Oct 19, 2021
Oct 14, 2021
How To Buy A Multifamily Property: An Investor’s Guide To Real Estate Investing in Apartment Buildings
Buying multifamily properties offers investors the opportunity to recoup their investment much faster by generating more rental income from having multiple tenants in a building. You can even decide to stay in one unit and rent out the other five or more units to enjoy a steady cash flow and monthly income. If you’re interested in learning more about multifamily investing you’re in the right place! We've composed this investor's guide on how to buy a multifamily property for new and experienced investors. Let's dive in! A Quick Word on Multifamily Crowdfunding Suppose you don't have money to buy a multifamily property directly. One investment strategy that can enable you to enjoy the benefits that come with buying a multifamily home, like earning a steady income, is crowdfunding from Holdfolio.The World Bank has estimated that global crowdfunding for real estate will reach a whopping $93 billion by 2025. Crowdfunding with Holdfolio enables small investors to pool their money as a group and invest in a large real estate investment vehicle that would have been beyond their reach as an individual investor due to capital constraints. Holdfolio will source the investment opportunity, place the money, and manage the investment. This real estate investing option is perfect for investors that are seeking alternative investments to diversify their portfolio. Crowdfunding with Holdfolio presents an opportunity to mezzanine debt, or first-lien debt, as well as provide joint venture equity, and preferred equity for a regular or newbie investor with $20,000. Holdfolio provides all the benefits of crowdfunding real estate properties like making bids on multi-family homes, no tenant management, and high returns without the negatives of buying multifamily properties alone or starting your own fund (options which we will explore more in detail throughout this article).Learn more about crowdfunding with Holdfolio here Searching for Viable Real Estate The first step in privately acquiring your first piece of multifamily real estate is finding viable properties which will recoup your investment whilst also appreciating in value over time.The following are ways to find viable real estate investment properties. Off-Market Deals Sometimes, multi-family home sellers might not want to list the building for various reasons. The problem lies with discovering where to find those properties. That's why you need to network and connect with people who deal in multifamily properties. You can meet those people when you attend real estate workshops, conferences, meetups, and real estate masters’ summits. The National Association of Realtors (NAR) often organizes meetings about a range of real estate topics. Work With a Real Estate Agent It's often hard finding a great multifamily investment deal in Class B and C real estate categories in large metropolitan areas, especially as a new investor. The reason is that these multifamily property deals mostly pass through referrals and networking and don't often get listed publicly. Investors with great relationships with a real estate agent are often lucky enough to hear about these deals. Real estate brokers usually list multifamily properties that are overpriced and competitive in MLS sites so interested persons can see them. Suppose you contacted a broker to help you find a multifamily property, and they start sending you deals, ensure you follow them up promptly and respond to their calls and emails. Contact Owners Directly One way to contact a seller directly is by driving for dollars which entails going around in a neighborhood where you intend to buy a multifamily property to see if you can find an unlisted multifamily property you can buy directly from the owner.These kinds of deals are usually great and will help you save money. Valuing The Property & Negotiating on PriceA property valuation is vital when buying a commercial real estate investment, whether single-family or multifamily properties. The valuation is essential for several reasons, including investment analysis, taxation, financing, property insurance, and sales listing. However, most people opt for a real estate valuation to determine the asking price when purchasing a multifamily property. The following are some of the approaches to property evaluations you can use before making a multifamily real estate investment. Income Approach This is the most popular commercial real estate investment valuation technique. Here, the appraiser employs regular investing calculations, like cap rate and NOI (Net Operating Income), to determine the property's potential income generation in the current market. The income approach formula is:NOI / cap rate = property value.However, while evaluating the property, the NOI on the pro forma should be accurate. An inaccurate NOI will lead to an incorrect valuation. Investors will also need to find comparable sales cap rates to enable them to come up with the valuation's cap rate.It is hard to determine an ideal cap rate if there are limited comparable sales available and this can throw off the valuation's accuracy. Cost Approach Although not a popular approach, the cost method is best for new buildings. The cost method estimates a property's value by checking the cost to construct the building from scratch.This approach considers the land cost, labor, and materials to determine the amount it'll take to build the same property in the current market. That way, you won't pay more than it takes to construct a new dwelling.Appraisers often use the following formula to evaluate multifamily properties.New building cost + land cost - accumulated depreciation = property valueGross Rent Multiplier Approach Another common real estate investment valuation method individual investors use is the gross rent multiplier. This method isn't the best for commercial valuations. It works by looking at comparables to enable the investor to find the property location's average gross rent multiplier.However, make sure you ensure the values are accurate to get the correct property valuation. You also need to check the building's pro forma to determine the property's average gross rental income. Then use this formula to evaluate the property:Annual income x gross rent multiplier = property valuationSales Comparison Approach Investors that prefer buying single-family homes and other residential real estate prefer the sales comparison approach. This valuation method uses comparable properties' sale prices to determine the property's value.A