Residential real estate: Homes and apartments.By investing in a real estate investment trust you are able to get into real estate that is not typically available on the market. These real estate properties can also be bought and sold very quickly, which means real estate investors don't have to wait around for the perfect deal. There may even be opportunities for new buyers if there's an opportunity to take the real estate property off the hands of the REIT. The biggest differences between REITs and Real Estate Syndication The main difference between real estate syndication and REITs is that real estate syndications are slightly better. With real estate syndication, you have a real person to talk to who is invested in the property just like you are. This can be great for networking opportunities or if you ever have any questions about the property.REITs, on the other hand, can be a little more difficult to deal with. Because they are publicly traded companies, their main goal is to increase their stock value and not necessarily focus on real estate investments. This means that you may not always get the best customer service when dealing with a REIT. Tax Depreciation One of the best benefits of real estate syndication is tax depreciation. This deduction allows you to write off a portion of your investment each year on your taxes, which can be a huge saving.REITs also offer some tax advantages, but they typically aren't as good as those offered through real estate syndication. Volatility Another difference between real estate syndication and REITs is the amount of volatility. Because real estate syndications are typically smaller companies, they tend to be less volatile than REITs. This means that your investment is less likely to go up and down in value as quickly as it would with a REIT.Fees When it comes to real estate syndication vs. REITs, real estate syndications typically have lower fees that can help your investment grow faster over time. Real estate syndications charge a flat fee for managing the property while building equity and may also add on additional charges if you'd like them to manage any tenants or maintenance issues. This can help you save money and even earn more than if you were to invest in real estate syndication.REITs typically charge a fee based on your investment, but it can be difficult to determine exactly how much they will cost until the end of each year (and sometimes at that point there may not be any fees). This means that real estate syndication can be a more affordable option when it comes to real estate investment. Liquidity One of the biggest benefits of real estate syndication is that it offers liquidity. This means you are able to sell your shares in the real estate company at any time for a fair price.REITs do not typically offer liquidity, which can be a huge disadvantage if you need to get your money out of the investment quickly. Higher Minimum Investments With real estate syndication, you typically need to invest a minimum of $50,000. This may be the case for REITs as well, but it's not something that is guaranteed if you choose real estate investment trusts. Cash Flow The real estate syndication offers cash flow that you can count on each month, even if the real estate market is down.REITs offer a lower amount of guaranteed monthly cash flow and typically don't make as much money throughout each year as real estate syndications do. This means your investment may take longer to grow with REITs. Diversification One of the best things about real estate syndication is that it offers great diversification. With a real estate syndication, you are able to invest in multiple properties all at once, which can help spread your risk out.REITs typically only offer investors the option to buy shares in their company, which may not be as diverse as real estate syndication. Legal Documents The legal documents for real estate syndication are typically much simpler than those for a REIT. This means that it's easier to understand what you're getting into when you invest in a real estate syndication.The real estate syndication offers a better return on investment and typically has lower fees. The legal documents for real estate syndications are also simpler, which can make it easier to understand what you're getting into before making an investment.REITs offer the chance to invest in real estate without having to be directly involved with owning property. This can be a good option if you're not interested in being a landlord or taking care of tenants. However, real estate syndication offers less liquidity and typically has a higher minimum investment than REITs.Which one should I invest in? Both real estate syndication and REITs can be great investment options, but it's important to understand the differences before you decide which is right for you. If you're looking for a more affordable option with good liquidity without having to be a landlord real estate syndication may be a better choice.On the other hand, if you're looking for something that will offer you great diversification and don't mind investing in real estate without liquidity, REITs may be your best bet. If you want to invest in real estate with less risk, real estate syndications might be the better choice.REITs offer real estate investors a chance to invest in real estate without having to worry about owning property or having tenants.If you're looking for something that will diversify your real estate portfolio and don't mind investing with less liquidity, real estate syndication might be right for you. Both real estate syndication and real estate investment trusts offer investors real estate opportunities, but they have a few key differences that might make one better for you. Final Thoughts Blog post conclusion paragraph: To summarize, real estate syndications are a great opportunity to invest in the booming real estate market.When you join Holdfolio as an investor or owner, we will take care of everything for you - from finding and vetting properties, brokering deals with sellers and buyers, negotiating contracts, and managing property management issues. And because our team is experienced in all aspects of the business side of things like finance, accounting, and technology (not just marketing), we can offer greater peace of mind that your investment will be safe and profitable.If this sounds like something you're interested in investing in then contact us today to learn more about how your money would work for you at Holdfolio! FAQs [INSERT_ELEMENTOR id="9701"]
How to Find Real Estate Syndication Deals

Dec 20, 2021

How to Find Real Estate Syndication Deals

The real estate industry is a huge business with many opportunities for growth. Finding real estate syndication deals is not always easy.How do you know if the deal is legitimate? How can you find out about all of your options? How do you get into the market? How can you find deals that are worth buying? How can you make sure that they're profitable investments?In this blog post, we'll talk about how to find real estate syndications and why it's important to join Holdfolio! Where can you find the best real estate syndication deals? In reality, there are so many options when it comes to finding the best real estate syndication deals. How can you find these opportunities? How do you know which ones will be a good fit for your portfolio and why they're worth investing in? You have several choices:Networking with other investors who might have leads on profitable deals that are worth pursuing Watching for posts on social media, discussion forums, and real estate websites where investors are talking about opportunities to pursue. Posting questions is a good way to find out what people know Checking with your local broker or agents who might have leads on profitable deals that they can bring directly to you without marketing them to the entire market Looking for advertised deals, both in your local area and online. The internet has made it possible to find real estate syndications from anywhere in the world Joining a real estate syndication platform like Holdfolio that offers vetted deals with all of the due diligence completed so you can quickly assess their potential and make an investment decisionEach of these options has its own set of pros and cons, but all of them can lead to finding real estate syndication deals that are worth your time and money. It's important to remember that the best deals might not be the ones that are advertised the most. Sometimes, you have to do a little digging to find the best opportunities.Real Estate Online Investment Platforms One of the best ways to find real estate syndications is by joining a real estate online investment platform. These platforms offer vetted deals with all of the due diligence completed so you can quickly assess their potential and make an investment decision. They also provide educational resources, support from experts, and networking opportunities with other investors, making it easy to get started in this market.Holdfolio is a real estate online investment platform that offers vetted deals with all of the due diligence completed so you can quickly assess their potential and make an investment decision. We also provide educational resources, support from experts, and networking opportunities with other investors, making it easy to get started in this market.If you're interested in finding real estate syndications, Holdfolio is a great place to start. We offer vetted deals with all of the due diligence completed so you can quickly assess their potential and make an investment decision. We also provide educational resources, support from experts, and networking opportunities with other investors, making it easy to get started in this market.Online Forums Another great place to look for real estate syndication deals is online forums. These are places where investors come together to share information, discuss opportunities and learn from each other. How can you find these? You have several options:Searching the internet with keywords that describe your area of interest, such as 'real estate investment forum' and 'real estate syndication deals'. There are many forums out there, but you should also search for local groups that might be more likely to have information about opportunities in your area. You can find these by doing a Google or Facebook search with the name of your city Joining social media platforms like Facebook where investors discuss real estate deals. There are many groups that focus specifically on real estate syndications, and you can find them by doing a search on Facebook or LinkedIn Visiting websites that offer information about real estate investment opportunities. These might include forums, blog posts, or articles written by experienced investorsAgain, each of these options has its own set of pros and cons, but they all can lead to finding syndication deals that are worth your time and money. Networking with Other Investors One of the best ways to find real estate syndications is by networking with other investors. These are people who have already made money in this market, so they might be able to help connect you with opportunities that aren't advertised anywhere else. How can you meet these people?Searching for local investors on LinkedIn. This is a great way to find people who are interested in syndication deals and might be able to help you get started Attending local real estate investing meetups. These events are a great way to learn from experienced investors, make connections, and find opportunities that aren't advertised anywhere else Joining online groups or forums where investors discuss real estate deals. This is a great way to get access to a lot of information quickly and make connections with people who might be able to help you find opportunities Going to events that are hosted by real estate investing companies. These companies often have events where they bring in experienced investors to speak, and this is a great opportunity to learn from them and make connectionsAll of these methods have their own set of benefits, but they all can lead to finding real estate syndication deals that are worth your time and money. So if you're interested in this market, don't be afraid to get out there and start networking!Contacting Syndicates Directly Another way to find real estate syndication deals is by contacting syndicates directly. This can be a great way to get access to opportunities that aren't advertised anywhere else. How can you do this?Searching for local and national syndicates on the internet. There are many websites that list syndicates, so it's a good idea to do a search with keywords that describe your area of interest Contacting real estate investment firms. Many of these firms have relationships with syndicates and might be able to help you get access to their dealsAgain, each of these options has its own set of pros and cons, but they all can lead to finding real estate syndication deals that are worth your time and money. So if you're interested in this market, don't be afraid to reach out to syndicates directly! Final Thoughts We've talked about different methods for finding these opportunities, and each of them has its own set of pros and cons. But no matter which way you decide to go, the most important thing is to get out there and start networking! The real estate market can be a great place to make money, but you have to be willing to put in the work.The decision to find a reliable source of high-quality real estate syndication deals is an important one. You should carefully consider your options and decide which avenue will best serve you based on your personal needs, goals, and resources. We hope this article helped point you in the right direction!We would be happy to discuss with you how Holdfolio can help make sense of everything for you by providing quality service and access to top-tier investments that meet our strict criteria.
The Phases of Real Estate Syndication

