Avoid These 2 <b>Real Estate Investing</b> Train Wrecks - NuWire Investor | Real Estate Investing |
- Avoid These 2 <b>Real Estate Investing</b> Train Wrecks - NuWire Investor
- Get $1,000 in Monthly Rental Income From H&R <b>Real Estate</b> <b>...</b>
- Why <b>Real Estate Investing</b> Isn't Easy - Modest Money
- Where are the top smart money VCs <b>investing</b> in <b>real estate</b> tech <b>...</b>
| Avoid These 2 <b>Real Estate Investing</b> Train Wrecks - NuWire Investor Posted: 23 Oct 2015 06:31 AM PDT Many promising real estate investing careers start with great promise and intentions, and end in disaster. I know many ex-investors who lost tens of thousands of dollars on poor real estate investments in the last crash. However, I also know several investors who have always done very well with their properties. Those experienced investors have wisely avoided the disasters that befall so many rookie investors. Avoid these two train wrecks to maximize your success and profits: #1 Flying SoloThe majority of new real estate investors jump into the business in a careless fashion, lacking both a plan and expert guidance. I know a former investor – let's call him Ralph – who got into the field like this:
This is what happens to rookies jumping into real estate haphazardly. Instead, you should invest with an exact plan, and execute that plan with an expert guiding you. In my case, I purchase under market value houses in Texas for approximately $50,000. I then perform ~$5000 in rehab, and resell them at 10% with seller financing. This buy and hold strategy offers approximate returns of 10-12%, with no ongoing maintenance costs. Buying the house 30% under market value is critically important, and protects me in case of a real estate crash. I invest in this way with a local real estate investing expert who helps me to find the right types of houses in the right areas to make this plan work. What you should do: Find an expert investor in your market at local real estate meetings. He or she should have a successful investing record for at least 10 years, with several hundred deals under their belt. Ask if they did well in the last crash. You can ask this expert to assist you in getting started – in return for helping them do some 'grunt' work, such as posting signs and making calls. #2 OverpayingIf I had to give just one warning to all aspiring investors, it would be this: Your real estate profit/loss is SEALED the moment you ink the contract. If you pay too much, congratulations! You just signed on to a losing real estate investment. So many real estate investing careers go off the rails at the start because they pay too much. Remember Ralph in the above example? When Ralph had the inevitable cost overruns on the rehab, as well as more vacancies and evictions than he thought, he had no wiggle room. His mortgage was so high that the only time he could make money was with full occupancy. There are two lessons here: Buy houses under market value. If you cannot find one that is at least 15% under market value, move on. Second, you MUST do a full financial analysis of your potential property. Calculate:
Be certain that your property is going to produce positive cash flow after expenses. Also, I advise seller financing your houses to qualified buyers, instead of renting. This allows you to off load property maintenance costs to your occupant. I hope that by avoiding these real estate investing train wrecks that your efforts pay off with plenty of long term, passive cash flow. John Majalca is a licensed real estate agent and financially retired real estate investor in Texas. Visit his website at www.donotlandlord.com.  | ||||||||
| Get $1,000 in Monthly Rental Income From H&R <b>Real Estate</b> <b>...</b> Posted: 22 Oct 2015 06:55 AM PDT Some investors buy properties and rent them out to receive rental income. Those properties require a huge amount of capital up front. By investing in real estate investment trusts (REITs) instead, investors can invest a small amount and still receive a juicy monthly income. Additionally, a professional management team takes care of the properties and the tenants, so you don't have to. Furthermore, by buying REITs, you diversify your portfolio immediately because REITs typically own and operate hundreds of properties. H&R Real Estate Investment Trust (TSX:HR.UN) is a diversified REIT that primarily owns retail, industrial, and office properties. Specifically, it has a portfolio of 40 office properties, 162 retail properties, 105 industrial properties, and five residential properties. There is lots to like about H&R REIT. From 1997 to June 30, 2015, it has maintained high occupancy rates of at least 97%. In addition, 12 of its top 15 tenants have investment grade credit ratings. It also has a strong balance sheet with a debt-to-cap ratio of 45%. One thing I don't like about H&R REIT is that it receives 11.6% of rental income from Encana Corporation. Its second-largest tenant is BCE Inc., which generate 7.9% of its rental income. That is, the REIT has concentration risk in two tenants. I'm more worried about Encana than BCE because the former has an S&P credit rating of BBB, while the latter's is BBB+. How to receive $1,000 in monthly income If you still like H&R REIT, you can buy 8,889 units at $21 per unit. It would cost a total of $186,669, and you'd receive $1,000 per month, a yield of roughly 6.5%.
