Improve Your Investment Home’s Value

home improvement tools

home improvement toolsAs a real estate investor, your primary goal is to seek ways to maximize your profits. If you ever watch HGTV, you most likely know that some home remodels can bring terrific return on investment.

While there is no guarantee that any renovation project will affect resale value, certain home improvements have been shown to provide a higher financial return than others. When planning renovations, keep this in mind: To add the most value to your home, changes should conform with the neighborhood and flow with the rest of the house.

The good news is that you don’t have to spend a small fortune on extravagant upgrades to boost your home’s value, which is why setting a budget is key.

Set a Budget

This is likely the most important step when taking up a remodel of any magnitude. Many people envision lofty home improvement projects only to get stuck halfway because they couldn’t meet their financial commitments.

Be sure to track every expense no matter how small or large and factor in costs such as legal fees and permits. By recording your spending and allowing some breathing room in your budget, you will be setting yourself up for success.

Some Home Improvements Projects to Try:

Kitchen Updates: Kitchen upgrades that include new cabinets and updated finishes are sometimes all that is needed to impress sellers and increase your investment home’s value. If your budget allows, replacing dated appliances with top-notch ones will definitely help you close a winning deal.

HVAC System: Giving the HVAC system an energy-efficient upgrade can provide an 85% return. Buyers will love the idea of a lower energy bill and be ready to pay extra for a new system.

Vinyl Siding – Curb appeal is the best way to lure in homebuyers. By giving your vinyl siding a facelift, you can expect a return of around 63%.

Fresh Coat of Paint: Painting the interior or exterior of your house is one of the most effective ways to increase the value of your property and enhance its curb appeal. When painting your walls, choose neutral colors that appeal to a wider range of people.

Would you like to speak with a member of the RLG team to discuss the value of your current investment real estate portfolio and determine areas for improvement? Give us a call today! We would love to help you with the properties you currently have and multiply your investment portfolio.

Getting Started in Real Estate Investing

real estate investing

real estate investingReal estate investing can be a profitable business and, for many, a path to financial freedom. But as with any venture, there can be a number of pitfalls and risks beginners should be aware of. To help mitigate these risks, it is important to lay out goals and draw up a financial plan that takes into account everything from the costs you expect to incur to the size mortgage you will be taking out.

Once you have a strategy mapped out as well as a clear understanding of your risk tolerance, you should be able to focus on the different assets and options to invest in with confidence.

Get into Wholesaling

For your first purchase, consider starting with less expensive wholesale properties. Wholesaling is the process through which the wholesaler contracts a home—often one that is distressed—with a seller, shops that home around to potential buyers, and then assigns the contract to one of them. It is a less risky method for new investors as it does not require a significant amount of capital to get started. Having a solid list of potential buyers prior to making an initial offer to the seller is a good idea to counter risks.

Buy a Rental Home

Rentals are the most common way to get started in real estate investing. Renting an investment property will generate passive income over a long period of time and provide the means for you to reinvest into additional real estate purchases and expand your portfolio.

For new investors, residential rentals are much more straightforward than renting out commercial properties. Just be sure you have the time to commit to the upkeep of the property as well as to handle potential complaints from tenants.

When it comes to choosing a property type, make sure it aligns with your goals. For example, though duplexes and triplexes tend to generate higher rental income with lower relative expenses, appreciation is usually lower as compared to single-family homes.

Look into Real Estate Investment Trusts

A real estate investment trust (REIT) is a publicly traded entity that owns, operates, or finances income-generating real estate. By putting your money into a REIT, you are essentially buying a tiny piece of a portfolio owned by a corporation (or trust). As their portfolio appreciates, the trust pays out dividends to the investors. Relative to other investment options, REITs are far less time-consuming and labor-intensive and may generate steady income stream for investors. On the flipside, they offer little in the way of capital appreciation.

At Ridge Lending Group, we believe investment education is key. Call RLG today to continue this discussion and to learn how our financial experts can help grow your business

What to Know About Multifamily Properties

Multifamily PropertiesMultifamily properties come in many shapes and forms – duplexes, townhouses, semi-detached houses, and apartment buildings, to name a few. Billionaires and millionaires have seen their wealth grow by developing residential and commercial multifamily properties.