Dec 20, 2021

The Phases of Real Estate Syndication

Syndicating a real estate deal is among the most lucrative investment opportunities for those with the grit and determination to execute it.But as any successful syndicator will warn: it's not a game for the faint-hearted.Syndication demands skills, knowledge, and the ability to strategically adapt in the face of unforeseen circumstances that impact the syndicate both internally and externally.That said, it can come with many rewards for those prepared to rise to the challenge. First-hand experience gained is invaluable to those considering a future in syndication. Many real estate entrepreneurs have transitioned from other career paths to build flourishing real estate syndication businesses from the ground up.We've outlined the real estate syndication phases to help get you familiar with the process. Syndication for Passive Income There are two sides to the coin of passive cash flow when we're talking about syndication.Passive investors are only required to provide upfront capital for the purchase and operation of the desired real estate asset. They then gain a return in continuous cash distributions and build equity in the property over the investment term.In many cases, passive investors are called on to guide the sponsor by contributing relevant knowledge and experience to the team.This process is easy provided the sponsor is well educated and proactive. Partnering with an inexperienced sponsor can lead to bumps in the road for passive investors who have not developed a deep personal and professional trust with the syndicate.Real estate syndications are appealing to sponsors seeking high returns with little capital to invest.That said, there's very little that's passive about syndicating a real estate deal in the beginning. The sponsor's position comes hand in hand with all active duties of the deal, including soliciting the asset, implementing the business plan, managing the property, and executing the exit strategy in due course.Of course, some of these duties can be outsourced to a third-party property management team. However, the onus of ensuring the deal is seamless and all key players are performing in the team's best interests balances on the shoulders of the sponsor. Investing Made Simple There is a smarter way to invest completely passively in syndication. Holdfolio is a trusted professional crowdfunding real estate syndicator that offers an easy and stable alternative to the unexpected hitches non-professional syndicates may encounter.By partnering with Holdfolio, investors can enjoy a passive revenue stream without worrying about whether their sponsor has the competency, and without having to do any of the work themselves.Holdfolio has a vertically integrated property management team to take care of daily operations for investors. They put skin in the game by investing alongside partners, and work hard to ensure everybody receives a high return. Currently, investors enjoy an average of 19% ROI. When investors partner with Holdfolio, everybody wins.With Holdfolio you can enter real estate deals for as little as $20k, which is significantly lower than the industry standard of $50k. This gives non-accredited investors the same access to lucrative opportunities as pro investors.Investing with Holdfolio is simple. All you have to do is create an account on the online platform, select your investment asset, then deposit the money. Partners can monitor how their investment is performing from this online channel, making it the easiest and smartest way to attain a residual passive income stream with little effort.If you prefer a reliable, hassle-free passive income with syndication, partner with Holdfolio today.On the other hand, if you hunger for an adrenaline kick and prefer the increased control of active participation in a syndicated deal, read on to learn about the phases you can expect to encounter. Origination The origination phase of syndication is where the sponsor undertakes heavy due diligence duties to prepare for all aspects of the project. By breaking down each stage of the syndication, planning and research becomes a more logical process.This phase entails planning, marketing the deal, satisfying registration and disclosure obligations, and acquiring the property. Let's break them down into individual sections: Planning Planning a syndicate is the most critical part of the process! During the planning phase, start by immersing yourself in the local market where you plan to invest.Call upon networks in the real estate industry to find viable property options that can cater to the flexibility of your syndicate team.To select the right asset, sponsors may wish to consider the following:Lot size: land is a finite commodity and tends to gain higher appreciation than a building or structure. Local development plans can positively or negatively affect the resale value of your asset when it comes time to exit the investment. Physical inspection of the property to gain a first-hand appreciation of the investment potential. Cost-segregation analyses will give you a better idea of depreciation and tax advantages to inform your approachThe key here is to do thorough due diligence on the property.Research and planning help the sponsor devise a strong business case to attract passive real estate investors to enter the project.All information gathered will inform contingency planning to ensure smooth running through the operational phase. Marketing the deal Now you know which asset you want to invest in and have a detailed game plan in tow. It's time to market the deal.Consult with your personal and professional networks to rally up a group of trustworthy, interested participants that have the capital you need for the deal.Individuals with specific skill sets and experience to inject into the project are highly desirable. Think lawyers, accountants, property managers, or simply investors who have previously been involved in syndicates.Find partners you can work productively with through the entire investment term.When a syndicate has aligned values and objectives, smooth interpersonal relationships and a consolidated strategy ensure that the venture will not only be successful, but enjoyable too.For instance, imagine one partner's goals are to earn cash fast by flipping the property, and another prefers to hold an asset and enjoy a long-term passive income stream. You can avoid major complications down the line by confirming everyone is on the same page at the very beginning. Satisfying Registration and Disclosure Obligations Because raising funds for a syndicate is considered equivalent to issuing securities, the Securities and Exchange Commission (SEC) Act, 1933, will mandate that you form a syndicate when putting a deal together with passive investors.This is because you hold a responsibility to partners, who put their trust in you as they would a funds manager in stock trading.Syndications also require a government-regulated Private Placement Memorandum. This details the set-up of the agreement, and outlines the returns and risk each party can expect.Enlist a syndication attorney during this step, as it's the best way to establish the agreement in a legal framework and protect the syndicate from potential problems.Hire an accountant to audit the financial records of the asset to avoid an undue call from Uncle Sam during the operational phase. Acquiring the Property Brush up those negotiation skills! Your partners rely on you to negotiate a good deal with the seller, so clarify where your investor team can be flexible, as well as the non-negotiables.You'll be expected to validate the title and solve any impediments to closing the deal, then secure the contract.First-time buyers are advised to engage a buyer's agent. Professionals offer their expertise and help remove some of the emotion from the transaction. This is particularly useful when there is more than one person involved in the decision-making.Next, it's time to get down to business. Operation During the operational phase, sponsors have two key duties: managing the syndicate and managing the property.You will need to utilise your excellent communication, logistical, and managerial skills to pull off this stage. Let's take a closer look. Property Management The sponsor's job is to manage the daily operations of the property, according to the strategy your syndicate has chosen.The scope and nature of work could vary greatly, depending on your asset and strategy.For example, let's say the team has chosen to flip an apartment over the short term and capitalize on forced appreciation. You will be responsible for soliciting contracts or consent, overseeing rehab, developments, and construction at the property.In another instance, if your strategy is to buy and hold an apartment complex for ten years and take advantage of rental income, you will be responsible for property management.This may involve collecting rent, finding reliable tenants and performing background checks, managing individual leases, building maintenance, and repairs. That's not to mention tending to the unexpected events that arise with property management.It is possible to outsource property management responsibilities to a professional company if you're prepared to relinquish a cut of your investment returns.In this case, the sponsor needs to "manage the manager" to ensure their decision-making is in the best interests of the syndicate. Syndicate Relationships It's necessary to hold regular meetings with limited partners to update them on business operations and keep everyone informed.Parties can meet on a monthly or quarterly basis to learn how the asset is performing. If your strategy is working well, your partners will be reassured.However if the strategy is not functioning to plan, or if you identify certain opportunities for the syndicate that may require a recalibration of direction, use these gatherings to communicate openly with partners.This is an opportunity to collectively devise a strategic way forward, and ensure that everybody is on the same page. Syndicate meetings are the best place to ask questions.Don't worry if your investors are not located in the same place - with modern technology it's easy to host online meetings.You may also wish to conduct an annual report to keep partners informed about the business’s performance.The operational stage is where sponsors do the most work in a syndicate. If this sounds a bit much, and you prefer a passive role in syndication, partner with Holdfolio. Our property management team takes charge of running your assets, and you can easily access your investment performance any time from the online portal. Liquidation and Completion The liquidation phase entails a "liquidation event" whereupon capital is returned to investors, or the sydicate may also choose to refinance.In the event of liquidation by selling the asset, the sponsor must undertake a series of critical tasks.First, the property is prepared for sale by making necessary renovations to increase its appeal to buyers. Enlist the help of a broker to market the asset to prospective buyers in the commercial real estate market.The sponsor then facilitates a tour of the premises to any interested prospects, reviews the offers, then negotiates a good selling price for the asset with the winning buyer.Passive investors are paid their shares from the investment. Lastly, the sponsor prepares the final tax returns for the investment.In the case of refinancing, you need to find a good lender and negotiate the refinancing of the property. This involves closing on the loan and distributing new loan proceeds to partners.If refinancing is a viable option, the operational phase will run until the final liquidation of the asset. Summary Syndicating a real estate deal is a big task, but it's made much more approachable by distilling it down to the three fundamental phases: origination, operation, and liquidation.Sponsors generally thrive off chasing down a great deal and working closely with teams to make the venture successful. However, if you're looking for a less active role in your real estate investment, Holdfolio is there to take the weight of active investment off your shoulders. Partner with Holdfolio to enjoy a hassle-free passive income stream today.
How to Invest 50k

