Three Ways to Turn an Average Real Estate Deal into an Exceptional One

Start this blog by telling you my real estate and cash flow plan. When I was 29, I passed the real estate exam. After passing the exam, I bought my first real estate property. I planned to buy one rental apartment a year. I planned that I could cash flow off at least twenty properties. Or I could sell a house each year. Buying one property each year was an initial goal. With the time I changed my real estate property goals.  I bought seven rental properties within a year. Next year, I followed by 9 more rental properties. At the age of 40, I was about to hit 100 rental properties.

I thought about 100 rental units and I changed my dream. I wanted a high and posh lifestyle. And I came to a solution to get a lifestyle I wanted. I could achieve my goal by using creative financing. With creative financing, I will be able to increase cash flow. I could also enhance my lifestyle by incorporating tax and note strategy. When I thought about these strategies, I realized I might not buy 100 units to fulfill my dreams. Thus, I need to improve my real estate strategies. I need to change the way of doing my real estate business. Moreover, I came to know what an average real estate deal is. This word gave a new charm to my real estate portfolio.

Average Real Estate Deal

In the real estate business, every property deal is unique. However, an average deal is based on the real estate market and your business’s strategies.

I am explaining an average real estate deal with an example. For instance, an apartment or a house outside the Philly has 3 to 3 bedrooms. The rent of this apartment could be $750 to $1,000. The expenses you could face are about $100k per month.

Here, you must be pondering about the area of the apartment. Does it matter? Yes, it matters. I will tell you later why the area does matter.

If you want an apartment of 3 bedrooms for $40k to $45k. The total repair cost will be $65K with ARV (after repair value). It means from $100K you are saving $35K. You can old your home at $100K. if you sold that apartment at $100K, it would be $28K net before taxes after the cutting of real estate agent fee and transfer taxes. At the end of the year, the net amount would be $19,600.

Moreover, you can go to the bank and gain a good return on it. You can take at least $300 cash flow per month from the 3-bedrooms apartment. Moreover, the bank will give you 20% to 30% down payment and 30 years mortgage on it.

3 Ways to Turn an Average Deal into Star One

You can turn your average real estate deal into a better one. If you try, you can save money on taxes (where possible). Use your property in the best ways. Try to make money from the property in all possible ways. Here are some ways to increase your cash flow from the rental property.

Save Money from Taxes

The biggest hit for the real estate owners would be a capital gain tax.  With a simple strategy, you can save money on capital gains. To save money wait for a year or a day before selling. You can use some other strategies to save money. One simple strategy is you can sell the property in lease-option. Another strategy would be selling the property with owner financing.

Use Your Property in the Best Way

You can use your property in the best way when you repair the property. You need to add bedrooms, repair the house, renovate the apartment. By doing this, you can gain a high cash flow on it.

Creative Financing

You need to be creative with finance if you want to increase the cash flow. It could be anything with financings like taking out 10 years fixed loan or interest-only mortgage.

Things to Consider before Buying the Second Home

Are you at that point in life where you are thinking of changing a home? Or if you are someone who’s circumstance in life has changed in terms of living alone to living with a family or with kids? Or are you somebody who is interested in changing the locality in general? All these concerns and additional factors will be mentioned in the following article to help you find the perfect second home. According to research, most of the contemporary owners of the home are the millennials, who are showing interest in buying new homes. This means that the property market revolves around the priority and buying trend of the people from the millennial. Moreover, some of the millennials are turning to the real estate property business to develop a lucrative property business. Therefore, one is supposed to take into account the entire significant variable in order to make the best decision.

Financial Matters

If you are new in the property business and you own a house, but you want to turn it into an investment for gaining profit and buy a new home for yourself and your family, entry into the rental property is probably one of the best options. According to the experts, the potential owners of the rental property will be the millennials due to the relatively improved financial situation of the millennial. In other words, the first houses bought by the millennial can be used as the rental property. However, if you don’t have the assets or financial backing to invest in your rental building or to buy a second home for living, you could take a loan to help you with the obstacles to an extent. Similarly, there is an option of the owner-occupied mortgage, which involves the submission of a down payment to get the suitable interest rate and to secure a second home for residing.

Taxation

The matters of tax can get hard, especially if you are in the transition phase of turning the home into a rental property, however, if you know a consultant who could advise you on the details of property that is subjected to taxes, you could prepare yourself to get the deductions or to manage it in an effective way. For example, the deduction on your mortgage interest and the maintenance can be availed if you know how to get out of the complications involved in taxation process and perks that are offered with real estate rental business. In addition, if you have lived in the house before converting the house into the rental property, it could also deduct one particular type of tax applied on the rental property in general.

Suitable Rental Property

If you want to get the maximum profit out of your rental property or if you want to succeed at your very first attempt, it is pertinent to critically assess the best features of a rental property that can be utilized by you to make it the most appealing option for the renters out there. For example, renters prefer to shift in a house which is neither too big nor too small for the living. In simple words, a house of three to four bedrooms is the most popular choices. However, if you don’t fall into the category that would gain the attention of the potential renters, you could make smart changes in your house to make it an ideal option in addition to formulating a strategy or plan to cater the needs of the renters.

Rental Fee

Although the range of a rental fee depends on the nature of the rental property one is offering in terms of the accessibility, a certain number of rooms and other facilities, however, there are few tips that may help you. Surveying the existing market or the areas surrounding the rental property may help you in comparing the prices and determining the suitable range for your house. For example, if you don’t have a well-established name in the business, it is better to lower your rental rates to start your business; however, over the passage of time you can increase the rental range to get the desired profit. Furthermore, it is important to calculate the maintenance charges and taxes applied on your rental property to balance the cost and benefit of your rental house.

Put Yourself in the Shoes of a Renter

A strategy that takes into consideration all the factors and requirements from the point of view of a renter is what most of the beginners in the field overlook. This is why it is important to understand the market dynamics if you want to respond to the competition and make a name for yourself in a cogent way. If you work on a statement that describes the best features of your rental property and the locality, it may help to make you seem different than the contemporaries. Moreover, it gives an impression of a thoughtful gesture on the part of a landlord and facilitates in building a sense of good bond between them, which is long lasting in terms of gaining the loyalty of the renters as well. In addition, narrow down the category of people you want as the renter of your house. For example, whether it is young students that you like to rent out your house to or families?

Virtual Tours

The facility of Real Estate virtual tours of your rental house is another convenient way of appealing to the potential renters. The main purpose is to tap into the market that has not been catered to. For example, millennials are regular users of the internet, so a person in another country may want to shift to your rental house for pursuing studies or to find a job. As the real estate market is very competitive due to the monopoly of established names. Therefore, launching your rental business and attracting renters may become difficult if you don’t use innovative ways of marketing your rental property. Additionally, if you want to rent out the rental property to young students or singles, the virtual tour will play a role in appealing to the millennials in a convenient manner.