single-family home appraiser has lots of comparables to select from compared to commercial appraisers. A commercial appraiser might need to look outside the location's current market to find a comparable property. However, the valuation might be less reliable. Timing Offer SubmissionAs an investor seeking to learn how to buy a multifamily property, quickly submitting an offer might be the difference between losing the deal or securing it. Suppose you wish to inspect different homes, your broker might contact the listing real estate agents for properties on your purchase shortlist to get an idea of how many offers they have. The following is the process for submitting formal offers for your property of choice. House Offer Letter Consider writing a persuasive house offer letter - a personal, short letter that shows your appreciation of the home and willingness to buy it.Don't forget that a house offer letter isn't suggested for every seller so you'll need to decide if a personal appeal is suitable. Starting Price When evaluating a written offer, the seller will first look at the offered purchase price before anything else. Thus, you'll need to state your starting price accurately to prevent the seller from discarding your offer immediately. However, you'll need to consider some factors before setting a competitive starting price such as does the property require many repairs and renovations? Is the building adequately valued compared to similar ones in the local market? Then consider what you can easily afford to pay for it without jeopardizing your financial security. More so, it'd be best to check that the property is close to major schools, local entertainment hubs, companies, and shopping centers. We advise that you do your due diligence before buying a multifamily property and work with a realtor with excellent knowledge of the local market. Contingency Period After submitting your offer, the property seller will either counter, decline, or accept your offer. If they decline, the seller might come with an alternative proposal, but if accepted, you'll be invited to sign the purchase agreement. This agreement explains the framework in the initial written offer, pushing both parties to the contingency period. As a legally binding document, the purchase agreement must include the agreed-upon price, earnest money deposit (escrow money), breakdown of closing costs, and the property's full legal address. During this contingency period, both parties will conduct home inspections and appraisals, set contingencies on the property sale, inform each other of any disclosures, and continue further negotiations. If the negotiation fails, the whole process will be repeated.Most investors don't want to go through all this stress of buying a multi-family property due to the time and money involved and prefer buying multi-family homes by crowdfunding with Holdfolio. Through crowdfunding, investors are able to combine their capital and get access to higher-value deals with greater returns that they wouldn’t otherwise be eligible for.Heard enough and ready to invest? Get started with Holdfolio now. Multifamily Real Estate Financing Options (Mortgages & Loans)Besides asking how to buy a multifamily property, you need to also enquire about its financing. As a commercial real estate investor, you can access many financing options to start your investment journey. Conventional Mortgages This type of real estate financing is ideal for those who invest in single-family properties and residential buildings. Conventional mortgages are also perfect for house hackers and multifamily investors.Freddie Mac and Fannie Mae have rules to qualify for these loans. Once you meet stipulated conditions, you're on your way to getting the mortgage from Fannie Mae and Freddie Mac. The main requirements of conventional multifamily financing are a 25 percent down payment for fourplexes (four units) and buildings with more units. Fannie Mae and Freddie Mac set their minimum multifamily lending credit score at 620. At the same time, the debt to income ratio is 50 percent. Hard Money Loan Also called short-term bridge mortgages and considered loans of last resort, hard money loans are issued mainly by companies or individuals, rather than banks, because of the loan's potentially risky nature.A hard money lender focuses on the collateral property's value rather than the borrower's creditworthiness. This mortgage is suitable for short-term financing, turnaround situations, and borrowers with substantial equity but poor credit. Keep in mind that the interest rates for hard money loans tend to be higher than other types. In 2020, the average hard money mortgage interest rate was 11.25 percent, with rates from 7.5 to 15 percent across the country. HUD Multifamily Financing This loan type is insured by the US government and always comes with favorable terms. However, they're exclusively designed for multifamily investors and developers. To qualify for a HUD mortgage when investing in multi-family properties, you'll need to go through an annual operating audit, show that you've got a strong financial standing, and demonstrate your experience in multifamily investing. Lastly, the minimum refinancing or purchasing loan amount is $1 million. FHA Multifamily Loan FHA-approved mortgage lenders issue federal housing administration FHA loans. This mortgage is primarily for low-income Americans. However, you can qualify for this loan for properties with two to four units. Nonetheless, these mortgages often require a small down payment and have lower closing costs. FHA multifamily mortgage loan requirements include 3.5 percent down, and you must live in one of the units for at least one year. Furthermore, before buying a multifamily property of two units, you must have a 580 credit score and at least 620 credit score for a multifamily house of four units. The interest rates are also low. Investing Your 401K Most people think it isn't easy to invest with their 401k, but that's not true. You can take out a loan against your 401k if you decide to invest in real estate with it. Most plans allow you to take a loan out of your 401k. However, make sure you ask your plan administrator before taking that step. You may be allowed to borrow half of your 401k, up to $50,000. Nevertheless, it'll have to be structured as a non-recourse loan, a loan type secured by collateral, which will be the rental property under purchase. Another option is to move the funds to your self-directed IRA from your 401k before buying multifamily real estate and earning more income. However, it’s best to check with your administrator to be sure