Dec 15, 2021

How to Invest 50k

If you ask the wealthiest people in the world how they came about their riches, the majority will tell you they've come through inheritance or investments. While most of us have no control over our inheritance, we can control how we choose to invest our money.The multiplicity of available investment opportunities can leave new entrants overwhelmed and confused about creating goals, managing risk, and understanding how to make the right investment decisions based on their financial aspirations.Want to know the good news? Today, there's a greater breadth of investment approaches and strategies than ever before. Now, investors have the flexibility to tailor their process according to goals, lifestyle, and risk tolerance.If you're sitting on a wee nest egg and are interested in learning how to invest $50k to watch it grow, look no further than the top ten most effective ways to invest your money right here.Equipped with this guide, you'll be ready to start investing in no time at all. What to Invest in? With $50k ready to go, a good place to start is by looking into your personal finances. Compounding interest accrued by outstanding debt and loans can shrink our money reserves as quickly as investing can grow them.Always start by ensuring your accounts are looking healthy first.As you begin to plan your investment, set clear goals to act as a compass throughout your investment journey. What's the ideal duration of your venture? Are you investing to pay off credit card debt, boost retirement accounts, start a savings account, or top up your emergency fund?It's alright if your goals shift as you gain experience and capital, but it's imperative to have a direction and end goal to keep decision-making on track.Identifying your personal risk capacity will inform smart financial choices because all investment vehicles carry varying degrees of risk. Regardless of which of these outlined strategies works best for you, one of the most fundamental investing checkboxes is diversification. By diversifying across various asset classes, your portfolio's overall risk exposure lessens as the forces of market activity influence your portfolio's performance. Real Estate Syndication Let's start with the easiest hands-off option. Real estate syndication offers a safe investment with accessible entry barriers. It is one of the simplest ways to invest $50k and begin growing your wealth today.This strategy invites multiple investors to pool funds and access a professionally managed portfolio with low risk and high returns through completely passive investing. By joining a professional syndication platform, emerging and experienced investors access the same lucrative commercial real estate opportunities as pro investors.Holdfolio is a multifamily crowdfunding syndication platform that delivers a diversified real estate portfolio, contributing to decreased risk and increased returns. Currently, returns average about 19.02%.Holdfolio holds aligned interests with partners by investing upfront capital into projects, then works hard to maximize returns so that everybody wins together. Investors can trust that their money is in good hands.Multifamily real estate investments come with several advantages over single-family properties. First, investors earn several streams of passive rental yield from one investment as they grow equity in the property. You can also get up to 80% tax shields on this income when you invest with Holdfolio.What makes this service entirely passive is the vertically integrated property management company that takes care of the day-to-day hassles of real estate investment. Partners enjoy professionally managed commercial projects without the responsibility of managing it themselves.The multifaceted benefits that range from growing wealth, earning equity in a property, reducing tax obligations, and receiving multiple cash flow streams make real estate syndication one of the smartest ways to invest 50k in a low-risk high returns environment.To get started, all you have to do is create an online account, select which investment you'd like to make, and deposit your money. If you're looking for a simple and hassle-free way to invest your money, partner with Holdfolio today. Buy a Turnkey Rental Property Buying a real estate property is another strategy preferred by investors who want to gain equity in a real asset. The school of thought behind this option is to provide tenants with shelter and a place to live, while they pay off your mortgage for you.Buying a turnkey rental property comes with a potential for increased risk and increased rewards. Real estate has a low correlation to the stock market, so it provides diversification advantages for those invested in stocks and bonds. The main allure that draws investors into turnkeys is gaining equity in a physical asset that steadily appreciates over time.Granted, you may not be able to purchase a turnkey property outright with $50k unless you live somewhere with a startlingly low price of living. But with some financing, $50k is enough capital to make a down payment and begin earning residual income.Managing rental properties tends to be an active investment as the homeowner is required to solicit and manage tenants, leases, paperwork, as well as oversee routine maintenance and repairs. It's possible to hire a third-party property management company though this will cut into your profit margins. Index Funds If turnkey rentals have your head spinning, and you prefer a low-cost, hands-off investment strategy, consider index funds.These are a type of mutual fund or exchange traded funds with a portfolio designed to match the performance of a designated index. They do this by tracking various indexes composed of stocks based on industry, business sector, asset type, and market opportunities.Investors that purchase index funds receive a broad spectrum of securities in one low-cost investment. Index funds simply duplicate the performance of their designated index, which lowers fees because they are entirely passively managed.As these funds rise with their assigned indexes, investors can enjoy the market heights. The drawback is that passively managed funds leave investors more vulnerable than actively managed funds during downturns, where the fund manager may adjust or liquidate the portfolio's position as a buffer against market shifts.Because they are passively managed, there is no way for investors to take advantage of market opportunities. These funds are specially designed to replicate the performance of indexes, so they will never beat the market.Investors do not have the liberty to trim underperforming funds that hold the overall operation back. This hinders the all-embracing portfolio performance more severely than an actively managed hand-picked portfolio.In general, index funds tend to outperform other mutual funds in the long term and produce lower taxable income which can be great news for a long-term passive investor. They offer the investor a heavily diversified portfolio that lowers risk.Extreme diversification can be considered a double-edged sword in certain cases. On the one hand, a buffer can reduce risk by limiting exposure to market volatility, but on the other hand, the same shield can cap the upsides too.To begin your investment in index funds, select which index you're interested in participating in, then pick your index fund and decide where you want to purchase it from. You may open an account and buy shares from a mutual fund company, or a brokerage, depending on who you prefer to do business with. Mutual Funds You may be feeling as though the knowledge and time required to research and invest in individual stocks or indexes can be overwhelming! Many non-professional investors feel the same way and instead opt to instantly diversify with ETFs and mutual funds.Investors lose some control with mutual funds because they don't get to select the underlying securities, but this also makes the investment less work for the individual. A lot of people see this as an appealing trade-off.Mutual funds refer to a broad class of reserves that collectively follow a similar investment strategy.The term "mutual" refers to the fund's structure, where many investors mutually pool their capital together to buy and trade securities. In general mutual funds cost more than index funds because the majority of them are actively managed.When selecting your asset allocation, try to get a mix of equity and debt instruments, like stocks and bonds, to balance the risk. You can compare mutual funds based on investment objectives and past performance.Mutual funds can be segregated into categories: Growth Funds Growth and equity schemes chase capital gains over the medium to long term. These are best suited to long-term goals. Risk association and volatility in the stock market are high, but if you're willing to ride out inevitable market fluctuations, they have a better potential for large gains.If your goals are 10-30 years away, you could