The nose dive we experienced with the stock market in August 2015 should have been a HUGE wake-up call to anyone who was getting a bit comfortable with stocks. This is similar to the wake-up we all received when the housing market crashed in 2007. During the recent stock slide, my rent checks came in as usual and the value of my property wasn’t affected. What I did notice, however, was the large one day drop (around 6%) in my retirement portfolio linked to stocks and mutual funds.
Before I upset all the stock investors out there, let me start out with the fact that I’ve invested in both stocks and real estate. They are both great investments and at certain times and market conditions, you may decide to use either of these tools. You may want to use both of them simultaneously. If you decide to invest in real estate, we are happy to help, and continue you down the path to higher financial education!
Hedge fund Investments had a prevalent impact on the Tampa Bay market from 2013 and 2014. These are groups out of Wall street most of which are publicly traded. They are once again buying homes in Tampa Bay and some are beginning to sell homes. An interesting thing about it is that helped the Tampa Bay market recover.
There were many positive gains as they bought 1000’s of homes, created jobs and improve the Real Estate market overall. The hedge funds have large amounts of investment cash. They target a list of minimums that we all should consider. They tend to like a relatively newer home with a minimum of 3 bedrooms, 2 baths with a garage. Generally they like it to rent and make at least a 10% cap rate. They like turnkey but doesn’t need to be significantly updated. They tend to buy within the $100,000-300,000 range.
How to Select an Investment Opportunity
Investments are like “rain coats” you have to try them on and see what fits. The best place to start is determine what amount of cash you want to invest or reach out to a Lender to get the latest rules regarding investment loans. Lending is an ever changing process and industry. Knowing what area you want to invest in is usually an area you have specific knowledge about or is a close proximity to where you live or work.
Distance is a concern unless you are turning the property over to a Professional Property Manager. We won’t take Property Management clients that are more than 30 miles away. It is unrealistic that we would be in the neighborhood on a regular basis to monitor the property if it too far. Next is your price range. That can dictate the area you are able to buy or should buy. Schools may mean nothing to you but they are statistically tied into increasing property values and rental demand.
Rent price ranges changes the complexity of the investment as the lower rent range is vulnerable to be less appreciated or cared for by a tenant. Higher price rentals come with more complicated issues like job less events that change the plan course. In either case and all cases awareness of the Asset and the Tenant are what makes investing successful.
The tax opportunities for an owner require a well versed CPA advisor and the opportunity to delay taxes and upgrade the investment through a 1031 still makes real estate a great investment. Great advice is available through the Anderson Realty Team as Lisa Anderson still owns 6 and professionally advises Investors every day with their decisions.