you can transfer the funds into a self-directed IRA and what the necessary paperwork involved is, if possible. How To Buy A Multifamily Property With No Money DownBesides more information on how to buy a multifamily property for sale, most new investors worry about finance. If you've been wondering how to buy a multifamily property with no money down, we have the answer, and it includes the following options: Equity Shares We recommend finding an equity share investor once you find a great multifamily investment deal. An equity share investor is a real estate investor that'll agree to provide funds for the real estate property purchase in exchange for owning a percentage of the building's equity.For instance, if the equity share investor provides $150,000 for the property purchase, you may agree to give them 30 to 40 percent of the multifamily real estate investment equity. The equity share investor will be entitled to a specified monthly cash flow. Furthermore, the financier will also receive the same percentage of the profit when you sell the investment property. Real Estate Syndication or Raise Private Money Another way to invest in multifamily real estate is to join a real estate syndication or raise private money. Real estate syndication entails real estate investors coming together to pool funds for real estate investment financing to earn more income. You can enter into a partnership by teaming up with another investor with more financial resources than you to buy multifamily property. On the other hand, you can also crowdfund with Holdfolio. That way, you gain an ROI from the funds invested. Real estate partners can also share the rental property management responsibility depending on the agreement between them. In contrast, Holdfolio investors aren't tasked with this responsibility. Hard Money Lenders Although most real estate investors get financing from hard money lenders as a last resort, hard money lenders don't focus on your credit history, but rather the multifamily property's earning potential. More so, hard money lenders don't usually require a down payment. However, bear in mind that the interest rates are high, and it comes with a shorter amortization period. Therefore, while you might consider it a viable option for buying a multifamily home, keep in mind that the cons far outweigh the pros. Thus, we recommend joining a crowdfunding company like Holdfolio if you want to start your multifamily investing journey but don’t have sufficient funds. Registering Your Property After The SaleIt's not enough to be worried only about how to buy a multifamily property, you also need to consider the entire process, from submitting an offer, getting finance from a lender to registering your property after the sale. Besides the deed and title, you'll have to pay the property registration fee at your property location. The United States doesn't have a unified property registration policy, so the cost for registering properties differs in individual states. For instance, if you're registering your property in Florida, you'll be charged ten percent of the property cost payable within five to ten days of the application. In California, it's three percent to be paid in three days after applying. While if you're registering your property in New York, it's 10 to 20 percent of the total property cost to be paid within five to 10 days of application. However, you can save yourself all this effort and money by investing through a real estate crowdfunding platform like Holdfolio. Conclusion Investing in a multifamily apartment complex of four units or five or more units for the first time is an incredibly exciting venture, however, it also involves lots of work and a foolproof investment strategy. Regardless of the preparation and research, you put into it when starting out, things are likely to go awry. However, one guaranteed way to start multifamily real estate investing with little or no money and enjoy a steady cash flow is through crowdfunding. Do you want to invest in crowdfunded commercial real estate? Consider signing up with the leading crowdfunding real estate investing platform Holdfolio. Holdfolio allows an investor with as little as $20,000 to own a multifamily property and earn monthly returns from the investment. Visit the website today to sign up, choose a property to invest in, and the investment amount and viola! You're on your way to earning a steady, monthly income.
Sep 30, 2021
Real estate syndication has been exclusive to only the wealthiest investors for many years, but with recent changes, they have now become more mainstream. Regardless of your background and experience, joining a real estate syndication deal can help you grow your wealth enormously while diversifying your portfolio.Read on to learn more about real estate syndication, its benefits and how you can get started today! What Is Real Estate Syndication? Simply put, real estate syndication is created when a group of passive investors pool their money to buy income-producing real estate. There is a lead investor, who identifies and actively manages the property or portfolio of properties that make up the syndicate’s portfolio. Then, there’s the passive investor. Their role here is more narrow: invest money in a real estate venture that has been solicited for a specific return.The syndicate is principally a joint investment vehicle for investors to pool their funds in order to make a high-value investment. They are a special investment with legal regulations that closely define the financial relationship between the sponsoring investor and the participating parties. The SEC will require you to organize a syndicate if you are putting together a deal with passive investors. The management is known as a syndicator, and he or she has a fiduciary responsibility to investors to define the returns and risks, as well as to protect their investment. What is a Syndicator? General partners (GPs), often known as real estate syndicators, are in charge of organizing and running the real estate syndication. The general partner(s)' primary responsibilities are: Underwriting the contract.Conducting a comprehensive investigation of the property. Putting together a financial plan. Dealing with the vendor. Attracting investment. Managing the asset. Taking care of investor relations. Creating a company strategy. Obtaining funding for the deal Collaborating with the property management company.A real estate syndicator is in charge of finding the property, negotiating the sale, and overseeing the asset after the deal has been closed. The purpose of the syndicator in real estate syndication