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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 Estate When 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 2021 New 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. 
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Mar 30, 2021

5 Reasons a Property Management Company is Key to Your Rental’s Success

The Benefits of a Property Management Company A property management company could be a beneficial component to your rental's success. A property management company, otherwise known as a PMC, deals directly with prospects and tenants, saving you time and worry over marketing your rentals, collecting rent, handling maintenance and repair issues, responding to tenant complaints, and even pursuing evictions.  This allows you to outsource some of the tasks you don't want to deal with for a small fee. Below are five reasons that will encourage you to look into hiring a property management company for your rentals.  1. Property management companies are full of industry experience.  Hiring a property management company provides many benefits to both new real estate and veteran investors. PMCs give you a support team full of individuals who have many years of experience in the industry and can assist you in making the best decisions for your rental.  A majority of property managers are licensed real estate agents, meaning that they have a good understanding of the industry. This allows you to have a group of professionals that know how to price your rentals accordingly. Property managers also have in-depth knowledge of the fair housing laws and local laws that affect both landlords and tenants. These laws are very specific, and without a deep understanding of their complexities, one could easily break them.   2. A PMC is an established point of contact for tenants.  One benefit to having a property management company at hand is the fact that it relieves you of having to constantly keep in contact with your tenants. A PMC can also prevent you from losing money because he or she will work diligently to place new tenants in your property so it doesn't sit idle.  An experienced PMS can make life easier for your tenants with someone available at all times, especially if you happen to be busy or out of town. This is very convenient for addressing problems like noise complaints, parking issues, etc. It also is beneficial when tenants need to make maintenance requests for things such as replacing fire alarms or lights. Allowing someone else to handle many day-to-day responsibilities saves you valuable time.   3. Property management companies will handle tenant issues.  One of the biggest benefits of property management is that the property manager will handle tenant screening. Having experience with hundreds of applications, property managers tend to be able to spot the red flags that a potential tenant may possess. This could include not being able to pay rent, or having a history of causing damage to the property over time.  Property managers can also save you the trouble of having to evict people who can't pay rent on time, and ensure that the process of paying rent is simple. Additionally, a PMC can handle any lawyer fees that may be associated with evictions, and damages made to the property.   4. A PMC can market your rental for you. Another upside to hiring a property management company is that they can take over all of the marketing responsibilities. A PMC will typically develop a marketing strategy for each property that is dedicated to targeting your market segment to get the best results possible, from messaging to the platforms your audience is active on.  These professionals have a deep understanding of needing to fill your property with great tenants so that you can turn over the property quickly. A valuable tenant could mean the difference between having to replace carpets or simply having them cleaned.    5. Working with a property management company saves you money on maintenance & repairs. A property management team saves you time. You won’t have to go to the property to fix every problem that may come up such as clogged toilets, broken appliances, and dealing with locked out tenants. The team will handle problems as soon as possible, which will keep tenants happy. It is also a great way to save money because an experienced management team is better equipped to find a cost-effective solution to a common problem. Hiring a PMC is a simple way to save time managing your property. With a PMC, experienced professionals deal with time-consuming tasks, at a relatively low cost, allowing you to scale your rental properties and increase your cash flow.
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Feb 24, 2021