consider 70-100% in stock mutual funds. Balanced Funds Balanced funds invest in a mix of debt funds and equity shares. They often provide regular income at the same time as investment growth. This option is well suited for moderate-risk investors for the medium or long term. So, for example, if your ideal investment term is 5-10 years, this option will reduce the potential for rapid changes in investment value. Debt Funds Debt funds, also known by the name of fixed-income funds, provide regular, steady, and risk-free income. For short-term goals under five years from now, opting for bond mutual funds is a low-risk solution. Investing 70% in bonds and 30% in stocks will produce steady income through interest payments. Real Estate Partnerships A real estate partnership is a business structure between two or more entrepreneurs who undertake real estate business together to accomplish a collective goal.Partnerships are similar to professional syndicates in that several investors pool funds together to purchase, develop, or lease property. The difference lies in the risk allocation and active management required for the investment.The investor team undertakes the full extent of risk themselves in a real estate partnership. Part of the job is to actively manage the project's performance from conception to termination.Therefore this approach is suited to those with a high risk tolerance, as well as free time and energy available to manage the process. Any relevant knowledge, experience, or skills to bring to the table would work in your best interest.By adopting a suitable approach for the team, partnerships can cater to various goals and investment terms. For short-term aspirations, a team may opt for a quick buy and flip. For a longer investment term, holding for cash flow may be applicable.It's imperative to partner with people that share similar investment goals and risk tolerance to you. When looking for partners, take your time and perform due diligence. The success of the project relies on a strong and reliable team.Real estate partnerships can be formed through a few different entities: Limited Liability Company (LLC), Limited Liability Partnership (LLP), or an S-Corporation.These structures offer protection from litigious claims against a business or personal assets belonging to each investor that are unrelated to the partnership.In commercial real estate, investors can combine skills and capital to access higher profit margins than residential real estate can provide. Those with the grit to pull it off can access lucrative returns. That being said, commercial real estate requires heftier management, more financing, and it demands far greater responsibility.If pooling capital with other investors to access high-profit margins sounds like your ideal investment strategy, but you don't want the risk or the weight of responsibility, partner with Holdfolio today. You'll have access to a completely passive, professionally managed portfolio within mere hours from starting. Rental Properties Investing in a rental property is a great way to secure regular income and gain equity in an asset that steadily appreciates with time. It's best suited to those with investment goals in the mid to long term.When selecting a rental investment property consider the location of the market you plan to buy in. Generally, rentals located in a metropolitan area, situated near schools, public transport, and medical facilities, are considered desirable by tenants. Securing property in a good, safe neighborhood offers the best chance of finding stable, reliable long-term tenants.Rental property investments require active involvement. The homeowner must find and screen reliable tenants, manage leases, paperwork, and perform routine maintenance and repairs.If the landlord loses the tenants, they also shoulder a loss of income until new incumbent tenants are found.Some investors choose to hire third-party property management companies so they can achieve a passive role in their investment. In this case, it's still up to the homeowner to keep the property management company on track and ensure all decisions are in the best interests of the investment strategy.The cost of a property management company can cut into the investor's returns if they wish to take this road. The 1031 Exchange If you choose to invest in real estate over the long term, the IRS offers a 1031 exchange specifically designed for serial real estate investors.A 1031 exchange allows investors to defer capital gains tax and depreciation recapture tax onto a new investment property when they choose to sell. This cannot be achieved with a primary residence: only investment properties can benefit from the 1031 exchange. Start a Business If you have established a side business that generates some extra cash, it may be time to take it to the next level by investing your $50k into making it grow!Investing in your own business is a high-risk and high rewards game - depending on the nature of your business and the market you're working with. When taking this road, investors should thoroughly scrutinize their investment goals and risk tolerance.There is a considerable investment of time, energy and knowledge injected into start-ups before any money gets involved.Investing in your own start-up business can bring you unbelievable financial gains, though realistically, the odds for entry-level companies to achieve a huge financial success are stacked against them. It's only advised to take this "all eggs in one basket" route if you have a high tolerance for risk.To determine whether this is the right path for your investment goals, consider your high and low revenue forecast for the first year, and succeeding years that follow. Understanding your cash flow projections will give you a better idea of whether this venture is likely to generate high or low returns for your investment.Consulting with a financial advisor or planner can provide invaluable guidance for your business. Keep in mind that whether you press on full steam ahead or choose another investment strategy is entirely up to you.If you can solicit additional funding from venture capitalists or angel investors, you'll share some risk exposure, and it may improve your chances of success. The Importance of Diversifying Your Investments Diversification reduces risk by allocating investments to various financial instruments and asset classes. It maximizes returns, and balances the rise and falls of various markets by securing investments in areas that are affected differently by market shifts.We've said this already: investing in a variety of asset classes is advantageous. For example, stocks, bonds, and real estate react differently to adverse events, so a mixture of asset classes will help protect you from market swings. The more uncorrelated your investments are, the better.A diversified portfolio does not guarantee against loss, but it is the most critical component of achieving your long-term financial goals while minimizing risk.There are two kinds of risk an investor will encounter:Systemic and market risk is unavoidable in competitive markets and cannot be reduced by diversification. These risks are driven by political instability, inflation, international exchange rates, and interest rates. Unsystematic risk can be mitigated by strategic diversification. These risk factors may be specific to a company, industry, market, economy, or country and are recognized through business or financial drivers.Diversifying a portfolio can be expensive because not all asset classes cost the same at the point of entry. Managing investments across multiple financial instruments and asset classes can be cumbersome, though returns are generally worthwhile.Diversification ultimately reduces the amount of risk the investor is exposed to and maximizes returns.Financial risk can never be completely removed when you're investing, though it's imperative to protect your interests by diversifying as much as you can. Summary There are so many modern-day options for individuals to invest $50,000. Your ultimate financial goals, the timeline you have to achieve them, your risk tolerance, and the activity level of engagement you're interested in will determine which strategies are the best for you to follow.Diversification is clearly an important factor to battle economic shifts and market fluctuations.Stocks and bonds investments are simple and require little action from the investor, however, they also come with performance limitations.For investors with a high risk tolerance and spare time and energy to pour into an investment project, purchasing a real estate asset as a rental project, or starting your own business can also be a high-risk but potentially rewarding venture.If you're looking to invest $50k in a project that doesn't require any effort beyond the point of entry, offers low risk, high returns, and diversification benefits, passively invest in professional syndication with Holdfolio today.
Real Estate Syndication Tax Benefits

