Category Archives: asset management

4 Ways to Tap Into Your Full Investment Potential

Are you ready to grow your wealth and watch your portfolio expand like you never thought possible? While real estate has traditionally been treated as a boring, slow-moving diversifier and stabilizer for portfolios, it can actually do incredible things for you if you know how to tap into your full investment potential. With these tips, you can efficiently and effectively take the steps necessary to gain more wealth and more earning power with your real estate investment portfolio.

Become an Excellent Communicator

Whether you’re working with an investment expert to perfect your portfolio or you’ve hired a realtor to help you find the best fix-and-flip houses, communication is key in the world of real estate investing. The clearer and more succinct you can be when communicating what you want and need, the more effectively others can work for you to help you achieve it.

Never Underestimate the Power of Networking

Next, use those communication skills to your advantage by networking with people in the real estate industry. You want to get to know brokers, contractors, real estate agents, financial advisors, other investors, and anyone who may have a new perspective or lead on the best investments for your portfolio. You never know when you might encounter a new investing partner, so always take advantage of opportunities to do some networking.

Always Follow Up

Of course, just meeting and greeting people in the real estate industry won’t get you very far if you don’t follow up with them later. Whenever you collect business cards at an event or whenever you meet someone by chance who works in real estate investing, be sure to follow up with a brief, professional email or call within 24 hours. You don’t want them to forget who you are and wonder why you’re emailing them, so always be prompt. Then, after that initial email, be sure to foster and build the relationship so that you create a true connection, not just another name in your phone.

Get Social

Beyond in-person interactions, get online and create an active social media presence for yourself as an investor. Whether or not you create specific pages for your investing ventures, you should be active on Facebook, Twitter, and LinkedIn, showing that you are a serious investor with a head for business.

On that note, be very aware of how you present yourself online and in person. Post only professional and appropriate pictures and content. Avoid volatile political debates, and don’t make comments that could make people question your character. You want people to find you on social media, and you want them to see you as someone they’d like to work with, whether in an investment deal or in another venture.

When you do these four things, you’ll create a reputation for yourself as a savvy investor with great people skills. You’ll be approachable, and you’ll have the connections you need to get leads on Harriet Robertsonthe very best investments in your niche.

Give us a call for more information, Thanks, Harriet

Having Market Jitters With the Stock Market?

jitters-stock Historically, the stock market will generate positive returns for investors over the long-term, with “long-term” being defined by 10+ years. If you’re confident in your portfolio allocation, one bad month shouldn’t cause you to change course.

It’s only natural for investors to wonder if they are over-allocated in equities after a large stock market drop. After the bull market of the last six years, many investors have become accustomed to a steadily rising market. For newer investors, in particular, this may be their first opportunity to assess their risk tolerance in a falling market. Investors who have a 90%+ asset allocation in equities are likely a little bit uneasy at the moment.

Real Estate as an Alternative Asset
If you’re an investor over-allocated in equities and looking for an alternative, we suggest that you consider real estate. Let’s be clear – real estate investing carries its own risks. No form of investing is risk-free, and generally the greater the potential returns, the greater the potential risk of loss. This goes in the stock market, in real estate, and everywhere else.

2012-housing-market-forecast-Real estate investing, though, offers features that investors who are concerned about stock market volatility might be attracted to. While there obviously can be downturns, real estate (or more precisely, the land underneath a property) is generally an appreciating asset. Even when the real estate market suffers a downturn, housing values will not plunge 5% in 5 minutes. The stock market is subject to high-frequency trading, which has only exacerbated the volatility of the market. These “flash” crashes and recoveries usually have nothing to do with the strength of the underlying businesses, which can be frustrating for more conservative investors. Real estate valuations are generally much more tied to the fundamentals of a property and market.

The Advantages of a  Self-Directed IRA LLC
Tax Advantages: With the Self-Directed IRA LLC, you have all the tax advantages of traditional IRAs, as well as tax deferral and tax-free gains. All income and gains generated by your IRA investment will flow back to your IRA tax-free. By using a Self-Directed IRA to make investments, the IRA owner is able to defer taxes on any investment returns, thus, allowing the IRA owner to benefit from tax-free growth. Instead of paying tax on the Self-Directed IRA returns of an investment, the tax is paid only at a later date when a distribution is taken, leaving the investment to grow tax-free without interruption.

With the Self-Directed IRA LLC, you can invest in almost any type of investment, including real estate, private business entities, tax liens, precious metals and commercial paper tax-free!