is to carry out the bu Real Estate Syndication Vs Crowdfunding The distinction between real estate syndication and crowdfunding is often misunderstood. The names are similar and both refer to investment in institutional real estate deals, but they are not interchangeable. As the name suggests, syndication in real estate refers to a financial framework between the investors and the project sponsor. Crowdfunding, on the other hand, is another more informal way for sponsors to solicit and collect funding from investors. You can think of crowdfunding as an umbrella term: every real estate syndication project falls under the crowdfunding category but not every crowdfunding project is syndicated. Getting involved in real estate syndication via Holdfolio will allow you to make thousands of dollars in profit annually with an investment of as little as $20,000! You can access commercial real estate investment deals that are exclusive and enjoy the benefits of tax deductions of up to 80%! Our investors make high returns on their investment with an average of 19.50% per deal.Learn more about syndicating multifamily real estate with Holdfolio. Let your money provide the lifestyle you deserve.Not all crowdfunding real estate deals are through syndicates. The latter are more narrowly defined, special investment vehicles with specific legal requirements that the lead investor is beholden to. Expected Return From Syndicates For real estate investors, there are two main ways to get paid are through what are known as preferred returns and through profit sharing. Preferred Return The preferred return is a percentage of the total money invested paid to syndicate investors, either immediately from continuous cash flow or stockpiled until the project has enough cash to make the payment. It works like bank interest payments, except there is no assurance it will be paid because the project must produce money in order to have enough funds to make the payment.For example, if you want to join a real estate syndication project that includes a property of $100,000 and you invest 10% you will own 10% of that property and the profit made from the property. Let’s say the property is being sold for $200,000, after reducing all the expenses such as realtor fees, closing costs, etcetera the net profit is $180,000. Since you invested 10%, you will be getting $18,000 from that $180,000. Removing the $10,000 you’ve invested, you are making $8,000 profit. Profit Sharing Profits and appreciation are also given to investors for their participation in the transaction. The share of profits for real estate syndication investors is paid in proportion to the amount invested.For example, if you want to invest $100,000 in a deal and receive a 10% preferred return, you may potentially make $10,000 per year if the property generates sufficient revenue.Once each investor has received their preferred return, the balance is divided between the sponsor and the investors based on a predetermined profit structure. If there is $1 million left over after the preferred returns are paid out, the investors will receive $800,000, while the sponsor or syndicator will receive $200,000.Real estate syndicates are legally required to maintain accurate and transparent accounting practices for their investors. They also customarily pay out around 90% of their earnings.Benefits of Real Estate Syndication Syndications, as any real estate investment, offer a variety of advantages that few other investments can match. Passive Income A real estate syndication structure offers investors a passive income while the sponsor manages the property and takes care of the day-to-day operations of the project.Not all investors have the time or expertise to meaningfully evaluate a variety of properties to identify the finest investment opportunities. But there are real estate investment companies like Holdfolio that can do this for you.Holdfolio's team of professionals is in charge of things like proper research, identifying lucrative investment properties, appointing a property manager, and managing investor relations, among other things.The only thing the real estate investor has to do after providing funds is to sit back and enjoy their passive incomes. Anyone can grow their wealth by joining real estate syndication, you don't have to be an expert! Various Investment Opportunities Investors in estate syndicates receive access to various investment options that they might not have been able to access individually. Commercial properties, for example, are some of the best investment opportunities. However, property values in this asset type are often high.Investors can acquire access to this asset class through real estate syndications, which allow them to pool their funds. They can do so without putting too much of their own money in danger or subjecting themselves to credit risk. A lot of commercial real estate has been acquired through the use of a syndicated arrangement. Shared Risks Just as any investment, real estate can be risky. Investing in a real estate syndication, on the other hand, will allow you to share these risks with other real estate investors rather than carrying them alone. Diversification Diversification is an excellent method to prevent yourself from major financial loss and risks. A real estate syndication can buy more investment properties and diversify their portfolio more easily than an individual investor. As a result, even when funds are restricted, this method allows real estate investors to benefit from variety. Trustworthy Partnerships with Holdfolio Strong collaborations and expertise are the foundations of real estate investing success, and investors continue to pick us above the competition because of our knowledge and consistent asset development.Such strong partnerships will enable you to receive the highest level of aligned interest and build money. We aim to gain a significant return on your investment without guessing, regardless of market circumstances or the real estate cycle.Here at Holdfolio, our clients enjoy exclusive benefits such as:low minimum required investment significant tax deductions that can result in a tax shield of 80% or more above-average returns for our investors, our track record is currently at 19.50% accessibility for both accredited and non-accredited investors Besides all of these benefits, here's another exclusive perk; we invest alongside our clients. Yes, we are so confident that you will make high returns on the deal we provide that we put our own money into the project with you!While most investors fail to generate a predictable cash flow our investors, both