Should You Invest in Real Estate to Avoid Further Losses in The Stock Market?

If you’ve been watching the news, it’s not uncommon to read that the stock market is down 600 points one day, or up 400 points the next. Sadly, this is due to the fact that the long-awaited correction in the stock market has finally arrived and many analysts are predicting that the stock market could lose up to 2,500 points in value within the next 30 days.

As an investor, one of the biggest questions that you need to ask yourself is if you should pull your money out of stocks and put it into real estate.

If you’ve been unsure about getting involved in real estate investing, this article will provide you with several reasons why real estate investing is the best investment to make right now compared to the wild roller coaster ride that is the stock market.

Stability

Over the last 20 years, real estate has been one of the most stable investments in the United States, and that stability is only expected to continue because the success of real estate is not tied to the success of the economy, it’s tied to the geographic area where the rental property is located, and of course the demand for rental properties as well.

Thankfully, in 2018-2019, the Houston Texas area continues to be one of the most highly desirable areas for relocation in the United States Because Houston has a thriving jobs market and a lower cost of living than what can be found in other states like California.

Cash Flow

Another great reason to invest in real estate is cash flow. Over the last 20 years, rental properties in Houston and across the United States have continued to produce consistent cash flow on a monthly basis even during turbulent times like the .COM bust of the late 1990’s, or the beginning of the Great Recession in 2008.

If you had your money invested in stocks over the last 20 years, imagine how much money you could have avoided losing how you been invested in rental properties instead.

Hedge Against Inflation

Last of all, but most important, another great reason to invest in Real Estate is that rental properties are an excellent hedge against inflation because, when your tenant moves out of your rental property, you can raise the rent so that it’s comparable to what other rental properties in the same area are renting for.

Contact VestPro Residential Services

To get started with investing in rental properties in the Houston Texas area contact best VestPro residential services today by calling us at (832) 971-1841 or click here to connect with us online.

Will More Stock Market Investors Put Their Money in The Real Estate Investment Market?

The stock market has been experiencing another correction in recent days and with a stock market correction, it’s not uncommon for investors to put their money into the bond market or real estate investment market like commercial or residential rental properties.

This has happened before in the past before the crash of 1987 and 2008 because smart investors like to get out of stocks before their investments lose a ton of value like Amazon’s Jeff Bezos who lost a record $9 billion in one day.

Let’s say that you have $1 million in stocks, should you invest some of your money into real estate? The answer to this question is yes.

A Very Stable Investment

Like Bonds, the Real Estate investment market is very stable and can offer you an excellent return on your investment.

Real Estate is different than bonds though because with real estate you can rent it out, generate income and ultimately raise the rent for inflation compared with bonds which depending on the bond will only pay you a small return on your investment.

How Long Will the Stock Market Correction Last?

If you’re wondering how long the stock market correction will last, the answer is it’s anyone’s guess. Many institutional traders have been predicting that the market may lose up to 30% of its value but since we haven’t seen a wild swing like that there’s a good chance that the market may not lose much more value from here.

Tired of the up and down of the stock market? If you’ve been investing since before 2008, you’ve been riding the “roller coaster” for a long time.

Thankfully, with rental properties, you can enjoy long-term stability and cash flow from your investment plus a wide variety of other tax advantages compared to stocks or bonds.

Learn More About Houston Texas Real Estate Investments

To learn more about real estate investments in the Houston Texas area contact us today by calling (832) 971-1841 or click here to connect with us online.

Trying to Buy More Single-Family Rentals? Here’s What Could Kill the Deal

Are you thinking about adding more single-family rentals to your portfolio of rental properties? If so, you’re making a smart choice!

Even though you may currently own one or more single-family homes, the reality is that you can easily kill a home purchase deal by making one or more of the following mistakes.

  1. Lack of preparedness

Many property managers look at their business as a revenue source, but according to Propst, it’s so much more. He recommends viewing your business as an asset that can increase in value and consider how you want it to evolve down the road. By beginning with the end in mind and setting up goals to grow your business, you can make it more marketable when it’s time to sell.

  1. Poor financial management

In an acquisition, financials can be difficult to get your arms around and verify. Are the earnings you post on your financials what you are actually earning? Propst says it’s important to ensure the customer’s, tenant’s and business owner’s books are all reconciled. Both the buyer and seller need to understand that the numbers put into the system are accurate. If you reconcile your books on a monthly basis, life is much easier when it comes time to sell your business and investing in a certified audit may be a good idea.