Investment Options: With the Self-Directed IRA LLC, you can invest in almost any type of investment, including real estate, private business entities, tax liens, precious metals and commercial paper tax-free!

Diversification: With the Self-Directed IRA LLC, you can invest in almost any type of investment, including real estate, allowing you to diversify and better protect your retirement portfolio.

Checkbook-Control: With a Self-Directed IRA LLC, you have even more advantages, including what’s called Checkbook-Control. As manager of the Self-Directed IRA LLC you will have the ability to make IRA investments without seeking the consent of a custodian. Instead, all decisions are truly yours.

Access: With a Self-Directed IRA LLC, you will have direct access to your IRA funds allowing you to make an investment quickly and efficiently. There is no need to obtain approvals from your custodian or deal with time delays in awaiting approval from your custodian or pay any review fees.

Speed: With a Self-Directed IRA LLC, when you find an investment that you want to make with your IRA funds, simply write a check or wire the funds straight from your Self-Directed IRA LLC bank account to make the investment. The Self-Directed IRA LLC allows you to eliminate the delays associated with an IRA custodian, letting you act quickly when the right investment opportunity presents itself.

Lower fees: Another advantage to a Self-Directed IRA LLC account is that you can save a lot of money on custodian fees. With the Self-Directed IRA LLC structure, you will not be required to seek custodian investments when making IRA investments allowing you to eliminate custodian transaction fees and account valuation fees.

Limited Liability: By using a Self-Directed IRA LLC with “Checkbook Control, your IRA will benefit from the limited liability protection afforded by using an LLC. By using an LLC, all your IRA assets held outside the LLC will be shielded from attack. This is especially important in the case of IRA real estate investments where many state statutes impose an extended statute of limitation for claims arising from defects in the design or construction of improvements to real estate.

Asset & Creditor Protection: By using a Self-Directed IRA LLC, the IRA holder’s IRA will be protected for up to $1 million in the case of personal bankruptcy. Also, most states will shield a Self-Directed IRA from creditors’ attack against the IRA holder outside of bankruptcy. Therefore, by using a Self-Directed IRA LLC, the IRA will generally be protected against creditor attack against the IRA holder.

REIT Correlation with Equities
This is another advantage that real estate crowdfunding (and other forms of direct real estate investing) has over publicly traded REITs. Large REITs such as General Growth were not immune from yesterday’s selloff. As we’ve previously mentioned, the stock performance of REITs correlated with the stock market nearly 80% of the time from 2007 to 2013, up from 47% between 1980 through 2006. REITs certainly have their positives, but it’s hard for them to act as a diversifier in one’s portfolio when 80% of their price correlates to the broader stock market.

Of course, the real estate market is not unaffected by broader market trends, and no one can predict if this stock market drop will be a blip or the start of a longer bear market. Commercial Property Executive notes that “even institutional investors have been known to up their allocations in real estate in the face of a weakened stock market,” and speculates that commercial real estate and larger residential properties will benefit while the single-family market will suffer. We won’t hazard a guess as to what the market will do.

even institutional investors have been known to up their allocations in real estate in the face of a weakened stock market

We will say, though, that if you’re finding that you’re over-allocated in the equities market, you should consider real estate as an alternative.

Real estate may provide your portfolio with a buffer to allow you to weather the falling stock market, and can help you weather the storm until a bull market returns.

Thanks,  Harriet

 

Recognizing Inefficiencies in Your Real Estate Marketplace

20160525-share-kcmOne of the first things that intrigued me about real estate was the unique opportunities that are available to outperform the market.  In the stock exchange, it’s nearly impossible to pick consistently winning stocks, though there are whole industries who will tell you otherwise. Over the long run, very few manage to outperform market averages. That is due, primarily, to the combination of fees and lack of skill and judgment.  All in all, it boils down to the fact that the stock market values are unpredictable, volatile, and emotional, but efficiently reflect the immediate value of the asset.

Warren Buffet said, “I’d be a bum on the street with a tin cup if the markets were efficient.” What he means is that he seeks underpriced stocks, ones worth more than the market values them. Market inefficiency doesn’t apply to only stocks. If you become adept at recognizing inefficiencies in a marketplace, you can position yourself to take advantage of those inefficiencies and prosper.