accredited and non-accredited, enjoy their worry-free passive incomes. You can learn about Holdfolio's real estate syndication process here!How To Syndicate Your First Real Estate Deal Syndicating your first real estate deal will require days - if not weeks - of research. The real estate syndication sector is strictly regulated, with many rules, regulations, and laws in place to preserve investors and the sector's overall stability. Before taking a step into real estate syndication, you should know all these regulations and rules by heart otherwise you might end up in a disastrous situation. Find the right property Searching for the right property will take a lot of your time unless you join an investment company, like Holdfolio. Real estate syndications can include all types of properties such as multifamily, retail, self-storage, office space, and more. As the syndicator, you will be the one to seek profitable properties to fit your investment strategy whether it's to flip a property, add value, hold it for long-term cash flow, or to produce a return on investment in any way that you and your investors want.Thinking of forming a syndicate? As the lead investor, you’re responsible for doing the homework and collecting the investment needed to purchase high value real property. Find Investors Finding investors can be tricky especially if you are relatively new to real estate investing. Instead of finding investors on your own, you can join a real estate crowdfunding site like Holdfolio, where you can be introduced to like-minded investors who are looking for similar opportunities. Decide on a payment structure Once you find your investors and decide on a property to invest in, you and your investors will have to decide how the payments will be made along with how the investors will be paid after the deal is done. Hire a property manager If you are not willing to make this your full-time occupation and manage your investment properties day-to-day then hiring a property manager is a must. This will save you so much time and you won’t have to worry about daily management chores and responsibilities. Summary In summary, real estate syndication can be a highly beneficial deal for both the sponsor and the investors. But as we've mentioned earlier in this article, it can also be difficult and extremely time-consuming to do everything on your own. That said, you don't have to be the one to do it all alone. Join Holdfolio today to save yourself from all that trouble. As a Holdfolio customer, all you need to do is sign up to our online platform and pick a property to invest in along with the investment amount. Then you can sit back and watch your wealth grow!Holdfolio connects you with like-minded investors who are looking for investment opportunities. Our team of professionals will take care of every single detail and you won't have to worry about anything! Start investing today!
Sep 14, 2021
Real estate crowdfunding is a popular way for multiple investors to pool capital together online and finance large property acquisitions.In this article we will explain everything you need to know about crowdfunding, starting from what it is explaining step by step, Holdfolio is here to help you.Read on to learn more about real estate crowdfunding and how you can start your journey to make a passive income! What Is Real Estate Crowdfunding? Real estate crowdfunding (also known as property crowdfunding) is a method of obtaining funds for real estate investments by acting with a group of investors who contribute an amount of their choice to purchase the holding.Simply described, it is a method of obtaining cash that allows real estate investors with limited capital to participate in large-scale projects.Real estate peer-to-peer lending, or fiduciary lending, is another term for real estate crowdfunding.How Does Real Estate Crowdfunding work? Real estate crowdfunding is one of the best passive income sources for investors, due to its high returns and little risk.Here at Holdfolio, we’ve put together a simple, fast way for people to access lucrative real estate deals. Let's get started.After signing up to our online portal you can look through active investments and handpick the property you want to invest in.All you need to do is invest as much as you want — while meeting the minimum requirement — then sit back and enjoy as the passive income you’ll receive grows your wealth!The crowdfunding opportunities found on Holdfolio’s online portal are found, vetted, and listed exclusively by Holdfolio. You can’t find the same high-calibre investments anywhere else.View more information on Crowdfunding with Holdfolio.Pros of Real Estate Crowdfunding There are multiple benefits to joining a real estate crowdfunding project. Accessible Investing Crowdfunding sites are now open to everyone, not just accredited investors, as of May 16, 2016.This means that regular people can invest in start-up companies that were previously available to just angel and venture capital investors.While the current Title III laws make it possible for non-accredited investors to participate in crowdfunded initiatives, it is not free for everyone. The Securities and Exchange Commission has limited the amount of money non-accredited investors can invest in a 12-month period. Your personal limit is determined by your net worth and annual income.With Holdfolio’s online investment platform, non-accredited investors can easily join real estate crowdfunding projects. Handpick Which Properties To Invest In Being able to handpick the properties you want to invest in is a great advantage. But it is not available in every investing company.With Holdfolio’s exclusive online portal, investors can browse through the multiple active real estate investment projects and choose freely whichever project they want to invest in. High Return On Investment With Little Risk When you invest in debt, you are purchasing a mortgage note backed by commercial real estate. As the loan is repaid, you will receive a portion of the interest. This sort of investment is regarded as less risky than stock, but it has a disadvantage in that returns are restricted by the interest rate on the note.The average annual investor return that Holdfolio has produced is 19.5%. Tax Benefits Long-term capital gains are taxed at a lower rate. Because real estate appreciates in value over time, it's usual for real estate investors to sell their properties for more than they purchased for them. Long-term capital gains are taxed at a lower rate than short-term capital gains if you keep the property for more than a year. Depreciation can be claimed. You can