Investing in real estate comes with its fair share of risks. Still, with proper decision making, hard work, and smart investment, it can be very lucrative and an excellent source of income. When it comes to this industry, there are many strategies to consider, and learning how to make smart investments will boost your chances of success. The amount of capital needed, time, skills, and knowledge are dictated by the choice of your investment. The following are some of the ways you can invest in real estate.
Getting a house to live in first then transition into a rental is a great way to start investing in real estate. Purchase a multifamily residence, live in one unit then rent out the other units. This strategy minimizes the maintenance costs while giving you an additional source of income. Before investing, make sure you research the market and evaluate your sources of finance. You can go for a townhouse, duplex, or compact apartment complex that will be easy to rent out. While living in the house, you can make preparations for getting started in the business by making modifications that will save you on unnecessary costs. The interest in the property will also go up if you primarily live in the house.
House hacking implies renting out part of the house you live in to earn an income without digging into your pockets to invest in a separate property. You can lease a spare bedroom or convert the basement or garage into a room. However, this move is only ideal for someone who does not mind sharing their space. House hacking also reduces the costs of running your home as the tenant may pitch in. This strategy will help you understand your tenants and know the ins and outs of the property, so the transition to fully renting the house will go smoothly. You also need to understand the responsibility that comes with being a landlord and find ways to set boundaries. It would be best if you were also comfortable having a roommate for this strategy to work.
The popularity of vacation rentals has been on the rise over the years following the growth of platforms like HomeAway and Airbnb. The vacation rentals business is an $85 billion industry with HomeAway listing over 2.8 million units on its website. Short-term vacation renting means property owners rent out a fully furnished apartment, condo, or home to an interested party. Vacation rentals are popular because they are more affordable than hotels, less restrictive and much more comfortable as the guests get access to multiple rooms, a kitchen, or the pool. They are also kid and pet-friendly because, unlike a hotel, children get the space to play and run around freely. You also get to bring along your pet.
Investing in this business is a great way to invest in real estate. For this reason, you should familiarize yourself with the tax rules and regulations governing short-term rentals. You do not have to pay income tax if you rent out your property for a period of not exceeding 14 days yearly. If you lease out a room, the same 14-day tax rules are applied as if you had rented the entire house.
With REITs, you get to venture into real estate without owning real estate physically. It allows investors to invest in real estate by purchasing stocks in a company through an exchange-traded fund (ETF) or a mutual fund. REITs fund properties like warehouses, offices, medical facilities, hotels, apartments, rental centers, infrastructure, tell towers, and many more. REITs can be lucrative, but also, they are complex and varied, so the amount of risk and the chances of your success much depend on the kind of REIT you buy. It isn't effortless to value non-traded REITS so new investors should go for REITs that are traded publicly. To begin, you will need to create a brokerage account which takes not more than 15 minutes, and the good news is, most companies do not need an initial investment.
This strategy is ideal for individuals with extensive experience in marketing and valuing property as it requires proper evaluation of the cost of repairs and excellent marketing skills to flip the houses. It would be great if you had the capital and the skills to repair the property or the time and ability to oversee the renovations. If you have the money but lack the skills for flipping, then you could partner with a contractor who will manage the project. Excellent marketing and proper evaluation of the property will also ensure that you sell the house promptly and avoid losses. You can further lower the risk of incurring losses by living in the house while the repairs are done. Most house flippers often work with a time scale of 3-4 months.
Get started in real estate investments by purchasing a property on contract, then transfer the agreement to someone else and earn through contract fees. You do not need excellent marketing or networking skills, and the strategy helps you to learn the ropes of this industry quickly. Many investors get into the business through wholesaling because it requires minimal capital. After all, the wholesaler does not buy the house.
This move eliminates the responsibility of managing the real estate, generates income. Still, to get started, you will require a lot of capital. In investment groups, a company would typically buy or build houses; investors then purchase the properties through the company, hence joining the group. An investor can be the owner of multiple units. Still, the responsibility of running the properties belongs to the firm that runs the group. They conduct tenant interviews, manage, maintain, and market the properties lie. The lease of the properties is usually in the name of the investors.
