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2019: A Promising Year for Rental Real Estate Investments (2019 Update)

Rental real estate has always been considered a lucrative and stable investment. Traditionally, real estate tends to appreciate over time, so it’s a great hedge against inflation. At the same time, rental properties – whether they appreciate or not – give investors regular income that they can use to pay down their mortgages, save for retirement, and/or invest in other properties.

As much as rental real estate has always been a good choice for most investors, this year looks particularly good for this investing sector. Why? Several factors point toward profits for investors getting into rental properties.

Rental Nation

As of last year, the United States gained a new nickname – Rental Nation. Before the housing collapse in 2008, renting was seen as a failure or a sign of financial struggle. If you were eligible to buy a house, you were expected to do so. After the housing bubble burst, though, a couple of things happened.

First, many people who were once eligible to purchase properties are now relegated to renting for several years because they were forced to go through short sales or file for bankruptcy. At the same time, thanks to the fluctuations in housing markets around the country, more and more people are seeing renting as a viable option that will not put them in as much financial danger as buying a house in a questionable market. Thus, there’s more demand for quality rental properties all over the United States.

Monthly Cash Flow

With an increased demand for rental properties, you can be sure that your property management company will have no problem acquiring quality tenants who will pay their rent on time every month and take good care of your property. This will result in monthly positive cash flow from the property. Thus, whether or not the property appreciates, you can gain passive income from it that you can use to grow your investment portfolio and your net worth.

Appreciation

While we have seen one significant crash and a lot of fluctuation over the past few years, over the long term property tends to appreciate. Thus, while you’re making monthly income from your rental property, you will also have a quality hedge against inflation with your initial investment. And, when you do decide to sell in the future, you’re likely to sell at a significant profit.

Leverage

Looking toward other, larger investments in the future? You can actually use your rental properties as leverage and collateral for those. Plus, when you decide to sell a property with the intent of buying another investment property within the next few months, you can apply a 1031 exchange to it and defer your capital gains tax for as long as you own that property. Then, when you eventually decide to sell that property you can do the same thing again if you intend to continue investing.

Texas Is a Market to Watch

The rental markets throughout Texas, and especially in the Dallas-Fort Worth area, are showing consistent and significant growth. With numerous major corporations calling Dallas home, new residents are moving to the area all the time, and they need quality apartments and houses to rent. Thus, the market is in the perfect place to yield great returns for investors buying rental homes.

You can see, now, how 2019 is an exciting year for rental real estate investments in Dallas. Whether you’re interested in purchasing single-family homes, apartment buildings, or equity in larger commercial residential properties, now is the time to get on board with Dallas rental investments. Talk with a trusted financial advisor today to determine the best investment(s) for your portfolio.

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How to Get the Best Possible Rental Property Appraisal (2019 Update)

Whether you’re looking into refinancing a rental property to get a better interest rate and/or mortgage payment or you’re trying to figure out exactly how much you can charge in rental fees for the property, an appraisal is a must. Even if you’re already renting the property to tenants and you aren’t looking at refinancing, though, if you haven’t gotten your property appraised, you should. It’s an important part of getting an accurate look at your investment portfolio and Of course, there’s just one problem with getting a rental property appraisal – it’s not an exact science. In fact, it’s based far more on the opinion of the appraiser than most landlords would like, and it can feel very much like you’re putting your portfolio, your hopes of refinancing, and/or your property’s profitability in the hands of someone who’s just going to say, “This property is worth $15,000 less than you estimated. Have a nice day.”

Fortunately, though, if you know what appraisers look for, you can make the right improvements to the home to get the best rental property appraisal possible.

What Appraisers Look For

For the most part, your appraiser is going to be interested in the structure of the house and the size and quality of the property. They’re going to inspect the roof, the foundation, the quality of construction materials, and functional home systems. They’ll also be interested in the size of the house and the size of the property. Issues like cracks, holes, and leaks will affect your appraisal negatively, and you’ll want to ensure that your home is up to code, as well.

What Appraisers Don’t Care About

You may think that the tool shed in the backyard is a plus for your property, but it won’t actually affect your appraisal, as it’s a temporary structure. Your above ground pool won’t help your appraisal, either, but an in-ground pool or a permanent sprinkler system will improve your appraisal (if they’re functional and maintained).

Furthermore, your appraiser is not going to spend a lot of time looking at your interior design choices. They won’t care whether there’s clutter in the kitchen or you’ve put in a lot of work creating a whole new decorating scheme. However, they will care about your HVAC system, fireplace, home security system, doors and windows, and smoke detectors. Basically, when preparing a rental property for an appraiser, think about function and permanence.

Help Your Appraiser Help You

Getting the best appraisal essentially involves making sure that your property is in good shape and that all of the permanent, functional aspects of the house and property are in good working order. You will want to make sure that the exterior of the house looks its best, and you’ll want to see to it that your appraiser can easily get to all of the things that he or she needs to see to properly evaluate the house and property.

Follow this advice and supply any remodeling documents you have, as well as documentation on your appliances and upgrades, as well, and you’ll be in good shape to get the best appraisal for your rental property.

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Your Personal Guide to Choosing the Finest Medical Properties (2019 Update)

As you no doubt already know, medical real estate is one of the most lucrative sectors in real estate investment right now. Thanks to the Affordable Care Act, medical offices and other facilities are in incredibly high demand all over Dallas and the rest of the United States, as well. With millions of Americans getting health insurance, sometimes for the first time in their lives, people are eager to seek medical attention and improve their health. As a result, physicians are overbooked, and there’s plenty of room in the market for new practices. In fact, there’s a huge demand for them.

