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5 Tips for Investing in Commercial Real Estate (2019 Update)

If you’ve been researching different types of real estate investments, you likely already know that commercial real estate tends to yield larger returns in less time than single-family residential real estate. Whether you’re interested in investing in multi-unit residences, medical real estate, or retail real estate, you should know a few things before you commit.

Today’s Hottest Location Could Be Tomorrow’s Dud

We’ve all seen it happen. A new development goes in, and suddenly all of the most popular retailers and other businesses flock to open locations in it or near it. That’s great for a year or two, but then another new development begins just a few miles away. Suddenly, consumers are all intrigued by the latest shopping and dining area, and businesses in the first development start closing their doors. Before you know it, that area is completely unpopular and its investors find themselves looking for the fastest way to sell.

How can you avoid falling into this kind of trap? Look for areas that have catalysts for sustainable growth. Look for new schools, parks, rec centers, and shopping districts with longer leases on their units. All of these signs are indicators that an area will continue to be a good location for years to come, and that it’ll bring you good cash flow for as long as you choose to own a property (or equity in a property) there.

Beware – Properties Don’t Always Sell Quickly

Likewise, it’s a good idea to keep in mind that real estate is an illiquid asset. If you need liquidity in your portfolio, you should ensure that you have it with other investments (like stocks, bonds, precious metals, etc.) before you invest in real estate. If you think that you’ll need access to your investment capital quickly within the next few months or years, commercial real estate may not be the right investment for you at this time.

Cash Flow Is Not Guaranteed

You may be thinking, “But what about cash flow from the property’s rental fees?” If you have tenants who pay their rent on time every month, then you will have consistent, regular cash flow from your rental property or properties. If your property remains vacant for any length of time, however, you will need the liquid funds to pay the mortgage, property taxes, and any other fees or fines associated with it.

For most investors, this is worth the risk, as purchasing a good property in the right location will almost guarantee that you’ll have tenants willing to sign long-term leases. However, you do need to be aware that there may be some expenses associated with the property that you’ll need to take care of before you acquire tenants or between tenants when you have turnover.

Never Underestimate the Value of Good Accountants and Attorneys

Next, you may be tempted to try to do your own accounting, and you may not think that you need an attorney to be a real estate investor. However, these experts can save you a lot of money and legal trouble in the long run. Never underestimate their worth.

Turnkey Properties Are Great Investments

Finally, don’t turn your nose up at the slight premiums you see on turnkey investment properties. These properties are ready to rent as soon as you buy them, and many of them come with paying tenants from the beginning, as well as property management. When you consider the convenience and the lowered risk level of this kind of property, the slight premium on its initial market price becomes negligible.

Keep these tips in mind as you start to explore the world of commercial real estate investing.

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5 Common Mistakes Retirees Make With Real Estate (2019 Update)

Have you recently retired or are you planning to retire soon? Everyone wants to live a comfortable lifestyle after they quit working, but all too often people make a few simple mistakes that can create huge headaches and financial struggles for their retirement years. If you can avoid these real estate mistakes, you’ll have a much better chance of enjoying the kind of retirement you’ve always dreamed of.

Neglecting to Downsize

When your kids were young and lived with you, you needed a lot more space. Now they’ve all grown up and moved out, and you’re still living in that large house with all of those extra bedrooms. That house may have room for everyone to stay with you for the holidays, but it also comes with big utility bills and maintenance costs, too. Downsizing to a smaller home can greatly reduce your cost of living, which can make your retirement funds go a lot farther.

Keeping Two Homes

Worse yet, a lot of retirees maintain summer and winter homes, sometimes in different states. Keeping two properties means paying two mortgages, paying at least double the property taxes, and paying to maintain both houses and properties. That’s a huge drain on your finances, and it can lead to a lot of problems for you financially.

If you really want to live part-time in one area and part-time in another, make sure that both properties are small and have low maintenance costs. You may even want to invest in a timeshare so that someone else pays for the property you’re not living in when you’re not there. In most cases, it makes more sense to save money by selling one of your properties or at using it as a rental investment property instead of keeping up two homes.

Failing to Invest Profits From Downsizing

When you sell a bigger home and buy a smaller one, you’re more than likely going to have some profits. That’s great, but you shouldn’t spend them on vacations or sundry items. Instead, invest them in real estate and/or other investments that will give you a positive return to continue funding your retirement.

Failing to Research Before You Relocate

If you’re like a lot of retirees, you probably dream of relocating to a beautiful, sunny area where you can enjoy all of your favorite leisure activities whenever you please. You may have been dreaming of living in California or southern Florida for years, but what do you really know about living in these places? Will you have access to doctors and caregivers in your insurance provider’s network? What about the cost of living in your chosen area? You should thoroughly research any new location before you commit to buying a house there and moving.

Continuing to Pay a Mortgage in Retirement

Finally, we’re not saying that you should just stop paying your mortgage. However, if you sell your larger home and buy a smaller one, you will likely be able to pay in cash. Even if you can’t, with the returns from your investments, you should be able to pay down your mortgage fairly quickly so that you can be free of it and enjoy your retirement income without worrying about how you’ll pay your bills.

These real estate mistakes can make life really hard on retirees, and they can result in major financial problems. If you want to enjoy your retirement instead of pinching pennies and worrying if you’ll make it until your next Social Security check comes, avoid these mistakes and diversify your investment portfolio with income properties that will continue to supplement your wealth throughout your retirement.

