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Real Estate Retirement Investing Part 2: Sunday Morning Thoughts 09 September 2012
9 Sep
Retirement (Photo credit: Wikipedia)
Instead of wracking your brain over how long your retirement will last, why not give a lot of thought to understanding how you can use other non-conventional investments to make your money for retirement work for you.
Everyone either understands or pretends to understand how their 401k works. 401ks have been an investment vehicle for a long time, but there are many options for your 401k investment.
You can invest aggressively, moderately, or very cautiously, but will you still be able to have returns that will be viable when you retire?
Not necessarily.
You have to consider all of your fund options, and a diverse account is normally the best route.
What about if you are already in retirement, and your account is not going to last you for much longer and your greatest fear is out living your money?
No one should be afraid to live.
Precautions before your money runs out is best, whether you are safe guarding what you have, or you are trying to make what you have grow larger; sound investments are your key to living in a happier state of being, without the worry of your money running to low or out altogether.
Diversifying your portfolio to include real estate investments may prove to be a great option for growing and/or maintaining your retirement nest egg.
Being a private lender, also known as being the bank, is a way of earning interest without the risk of owning a property.
As a private lender you are investing in the vision of someone else, but only the vision is backed by real property, something tangible, sellable, and if calculations are done properly can also be profitable.
So even if a borrower defaults on the loan you have given them, you will still have an asset that you can resale or keep for yourself as an investment. Of course, you will already know from the documentation given to you in the initial evaluation of the loan, if the property is worth equal or more than your initial investment.
Retirement does not have to be bleak future/present if prepared for and maintained properly.
Related articles
- Real Estate Retirement Investing Part 1: Sunday Morning Thoughts 02 September 2012 (backedbyrealestate.com)
- Real Estate Retirement Investing Part 2: Sunday Morning Thoughts 09 September 2012 (backedbyrealestate.com)
- What Is A 401k Retirement Plan? (answers.com)
- Residential and Comercial Real Estate Investing: Sunday Morning Thoughts 5 August 2012 (backedbyrealestate.com)
The A, B, C’s of Real Estate Investing: Sunday Morning Thoughts 22July 2012
22 Jul
now renting? sweet! can I get the one with all the broken windows plz? (Photo credit: tray)
With so many great deals out there and on the horizon, how do you pick a winner?
Analyze.
For each type of invest there are hard and fast rules of analysis to apply.
For instance you would not analyze a residential deal the same as you would analyze a multifamily deal. Even within residential evaluations, a two bedroom one bath is not analyzed the same as a five bedroom 4 bath.
But there are similarities of analysis for all properties. The A, B, C’s of evaluating properties.
“A” classified investments are located in high-end areas. Generally people with higher incomes and educations reside in “A” type areas. The area can be all residential or mixed with multifamily units.
Generally, these types of properties are considered prime real estate, have a low cap rate, normally around 2-4%, they also have a higher tenant turnover if it is a rental property. Most often investors purchase “A” properties for equity and cash flow.
“B” and “C” class properties make great rentals and are in middle class type of areas. Investors tend to refer to these types of properties as ‘bread and butter’ investments.
Rental turnover is normally low to moderate for properties which are well-managed. These type of properties can have cap rates ranging from 5%-13%, have great cash flow, and moderate equity. Equity gains can be increased with improvements and minimal to moderate rental increases.
“D” and “F” properties, well just like in school you may want to avoid these types, but why?
“D” and “F” property investments coupled with strategic planning on improving can be a lucrative investment. Keep in mind people who live in “D” and “F’ areas may not have a checking account and may work lower blue-collar jobs. They may also receive some form of government assistance.
This does not by any means, mean for a person of more wealth to take advantage of someone by becoming a slumlord or slum investor. Where you are not making improvements, or taking care of maintenance issues. People of all walks of life deserve to live a happy life regardless of circumstances.
So which type of investment are good, better, and great?
All are profitable with the right types of strategies. Remember entry strategy, holding strategy, and exit strategy, are all phases of a great investment.
Related articles
- Real Estate Investing Advice – MilitaryVALoan.com (militaryvaloan.com)
- How to avoid a Ponzi Scheme: Sunday Morning Thoughts 15 July 2012 (backedbyrealestate.com)
- Spotlight on REITs: Equity Residential Properties (moneymanager.com)
- BTB Real Estate Investment Trust Announces Its Distribution for the Month of July 2012 (prnewswire.com)
Do you have a Diversified Portfolio?: Sunday Morning Thoughts 19 November 2011
20 Nov
Image via Wikipedia
What Does Diversification Mean?
A risk management technique, that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio.
Diversification strives to smooth out unsystematic risk events in a portfolio so that the positive performance of some investments will neutralize the negative performance of others. Therefore, the benefits of diversification will hold only if the securities in the portfolio are not perfectly correlated.
Read more: http://www.investopedia.com/terms/d/diversification.asp#ixzz1eDze88iz
Since we are a real estate investment company we will use the definition in regards to stocks and real estate.
When considering which types of real estate investments to make most people run for the fix a residential property and then flip said property, with as little holding time as possible. This strategy still holds even in this current down economy, provided the end buyer can qualify for the loan.
If the end buyer does not qualify for conventional financing, the transaction is not a lost cause, but an investor will have to consider other strategies which will help the end buyer purchase the property in as little time as possible. “Flipping” properties is still doable in this current economy but a little more creativity may be needed to structure the deal to be beneficial for seller and buyer.
In real estate diversifying your portfolio requires a little more foresight than just buying and flipping residential properties. To not have your investments become a job, one must also consider holding properties for cash flow, and appreciation; an ideal situation, which can be achieved.
But a portfolio of only fixing and flipping is very one sided. To be better well-rounded one would consider buying multi-units, such as 5units or more, better known as apartments. In this current economy the need for apartments is on the rise in some areas, plus the commercial market is due for a similar fate as the housing market, making apartments a more lucrative investment. People who are on the wrong side of a foreclosure still need a place to live. Renting an apartment or house is the next best option for most.
To make and/or keep your real estate portfolio diversified make sound investments in residential and commercial with holding properties for the future appreciation while they cash flow in the present
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