depreciate — or write off — the cost of real estate over time if you utilize it for business or rent it out, which lowers your tax payment. Depreciation periods for real estate have been established by the IRS: 27.5 years for residential assets and 39 years for commercial properties. For instance, if you spend $100,000 on a single-family rental property, you can deduct $3,363 in depreciation each year. Certain renovations, such as repairing the roof or installing a new HVAC system, can also be depreciated. Real estate investors can use a 1031 exchange. You can use a 1031 exchange to swap out an investment property for a like-kind property while postponing capital gains. While a 1031 exchange can save you thousands of dollars in taxes, it is a complex operation with many tax rules. As a result, you should always hire a professional to ensure everything is done correctly. Rental income is not a form of employment. Rental income is exempt from Social Security and Medicare taxes, unlike wages from a job or self-employment income (FICA). While this isn't a huge advantage over other sorts of investment income, it can save you a lot of money when compared to regular earned income. Let's imagine you find a part-time job that pays you $20,000 each year. Your wages would owe you $1,530 in FICA taxes. A rental property that brought in $20,000 in revenue per year, on the other hand, would not be subject to FICA or self-employment taxes. No day-to-day property management Crowdfunding is a passive income source that you are a shareholder of, along with other investors. If you join a crowdfunding project along with a crowdfunding company that also manages properties, like Holdfolio, you will be saved from the day-to-day management duties that a sole owner would suffer from. Portfolio diversification One of the most prominent advantages of real estate crowdfunding is that it allows you to diversify your portfolio. By diversifying your portfolio, you are essentially spreading the risk associated with a single investment across a number of different investments.Your investment portfolio will be split among other investments if one of your assets fails. To demonstrate the benefit, you might put $100,000 in investment A all at once, or you could invest the same amount in $20,000 increments among investments A, B, C, D, and E. You would lose $100,000 if you just invested in investment A and it failed completely.However, if you had spread that money among five investments and one of them failed, you would only have lost $20,000 in total.Cons of Real Estate Crowdfunding The biggest disadvantages of real estate crowdfunding usually stem from going at it alone. Without joining an established company, like Holdfolio, you will have to deal with every single detail alone and this is definitely a very time-consuming process. Finding Investors And Collecting Their Money Persuading like-minded investors to join your crowdfund is often a hard sell. Smart investors prefer joining established investment companies due to their track record of success and to avoid the risks associated with sponsoring an unknown venture.Not to mention, it's much easier to secure a loan from a single person than to assemble a group of investors.Increasing the number of participants may also reduce your profit margin. You should also remember to legally structure your transactions so that investors do not have an undue influence over the decision-making process. Making them limited partners is the simplest way to achieve this, but even that takes a lot of legal paperwork. Illiquid Asset Crowdsourcing is deemed an illiquid investment, i.e. these are investments that are difficult to sell for cash if the need arises.A buyer will need to be found for the property you've invested in, which can take time and in some rare instances lead to a decline in the holding value.Real estate is also considered an illiquid asset, which implies that withdrawing money from the investment for whatever reason is more difficult than withdrawing money from a brokerage account invested in stocks.Who Can Invest In Real Estate Crowdfunding? Real estate crowdfunding is currently open to both accredited and non-accredited investors. Crowdfunding was previously open to accredited investors only — those who either have logged $200,000 in annual income for the past two years or currently have $1 million in net worth not counting their home — until former president Barack Obama’s securities deregulation law opened real estate crowdfunding to all investors.The 2012 Jumpstart Our Business Startup (JOBS) Act has been phased in overtime; in 2016, a provision opening real estate crowdfunding to virtually anyone went into effect.However, there are limits.The non-accredited investor is restricted to investing no more than 5% of their annual income if they earn less than $100,000 per year.Given the capital restrictions, it’s important for a non-accredited investor who wants to find a real estate crowdfunding platform that can meet them at a contribution that makes both legal and financial sense for them. The industry norm in real estate crowdfunding is a $50,000+ minimum capital requirement for investors to get started.This is a powerful investment and needs to be made available to more investors to broaden access to wealth creation and financial security. Holdfolio is proud to work with non-accredited investors who can contribute $20,000 of capital or more in our real estate crowdfunding.How You Can Get Involved Now that you know what crowdfunding is and how it works, you probably want to know how you can get involved. Holdfolio’s online platform and small minimum investment amount have made real estate investing a real and easy possibility for everyone.Holdfolio connects like-minded investors to raise capital for lucrative multifamily properties and helps them make the same high return as experienced real estate developers.Real estate ventures were inaccessible for regular investors for a long time because they could not afford the high figures required by the development companies or they simply did not have the right connections.Holdfolio is changing all of that by making real estate investing accessible to everyone. We believe that everyone should be able to access the same opportunities; so we are here to help regular investors to grow their wealth as much as experienced investors.Holdfolio allows you to choose from various high-quality and resilient assets with just a $20,000 investment!Sign up to our investor platform today to partner with other investors and start making institutional quality returns, regularly and completely passively.