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4 Principles to Help Your Online Real Estate Investments (2019 Update)

Investing in real estate online may seem like a very simple venture at first, and it’s certainly a better means of increasing your passive income and diversifying your portfolio than other investment options. However, if you want to make successful investments and ensure that your investment capital is working for you, you should keep these four principles in mind.

Work With People Who Have an Intimate Understanding of the Market

Whether you’re investing through an REIT (real estate investment trust), a real estate crowdfunding platform, or any other online investment service, you need to know that you’re investing with a company that employs real estate and investing experts who know the market like the backs of their hands.

Essentially, you need to remember that you’re not just investing in a website. You’re investing in one or more income properties through a website that is backed by real estate agents and brokers, financial experts, and others who have an intimate knowledge of the market. These people will either use your capital to invest in a profitable development, as is the case with an REIT, or they will work with you to match you with the best investments to improve your portfolio’s performance.

Before deciding on a platform to invest in, look into their investment history and/or work with an investment firm that has a reputation for making great choices for their investors.

Diversify Your Investments for a More Stable Portfolio

This is one of the most exciting aspects of investing in real estate through REITs and/or real estate crowdfunding platforms. Instead of purchasing an entire property on your own, you have the opportunity to purchase a percentage of the equity in multiple properties. This gives you the ability to diversify your portfolio with a number of different investments, making it more stable should one of your investments fall short of your expectations.

Not only is real estate a great hedge against inflation for your investment capital, but spreading that capital across multiple properties also reduces your risk level while potentially increasing your rewards.

Communication Is Always Key

As we mentioned earlier, when you choose to invest in real estate online, you’ll be working with one or more investment firms. Years ago, this would have meant having regular in-person meetings and/or phone calls with your investment advisors. Today, it may mean regular emails, SMS messages, and live chats, as well as the occasional phone call when necessary or when you prefer. The modes by which you communicate with your investment firm may change, but the need to communicate openly with them remains the same. A quality investing firm will keep lines of communication open and will work with you so that you are always aware of what’s going on, where your capital is being invested, and how it benefits you.

Your Investments Make a Difference

You may never step foot in your investment properties. Many of them may be local, but they may also be out of town or out of state. The successful developments you fund with your investment capital will help to improve the property values and vibrancy of the areas and neighborhoods where they’re located. In addition to making your local communities and communities around the country better places to work and live, this also yields more and better investment opportunities for the future.

Keep these four principles in mind, and you’ll have the basic tools you need to begin investing in real estate online. The platforms and forms of communication with your financial advisors may be evolving, but the basic elements of investing in commercial real estate remain constant.

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3 Tips for Investing in Real Estate for Retirement Income (2019 Update)

Whether you’re planning on retiring in a year, five years, or twenty years, you’re probably not looking forward to living on meager checks from the Social Security administration. Your job’s retirement plan may be good, but it’s likely not going to leave you living in the lap of luxury, either. That’s why it’s important to make the right investments now so that you can gain passive income and continue making money well after you’ve retired.

Real estate investments make sense for this because real estate is a brilliant hedge against inflation, and it’s a great source of passive income, as well. If you want to gain the most income with the least amount of effort, though, you’ll want to follow a few simple tips.

Find Truly Passive Income Streams

First of all, you may think that you want to buy, renovate, and flip houses to make more money and work on your own schedule. However, unless you put a lot of that money away and/or invest it in other areas, this is not a great way to create passive income, as you’ll need to continue flipping to keep making more money.

You may think, then, that fix-and-hold properties are the way to go because you can get great deals on distressed properties, renovate them on a budget, and then rent them out to tenants for monthly income. This is still a fairly active means of making income, at least at the beginning, but once you’ve established a relationship with a good property management firm, you can begin to relax and enjoy your monthly cash flow. A better method for a lot of people is to choose turnkey properties that require no work, often come with tenant acquisition and property management, and allow you to start collecting income from the beginning. Other good options include investing with REITs (real estate investment trusts) and/or crowdfunded real estate platforms.

Don’t Forget About Taxes

Now, whenever you sell a property at a profit, you will owe a substantial capital gains tax on that property. However, if you sell the property in order to buy another investment property, you can use a 1031 exchange to defer paying your capital gains tax indefinitely. This is something to consider when creating retirement income through real estate investments, as you cannot apply a 1031 exchange to REIT investments and some other equity investments. If you’re concerned about taxes – and you should be – talk with your financial advisors about the best options for your portfolio.

Work With Real Estate Experts and Financial Advisors

Finally, don’t try to do all of your investing on your own without any expert help or advice. First of all, you want to make sure that you’re investing in properties that have low risk levels and the kinds of rewards that will yield good monthly or quarterly cash flow now and into your retirement. This is harder than you might think if you’re new to investing and/or you don’t have a lot of experience in real estate. Plus, it’s sometimes difficult to determine how much of your assets to invest in one or more real estate developments to get the most from your capital.

When you work with a qualified real estate investing firm, you’ll have access to real estate brokers and agents, as well as financial and investment advisors who will take the time to understand your portfolio and your needs. With their help, you’ll have the best chance of making the right investments to continue making money long after you’ve retired.