So, with all of that in mind, how do you choose the finest medical properties to ensure the best returns on your investment? If you follow a few simple tips, you’ll be able to spot the best deals and the best properties to diversify your portfolio and grow your wealth while you improve your area with more of the medical properties that local patients want and need.

Research Local Demographics

First of all, what is the average age of the population in the area where you want to invest? And what’s the median age? What percentage of the population are single, married, young, old, male, and female? The more you know about the demographics of the people who live in your area, the better you’ll be able to understand their medical needs.

For example, if you are investing in a location that’s mostly made up of young couples and families just starting out, your best medical real estate investments will likely be OB/GYNs, pediatricians, and family practices. On the other hand, if your area is primarily made up of retirees and senior citizens, a senior care center, nursing home, or senior living community might be the better investment. If you know where you want to invest, you can do just a bit of research to find out what kinds of medical properties are in demand and which ones will make the best investment opportunities.

Look for Positive NOIs and Cash Flow

Medical properties fall under the heading of commercial real estate, and the net operating income (NOI) of any commercial property is the difference between the income on the property from rent and the cost to maintain and manage the property, not including income tax or loans. This number needs to be positive if you want to make a profit when you decide to sell.

While your NOI determines the value of the property and will help you understand its resale value, you should also take into account any mortgage or loan payments, as well as your income and property taxes. Does the rental income from the property more than make up for these costs? If not, you’re not looking at a profitable medical property, and you should consider a different location, type of practice, and/or developer.

Consider Market Trends in the Surrounding Area

While commercial properties’ market values are based on their potential rental income rather than the value of comparable properties in the area (as is the case with residential properties), you should still look at the market trends and property values in the surrounding area. Essentially, you want to know if you’re investing in a medical property in a growing neighborhood or a community that’s slowly dying.

To determine this, look at the property values for both commercial and residential properties in the area over the last 18 months. What kind of trend do you see? If the trend is steady with a slight tendency toward positive growth, you’re looking at a good area to invest in. If it’s been steadily declining, you should move on to your next investment opportunity. If it has been rapidly increasing, you may want to be wary. This could be a sign that the area is growing and thriving, but that rapid rise in property values could either level off or crash. Be wary of volatile markets.

With this information, you should have everything you need to find the finest medical properties for the best real estate investments for your portfolio.

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Why Do Apartments Attract More and More Visitors? (2019 Update)

It’s no secret that Dallas has an incredibly popular rental market, especially for apartments and condos. This is both good and bad news for property owners and real estate investors. On the one hand, purchasing turnkey rental properties has never been more lucrative than it is right now. With corporate businesses booming all over Dallas, bringing in more new talent every day, the demand for rental apartments is astronomical, which means you’re almost guaranteed to make a profit on any turnkey rental apartment you purchase.

At the same time, apartments can involve a great deal of maintenance and can undergo a lot of wear and tear from one tenant to the next. This is made even worse when apartments seem to attract more and more visitors. With people coming and going all the time, floors get more traffic and appliances and fixtures get more use and abuse. So why are there so many visitors in these apartments, and can you control the flow of people in and out of your property?

Weekend Sublets Can Be a Problem

According to the New York Post, one landlord is suing his tenant for subletting her apartment on AirBnB for $190 per night. While subletting might seem harmless, when you have a turnkey property, it can turn into a nightmare. Not only does it increase foot traffic through the property, but it can also result in major property damage.

Time Magazine reported on a house that was completely trashed after a single weekend. That’s bad enough if you are renting your own home out for a period of a few days at a time, but what do you do if your tenants sublet their apartment and come back to find serious damage and toxic waste? Fortunately, your rental agreement should have a clause regarding sublets, and you should be protected against this kind of problem. If you have any questions about the risk of tenants subletting your property to unvetted guests, talk with your property management company to ensure that you are covered and that your risk is minimized.

More Visitors Can Mean New Tenants and Investment Opportunities

Now, obviously not all AirBnB and subletting guests are the kinds of people who will ruin a property in just a few days. In fact, many of these people are actually visiting Dallas because they may want to move here for work or school. If we look at the root of the issue, apartments are attracting more and more visitors because Dallas has a lot of great job opportunities, great quality of life, and the cost of living is not astronomical, either.

So what does that mean for you as a real estate investor? How can you improve your investment portfolio while decreasing your risks of property damage and liability? If you are concerned about a situation like the one that Time reported, you may want to opt to invest in a real estate investment trust (REIT) instead of purchasing a single unit in a commercial residential building.

This solution comes with a number of potential benefits. If you purchase equity in a building or complex, you will not be dependent on a single tenant to continue to see monthly or quarterly income. Instead, you will own a share of the property’s equity, which means you will get a percentage of the profits on the property on a regular basis, usually paid quarterly.

If you invest in an REIT, you will not be responsible for finding tenants for your property, and all property management responsibilities will be taken care of for you. This kind of property is much less likely to have problems with subletting, and if the complex has 100 units, a few vacant units will not hurt your profits in any significant way. Thus, if something does happen due to subletting or abusive visitors putting wear and tear on the unit, you will not have to worry about losing a lot of capital.

All in all, increased numbers of visitors to Dallas apartments should be a good thing for real estate investors because those numbers represent a continued high demand for rental properties in the area.