Dec 10, 2021

Real Estate Syndication Tax Benefits

Real estate syndication is a great way to diversify your investments. If you are considering investing in real estate, or already have, then real estate syndication may be something that interests you.It allows investors to pool their money together and share the profits of those deals without having to worry about things like managing tenants and hiring contractors for repairs. The benefits of this type of investment can be substantial and it's definitely worth looking into further if you haven't done so already!Investing in real estate syndication comes with a number of benefits, one of them being lucrative tax benefits. Of course, taxes are about the last thing on an investor's mind before their first syndication investment, however, taxes aren't always seen as a bad thing. Why? That's because tax regulations generally favor real estate investors.Real Estate Syndication Treatment Several tax loopholes and tax benefits come with investing in real estate. Real estate investors can enjoy tax benefits in the form of deductions. These might include:Depreciation Recapture Capital Gains Refinancing Mortgage Interests Deferring income taxesAs a limited partner in a syndication deal, you're a passive investor, earning passive income, who can still share many tax-perks that the exclusive partnership enjoys. The government rewards real estate investors to encourage productivity within the national economy.To the government, people who create businesses, and investors who fund them, including real estate investors, are invaluable to the economy. So, they look for ways to grant tax benefits through tax deductions to encourage them.On top of that, real estate investors get special treatment when paying taxes because of the extra advantage of depreciation. Due to depreciation, the IRS will regard a property that is usually earning money as losing money. So, the investor doesn’t have to pay any taxes on their annual returns.As Tom Wheelwright, author of the book Tax-Free Wealth, puts it, the government isn't in the market of providing housing and commercial space to the public. It, therefore, needs people to supply publicly accessible housing and commercial spaces to manage the nation's housing market. Depreciation One of the most vital wealth-creating pathways in the real estate industry is that depreciation allows you to write off an asset’s worth with time. Here's what depreciation looks like: suppose you purchased a new car, working perfectly at the point of purchase. With time, the tires start wearing down and the engine starts losing its strength. After a while, the car would eventually break down and might be worth no more than its scrap value.That's precisely the basis for depreciation when investing in real estate. The tax office understands that all real estate properties reduce in value, and without continuous maintenance, would lose most of their initial value. So, the IRS allows property owners to write off a home's worth, excluding the land it's built on, over 27.5 years.If the building costs $1.65m, that's $60,000 off each year due to depreciation. That is, if you made $10,000 on the property the first year, in cash flow, you wouldn't pay any taxes on it—depending on your tax situation. The tax office considers that you lost $60,000 that year, but you made $10,000! Moreover, houses bought after September 27, 2017, can enjoy bonus depreciation, further increasing the tax benefits for the first year. Capital Gains When an investor makes a profit from the sale of an investment, the return is what we term capital gains. The US Internal Revenue Service collects taxes from such profits from each investor (of course, other tax situations or exceptions may apply). Typically, such taxes are levied as a one-off investment. That is, one doesn't have to pay them each year.Moreover, an investment could have a short-term gain, or a long-term gain, depending on the lifespan of the buy. Investments that take less than one year, such as a fix-and-flip project, are short-term. Conversely, projects that take longer take the tag of long-term investments. In the United States, the Internal Revenue Service taxes short-term capital gains in the same vein as your earnings from your job.Depending on the taxpayer's taxable income, the IRS levies capital gains tax at 0%, 15%, or 20%. Under the most recent 2018 tax law, here's a breakdown of the different tax brackets:$77,220 and under: 0% capital gains tax $77,221 to 479,000: 15% capital gains tax Above $479,000: 20% capital gains taxSo, here's the good news. Capital gains taxes (even at 20%) are lower taxes on earned income. Long-term investments such as investing in real estate syndications cap out at a maximum of 20% tax rate, which is far better than, say, the rate for tax payers in the 37% marginal tax bracket.Refinancing One of the other ways both new and experienced investors in real estate syndication can enjoy tax benefits is refinancing. With easy-to-access tax reliefs, the idea of refinancing has proven itself to be a great way to buy different real estate assets, inclusive of syndications. An investor can borrow against appreciation and increase asset equity with a refinance without having to pay taxes.Here's how it works. If, for instance, someone purchased an apartment building property for five hundred thousand dollars. The investor renovated the property and consequently yielded higher rents as the market improved. This property now has an additional five hundred thousand dollars in appreciation and is worth a million dollars.The investor could now execute a cash-out refinance and take out $500,000 towards purchasing another building. Based on the IRS rules, this process is entirely tax-free. The same scenario works with any investment in real estate syndications.Value-add syndicators could optimize a property's worth over about two years after renovating the property to command higher rents. They could readily walk into the bank to refinance the property and withdraw equity. Any investor could utilize cash-out refinancing to keep increasing their passive income sources without paying more in tax. Mortgage Interest Deduction The mortgage interest tax deduction lets investors deduct money paid in mortgage interest during the tax year from their taxable income. Here's a summary of what it's like. Homeowners who bought their primary residence or second home after Dec. 15, 2017, qualify for a deduction for the first $750,000 of mortgage debt, according to the Tax Cuts and Jobs Act.One beneficial aspect of mortgage interest deductions is that they apply to your marginal income, and consequently, your most effective marginal tax rate. Whether you have a mortgage high enough to enjoy maximum mortgage tax deduction or not entirely, you can save some money on your taxes.However, a mortgage tax deduction isn't beneficial for persons or entities in the 12% federal tax bracket and below. Such investors would need a huge mortgage to receive any interest deduction. That's because the standard deduction is $12,000 for singles and $24,000 for married couples.Note though, that homeowners aren't the only ones who can enjoy the benefit of deducting mortgage interest paid on their primary residence. Similarly, real estate syndication investors can deduct the interest on a mortgage loan.As with depreciation deduction, this is an excellent option for lucrative tax benefits available for investors in real estate syndications who are not investing over the long term. In the earlier years of a mortgage loan, most of the repayment goes into the interest.The main benefit of obtaining the mortgage interest tax deduction is that it offers you a tax break. If real estate syndication investors would do their due diligence, understanding it can help reduce their taxable income and potentially even change their tax rate.The bottom line is saving yourself hundreds or (possibly) thousands of dollars over the span of your mortgage. Nevertheless, don't hesitate to refer to your tax professional for personalized counsel on making your tax decisions. FAQs on Real Estate Syndication Tax BenefitsYou can earn significant passive income through investing in real estate syndication without ever worrying about your tax bill. Here, we address the most common questions from aspiring investors looking at real estate syndication. How Are Real Estate Syndicates Taxed? General partners and limited partners in real estate syndications pay taxes differently. This is because general partners get extra fees which are taxed differently to the regular cash flow and sales proceeds. You want to discuss with your tax professional to ensure you're using the appropriate tax strategies to minimize your tax as much as possible.Typically, general partners get an acquisition fee, ranging from one to three percent of the property's purchase price for their roles in the syndication. This acquisition is regarded as ordinary income and bears self-employment tax.Additionally, general partners get an asset management fee, ranging from one to three percent of the collected gross rent, which comes under self-employment tax. Sometimes, a real estate syndication charges other fees like construction fees, refinancing fees, or disposition charges. All these fees are subject to self-employment taxation like the asset management and acquisition fees.On the other side of the coin, the general partner's income is part of the cash flow from the interest on the investment. Depending on the holding period, the proceeds of the sale are taxed as either a short-term capital gain or long-term capital gain. The IRS levies a passive rental income or loss—as applicable—on this income. Lastly, general partners have to pay appreciation recapture tax on depreciation on their investment interest.Limited partners get different fees from general partners since they're not actively participating in the routine management investment. Their aim of investing is to earn a return on their investment from the cash flow on the investment. So, like with general partners, this income is taxed as a passive rental income or passive income loss.Also, the IRS will tax short-term or long-term capital gains, depending on the holding period of the sales proceeds. Other taxes applicable to limited partners are depreciation recapture (as appropriate) and a share of the income or loss on Form K-1 when filing in the partnership tax return. Can You 1031 Out of a Syndication? Yes, you can carry a 1031 Exchange out of a real estate syndication into other investments. Here are the requirements for doing a 1031 exchange according to the US Internal Revenue Code:The property you're selling must be an investment property The investment you're buying must be of "like-kind" The purchased property must be at least the same value as the relinquished property or more Both the person or entity that submitted property and the person buying the new property must be the same Sales proceeds must be held in an escrow account The purchased property must be identified within 45 days after closing on the relinquished property. The purchase must be completed within 180 days of closing on the sold property.Typically, a 1031 Exchange offers two significant benefits: a preferred return based on a higher investment amount and deferred taxes. Once you're ready to do a 1031 exchange, you need to consult a 1031 exchange consultant. These consultants are intermediaries who specialize in 1031 exchanges.It can be difficult to find 1031 exchange consultants. The best way is by receiving a recommendation from someone you trust who has used their service before. A friend, family member, or business associate with whom they've had positive experiences working together, for example. If that doesn't work, try third party websites like Yelp where reviews can help to inform your decision.The company you eventually choose will send you an outline of their 1031 Exchange process and ask you to fill a Form W-9.Alongside filling the Form W-9, the company will require that you provide them with some details such as the following:Name and contact information of the person(s) or entity (or who will sign on behalf of) in the title, and the type of entity (whether single-member LLC, partnership, large firm, etc.?) Copy of the purchase and sale agreement Address of the property under consideration Name of the buyer Tentative closing date Name and contact information of title company or closing attorney handling the sale.Your 1031 consultant will roll out your sale proceeds into a new deal and keep you informed on the subsequent obligations and rewards involved. How Can I Lower My Taxable Income in Real Estate? Depreciation is the most straightforward way for passive investors to reduce taxable income in the real estate industry. Typically, depreciation is a term that expresses the reduction in the value of a tangible asset such as equipment or a building. As you may already know, wear and tear, age, and usage are the most significant causes of the decrease in any property's value.There are different ways you could calculate the value of depreciation on your real estate syndication investment. Some calculators are based on the straight-line depreciation method, whereby users will input the number of years or months to depreciate the property.Then there are reducing balance method calculators, a strategic tax planning tool, that's based on the annual depreciation rate and the initial worth of the asset.Other tools are the annuity, the composite method, and the sum of years' digits. For instance, the composite method considers factors like the depreciable and historical cost, the useful life of an asset, and the salvage value.The tax office calculates the depreciation expense as accumulated depreciation and deducts it from the gross amount reported on the asset. That's not all. The amount of accumulated depreciation also increases annually in your tax bill. That means you can enjoy more deductions from your investment gains with time over accumulated depreciation.If you still have more questions on real estate investing or how to offset passive gains, the real estate experts at Holdfolio investments can help you. You can also contact your tax professional for more personalized information on all the tax benefits, depreciation deductions, tax-deferred benefits, and accelerating depreciation deductions, which may apply to your situation. Otherwise, contact an experienced real estate professional at Holdfolio.
Real Estate Marketing