Most of us probably don't have that kind of cash lying around. No problem. You could buy 4,445 units at $21, costing roughly $93,335, and you'd receive $500 per month and still get a 6.5% income from your investment. Okay, $93,335 is still too much. Instead, you could buy 889 units at $21 per unit, costing $18,667, and you'd receive $100 per month. See what I'm getting at? You'd receive that 6.5% annual income no matter how much you invest. And the investment amount is up to you. Is H&R REIT's income safe? H&R REIT had a hard time during the financial crisis. In 2009, it cut its monthly distribution in half from 12 cents per unit to six cents per unit. From July 2010 to January 2013, it steadily increased its monthly distribution to 11.25 cents per unit. It has maintained at those levels until now. H&R REIT's average lease term is over nine years, implying that its funds from operations should remain stable. In the second quarter of 2015, H&R REIT's payout ratio was 69%. So, its annual payout of $1.35 per unit seems sustainable for the time being. At $21 per unit, it yields 6.5%. Tax on the income REITs pay out distributions that are unlike dividends. Distributions can consist of other income, capital gains, foreign non-business income, and return of capital. Other income and foreign non-business income are taxed at your marginal tax rate, while capital gains are taxed at half your marginal tax rate. So, to avoid any headaches when reporting taxes, buy and hold REIT units in a TFSA or an RRSP. However, the return of capital portion of the distribution is tax deferred. So, it may be worth the hassle to buy REITs with a high return of capital in a non-registered account. Of course, each investor will need to look at their own situation. For instance, if you have room in your TFSA, it doesn't make sense to hold investments in a non-registered account to be exposed to taxation. In conclusion H&R REIT offers a diversified yield of 6.5% from a portfolio of retail, office, and industrial properties. The REIT pays monthly income, so you can do whatever you want with it, including paying your bills. Want more top dividend stocks? These three top stocks have delivered dividends for shareholders for decades (and even centuries!). Check out our special FREE report: . Click here now to get the full story! Fool contributor Kay Ng has no position in any stocks mentioned. Some investors buy properties and rent them out to receive rental income. Those properties require a huge amount of capital up front. By investing in real estate investment trusts (REITs) instead, investors can invest a small amount and still receive a juicy monthly income. Additionally, a professional management team takes care of the properties and the tenants, so you don't have to. Furthermore, by buying REITs, you diversify your portfolio immediately because REITs typically own and operate hundreds of properties. H&R Real Estate Investment Trust (TSX:HR.UN) is a diversified REIT that primarily owns retail, industrial, and office properties. Specifically, it has… | ||||||||
| Why <b>Real Estate Investing</b> Isn't Easy - Modest Money Posted: 18 Aug 2015 06:15 AM PDT By Rachel Hernandez Many people want to become real estate investors. They watch television shows about others who have made it rich. They hear stories about those who have been successful and made money with their real estate investments. Though, people fail to realize this is only part of the story – not the whole piece. Real estate investing is not easy. Successful real estate investors have been through cycles. Periods of highs and lows. They have gone through changes, not only in their business lives but their personal ones as well. Those who are pros have decades of experience, not years or months. What separates successful real estate investors from those who are not is their ability to adapt to change. We've all heard it before: change makes us uncomfortable. But it's periods of change where we are forced to do things outside of our comfort zone. And, that is a good thing. If we never did, we'd be too comfortable. Status quo remains and we would not be able to grow. The benefits of real estate investing far outweigh the cons but there are some things to think about. Real Estate Investing Involves ManagementDespite what you've heard, real estate investing involves management. Whether it be your own properties when buying and holding or if you are fixing up properties for resale, you still need to be involved. Someone needs to be there to make sure things get done. On time. The right way. Even if you hire property managers to help you manage your properties, you still have to manage them. I've been there, done that. Real Estate Investing Involves TimeSuccess does not happen overnight. It takes time to build up a successful business. Real estate investing is no different. Many people who go into real estate investing want immediate results. Don't we all? Going in, remember it will take time. You will need to try new things to see what works and does not work. You will need practice building a team of professionals to help your business. It could take months or even years until you do your first deal. If you are clearly in it for the long haul, don't give up. Success will come eventually. Real Estate Investing Involves SacrificeWith the amount of time involved, you may have to give up things you did before. Attending parties, watching television, or taking an afternoon stroll on the weekends are all activities you may miss. Sure, you can do all these things with the little free time you have. But then again, you could also use the time to be out looking at potential investment properties. Personally, I've sacrificed a lot. Due to the time needed to focus on my real estate investing business, I've missed many activities and events. But looking back, I'm glad I did. As a result, my life improved. ConclusionReal estate investing can be rewarding but it isn't easy. Success will take time. When investing in real estate, there are situations that will take away from your day-to-day life. Though with enough passion and determination, you will find success eventually creating a better life for yourself and your family. Rachel Hernandez is the author of Real Estate Investing Sucks: How to Deal with Change and Find Success as a Real Estate Investor and Adventures in Mobile Homes: How I Got Started in Mobile Home Investing and How You Can Too!. Find her at: www.adventuresinmobilehomes.com. | ||||||||
| Where are the top smart money VCs <b>investing</b> in <b>real estate</b> tech <b>...</b> Posted: 21 Oct 2015 11:33 AM PDT
CB Insights has delved into smart money VC annual deals and dollars in real estate tech and created a CB Insights Business Social Graph, a visualization that shows how key investors and target companies are related. Between 2013 and 2015, the top 20 smart money VCs are averaging 15 deals annually in real estate tech (assuming 2015 year-to-date trends continue).
The CB Insights Business Social Graph details the relationship between investors and companies, and helps illuminate how the smart money is investing in real estate tech. Tracking smart money VC investments can help industry-watchers stay on top of real estate tech disruption, since the top VCs can often see around corners and anticipate industry shifts. � Smart money categoriesWe identified five specific real estate tech categories where smart money VCs are investing heavily.
Note: Smart money VCs can often see around corners and recognize great companies early on. To analyze smart money trends in real estate tech, we looked at the activity of the top 20 VC firms, selected according to portfolio evaluations and CB Insights' Investor Mosaic investor ranking model. Here's our full list of 20 smart money investors:
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