Real Estate Crowdfunding: The Ultimate Path To Passive Income

Real estate crowdfunding is a great way for new investors to begin their path to developing a passive income. It allows investors to earn rental income and profits from the sale of owned properties. With modern-day technology and easy access to the web, real estate crowdfunding is something that anyone can take advantage of if they are interested in increasing their income.  What is real estate crowdfunding? Real estate crowdfunding uses social media and the internet to connect investors who may have a mutual interest in investing in a common project. It is very similar to equity crowdfunding in the sense that investors can buy a property and become shareholders. Investors don't have to buy the entire property but instead can earn a portion of the profits generated from the investment.  Real estate crowdfunding was originally created by JOBS (Jumpstart Our Business Startups Act), which allowed crowdfunding to aid small businesses. The SEC (Securities and Exchange Commission) has since taken off the restrictions so that non-accredited investors can invest in crowdfunding projects. This has widened the pool of investors in the real estate industry.  Who is real estate crowdfunding for? Investors of all ages can begin their path to a passive income. Whether a seasoned or first-time investor, the playing field is level. One of the most important components of successful investing is taking the time to research potential investments, giving each investor an equal opportunity for success.  Conducting the appropriate amount of research determines the success that can come from each project. With easy access to the internet, research is something that any investor can perform within a matter of minutes. This makes real estate crowdfunding an easy market to dive into. What are the benefits of real estate crowdfunding? There are many benefits to crowdfunding. Due to the COVID-19 pandemic, lenders have been slower to supply funding because of sensitive financial stability. However, real estate crowdfunding gives investors a low-risk, high-reward opportunity. Platforms such as Holdfolio give both accredited and non-accredited shareholders the resources to gain more knowledge on investments.  One advantage of crowdfunding is the ability to earn extra money from the dividends that are generated by the investment. Depending on the platform and the package that is selected, investors can choose to have dividends paid out quarterly or monthly. From there, investors are given the option to either reinvest their dividends back into projects or pull out the earnings as they go. Another attractive aspect of real estate crowdfunding is that many platforms allow individuals opportunities to invest as low as $500 to $1,000. This makes it relatively easy for new, young investors to enter the market.  Finally, real estate crowdfunding platforms provide users with resources to learn about real estate and also browse multiple investment opportunities online. They provide a secure dashboard that allows investors to be able to manage their investments in a secure manner. What are the cons of real estate crowdfunding?  Although real estate crowdfunding can be a great source of income, there are also factors to consider in making this decision. One of the cons of crowdfunding is investor risk. There are many circumstances that are out of the investor’s control. Market volatility is likely the biggest downfall for this type of investment. Real estate crowdfunding may not be the right choice for you if you prefer to have more control over investments.  Crowdfunding can also be an illiquid investment, meaning that the investments cannot be easily sold for cash if necessary. In most cases, even if an emergency situation comes up, it is almost impossible to pull out the funds from that investment. This could be a problem for inexperienced investors who might need the flexibility to access their funds more quickly. It is important each investor evaluates the pros and cons before entering a new deal. However, crowdfunding is an opportunity for investors with any level of experience to try a new line of investing. With crowdfunding, the opportunities and benefits are endless, especially if paired with the appropriate due diligence.

Jun 15, 2020

Q&A for New Investors: Part 2

Here is Part 2 of our Q&A Interview for new investors. How long will the investment be? Holdfolio’s goal is to own our real estate over the long term to collect rental income & take advantage of the benefits of owning real estate. It is in the best interest of everyone that we sell the property at the right time, this event may occur sooner or later depending on market conditions, performance factors, and desires of the investor members. If it is not the right time to sell, then Holdfolio will continue to hold onto the property for cash flow. Do investors share in any of the tax benefits of owning real estate? Yes. We will be writing off depreciation on the property and all other business expenses related to the operation of the rental properties. So, the taxable income you earn from the investment will be reduced by these tax benefits. What makes Holdfolio different from other crowdfunding platforms? Holdfolio is operated by full-time real estate investors. This means there are no middlemen and all the opportunities on the platform are sourced by Holdfolio. How do the legal agreements describe the relationship between investor members and the manager? For the most part, the manager retains the right to make all day to day decisions, however there are certain decisions that will be made through a vote of the investor members in order to reach a majority consensus. The partnership is facilitated by a limited liability company & the manager is the responsible party for the acts of the company. Investor have zero liability. When are profits distributed to investors? Holdfolio disburses profit to investors quarterly. This means that you will receive profit from your investment deposited directly into your account during the first couple weeks of January, April, July, & October. To date the average return to partners is 10.17%. *This return does not take into account possible increases or decreases in the value of current investments. Further, the performance of our portfolios in the past does not guarantee that they will be successful in the future. More information about our track record is available to registered users. How do I get my invested capital back? After Holdfolio holds the property to collect rental income, the property can be sold for a profit or refinanced with long term debt. In the event the property is sold, you will receive the return of your invested capital plus the profits from the sale. If the property is refinanced, you will receive a return of your invested capital & still keep ownership in the property. It is also possible for you to sell your ownership to recoup your investment. In this scenario, either Holdfolio can purchase your ownership, or we can assist in a match-making effort to find someone interested in purchasing your ownership. Holdfolio retains a first right of refusal to purchase your ownership should you decide to sell. In general, you cannot sell your ownership within 12 months from your initial investment date.