Nov 22, 2021

How To Syndicate Real Estate: A Simple and Complete Guide

Real estate syndication is no longer the elusive and lucrative private collaboration between the ultra-rich that it once was. It has now become an attainable collaboration between regular people who want to become ultra-rich.But don't be fooled into thinking you've stumbled upon an easy process. With high stakes at play, the game demands palpable responsibility. This guide will show you how to syndicate real estate deals and tap into higher earning potential the smart way.Before we begin, let me tell you the easy way to start investing.By the end of this article you will have a good understanding of the scope of work involved in syndicating a real estate deal.For those who possess the competency and experience to manage a high-end deal, but not the funds, forming a syndication and partnering with investors can be the Ace of Spades to achieving financial freedom.But that doesn’t mean it’s an easy job.Forming syndications can be riddled with potential issues to work through in every step of the process.If your investor team is not a carefully hand-selected group of trustworthy individuals, the entire syndicate may be compromised down the line. It’s not hard to find honest partners, but you need to be aware of who is out there.If you have any doubts about your competencies, or you’re not committed to following through with the project in the face of a few rough challenges, our advice is to search for an alternative way to get involved with syndication.Syndicating with Holdfolio’s crowdfunding platform gives you the same high-returns with none of the responsibility that comes from running your own ventureFrom finding exclusive investment properties, to vetting all potential investors in the syndicate, and taking care of the day-to-day management of the property - Holdfolio takes care of everything so that you don’t have to.Simply choose your investment, deposit your stake, and then sit back and enjoy your newest revenue stream.Investing with Holdfolio is a safe and smart choice thanks to their ‘winning together’ policy.Holdfolio is so confident their crowdfunding listings will be a financial success, they purchase a stake in every property. Meaning that your interests are aligned and you can trust Holdfolio to make the right choices to improve your ROI throughout the partnership.Not only do you get healthy returns on your passive investment - currently around 19% - you gain a more in-depth understanding of syndication from the front line.Many of Holdfolio’s investors hold accredited status, but the portal is also open to non-accredited people who can join up with as little as $20k.To grow your wealth with decreased risk and increased returns, partner with Holdfolio today. Investing Made Accessible Syndication through crowdfunding brings deals that would be otherwise unattainable to individual investors within the syndicate's financial horizons, through the power of collective resources.Let's compare an individual's project scope during an investment’s lifespan, versus the work involved in collaboration.Independent investors must first conduct research to locate a slice of real estate within their financial means. They produce all the funds upfront, renovate and maintain the property themselves (or at least foot the bill for it), and exert time and energy on the day-to-day operational tasks.When it comes time to exit, the individual sells the property for profit, based on appreciation minus operative costs.When growing an investment as a team, the compounding financial and intellectual benefits are greater than the sum of their individual parts.The sponsor delivering the project and each investing partner can take advantage of scalable, more profitable assets which bring two immediate financial benefits:greater monthly cash flow dividends a higher resale profit marginHow about the advantages of shared intellectual resources?When parties bring an array of knowledge, skills, networks, and experience to a joint venture, they each input their best offerings to ensure the project is as effective, streamlined, and profitable as possible.The pooled intellectual resources of a syndicate guides the investment strategy, and can significantly affect the outcome for all partners at the end of the investment term.Any investor will confirm that experiential wisdom is as much an asset to your business as the asset itself. Let’s Syndicate Real Estate Deals It's clear to see why people get involved with syndication. The road to achieving success is a steep learning curve even for those who have done it before, and the benefits are worth it if you can pull it off.Let's take a look at what it takes to be a real estate syndicator, and learn how to approach the path in bite-sized steps. Use this guide as an opportunity to explore whether you have the competency and expertise to handle the job of a real estate syndicator - if you do, it could be a big win for you. 1. Research and More Research Syndicators need to constantly and effectively learn and adapt their game to provide the best outcomes for the syndicate. We can't stress this enough: as you learn how to syndicate a real estate deal, keep upskilling.A passive investor has one role: providing cash upfront for a solicited deal in syndication.Sponsors, on the other hand, shoulder the burden of hunting for the right deal, relying on their network, inbound and outbound lead generation, as well as experience in due diligence. Then when the right deal comes up, sponsors crowdfund with limited partners to provide the required capital for the purchase.Here are a few points about the research phase:The Securities and Exchange Commission (SEC) will mandate you form a syndicate when piecing together a deal with passive investors. This is because investors trust you to manage the fund in the same way as they would trust a fund manager when investing in a publicly-traded stock.Under certain conditions, 'Regulation D' provides exemptions from the costly and timely process of filing a 'Registration statement,' allowing issuers to raise money from accredited investors, and in rare cases, non-accredited investors.To provide partners with reassurance, syndications require a government-regulated Private Placement Memorandum. This is how the agreement is set up, as well as the returns and risks involved.It’s best to hire a syndication attorney to protect assets and limited partners from litigious sharks, and to establish the agreement within a legal framework.Syndication lawyers can cost between $450-$1000 per hour, so buckle up and tap your network.Always seek advice from a professional when investing money and taking part in a syndicate. A good place to start is with Holdfolio. They offer investors and newbie sponsors invaluable guidance throughout the journey.Now you've polished up your knowledge of syndication, how do you know who makes a worthy and legitimate partner?Sponsors need to become effective at building a network of pure, passive accredited investors, and learn to get around other people. It's time to start building your investor team. 2. Create your Investor Team  Sponsors use mature and well-developed networking skills to their advantage when forming syndicates.Mutually trusting and beneficial connections built throughout a career, or through various life paths can yield great limited partners, lawyers, accountants, property management, and friends to pool together to ensure the venture's success.Ideally, relationships that foster trust between individuals would be at the forefront of joint proposals like real estate syndication, mainly because of the liability a sponsor holds towards their passive investors.Look out for truthfulness, good business sense, and proficiency in potential partners.Find people you can meet with at least quarterly for updates. With a rise in virtual meeting channels available, it shouldn't be considered a roadblock if partners are not in close physical proximity.To build a network of like-minded and experienced investors, professional networking sites such as LinkedIn are great resources to source skills, networks, and the capital you seek.Another practical option is a website called Meetup, designed to organize local gatherings fx interested in undertaking similar projects. By embracing these tools, sponsors can also watch out for meetings in their area that add value to their business dealings.Bark is a great website to link professionals with people who require their services. This can stimulate your inbound and outbound network to connect you with the right people.The most powerful platforms yet are undoubtedly online crowdfunding communities like Holdfolio. They are uniquely created for passive investors and sponsors alike who show an active interest in pursuing real estate syndications.Through professional syndicators like Holdfolio, you have a far greater chance of securing accredited investors - those who are serious and are backed by the capital to make the project a success.For first-time sponsors, it's advised to partner with experienced investors who can provide mentorship and offer their expertise as you make your own way as a syndicator.When assembling a team, consider which skill sets, proficiencies, and networks are going to complement those that you offer. Use these to align interests toward the syndication deal and shape a tight strategy outline. 3. Locate and Analyze Properties Once a healthy team with synergetic qualities has been assembled, and a preferred investment strategy has been identified for consideration, the sponsor will scour deals until they have found "the one."The nucleus of this stage is property location and analysis. Location Depending on state laws, accessibility requirements (most likely gauged by whether the sponsor will undertake operational responsibilities, or whether the syndicate has voted to outsource), you may search for in-state or out-of-state opportunities.The important components of location searches include the following:local employment rates population growth location desirability (proximity to education faculties, public transport, a central business district or noisy roads, as well as neighborhood crime rate, can all affect property appeal)These factors impact occupancy during the investment term, and will often affect the resale value of an asset.For example, in regions that encounter mass exodus, sprawled populations in the outskirts of the central business district are the first to leave. This lowers the demand and therefore the resale value of commercial real estate assets.Similarly, because land is a finite commodity larger lots appreciate more steadily than comparable assets on a smaller plot of land.Development plans in any given place can influence future location desirability and can be used to forecast resale projections at the end of the investment term. This should be thoroughly weighted within your strategy.Analysis Match the deal with the syndicate's goals and chosen investment strategy.The flexibility available when you syndicate real estate deals means you can select a unique approach aligned with the group’s interests.Multifamily properties are optimal for beginning commercial real estate syndications because they are less complex operations than retail or office space.Moreover, they vary so greatly in size and scope. From the smallest duplex condominiums to multiple hundreds of units under the same roof, multifamily offers the freedom to choose what works best for the syndicate.If the goal is to maximize return on investment (ROI) in minimal time through forced appreciation, select a deal suitable for property flipping.Alternatively, if the goal is to hold the property long-term and enjoy passive cash flow generated, go for a primed asset so you can easily outsource the operative work to a third party. 4. Time to Manage Sponsors have a fiduciary responsibility towards passive investors to manage the legal framework, accounting, strategy implementation, and daily duties of the project.Large-scale property management can be a full-time job and in some cases even a career in itself!In this role, you have the responsibility of overseeing occupancy, collecting rents, arranging maintenance and repairs, property development, handling complaints, and legal regulations and safety compliance, to name just a few.Sponsors actively undertaking property management roles can attract a larger portion of the investment shares to compensate for the time and energy they dedicate to ensuring the syndicate’s success.Hiring property management is more affordable with multifamily and single-family investments because the revenue yield is greater. That said, the onus of overseeing operations still lies in the hands of the sponsor, so make sure your resources and expertise are secure enough to handle the job. Hands-Off Mode All things considered, real estate syndication can offer sponsors the opportunity to enter the deal with a hands-off approach and get almost as much freedom as passive investors during the investment term.Everything gets easier once you have a trusted and reliable property management team to handle the daily operations for you. This team could come from your network or someone in your syndicate's network.Holdfolio is a great example of how easy syndication can be. They have a vertically integrated property management team to remove the hassle of daily burdens from the hands of their investors.If the responsibility of dealing with management sounds too high-energy for you, consider a syndicate with Holdfolio. It's a great way to learn the ropes without the risk, and experience how effective syndication works. 5. Cash Distribution Recurring cash flow is an appealing advantage of real estate syndicate investing.Cash flow is determined by the net operating income of the asset. This number is calculated by adding the monthly gross rental yield of the property and subtracting monthly expenses, including property management, renovations and repairs, insurance, and other levies.The remaining value shows the revenue distributions for investors.A passive investor will enjoy healthy cash dividends throughout the life of the project. Cash flow is derived from the investor's preferred return in the investment, generally streaming from rental income.Sponsors profit from the acquisition fee - around 1% of the purchase price of the asset - and can charge a property management fee if they choose to take on this responsibility rather than outsourcing.All shareholders distribute monthly profit shares after investors have received their preferred return. The numbers are up to each syndication to agree on.Let's look at an example of how this may work:Four investors contribute $250k towards an asset valued at $1 million, with a 5% preferred return. The sponsor charges a 1% acquisition fee of $10k. Each of the five people owns 20% of the syndicate.Assuming the building's NOI is $80k, each investor will get a $12,500 preferred return, or $50k total.The remaining $30k is divided five ways, so each individual receives an additional $6k.Passive investors make $18,500 annually, and the sponsor makes $16k.Profit from the property's resale value also splits five ways, so if the property appreciated 30% and sold after five years at $1.3 million, each party would gain an additional $60k.At the end of the investment lifetime, each of the passive investors walks away with $402,500.Let's now take a look at how this may work with Holdfolio's Return on Investment Calculator.If an investor was to contribute $250k through Holdfolio's crowdfunding syndication platform, after five years their estimated investment value would be at $410k, with an annual cash flow of $32,800.Under these circumstances, investors also enjoy entirely passive income because they don't have to engage with any day-to-day hassles: Holdfolio takes care of the hard work.Compare this with $250,000 invested in stocks. Even with the same appreciation rate of 30%, investors would only walk away with $325k.It's clear that syndicating real estate works harder on the dollar for any partner. Summary Learning how to syndicate a real estate deal is not a game for the fainthearted. For sponsors with the expertise, competency, and confidence to sink their teeth in, collaboration can lead to unbelievable gains and success.For those who don't have the skills and confidence to make it work, syndication comes with risks that should be addressed before embarking on such a pursuit.If you're still unsure whether you've got what it takes to syndicate a real estate deal, the best way to learn is to take part in a low-risk option and learn from the experts.By becoming involved as an investor, tomorrow's sponsors gain invaluable first-hand experience in a syndicated deal, increasing their chances of successfully pulling off these types of deals in the future. Holdfolio has successfully delivered syndication deals for more than twenty years with a great track record, and the refined process removes the hassle and risk associated with forming syndicates.It's easier with Holdfolio. Simply sign into the online portal, select youvr investment asset, then choose the amount you wish to invest.To learn more about effective syndication, partner with Holdfolio today.
out of state investing

Nov 4, 2021

Out Of State Real Estate Investing: How to build a system for buying properties remotely