The real estate market is considered an inefficient market, in which prices are set solely by the meeting of the minds of the seller and the buyer, who make decisions based solely on their particular circumstances, and having little if anything to do with the market at large.  This makes the value in real estate very much a moving target.  Often enough, that the property you just bought for $90,000 could be worth $125,000, or it might only be worth $75,000, in which case you paid too much.

Confounding any assessment of the value is that different economic factors hit different locations differently.   Since the economic news will have different effects on a property in State A as opposed to State B, and it becomes difficult to determine an effect on any given property, and the various neighborhoods within each town, and the streets in each neighborhood – it quickly becomes overwhelming!

Another major inefficiency is the lack of information in the debt market.  Lenders and investors rely heavily on relationships for opportunity spotting (aka “deal flow”) and asset understanding.  On the other side of the deal, asset owners have limited options for capital often going with broker-fed funding options rather than seeking multiple lenders and letting them compete.   With access to deal flow and capital in the hands of a few, the market is naturally opaque and one-sided.  Commercial real estate brokers depend on 3rd party data service providers to continually update data on tenants and property owners. This information is in continual flux and as such isn’t feasible for an in-house solution.

Harriet Robertson“In short, change in supply and demand are going on all the time, however, due to the vast size of market participants not understanding the effects of that change – or even that change took place in a particular area. The people who do realize that values have changed will be in a position to take advantage of and in a position to exploit inefficiencies in the market”. 

Advice To Help You When Purchasing Property

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If you’re new at purchasing real estate, then you might want to read this and then employ the help of reputable real estate agents. Pros have lots of resources you don’t, including computer software that allows one to effectively search all MLS listings. The MLS tools available to professionals are more detailed than those accessible by the average individual, and are able to advise you with greater accuracy and insight. Many first-time home buyers don’t bother to get prequalified. They, also, don’t take the time to shop around and find the best mortgage for their individual situation. It’s crucial to ask questions and make sure you fully understand the home loan process.

Getting pre-approved gives the buyer a chance to find out how much home they can afford. A competent loan officer will tell the buyer not only the principal and interest payments per month, but also the estimated taxes, insurance and mortgage insurance monthly amounts. This gives the borrower a true number to work with in order to decide their comfort zone when looking at potential properties. Also, sellers will be more interested in negotiating with you, and accepting you as their purchaser, if you’re working with a good RE agent, and if you’ve already been pre-approved for a mortgage loan. If you are not pre-approved, it can lengthen the timeline of the purchasing process, and can result in additional costs.

Before buying a home, get an inspector to examine it. You don’t want to have a home that needs tons of renovating. Not only will this cost a lot, you might need to change your living situation until it’s fixed.

One simple way to start the entire real estate buying process is to get organized. You should have a notebook full of the information you get from newspapers, friends, online, and also from your agent. This will avoid confusion and make it easier for you to compare different offerings. Remember that your offer is very unlikely to be the only one on the table, so make a good offer. Do what you can to ensure it’s appealing to a seller.

If you are looking to purchase some of or all of a building in order to open a business, make sure it is in a good neighborhood. When you open a business that is located in a poor neighborhood, most likely you will not have a large pool of customers. Real estate agents will be able to advise you as to the best places to open a business. It’s easy to get wrapped up in your present needs, but you should also think about reselling the home before you buy. The average first-time buyer expects to stay in a home for around 10 years, according to the National Association of REALTORS®’ 2013 Profile of Home Buyers and Sellers. Factor maintenance and repair costs into your buying budget, because even brand-new homes will require some work. Don’t leave yourself short and let your home deteriorate.

When deciding on an agent, it is important to have a list of questions already planned out. You will want to know how many homes were sold during the previous year, as well as the number in your target area. The agent should be prepared to answer all of these questions in a professional manner. It’s absolutely vital that you find a real estate professional who understands your goals and who is ready and able to guide you through the home buying process.

If you’ve made an offer for a house that seller didn’t take, don’t be discouraged, since you might find a better home. See if they might offer to cover closing costs or necessary repairs prior to you moving in.

Request a checklist from your Realtor to put yourself in the best position before buying. There are many Realtors that have a checklist like this already prepared. It covers the entire home-buying process, from choosing a house to getting a loan. Using this checklist can help you make sure that you have completed everything in time to close the sale.

sold101As this article shows, buying real estate is not as complex as it seems. You must take some time to educate yourself and ask a lot of questions, but the potential profits are well worth the invested time. If you use the above tips, you should be able to make a wise decision on your next real estate purchase.

Call me for your next good adventure..!