  1. Lack of documented processes

When you acquire a company, you also acquire its processes. Propst recommends analyzing these processes so you can best leverage strengths and tweak areas that need improvement. From there, integrate the processes into your business as a whole. Use technology to document all processes, such as business procedures and communications with owners and tenants.

Key performance indicators (KPIs) are important for anyone who is building their business and eventually wants to sell. Consider what is driving dollars and bottom line and focus on these areas. Instead of trying to do it all, set a few KPIs that help you reach your goal and place your efforts there.

What does Andy recommend to document processes? Tools like Traxion or even simply Microsoft Word.

  1. Poor data management

Do you have streamlined property management data? According to Propst, businesses should establish clear policies and procedures for how data is entered so it can be easily accessed and interpreted across the board. When managing multiple platforms (such as a tenant portal and owner portal), you need to establish data standards so you and your team can consistently enter data in the same way and avoid confusion (e.g.- “TX” instead of “Texas.”)

  1. Not knowing your worth

Do you know the value of your business? Property managers who begin with the end in mind by setting clear goals, along with mission and vision statements, are better equipped for long-term success. Be proactive in planning and focus primarily on initiatives that drive revenue for your business. Propst says that “Stepping away from the day-to-day of your business to create a game plan is an investment that will pay tenfold.” Making time to establish, review and adjust your goals is essential to understanding the true value of your business.

Get Property Management Here

For professional property management in the Houston Texas area contact Vestpro Residential Services at (832) 971-1841 or click here to connect with us online.

Traditional and Creative Ways You Can Finance Your First Houston Rental Property

By Vestpro Residential Services

Are you planning on buying your first rental property in the Houston TX area? If so, as a first-time investor you’re probably wondering how you’re going to purchase that rental property especially if you already have a primary residence and other financial obligations.

Thankfully, you have options available that will help you get that rental property sooner than you think.

Get A Traditional Mortgage Loan

The first and obvious way you can finance the purchase of a rental property in the Houston TX area is to get a traditional mortgage loan and use the equity from your primary residence towards the purchase of that rental property.

Most new investors with good credit will go this route because it’s the obvious way of using the equity that you already have in your home and making it work for you.

Here are some more options to consider for buying a rental property:

Seller Financing

This involves getting a loan from the person you’re buying the property from. In some cases, if the seller is willing to lend you money, it’s easier (read: less paperwork) than getting a loan from a bank.

I’ve seen these deals work in a number of scenarios: The seller might finance either the down payment or the full purchase price. The seller might be another property investor — or they might be the property’s live-in owner.

The key to success is to ensure you agree on a fair interest rate for the loan. If you don’t have much experience in this area, it may be wise to work with your CPA and/or attorney. And regardless of how much experience you have, be sure to get the terms of the loan in writing, with signatures.

Partnerships

Another great financing option is to partner with someone who has enough money for a down payment. This is an effective strategy if you have a friend or family member who’s interested in getting involved in property investment, but maybe isn’t as interested in the day-to-day work of screening tenants and collecting rent payments.

In this scenario, what often happens is that one partner puts up money and the other handles all the actual work of being a landlord.

The key to success here is to agree on how to split proceeds. I recommend thinking about it in terms of aligning the risk and reward with costs and benefits. Your partner is taking on all the financial risk, but you’re putting in all the legwork of bringing in revenue via rent. Make sure the way you split proceeds reflects your contributions.

Whatever you decide makes sense, it’s best to have your terms in writing. Services like LegalZoom and Rocket Lawyer can help with drafting basic legal docs if you don’t have an attorney. (Full disclosure: Rocket Lawyer is a partner of ours.) Another strategy we find effective is to form an LLC, which requires you to put together an operating agreement. That document is a great place to lay out roles and responsibilities for all parties.

Government Programs

The Federal Housing Administration (FHA) was founded to encourage homeownership. One of the ways it does that is by offering homebuyers the chance to buy property with just 3.5% down.

While FHA loans are specifically designed to facilitate the purchase of owner-occupied homes, it’s completely allowable to buy a two-, three- or four-unit building, live in one unit, and earn rental income from the others. In fact, this can be an incredibly cost-effective way to finance a rental property, especially if it’s your first.

FHA loan limits are different in every county, so part of the art here is making sure the loan limit where you want to buy is high enough that you can purchase a multi-unit property.

Get Property Management in The Houston Area

Once you own your first rental property in the Houston area don’t waste time managing it yourself, let Vestpro Residential Services manage it for you. To learn more about our services contact us at (832) 971-1841 or click here to connect with us online.