Although these types of properties can multiply your income with little additional cost, they are more complex investments that demand special attention. Following are some important factors to consider when contemplating a multifamily property investment:

Building from Scratch or Buying Pre-Built?

As a real estate investor, you are responsible for the building’s structural integrity and safety. If you are looking to buy an existing multifamily property, it is important to thoroughly evaluate the building for any major issues. If you go down this route, make sure to enlist the help of an inspector or engineer to check everything from its foundation and roofing to plumbing and electrical as well as any previous repairs done on the property. The upside about pre-built multifamily properties is the possibility to begin making profits quicker.

Alternatively, some investors choose to build from scratch and avoid dealing with things such as dated layouts, aging infrastructure, and other potential concerns. In addition, when constructing a new multifamily property, investors are able to cherry-pick the location of the development. New constructions in attractive, gentrifying neighborhoods can earn investors top dollar as growing demand sends prices up.

Reduced Risk and Easier to Finance

Contrary to common sense, million-dollar multifamily properties are oftentimes more likely to be approved by a lender than the average single-family rental home, as the former typically generate solid cash flow on a monthly basis from numerous tenants. This helps balance out the risks involved with potential vacancies and equates to a more desirable investment in the eyes of lending institutions.

Options Galore

Multifamily housing may include triplexes, townhouses, high-rise apartments, and more. Additionally, these developments tend to have a range of size units and even serve specific demographics such as low-income, age-restricted, and student housing. These myriad options make multifamily units an alluring investment type that enables investors to specialize in niche markets.

Be sure to carefully consider the type of occupant and the relationship you are willing to have with your target audience. Remember that is it also important to analyze your competition. With multifamily unit rentals, the competition can be fierce and entry barriers high, so you should be prepared and do your due diligence as you hit the ground running.

Are you ready to invest in real estate and see the value it can provide? RLG would love to help you! Call us today to learn more.

Why Choose Real Estate Over Stock Investments?

There are many reasons why real estate investments can be a lucrative alternative to stocks. For one, the stock market is highly unpredictable. Even though this volatility can sometimes produce hefty gains, the risks can be too high for many people.

If you are averse to the wild swings of the market, fret not. Luckily, there are much more reliable, lower-risk investments options available. Let’s look at why investing in real estate can be a great strategy for those seeking to reduce risks while reaping solid returns.

Resilience to Economic Turmoil

The stock market can experience dramatic highs and lows throughout the years based on current interest rates, government policies, economic trends, and investors’ beliefs. Real estate, on the other hand, has been historically much less susceptible to some of these factors.

Tangibility

Real estate is a tangible good and, for many investors, feels more “real.” With a stock, you are essentially buying a tiny piece of a particular company that you are otherwise unable to use. Conversely, real estate is an asset that can be utilized and controlled, with an added benefit of diversification.

Diversification

There are numerous ways you can diversify your real estate investments from property types to location to investment strategies. Let’s drill down on some of these modes of investments.

  • Property type: one of the most common ways of diversifying a portfolio is by property type. Some popular investment property types include single-family, duplex/triplex, condos, raw land, commercial, REITs, and large apartment buildings.
  • Rental vs. Flipping: while flipping houses provides quicker returns on your investment, renting an investment property can provide passive income over a long period of time. Creating a mixed portfolio of rentals and fixer-uppers can be a smart strategy to protect against risks.
  • Location: with so many up-and-coming neighborhoods and cities to choose from, real estate investors can hedge their bets and set themselves up for success by purchasing properties in multiple states, cities and areas of town. Consider attributes such as higher-than-average population growth rates, job growth rates, rental growth rates as well as low unemployment rates when deciding for a particular area.

Are you ready to plunge into investing in real estate? RLG has the tools and resources at its disposal to get you on your way and not waste a moment of your time. Call us today to learn more and experience firsthand the dedicated, personalized customer service and undivided attention that RLG has to offer!