Jun 15, 2020

Q&A for New Investors: Part 1

Here at Holdfolio, it is common for us to receive similar questions from new investors. This interview was conducted with one of our investors. What kinds of questions did you have for Holdfolio during the brief introduction call?  The call mostly was getting to gain a better understanding of how Holdfolio operates. What is the minimum investment? It can vary depending upon the specific investment opportunity but is typically $20,000. Why did you choose Holdfolio? It is a passive approach and the returns are attractive. I'm not looking to spend time managing the investment and didn't want the liability and potential headache that comes with owning real estate myself. What were the steps and processes to invest with Holdfolio? It was pretty simple. I went through a 3-step process online to invest. After signing the investment agreement I was able to fund my investment. I had the option of sending a wire or mailing a check which was deposited to Holdfolio's escrow account. How much time do you spend managing your investment with Holdfolio? I log on to my dashboard every so often to check the status of investments. Everything is updated quarterly. I was get email updates and distribution details so it's really nice.

Nov 13, 2017

Are You Adding Too Many Finishing Touches To Your Rental Property?

One of the biggest questions real estate investors have (or at least should have), is how many finishing touches and add ons they should give a remodel.  There are many factors which play into this. Some standard finishes will differ based on your particular market. Others should be different based on what the tradition and market history is locally, and the price point of your property and surrounding properties. All of these factors can be make or break when you are trying to turn a profit on your properties.  The Danger of Over-Improving Property One of the biggest dangers of investing in real estate is over-improving your investment properties. It is the number one pitfall for first time investors. First timers often sink way too much money to over improve a rental property, and often times, they never get any return on the investment. Unfortunately, many investors just don’t know what really adds tangible value to their properties. Being smart and sensible with your value adds can be major when it comes to turning a profit.   When it comes to buy and hold rental properties, it should be attractive to your level of prospective renters. Keep in mind the type of perspective tenant you are looking to attract, and what kind of amenities they need and do not need. Listen to what the market is telling you. But many times landlords must remember that tenants are going to put some wear and tear on the property, and chances are a lot of updates are going to have to be done every time you turn tenants. It could be in 6 months, or 24 months. You just don’t know. So, instead of going all out, especially on items which are easily dirtied or worn, go for slightly more affordable options, and more durable finishes. For example; carpet which can be cleaned, instead of tile which may need to be completely replaced if it is cracked. Or stainless steel sinks, versus custom materials which can stain. This approach applies to flips as well. You’ve got to know what really adds value, and not do any more than that. You’ve also got to know your buyers. Will they be renting the place out? Then stick to the above principles. In most cases, end buyers are going to have different tastes to you. That means no matter how nice you make it, they are likely to redo a lot of your work. Why put in unique, over the top finishes, if they are going to be pulled out and thrown on the curb a week after closing? They also aren’t going to pay you more, just because you think the design is nicer. Many tenants have a set range for the rent they are wiling to pay, and special add ons do not always help move that needle. Just because you spent a few dollars more per square foot on counter tops and flooring, doesn’t mean you’ll get an extra dollar on the sales price. What’s Your MVP? What investors need to know is what their MVP is. That is the Minimum Viable Product. That doesn’t mean be cheap. Do it right, make it look nice, but don’t throw away money. Otherwise you may have to sell at a loss, may not be able to sell at all, or are going to be making a lot less than you thought. You need floors, a roof, countertops, cabinets, bathroom fixtures, and freshly painted walls, but you don’t have to try and win any design awards. Basic countertops will work in most rentals. If you are doing a luxury renovation, you might get away with poured concrete or granite, instead of quartz. You can let the next buyer or renter get their own fridge, or stage it with a basic model, versus spending thousands on a smart fridge which may not be the right model your buyer wants. Know what the minimum standard expected by local buyers and renters is. You can go a little bit above that if you want to move it faster, if you can get a good deal on the materials. But don’t overdo it. There is a lot of confusion around what standard rentals and house flips should be finished too. It is also an area which can make or break investors fast. Know your values, and consult an actual appraiser, not just a Realtor to find out. Then set your own standard minimums based on your area, while looking out for deals on slightly higher quality, but neutral materials.

Oct 18, 2017

Rental Property Investing: What’s The Best Option For You?