If you live in a region where real estate is costly, investing in out-of-state property may sound attractive. If you currently own a house but want to diversify your assets, it may be appealing. It's possible that all you want is to purchase a vacation house. Alternatively, your motivation might be a combination of all of these factors or something else entirely.Regardless of your motivation, out-of-state real estate investments are great for passive income. But how do you get started in a state that you don't know?Here's Holdfolio's guide to out-of-state real estate investing.  What is Out-of-State Real Estate Investing? First, let's talk about what exactly out-of-state real estate investing is. It literally means investing in a real estate property that is not in the state that you live in.There are four primary reasons why investors buy rental property outside of their home state:Investing in locations where population and employment rates are both significant. Diversifying a rental real estate portfolio by investing in locations that fit your investment plan. Concentrating on the kind of returns you want, such as maximum cash flow, high appreciation, or total yield throughout the holding term you've set. In areas with fewer restrictions, cheaper real estate taxes, and landlord-friendly legislation, maintenance costs are cheaper.How To Start Investing Remotely The Easy Way Investing in out-of-state rental properties starts with doing your homework. Making informed judgments can help you make great selections. First and foremost, you should be pre-approved for financing so that you can make an offer promptly when you locate the right bargain.Locate the markets where you're most likely to meet your financial objectives, then do comprehensive research on the area, the property itself, and the seller. Because you won't be able to meet the seller in person or even view the property, you'll have to compensate by doing as much research as possible.Now let's get real.In order to be able to make the best decision about your investment, the local market, type of property, laws, and regulations, financing, and more it will require enormous amounts of time and effort. As a busy investor already you would not want to travel to different states or spend days, if not weeks, online researching.But there's an easy way to do all of this. You can just sign up for Holdfolio's online real estate investing platform and let us handle all this work.When you sign up for Holdfolio's online platform, you can handpick the properties you want to invest in from the listings provided and updated by Holdfolio's team of realtors. You can invest as little as $20k and start enjoying your passive income because when you invest with Holdfolio, you won't have to find a property manager or physically visit the property. Holdfolio has it all for you.There's a team of professionals to help and guide you through every step of the way such as preparing to buy a property, finding information about the local real estate market, finding tenants, managing the property, the day-to-day liabilities of the landlord, and more.Contact us and let our team of professional realtors help you find your next passive income resource! Before Starting Your Investment Journey... Before putting your money in an out-of-state real estate investing make sure to think through your goals and your finances. You can draft a business strategy and take notes of how much you want to invest and how much you want to have in return in a year or so by using the Return on Investment Calculator by Holdfolio (Scroll to the bottom of our online real estate investing page to find it).Make sure to have a strategy in mind because that will make it easier for you to reach your goals. If you are not sure about how to advance with your investment, Holdfolio is ready to help you. As mentioned earlier when you invest with Holdfolio, you will be provided with a property manager and you will have constant assistance from our team of professional realtors who can help you build a solid strategy.Make sure to utilize the available online tools to save time and money, like Holdfolio's app.  How And Why Out-of-State Investing Works There are various benefits to out-of-state real estate investing:  Higher Returns on Investment There are two significant financial advantages of investing in a property out of state:When you can afford a larger down payment, your cash flow improves. For example, if you have a $25,000 budget to work with. When you buy in a market where property values are $100,000 vs $200,000 or more in a high-cost location, your LTV will be more reasonable and your revenue stream will be higher with a reduced loan payment. When you invest in out-of-state markets that make sense, your return on investment is higher. Purchasing rental property in an undervalued market with a big population and job growth potential might result in considerable market value appreciation over time. With greater equity from appreciation, your return on investment is maximized.Finding Real Estate Market DiversityThe location of your rental property has a significant influence on your investment plan.Single-family homes are ideal in family-friendly suburban submarkets and some urban districts. Millennials and singles are prepared to pay a higher rent for a smaller space, on the other hand, like highly populated mixed-use areas where people live, work, and play.To comprehend what you're looking for before exploring out-of-state areas to buy a rental property in, you need to know what your preferred investing plan is.  Diversifying Your Portfolio Diversification is the fundamental guideline of risk management in investing. And, if you're seeking to flip houses for a livelihood, buying a house out of state is one method to diversify your real estate portfolio and keep your business afloat.Instead of focusing on finding the greatest rental property in a single market, smart investors focus on owning one or two properties in the correct out-of-state real estate markets to reduce risk and increase profit.If you invest only in one market, you might end up losing all of it if the market crashes.  Potential Appreciation There is limited opportunity for property prices to rise without considerable income growth when the ratio between local incomes and home prices becomes too high.In a healthy real estate market, the ratio of house prices to household income has historically ranged from 2.5 to 4. However, according to the Brookings Institute, average property prices in certain places are more than ten times greater than average wages. Without higher wages, it's just not feasible or sustainable for these places to experience much more appreciation.Challenges That You Must Consider When Choosing Far Away Properties Investing the time and energy to study the market is one of the most difficult aspects of buying rental property out of state. While the potential returns are higher, investing outside of your local market comes with a steeper learning curve.Here are a few potential downsides of renting a property out of state, as well as ways to prevent making a costly mistake:  Skipping Research Not doing the research before investing in an out-of-state property is one of the biggest mistakes an investor can make. Make sure to complete in-depth research and connect with local investors and investment companies.Hiring a knowledgeable and experienced property maintenance company that can support your due diligence and property assessment can help you eliminate the most common mistakes that investors make. Finding Tenants Long-distance real estate investors are attracted to rental properties because of the revenue they provide. As a result, they concentrate on full rental properties and modest multi-family ventures. Cash flow from a turnkey rental property begins the day escrow closes if the property is already occupied. Unfamiliar Local Real Estate Markets When you're investing in real estate in another state, you will need to study the local market. Unfamiliar local real estate markets can be challenging to understand.For example, in some areas, the laws are substantially stacked in favor of the tenant.While there may be a high demand for rental properties in certain areas, regulations and policies that favor tenants may limit ROI and cash flow. Investigate local regulations and market norms by speaking with property managers and joining local investment organizations to have a better understanding of the real estate market.  Unfamiliar Real Estate Laws Another problem is deciphering the rules and regulations governing property ownership and property taxes in your desired location. Even if you study every line of the municipal laws and regulations, what is written on paper does not necessarily correspond to what occurs in the actual world. Talk to local property owners to obtain a better grasp of the issues.  Misleading Expenses Similarly, it's difficult to correctly estimate remodeling expenses and, therefore, how much it would cost to flip a home without seeing it firsthand.Of course, photos are helpful, and you may acquire many prices by consulting a local Realtor. However, it's difficult to be certain about the repair bills and financing of a house fix and flip if you haven't visited the property in person. It's a danger that's amplified when you choose contractors you've never worked with before, and it might jeopardize your house-flipping business strategy. Tips For Finding A Great Property Manager When buying an investment property in another state, the principles of how to pick the appropriate Realtor remain the same.Their expertise working with investors is one area where you should pay special attention. When they stroll through potential houses, you'll be relying on their knowledge and vision. Realtors who have worked with investors and investment homes before will know what to look for—and what to look out for.You should look for property managers who are experienced and well-trained in the type of property you want to invest in. Your property manager should be an expert who is able to forecast an approximate return on your investment. Your property manager should be able to provide you with pre-inspected properties. Your property manager also should be able to tell the indicators of economic growth in the region you are interested in.Finding a property manager can be a time-consuming task as you cannot just trust anyone you see online. It'll take lots of research, asking for referrals, related documents and certification, and more.But as we said before, when you invest with Holdfolio, you don't need to worry about finding a property manager. Holdfolio has property managers who are experts in their areas and can help you with everything you need.  Letting Someone Else Operate Your Investment Property Consider turnkey homes if you want to invest in out-of-state rental properties that require less maintenance before being rented. A turnkey property is a fully refurbished home or apartment that is ready to rent. In certain situations, the property is already leased and has a renter, so you'll have a tenant and cash flow right away.Hundreds of firms around the United States, such as Holdfolio specialize in finding, maintaining, and selling rental properties.Working with Holdfolio has various benefits for out-of-state real estate investors such as:Accessible investment with low minimum investment, you can become a partner with an investment of as little as $20,000! Easy and transparent--you can calculate your potential returns on your investment by using the Return on Investment Calculator on Holdfolio's online platform. Small diversification, you can decrease your risk and increase your returns with multifamily investing. Vertical integration includes a construction company, a property management company, and a real estate firm, all under the same name: Holdfolio.You can learn more about out-of-state real estate investing online with Holdfolio here.  More Reasons To Become An Investor In Different States There are various reasons why investors choose to invest in out-of-state real estate. We've listed some of them before in this article but let's dig deeper.  Grow Your Portfolio While Diversifying It Other investment options may be discovered through out-of-town rental homes. For example, you may start investing in rental homes in another state and your real estate professional may also be able to assist you to find attractive commercial property deals. You could find yourself diversifying your real estate portfolio to include commercial properties or fix-and-flip chances.Buying a commercial property will broaden and diversify your real estate portfolio and experience. You may also be able to acquire additional real estate assets because you are in a more inexpensive market.  Having a Vacation Home If you've been to the area more than a few times, you could always buy a vacation house there. You can utilize it for a few weeks or months each year with your family.When the house is empty, you may rent it out to guests on short-term leases or through services like Homeaway or Airbnb. Guests leasing out your holiday home for their holidays might help keep your vacation home's expenditures down and ensure that it is used all year. In addition, the revenues from your holiday property provide a second source of passive income.  Conclusion Investing in out-of-state real estate can be a great source of passive income when you do it well. But doing all of that homework and research can be difficult.Having a real estate investment company like Holdfolio by your side to assist you whenever you need will ensure that your investments won't fail and you can just sit back and enjoy your passive income!Investing with Holdfolio is so easy! All you need to do is sign up to our online platform, choose the property from regularly updated listings and invest the amount of your choosing!Holdfolio helps real estate investors, both accredited and non-accredited, to find more secure investments with their years of experience and hard work.Sign up today and start growing your wealth through passive real estate investments!
spilled change on the table