Picking the Right Neighborhood for Your Investment Property

Neighborhood for real estate investment propertyKnowing well the area of town or neighborhood for your investment property plays a big part in a sound financial decision. While factors such as your investment goals and price range can help you winnow out some neighborhoods right off the bat, there will likely be hundreds of cities and neighborhoods that may pass muster – each with its cons and pros.

To make sure you pick the best neighborhood for your investing dollars, you may want to consider the following additional factors.

Safety

Lower crime rates are at the top of real estate investors and homebuyers’ must-have lists. Luckily, there is a wealth of online tools out there to help you research a neighborhood’s safety levels, such as ADT Crime, Neighborhood Scout, and SpotCrime.

A neighborhood that ranks high for safety not only provides peace of mind to buyers and tenants, but it can also keep property values high.

Convenience and Amenities

Convenience and amenities are valuable attractions for homebuyers. A convenient neighborhood is reasonably walkable and located in close proximity to schools, shopping areas, parks, gym, public transport, and more.

When it comes to amenities, consider neighborhoods that boast facilities such as swimming pools, play fields, tennis courts, club houses, community docks, and lakes. Other outside features that can pique homebuyers’ interest are nearby parks, open play meadows, and direct access to water bodies.

Growth

The expectation that the value of the property will continue to appreciate over time should inform investors’ decision when purchasing a home, hence the importance of market dynamics and macroeconomic factors. Look for neighborhoods that display attributes such as higher-than-average population growth rates, job growth rates, rental growth rates as well as low unemployment rates.

More broadly, the tax environment has been a key factor driving investments in the country, as seen in places such as Austin, TX and South Florida.

Are you ready to plunge into investing in real estate? RLG has the tools and resources at its disposal to get you on your way and not waste a moment of your time. Call us today to learn more and experience firsthand the dedicated, personalized customer service and undivided attention that RLG has to offer!

4 Maintenance Tasks to Boost Your Property’s Resale Value

Investing in real estate is the roadmap to passive income and financial freedom. Additionally, investors may take advantage of tax benefits, all the while seeing their property appreciate over the next months and years. To ensure that your property’s resale value continue its upward trend, you won’t necessarily have to undertake a series of home improvement projects. Rather, making a few basic home maintenance tasks your top priority may reap more benefits than you could imagine.

Let’s have a look at four of these maintenance tasks that can help bump up your investment property’s resale value.

Yard Work

Regularly mowing your lawn will help maintain the curb appeal of your investment property and attract higher-paying buyers. Homes with neglected, overgrown yards will spook prospective homebuyers and have a negative impact not only on your property’s value but also your neighbors’.

To avoid getting in trouble with your HOA and unloading your investment home at a fraction of what you could sell it for, pay close attention to your lawn by frequently mowing, watering, weeding, and fertilizing the grounds.

Garden

Starting a garden can increase the value of your home while attracting wildlife and adding flavor to your cooking and fragrance to your home. Spring is the best time to start a garden so you can watch your plants grow throughout the season.

To create a bountiful garden, be sure to mark out the area that you are planning to clear and improve the soil using organic compost first.

Erosion Control

Land degradation from soil erosion can have devastating effects on your property’s resale value. Without a protective topsoil layer, homes can start to slide, putting an enormous strain on their foundation. This can lead to cracks, sagging roofs, buckling walls and even a total foundation failure. There’s also an increased chance for landslides and flooding.

Fortunately, there are several ways to reduce the impact of erosion and prevent its far-reaching effects on your investment home. Planting bushes, trees, and grass around your home can be an effective maintenance strategy. If the soil isn’t suited for planting, you can use rocks and mulch. Having gutters and downspouts properly placed to divert rainwater away from your home is also very important.

Pest Control

Pest and rodents can make a serious dent in your property’s value if left unchecked. They can also pose health issues to occupants and cause significant damage to garden plants. The best way to prevent infestation is to remove possible entry points to your home and hire professional exterminators.

Just keep in mind that treating the area during blooming season may scare pollinators away from your home, so it’s best to wait until it is over. When it comes to pesticides, there are a lot of options out there that are harmless to bee and other pollinators.

Are you ready to invest in real estate and see the value it can provide? RLG would love to help you! Call us today to learn more!