Sep 6, 2021
In this article, we have listed the 10 best investments that accredited investors should look into. Read on to learn more about the alternative investment opportunities that will help you make more money! Crowdfunding Real Estate Real estate crowdfunding is the process of gathering a group of investors to raise funds for a real estate project. Through crowdfunding, investors have been able to take part in lucrative investments that they previously would not be able to finance.It’s an excellent way to generate passive income with little risk, as you benefit from acquiring high-value properties by sharing the cost with other like minded investors.Holdfolio specializes in helping accredited investors diversify their portfolios with multifamily holdings that generate considerable returns. On average, across 3,020 units, the cash return for Holdfolio investors was 19.53%! That’s around double the average return from the stock market over the last century.Investing with Holdfolio provides all the benefits of crowdfunding your own deals with none of the negatives.Spearheading your own multifamily crowdfund is a headache as you need to worry about:Finding and convincing investors Chasing those investors for payments Buying and negotiating properties for sale Day-to-day management of the property Finding tenants to rent the spaceSave yourself all these headaches and get the same high-returns by signing up for Holdfolio’s investor portal today. The process couldn’t be simpler. Visit our accredited investor crowdfunding page, sign up to our online investor portal for free, choose one of Holdfolio’s exclusive listings to invest in, deposit your money and that’s it! Venture Capital for Startups Venture capital (VC) is a type of private equity and a type of financing provided by investors to startups and small enterprises with the potential for long-term growth. Investment banks, wealthy investors, and other financial institutions provide venture funding. It does not always have to be in the form of money; it can be in the form of technical or management skills. Small businesses with outstanding development potential, or businesses that have expanded swiftly and are poised to expand, are frequently given venture capital.While putting money up can be dangerous, the possibility for above-average profits is enticing. Venture capital funding is gradually becoming a popular source of money for new companies or projects with a short working history (under two years), especially if they lack access to capital markets, bank loans, or other debt instruments. Investors typically receive shares in the company and consequently a say in company decisions.Both accredited and less affluent investors have the opportunity to invest in venture capital. Funds, stocks, venture capital debt, and direct investments are all examples of these types of investments. Hedge Funds Hedge funds, like ETFs and mutual funds, are professionally managed funds, but they are subject to far less regulation in terms of how they invest their money. In comparison to other funds, this permits them to invest in more intricate projects or asset types. When compared to more popular ETFs and mutual funds, the ability to invest in these alternative investments and apply advanced investment strategies (shorts, options, derivatives, etc.) modifies the risk and reward profiles of these funds.Hedge funds can be highly expensive in terms of fees, but they are comparable to other products available to accredited investors. Hedge funds allow you to invest in a certain money manager or a fund that follows a specific investing concept that appeals to you. This could enable you to participate in an investment strategy that you don't have the time or competence to implement on your own.After researching the fund managers and investment objectives of those funds using Form ADV, you'll need to call a hedge fund and inquire about minimum investment requirements. You'll also need to prove that you're a qualified investor. There is no centralized accreditation authority or defined system in place. Each fund uses its own methods to determine your eligibility. You may be required to give proof of your income, assets, debts, and experience through licensed third parties, such as a financial institution with which you have accounts, an investment advisor, or an attorney.Artwork This alternative investment can be appropriate for you if you are an art collector or an investor who enjoys art. The worth and value of each piece are determined by its individuality. Costs can be very large and illiquid. These types of investments are deeply sensitive to the age of the artwork and other particularities. Exclusivity brings greater pricing, but also larger profits. The artist's celebrity is also a significant factor. There are platforms and tools available that can assist you in making a well-informed investment decision. Thanks to sites like Masterworks, investing in fine art has become easier in recent years. Merchant Cash Advances A merchant cash advance provides a business with a lump sum of operating capital for a specific and immediate requirement. In exchange for the security of an immediate financial input, the company pays a portion of future sales. This is a short-term loan, usually ranging from three to twelve months. Unlike traditional loans, financing is not regulated, which means that business owners can utilize the funds any way they see right.There is the potential for large profits in addition to the inherent value that is supplied. Returns can be substantially greater than those available in standard high yield investments in the public markets.Adding alternative assets like merchant cash advances to your investment portfolio can help you reduce risk and protect your portfolio from instability. The stock market and merchant cash advances have little in common. A mix of traditional and merchant cash advance investing would produce a healthy, well-balanced return.Platforms for merchant cash advances, such as Supervest, connect investors with merchant funding organizations that pool their funds for specific businesses.Unlike past methods of investing in MCAs, this platform greatly reduces risk. A maximum of 5% of an investment can be made in a single business at a time. Hundreds of companies can be invested in at the same time by investors. Non-fungible tokens (NFTs) NFTs are digital assets that are kept on the blockchain and represent unique ownership of that item. The industry grows in popularity. OpenSea, an NFT trading platform, experienced more than $1 billion in trading volume during August 2021. According to a Wave spokeswoman, more than $2 billion in NFTs were traded in the first quarter of 2021, 131 times the volume in the first quarter of 2020.As a financial professional, investing in NFTs during a sideways drifting market appears to be profitable thus far. Since they have only been an emerging crypto asset class for a few years, the non-fungible token market has experienced spectacular volume gains year after year. From