Nov 4, 2021

How To Invest In Real Estate With Little Money: 5 Proven Tactics

Success is not being born with money and opportunity, rather it comes from what you do with them. Not everybody embarking on a real estate investment journey begins the race with a lot of capital, but we all have common opportunities.There are many creative ways to start investing in real estate, and we're going to teach you how to begin today by recognizing and leveraging the options available to you.  Real Estate Crowdfunding Real estate crowdfunding is a way of raising funds for real estate investments by becoming a part of a group of investors who each contribute a set amount to the acquisition. Simply put, it is a technique of collecting finance that allows small-scale real estate investors to participate in large-scale projects.Due to its high returns and low risk, real estate crowdfunding is one of the best passive revenue sources for investors. Holdofolio has put together a simple, efficient approach for customers to obtain access to lucrative real estate offers. Interested investors can browse active investments and handpick the property they want to invest in after signing up for access to Holdfolio's web portal.Learn more about non-accredited investor crowdfunding with Holdfolio.How Does My Financial Situation Affect My Crowdfunding Opportunities? Usually, real estate syndicators accrue investors by gauging an individual’s economic status to determine their eligibility for investment. Accredited investors are those who can meet predetermined financial requirements. With a sufficiently high income or net worth, accredited investors have a golden pass into real estate investment opportunities. Most real estate investment companies preclude non-accredited investors from partnering with them.Holdfolio's crowdfunding system is designed for non-accredited investors. Low capital applicants can now profit by passively investing in multifamily properties.Typically, investors are required to deliver a $50k minimum holding upfront. With Holdfolio you can enter the game with as low as a modest $20k in the bank. What’s unique about Holdfolio’s approach is that by slashing the barriers to entry into a multifamily investment, regular people gain access to the same rewarding deals as pro investors.Crowdfunding is the only passive investment option where you can sign up today and grow your capital with our average 18.87% investor return with no stress. You don’t have to be an experienced investor, because Holdfolio handles the hard work for you.Most real estate investments demand site inspections, negotiations, a stack of paperwork, as well as spare time and money for property management allocations. Holdfolio’s investor portal is offered exclusively online, so it’s simple and easy to fast-track a strong portfolio.The three steps to becoming an investor - create an online account, select an investment, and deposit money - are all it takes to produce compounding positive outcomes for your finances. Manage your portfolio online from the comfort of your home, and we'll manage the properties so you have more time for the things you enjoy.For those with plenty of time available, perhaps you'll prefer a more active approach.  House Hacking House hacking is the term used for individuals that sublet a spare room in their home and make money off the rental income. Whether you already own a property or live in a house with an extra guest room, this method will demonstrate how to get into real estate with almost no money.Begin by researching your lease agreement and local laws to ensure you're legally equipped to rent a room to a third party. District housing authorities or local government websites provide this information. Check housing codes to ensure the room is safety compliant. For example, some housing codes require large windows in liveable rooms for emergency escape purposes.Consider whether you want to rent the room furnished. Short-term rental tenants usually expect furnishings, and in many cases, people pay more for large furnished rooms. You can charge more for an independent living space, with private access, kitchenette, and bathroom. Get Creative A Long-term lease provides a more steady and stable income stream, but it's not your only option. If you're located in a metropolitan area or tourist hotspot, take advantage of short-term visitors by renting your spare room through accommodation providers like Air B'n'B. Buying a house with extra rooms to rent out is another way to consider this approach.If you feel hesitant about sharing a living space with a tenant, rent the room for storage. Be sure to do your due diligence by ensuring your renters are trustworthy, and clarifying access expectations.House Hacking requires energy and time to organize and manage, but the rental yield will be worth it.  A Sandwich Lease Option Many people wonder how you can invest in real estate with very little money in the bank. Those people haven't heard of the sandwich lease option. This approach is advantageous for those who want a foothold in the real estate market without going through financial institutions and without hefty down payments.A sandwich lease is a subletting strategy that facilitates entry-level investors with limited capital and experience. Similar to renting rooms, this option positions a real estate investor between the property owner and the tenant-buyer.Here's how it works:First, conduct an online search to find a rent-to-own home. When you discover your desired property, you enter a contract with the property owner. In this example, they are the lessor and you are the lessee.Next, find somebody prepared to enter a parallel agreement with you to move into the home. The catch is that your asking price is greater than what you've agreed to pay in your lease with the property owner.In layman's terms, you agree to lease a property from the owner, but instead of living in it, you find someone else to move into the property who is prepared to pay you more.The dividends you earn from rental income are determined by calculating the difference between what you have agreed to pay the property owner, and what your tenant has agreed to pay you. You can also capitalize on the sale of the property itself.It's worth disclosing your intentions to the homeowner. Some rent-to-own contracts prohibit sublease agreements, so be upfront and make sure the homeowner is on board. Use your savvy communication and negotiation skills to take advantage of this technique.Similar to renting a room, sandwich lease ventures call for time to manage. They can be risky and labor-intensive because they involve business with two parties rather than one. However, as a low-capital investor, this is one of the most efficient ways to leverage your money.  Property Flipping 'Perhaps you already know how to invest in real estate with little money and have achieved a basic level of financial leverage or lender support. House flipping could be a well-calculated move. This strategy is more contingent than the alternatives and consumes a significant amount of time and effort. But you stand to gain a desirable return on investment if you play your cards right.Property flips involve buying for renovation, then re-entering the market to sell for profit. An investment property sold for rehab is usually below market value because it requires a laborious undertaking before it is inhabitable.Not only does the buyer fund the purchase of the property, but also the repairs. These can be achieved more cost-effectively if you have the time and skills to commit to the work, though contractors are available for flexible budgets.Before buying, scan the paperwork regarding the construction and condition of the property with a fine-tooth comb and crunch the numbers thoroughly. Hire a professional inspector and ensure you account for these expenses in your breakdown. Certain urban areas have local tax and legal obligations that may affect house flipping projects.Related expenses include:purchase costs holding costs renovation costs selling costsGet quotes so that you can set realistic expectations about the scope and financial commitments of the work. Researching this stage will be time-consuming, but it's a critical step. By being aware of the profit available from house flipping - including the purchase price and expenses - you're better equipped to land a smart deal. How Does This Gain Capital? The money-making potential of house flipping is driven by how much you pay for the property. Strong negotiation skills will be necessary to get a good deal.The second way this makes you money depends on how cost-effective renovations and repairs are. For example, by investing your own time and skills to rehab the interior and landscape you can save the cost of hiring contractors.You may need to hire professionals for tasks like plumbing and electrical, roof repairs, and structural or health and safety compliance issues. For tight budgets, reach out to your network and hustle.Aim to make the process as quick as you realistically can, so you sell in the same market that you bought the property.  Seller FinancingNot every investor can meet the strict lending requirements of mortgages at the beginning of their real estate journey. Seller financing is a practice where property owners also serve as the mortgage lender, eliminating the need for banks, credit unions, or other financing institutions to finance the sale. Instead, the homeowner owns and handles the debt themselves.This generally happens under one of the following two conditions:There is no mortgage on the property The seller's financing institution has agreed to extend the mortgageThe seller extends credit to the buyer to finance the property purchase, minus any down payment. Both parties sign a promissory note where the buyer agrees to pay in installments over a set period.With seller financing, you can land great flexibility in agreement terms, financing options, and interest rates, which is ideal for low-income, or first-time buyers. Additionally, this strategy reduces closing costs which can offset standard credit checks and legal expenses.Some risks include fewer regulations to protect home buyers, and the possibility of early foreclosure because the seller has defaulted on their payments to senior financiers. Sellers can use this arrangement as an opportunity to sell a home "as is," which could lead to unexpected maintenance expenses later on. Both buyers and sellers are advised to do due diligence by conducting thorough research. Consider employing an experienced real estate lawyer to draw up the contract so that the agreement is watertight.  Summary You don't need a lot of capital or industry experience to get involved in real estate investment.With a little savvy, these opportunities will help get a foothold in active investment to begin your real estate journey. House hacking and sandwich leases are an easy way to start with minimal capital and require an ongoing property management commitment. Through preparation and smark risk management decision-making, house flipping and seller financing can improve your finances significantly. The drawback of these strategies is that they consume greater amounts of time and stamina than crowdfunding, and at least a baseline of financial leverage.Holdfolio crowdfunding is the only approach that saves you hassle while you receive a passive income, and watch your investment grow. Register with Holdfolio crowdfunding to start your investment journey (with or without little money) today.