Other People’s Money – Learn more about how this Real Estate investing principle works

Consider the goal of funding a child’s college education in the future. If “other people’s money” in the form of a scholarship is not a possibility, there still may be another way to use some “other people’s money.”

The Power Of Other People’s Money

A $25,000 investment into a mutual fund paying 5% would earn $1,250 in the first year. Alternatively, the $25,000 as a 20% down payment to purchase a $125,000 rental home appreciating 3% a year would have gone up by $3,750 or three times that of the mutual fund in the first year.

The mutual fund’s growth depends on the value of the money invested. Rental real estate benefits because a 20% down payment controls a much larger asset because you’re using “other people’s money.” Leverage allows the investor to profit not only from the amount of cash invested but from the value of the investment.

How Other People’s Money Pays Off 

With a 20% down payment and current interest rates, a typical rental would have a positive cash flow. In ten years, the equity could be $75,000. On the other hand, the $25,000 initial investment in a mutual fund earning 5% annually would only grow to about $40,000 in the same 10 years. It would require an additional $2,700 each year to reach the same $75,000 value.

Leverage is just one of the many benefits that make rental real estate the IDEAL investment. Whether you are saving for higher education, retirement or wealth accumulation, consider rental real estate. Using single-family homes as investments are attractive because homeowners have a better understanding than many other investments and self-management is a possibility.

Get Property Management Here

For professional property management contact Vestpro Residential Services by calling us at (832) 498-0016 or click here to connect with us online.

How to Begin Investing in Real Estate

Are you thinking about getting started in Real Estate investing in the Houston Texas area? If so, you’re not alone.

Many people have made the decision to invest in real estate over the last year thanks to historically low mortgage interest rates and demand for rental property across Houston and the United States.

In this article we will share with you several tips you can use for getting started in Real Estate investment.

How To Get Started Investing In Real Estate

Buying shares in a real estate investment trust. You can invest in a REIT, but doing so involves buying shares of a portfolio of properties. “It’s really more like buying a stock or buying into a fund,” Baron says. “It’s a completely different animal from owning real estate directly.”

“There are three layers of value – the real estate itself, the management and cash flow that supports the trust, and the fund based on the trust,” explains Gary Gastineau, founder of ETFConsultants.com, based in Bonita Springs, Florida. “It’s a very different vehicle than buying real estate, but most of us can’t just go out and buy 1 percent of a skyscraper.”
Adding a REIT to your portfolio can complement stock and bond funds, Gastineau says, but you must be sure you understand how the real estate fund is designed and how its managers will likely extract value from the holdings. You can buy shares of REITs and real estate-based funds, but the performance of the funds is based on both cash flow and gains from occasionally selling properties – a very different scenario from the typical performance drivers of stock and bond funds.

Direct ownership. This is anything but a passive investment, Baron says. “People think it’s easy money, that there’s not a lot of work, that tenants will pay on time and that pipes never leak,” he says.

Some individuals enter the market by buying a small apartment building, he explains. You should research diligently to find a good deal on a building that produces positive cash flow and has no hidden defects that will require expensive repairs. Don’t take investment guidance from a real estate agent, Baron warns. To them, everything is a good investment, because they only win a commission when you buy.

Don’t assume your personal experience as a homeowner translates to managing rentals, just on a bigger scale, he adds. From complying with fair housing rental regulations to insurance, to making sure the property complies with building codes and common-sense safety guidelines, property management dominates your wallet and your time. “It’s a very complicated asset. But because it’s a physical asset, people think it isn’t complicated,” Baron says. “People way underestimate the number of issues that come up.”

One way to test your tolerance for being a landlord is to buy a duplex or a small apartment building, with the aim of living in one unit and renting the others.

A nascent rebound seems to be buoyed by millennials who are edging into the market as owner-occupants. Thin on cash, 20-somethings are finding they can gain a toehold into homeownership by buying a small, multiunit property, such as a duplex or three-apartment building. Their plan is to live in one unit and rent out the others, says John Mosey, president and CEO of Northstar MLS, a Saint Paul, Minnesota-based data service for real estate brokers.

Although this arrangement can stretch down payment dollars, it also demands a Himalayan learning curve: first-time homeownership simultaneous with first-time landlord.

The most important consideration for potential first-time landlords is to not assume today’s rising rental rates will lift future cash flow, Mosey says. Today’s tight rental market will be eased as projects under construction enter the market. That means rents will level off, so it’s best to work cash flow and return numbers using conservative projections, Mosey says.