the first half of 2020 to the first half of 2021, the total market volume increased from $13.7 million to $2.5 billion.It could be a good idea to consider NFTs as a means to diversify your portfolio by potentially investing in these investable assets to add or subtract risk to your holdings. NFTs have limitless applications and tokenization possibilities for both tangible and intangible things. From combating avatars to creating eternal works of art, the future of NFTs is dependent on the free market's limitless ingenuity. Commodities Though lacking the allure and media darling status of NFTs or cryptocurrency, the $20 trillion commodities market—a financial sector where raw materials are transacted—continues to be a preferred investment vehicle for accredited investors who favor strong returns and need an investment that will weather high inflation or a weakening dollar.The term “commodity” may be new, but its goods are found throughout daily life. The gas powering automobiles was one oil traded on a commodities market. The gold found in cell phones was once traded as a commodity. Rubber, wheat, electricity—these are all traded as commodities before they get to consumers.Because of persistent demands for these goods which rise in times of high inflation, commodities are a class of investment that does well against weakening currencies. When the dollar or another form of currency loses buying power, prices rise and so too do the price of commodities.One should not mistake these for uniquely stable investments, however. Individual commodities are notoriously volatile and should be part of a diversified portfolio that includes other commodity types and investments.A good way to get started in this investment type is through a commodity fund, which is a collection of commodities. Similar to the way a hedge fund invests in a range of securities, a commodity fund like BlackRock offers investors a share of a basket of commodities to minimize the risk of their fluctuating price for investors who want to enjoy the strong returns they offer. Commodities have an annual gross exceeding 20 percent, double that of the average stock.Cryptocurrency Cryptocurrencies have exploded into the spotlight as their own asset class in the previous five years. Cryptocurrency data demonstrates that in the last ten years, they've grown from nothing to a market valuation of about $2 trillion. Without a doubt, it's been a phenomenal rise. In terms of the magnitude of returns investors have made, this is the quickest rise of any asset class in history. Unlike conventional currencies, cryptocurrency is supposed to be a store of value that is immune to depreciation and inflation. In times of economic distress, governments print money to compensate for the imbalance, which leads to inflation, which can swiftly spiral out of control. Cryptocurrency prices, on the other hand, are unaffected by the influx of cash that would otherwise depreciate government-issued fiat currencies. So, how do you get started with cryptocurrency investing? Many trading apps allow you to buy popular cryptocurrencies such as Bitcoin, Ethereum, XRP, and others. eToro, a social investment software that allows users to replicate the trades performed by expert crypto traders on the site, is the finest tool we’ve found for investing in cryptocurrencies. Online Business Buying and selling online businesses is one of the up-and-coming alternative investments for accredited investors. Websites are the virtual world's real estate. Many see buying and selling websites as business investments in the same way that some individuals choose to invest in properties.To acquire ownership of a website that generates a reasonable monthly income, one needs to be willing to spend at least 10 months of earnings. Because the labor involved in running most websites can usually be outsourced fairly cheaply, sellers frequently sell because they desire a huge lump amount to spend in other ventures.There are a number of online investment platforms, such as Empire Flippers, that connect accredited investors with well-established online entrepreneurs. Investors get to choose which firm to invest in based on the track record, acquisition criteria, and strategy of the business operator. Until the business is sold in 2-4 years, investors will get quarterly payments and reports. Collectibles Collectibles are goods that are worth significantly more than their initial purchase price and are classified as alternative investments—vehicles that do not fit into any of the other categories, such as stocks, bonds, cash, or real estate. Investing in this asset class can be both rewarding and beneficial to your financial goals. There are various collectibles that one can choose to focus on. Here are some of the most common and profitable collective items:Wine: It’s widely understood that wine improves in quality and value as it ages. Some wines, on the other hand, are better suited to collecting than others. For example, Sotheby's auction house in 2017 sold five bottles of a 1945 Romanee-Conti burgundy for $1.98 million. Before the vines were destroyed, only 600 bottles were created.Fine Art: Paintings by great painters from the past are almost priceless, which is why acquiring fine art can be a financially rewarding investment. For example, in 2018, a painting by living artist David Hockney titled "Portrait of an Artist (Pool with Two Figures)" sold for $90.3 million at a Christie's auction.Celebrity Items: Celebrity-related products can be considered valuable, and some individuals are willing to pay a high price for them. Russell Crowe sold personal belongings to fund his divorce in April 2018. The armor he wore in the movie "Gladiator" sold for $117,000 at a Sotheby's auction titled "The Art of Divorce," and his leather jockstrap from "Cinderella Man" sold for $6,500.There are more items that can be collected by those who are interested such as coins, classic automobiles, stamps, vintage jewelry, antique furniture, and more. Such items can be found and auctioned over online platforms such as Collectable, one of the best auction websites. Alternative Investments: A Smart Compliment to a Solid Investment Foundation We’ve listed some of the best alternative investment opportunities for accredited investors. We highly suggest that any investor who's interested in these alternative investments study the risks and benefits before diving in. Here at Holdfolio, we have a team of professionals who can help you on how to diversify your portfolio and your investments to get the best out of passive income investments. Holdfolio combines knowledge, strong partnerships, and innovative technology to deliver high-yield, professionally managed real estate opportunities to passive investors. So visit our accredited investors page today to begin growing your wealth.
Mar 30, 2021
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.
Feb 24, 2021
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.
Jan 27, 2021
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.
Nov 20, 2020