Rental Property Investing: Vacation Rentals vs. Long-Term Rentals Short term, Airbnb-style rentals have been gaining a lot of attention lately, especially in major metropolitan cities.  The question is, how do they stack up as an investment strategy for long-term income property investors? Are they more profitable? Or are long-term annual rentals still the best way to go? Vacation Rental Property Investing Many real estate investors and entrepreneurs have discovered that there are very juicy rental rates to be found by leasing their units to short-term renters for a day, week, or month. A whole new crowd has jumped into this industry to capitalize on this. It is a trend we are seeing more and more each day.  When rented as a hotel, property owners can often get far higher average rates than as annual rentals. What may rent for $1,000 a month to a regular long-term tenant, may rent for the equivalent $3,000 per month on Airbnb. There is clearly a lot of value in this short-term rental strategy, but there can be some drawbacks.  These rough figures can be very misleading. They don’t account for higher vacancy rates, taxes, wear and tear, and property management costs. All of which can take a big bite out of those anticipated rents. More importantly; experienced investors know that short-term and vacation rentals can be highly volatile. Short-term rental rates can fall just as fast as they rise, due to demand. There are many causes including the economy, new lists of top vacation spots, storms, gas prices, and other factors. All of which can catch short-term rental property owners by surprise. Those who have paid high prices for these assets, assuming they’ll be able to rent at these high rates, can be caught short, and find themselves in tough financial situations if they are not careful. If the numbers won’t work on a deal as an annual rental, be very, very wary. Research around popular message boards and forums frequented by users of Airbnb, VRBO, and more.   Long-Term Rental Property Investing In contrast, long-term rentals offer real estate investors more consistency, stability, and reliability for their investment portfolios. Good long-term tenants can also save a lot on property management, maintenance, and marketing. That can even out the spreads a lot. Even more so when investors are purchasing homes at far lower prices. It doesn’t take a genius to figure out that the yields on an $80,000 home that rents for $1,000 a month in the Midwest, may produce better yields than a condo on the coast that rents for $3,000 a month, but costs $500,000 or more. It is important to run these numbers before deciding on a short term or long term strategy  Both vacation rentals and long-term annual rentals can produce income and attractive returns for investors. It’s all about the numbers. Unfortunately, many are not doing the full math, or are looking far enough forward when trying to jump on the Airbnb bandwagon. Do your math well. Get a second opinion from an expert. Make sure your choice matches your personal financial goals and timeline.

Oct 2, 2017

How to Make Your Rental Look New Every Time You Turn Tenants

  Turning around rental units for new tenants is a pivotal part of being a successful and profitable landlord. If you are too slow, and don’t maximize the opportunities, it can ruin your business and crush your returns. On the other hand, it can be a chance to write a great new lease, and increase your tenant quality and income. Creating that new look and feel can really make a big difference in the number of prospective tenants you get to choose from, how fast it will be occupied, and what renters are willing to pay. Below are some tips for making those units look new every time you turn them. Landscaping For an immediate and powerful impression you need to ace this right at the curb appeal. Trim and clean up, put down new stones or fresh mulch, and plant plants and flowers that really look vibrant and alive. While this fix may be a bit of a labor intensive job, it is a relatively cheap improvement you can make to your rental property.   New Mailboxes Renters and home buyers can instantly spot the difference between an old neglected unit, and one which was just rehabbed by the mailbox. This won’t cost you much, and won’t take more than a few minutes to install, but it will make a big difference in sending the right message to prospective tenants.  Front Door Hardware New kick plates, door knockers, and locks make a great impression. Obviously, when tenant are searching for a new place to live, one of the first things they take into mind is safety. Replacing or improving front door hardware can make them feel safe and sense the pride in living there, and has some of the best ROI on anything you can do. Paint Get in and freshen up the paint. It is an easy solution that many landlords tend to get lazy about or easily overlook. Touch up walls, go over it with current trending color schemes, and you’ll be surprised at how much difference just a couple cans of paint can make. Tenants love to walk into a rental and smell fresh paint. It makes a great first impression and can go a long way when it comes to scoring the perfect tenant.  Deep Cleaning Do the hard work! Don’t skimp on the cleaning. Get the dust off of ceiling fans and vents, wash the windows, deep clean the carpet, and maybe even refinish other flooring. Make it smell great. Touch Up Cabinets Touch up or repaint kitchen and bathroom cabinets to make them look new. Make sure hinges and knobs are all working smoothly. Consider new hardware to update the look every few years. A kitchen is one of the most important parts to anyone's home, and your perspective tenants want to be proud to show off a clean kitchen with fresh looking cabinets.   New Window Coverings Blinds and curtains can get dingy, dusty, and damaged fast. Some tenant may take your window coverings down to add ones of their choice, and that is fine. While you may get away with nothing at all, you might also score extra points for new blinds too. Feel free to leave the tags on so they know they are new. Take the time to add this value to your rental.   Appliances Nothing dates a rental like old appliances. Even if you won’t be including appliances in the lease, you can use new ones to stage the home or apartment for showings and photos. This could be new kitchen appliances, washer and dryer, big screen 3D TVs, and more.