Growing Your Real Estate Investment Portfolio

Purchasing real estate is key to earning passive income and financial freedom. As markets and access to capital ebb and flow, adaptability is a critical trait for real estate investors. While there are no hard-and-fast rules to real estate investing, there are a number of tried-and-true ways to grow your portfolio. Let’s take a look at some of these strategies!

  1. Start Wholesaling

If you are new to real estate investing, know that it’s never too late to get your foot in the door. For your first purchase, consider starting with less expensive wholesale properties. Wholesaling is the process through which the wholesaler contracts a home—usually one that is distressed—with a seller, shops that home around to potential buyers, and then assigns the contract to one of them. It is a less risky method for new investors, as it does not require a significant amount of capital to get started. Having a solid list of potential buyers prior to making an initial offer to the seller is a good idea to help mitigate risks.

  1. Leverage Equity

Once you purchase and rehab your first property, the next step is to leverage your equity by either selling the property and reinvesting the cash profit or borrowing money against the equity. There are other financing options for investors looking to fix and flip homes. Some of them include bridge loans, fix-and-flip cash-out refinance, and investment property line of credit. Speak with your mortgage professional to find out what is best for your endeavors.

  1. Get the Word Out

If you are looking to quickly grow your portfolio, you will have to put in the work and reach out to brokers and sellers in your quest for the best deals. By networking with real estate agents and attending real estate auctions, investors will often find undervalued off-market properties that will produce incredible returns. Cold calling potential sellers can be hit-or-miss, but it may be worth a try. If you choose to go down that route, make sure you have a solid call script.

  1. Invest in Rentals

While flipping houses may provide quicker returns on your investment, renting an investment property will generate passive income over a long period of time. You can then use the additional passive income stream to reinvest into your real estate purchases. In addition, your property’s value should appreciate over time as real estate benefits from inflation and the state of the economy.

  1. Hire a Property Manager

As your real estate portfolio continues to grow, so does the amount of time you will need to dedicate to managing the properties. As they begin to scale, many real estate investors will hire a property management team to handle daily operations. This frees up their time to focus on researching, networking, and closing more deals.

Are you ready to plunge into investing in real estate? RLG has the tools and resources at its disposal to get you on your way and not waste a moment of your time. Call us today to learn more and experience firsthand the dedicated, personalized customer service and undivided attention that RLG has to offer!

4 Habits Successful Real Estate Investors Share

Real Estate Investors

Real Estate InvestorsNot long ago, it seemed as though an entire generation had been doomed to live out their adult years paying rent. Millennials were often portrayed in the media as a generation of renters. Other outlets spoke of the housing crunch affecting millennials in rather striking terms and likened the debate around housing policies to “generational warfare.”

While rising home prices still present a formidable challenge to the cohort of young adults – especially in larger urban areas – more and more millennials have taken the jump toward homeownership in the last few years. A 2021 report by the National Association of Realtors on generational real estate trends revealed that millennials currently make up the largest group of homebuyers at 37 percent.

The allure of homeownership comes from the fact that owning a property is one of the fundamental ways of accumulating wealth. In addition to the amount of equity you accrue as you pay down your mortgage, cash flow is a key part of the equation when it comes to building up a stronger financial future. That’s where real estate investing comes into play.

The benefits of investing in real estate include passive income, stable cash flow, tax advantages, and more. If you are ready to jump on the real estate investing bandwagon and take advantage of the current low mortgage rates, make sure you have a game plan in place that will set you up for success and pave the way to financial freedom. Here are four habits successful real estate investors share:

  1. Build Credit

Before you get started in real estate, make sure your finances are in good shape. There is no easy answer as to what credit score you need for a residential or commercial investment property loan as credit requirements can differ greatly among lenders and are based on numerous factors.

As is the case with other loan types, a good credit score will help you secure lower interest rates and more favorable conditions that might require little to none of your own cash up front. Another key factor lenders will look at is debt-to-income ratio (DTI). Your DTI is all your monthly debt payments divided by your gross monthly income. With a lower DTI and the income to support it, you are able to qualify to borrow a larger amount of money.