Real estate investing is a unique field to break into. When done right, you can bring in a lot of profit. Follow the tips above and watch as your investments pay off.
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Vacation homes can be wonderful assets. You can use them as a home away from home during vacations and rent them out when you aren't using them. Things can get a little more complicated when it comes to including the vacation home in estate plans. Here are some options you should consider for doing so.
Many people use a vacation home as a source of income. If you or those you intend to inherit your vacation home plan to continue doing this, it's a good idea to establish an LLC for the property. LLCs give you a measure of protection against being sued for incidents that occur on your vacation property. In the event of a lawsuit, the only assets that could be endangered would be those under the LLC. This provides protection for personal finances and other assets and belongings.
Once established, you can transfer ownership of the LLC to whomever you intend to inherit the property. This can be done all at once. If you want to take advantage of tax law gift benefits, however, you may find it beneficial to transfer ownership at a rate of $15,000 per year. This takes more time, but may be a better option financially. It can also be an easy way to transfer ownership to more than one person.
Alternatively, you can use a trust to transfer ownership of the home. There are a few different options for creating a trust for your vacation home. A revocable trust can be amended during your lifetime but becomes irrevocable upon your death. An irrevocable dynastic trust may be another option worth considering. A qualified personal residence trust can be a good option to pursue if you intend to live in the home for a time before passing it on. This type of trust has the potential to reduce the gift tax value of the home, which can reduce the amount of gift tax the beneficiary is liable for. However, that benefit may go away if the owner passes away before the term of the trust is over. Make sure you clearly understand the terms of the trust when it is being drawn up. You should have an explicit understanding of how long the trust lasts, who the beneficiary or beneficiaries will be, and the terms upon which it is predicated.
You might also consider giving your vacation home to someone in the family as a gift. This can be done through an outright transfer of the property title. You can do this in fractional shares if you want the ownership to pass to more than one individual. It's arguably one of the simpler ways of passing property on to others within the family. The downsides are that it doesn't provide much in the way of provisions for future property management. That could potentially lead to familial discord down the road. Additionally, those holding the title will be responsible for the cost of upkeep and maintenance. To reduce the friction that may occur in the future, consider adding a stipulation that owners must sign a written agreement detailing the future management of the property.
Of course, retaining the property and passing it down isn't always the best option for everyone. Those you want to inherit the property might not be in a position to take it. Sometimes the better option is to sell the vacation home, thereby liquidating the asset and providing you with cash you can disburse instead. This cash would still be subject to the gift tax, so it might be a good idea to spread out cash gifts over a few years until it's been distributed. A reverse mortgage might also be worth looking into if this is the route you want to go.
There are multiple ways you can include your vacation home in your estate plans. If it's going to be rented, establishing it under an LLC is a good idea. You might also consider creating a trust for it or giving it as a gift. There's also always the option of liquidating it as an asset. Which option will work best will depend on your circumstances. Make sure you take them into careful consideration when deciding how to include your vacation home in your estate plans.
If you were ever wondering if it's really a good thing to spend time outside, all the time you've likely had to spend inside this year has created a good argument in favor. With the pandemic giving many people cause to think twice before heading out, backyards have become havens for people who still want to enjoy some time outside. If you want to turn your backyard into your own slice of paradise, consider transforming it with beautiful landscaping.
You'll need to start with a theme you want to center your backyard around. The English garden and Oriental landscape styles offer you a chance to visit another place just by stepping outside. If you like symmetry, straight lines, and precision, the formal landscaping style may be a good option for you. Alternatively, informal landscaping can be more whimsical with curved plant beds and seemingly random plant placement. If you're looking to reduce the cost of utilities, xeriscaping can help you save water while creating a stunningly landscaped yard. With so many different options, you should be able to find something to suit your personal preferences.
Creating a truly gorgeous landscape is best done with the help of professional landscapers. They have the tools and skill to get the job done right and in a timely manner. They should be able to help you with any questions you might have, including care and maintenance questions. Of course, finding professionals you can trust can be easier said than done sometimes. If you aren't sure where to start, try checking out Houzz. Houzz connects you to home service professionals and also has guidebooks and articles on home improvement topics.
Once you have a beautifully landscaped yard, performing regular maintenance is a must if you want it to stay that way. Properly maintain your edges to keep them crisp and clean. Appropriately water and fertilize your plants to keep them healthy and vibrant. Mow and trim back as needed. Don't forget to aerate your grass regularly too. Consider hiring professionals if you don't have the time to do all the maintenance yourself.
Creating a beautifully landscaped backyard can boost the amount of enjoyment you get from it. Make the most of your backyard space by centering it around a theme, hiring professionals to create it, and regularly maintain it. The end result should be a gorgeous backyard you can't seem to get enough of.
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Being a homeowner is great—until it isn't. Over time your home may become worn. You may find yourself taking less and less joy in being there. If that sounds familiar, it's time to breathe some fresh life into your home. Here are some things you can do to help you feel proud of your home again.
Your home is arguably the place where you should feel the most comfortable. Adding personal touches to the interior of your home is a great way to give your home its own personality. Since you'll be the one calling the shots here, you can make sure that it's a personality that you'll feel proud to show off. Have a favorite color? Maybe you find ways to incorporate pops of color into an otherwise neutral room. You might add pictures of your friends and family to the walls. Add a figurine to a shelf or table. Choose something meaningful to add to every room that will make you feel good when you see it.
Regardless of the size of your backyard, there is ample potential to tap into. You can add decorative elements to your yard to make it stand out. Consider adding relaxing seating options to make it more enjoyable to lounge in. If you don't have much shade, add some trees or a pergola. If you're feeling ambitious, you might change up the landscaping. You could add different plants or maybe try your hand at gardening. Growing a garden can be a great way to develop a sense of pride in your property.
Houses have a tendency to get dirty even when their owners are diligent in cleaning them. Regardless of your diligence (or lack of it), giving your home a good deep cleaning can help it feel revitalized. Clean homes offer multiple benefits to those living in them. If you're embarrassed to have company over because your home is dirty, take action to overcome that. It can seem like a daunting challenge, so consider taking it a room at a time instead of all at once.
If you've lived in your home for years and it feels run down, try not to fret. Taking steps like these can have a powerful impact on your home. You'll find yourself feeling proud of owning your home again in no time.
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The condition of your walls changes the entire atmosphere of your home. Preventing damage to your walls helps your house look nicer, cleaner, and reduces the cost of fixing big problems later. Doing the things outlined in this post will help your house feel more like your home.
Water can damage almost anything if left long enough, and walls are no exception. Damp walls can lead to mold, paint damage, and structural damage. Sometimes it is hard to see these problems until it’s too late, so it is best to deal with water issues as soon as possible.
When water is spilled near your walls or if there is a flood, drying out the room using a dehumidifier is well worth the rental cost. Water can remain trapped in the carpet or floor and creep up the wall. Ventilation is a fantastic way to make sure that your walls do not get worn down by humidity. Keep your plumbing in the best shape possible to avoid unnoticed leaks that will damage your walls.
Pests, such as termites, can be in your home for a long time before you ever notice that they’re slowly eating away at your walls. Pests are also very difficult to get rid of for that reason—they have time to set up shop before you can deal with them. Consistent pest control greatly reduces this risk. There are many options in pest control, so consider what will be best for you and your family.
An in-wall pest control system has many benefits for homeowners over spray treatments. Because it is in your wall rather than sprayed outside, it can last longer. It also has the advantage of being constant, so that pests never have a chance to settle in your home in the first place.
If something looks broken, it probably is. That is why it is important to carefully consider how to personalize your home. When you furnish your home, if there is a chair or table placed next to a wall, think about what it might do if it rubs up against the wall. When hanging paintings, if the painting is heavy, it is important to find a stud that will be able to support the weight of the painting. As you personalize your home with art, photos, shelving, décor, and other furnishings, don’t forget to carefully consider how it will affect the state of your walls.
Helping your house feel like home is important and protecting your walls can be an important part of that. But preserving your walls isn’t something to do just for the aesthetic of your home—it helps keep your family healthy and helps the structural integrity of your home.
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