  1. Make a Plan

Figure out what your short and long-term goals are and solidify them into a business plan. The investment model best suited for you really depends on why you are in real estate investing and for how long you plan to keep the property. Some people may be eyeing passive income, while others have a goal to invest for retirement. Setting your goals from the outset will allow you to zero in on the type of property you should invest in.

  1. Develop a Niche

When you develop and invest within your niche market, you are better able to outperform your competition and secure superior deals as you can target your audience more efficiently and identify pain points to minimize your risks. Once the investor has dominated a particular niche, they can then move on to other niches using the same in-depth approach.

Single-family or multifamily homes, retail or office buildings, industrial or commercial properties, mobile homes, land, student housing, and short-term rentals are just some types of assets you could potentially invest in.

It bears mentioning that a focus on a niche does not necessarily mean being confined to a single location. Make sure that the numbers make sense for you, whether it be investing in smaller cities where prices are lower or in large metropolitan areas.

  1. Invest Now

The current low interest rates make it the perfect time to start investing in real estate. In addition, home prices are expected to continue to rise throughout 2021 for various reasons, one being a bullish stock market.

Are you ready to invest in real estate and see the value it can provide? RLG would love to help you! Call us today to learn more!

Investing in Real Estate for Your Financial Future

investing in real estate

Investing in real estateAccording to a recent HousingWire article, investing in real estate could be less risky than investing in the stock market. While the stock market has hit all-time highs this year, it likely belies a market that will be more volatile in the future. During 2020, home prices increased 10% to levels not seen since 2014, while inventory dropped across the country. This created a seller’s market and a successful investment environment.

Investors commonly share the following advice, “Don’t wait to buy real estate, buy real estate and wait.” Home prices are expected to continue to rise throughout 2021 for various reasons, one being a bullish stock market. When you invest in real estate, you invest in a tangible item that is not managed elsewhere. As home prices remain on an upward trajectory, real estate investment continues to be a lucrative way to financial freedom.

To learn more about the benefits of real estate investment in 2021, click here.

Are you ready to invest in real estate and see the value it can provide? RLG would love to help you! Call us today to learn more!

What is ARV?

Assorted,Work,Tools,On,Wood, ARV, Investment Lending

Assorted,Work,Tools,On,Wood, ARV, Investment LendingThe ARV, or After Repair Value, is a figure used in the BRRR Method (Buy, Rehab, Rent, Refi) to determine the difference between the as-is price of the home and the value of the property after repairs. It is a critical number for real estate investors as loans are granted based on the loan-to-value derived from the ARV.

The after-repair value formula is:

ARV = Property’s Current Value + Value of Renovations

To calculate the property’s current value, it is important to enlist the help of a professional appraiser as they have the expertise needed to identify any issues and “quirks” that could affect the property’s value.

Once you have the property’s value pinned down, you will need to estimate the costs of renovations. Keep in mind that the costs incurred to flip the house must be less than the value of the renovation so your investment will see positive returns. Here are some factors to consider:

  1. Size of space

Remodeling a guest bathroom will almost certainly be less costly than larger areas such as the master bedroom or the kitchen. Full kitchen remodeling projects are likely to run at least $50,000. To cut back on expenses, you may want to consider a partial renovation and avoid major structural changes such as knocking down walls and rearranging the layout.

  1. Property condition

Older houses will often require more maintenance and have underlying issues. An inspection report is key in ensuring that your fixer-upper does not turn out to be a money pit.

  1. Design and Materials

When it comes to pricing, cabinetry, flooring, and windows run the gamut. Choose finished materials that fit into your budget.

  1. Contractor

Get estimates from at least three contractors to zero in on an offer that combines both quality and fair price. Asking for specifics about the scope of work, such as itemized list of repairs, is a good idea.

When determining the maximum price you should consider paying for a property, many real estate investors abide by the 70% rule. Imagine the ARV for your property is $100,000, and it needs $25,000 in repairs, then the most you should pay for it is $45,000. Lenders often times rely on the ARV to determine how much money you can borrow.

Do you have any questions about a property investment you have been eyeing? RLG has the tools and resources at its disposal to get you on your way and not waste a moment of your time. Call us today to learn more and experience firsthand the dedicated, personalized customer service and undivided attention that RLG has to offer!