Key cash-flow factors include not only predictable costs, such as property taxes, but also variables that can affect the appeal of the units to potential renters. For example, Mosey says, you may think including heat and water in the monthly rent will attract renters. But the actual cost of heat and water is quite different for a single occupant compared with a unit shared by three roommates. The more water and heat they use, the less money you keep.

Source – US News

Start Investing In Real Estate With Property Management

Once you buy your first rental property in the Houston Texas area make the right decision to manage your property correctly with professional property management with Vestpro Residential Service. Contact us today by calling (832) 498-0016 or click here to connect with us online. 

8 Ways Real Estate Is Your Smartest Investment

 

Have you been thinking about investing in Real Estate but don’t know if it’s a smart investment to make for your portfolio? You’re not alone. 

Although Real Estate has been a strong place to invest for the last 4 years many people are still sitting on the fence deciding if they should but their first rental property when the right time has already arrived.

Stop what you’re doing, read this article and learn 8 reasons why you should get started with investing in Real Estate in Houston or elsewhere across the United States right now.

1. Positive cash flow.

One of the biggest benefits to income producing real estate investments is that leases generally secure the assets. This provides a regular income stream that is significantly higher than the typical stock dividend yields.

2. Using leverage to multiply asset value.

Another important characteristic of commercial real estate investing is the ability to place debt on the asset, which is several times the original equity. This allows you to buy more assets with less money and significantly multiply asset value and increase equity as the loans are paid down.

3. Low-cost debt leveraged to multiply cash flow.

Placing “positive leverage” on an asset allows for investors to effectively increase positive cash flow from operations by borrowing money at a lower cost than the property pays out. For example, if a property generating a 6 prcent cash-on-cash return were to have debt placed on it at 4 percent, the investors would be paid 6 percent on the equity portion and approximately 2 percent on the money borrowed, thereby leveraging debt.

4. Hedge on inflation.

For each dollar that is created, there is a corresponding liability. Real estate investments have historically shown the highest correlation to inflation when compared to other asset classes, such as the S&P 500, 10-year Treasury notes and corporate bonds.

As countries around the world continue to print money to spur economic growth, it is important to recognize the benefits of owning income producing real estate as a hedge against inflation. Generally speaking, when inflation occurs, the price of real estate, particularly multi-tenant assets that have a high ratio of labor and replacement costs, will also rise.

5. Capitalize on the physical assets.

Income-producing real estate is one of the few investment classes that, as a hard asset, has meaningful value. The property’s land has value, as does the structure itself, and the income it produces has value to future investors. Income producing real estate investments do not have red and green days, as does the stock market.

 6. Maximizing tax benefits.

The US Tax Code benefits real estate owners in a number of ways, including unlimited mortgage interest deductions and depreciation accelerations that can shield a portion of the positive cash flow generated and paid out to investors. At the time of sale, IRS allows investors a 1031 provision, allowing investors to exchange into a like-kind instrument and defer all taxable gains into the future. (See your tax advisor for full explanation.)

7. Asset value appreciation.

Over time, more and more inflation has made it into the economy, drastically reducing purchasing power. However, income producing real estate investments have historically provided excellent appreciation in value that meet and exceed other investment types. Properties historically increase in value as the net operating income of the property improves through rent increases and more effective management of the asset.

Click here to read reason #8!

Get Houston Texas Property Management 

Once you buy your first rental properties you owe it to yourself to get started with Houston Texas Property Management because, property management will save you the time, money and hassle of having to manage your rental properties yourself and best of all you will be able to devote more time to growing your investment portfolio.

Learn more about the affordable property management services we can offer you by calling us at (832) 498-0016 or click here to connect with us online. 

 

 

 

How To Get Started With Entry Level Rental Property Investing — Even if You’re Renting

iStock_000011512118XSmall

 

There’s no denying that now is a great time for anyone to invest in Houston Texas Real Estate but how do you get started with Real Estate investing even when you’re renting?

Most people will tell you that you have to be a homeowner to get started with Real Estate investing but the good news is that getting started is a lot easier than you think.

You can get a mortgage through the FHA with a super low down payment if you live in the home. So, how do you live in it and rent it out too? No, not a roommate. You can purchase a duplex home and rent out one side while you live in the other. Because it is your principle residence, you can get FHA lending. You not only now own your home, you’re an investor too! The FHA will even let you count the future rental income to help you to qualify for the loan!

I’m not blowing smoke, and I’ll use a real life example duplex for sale in Houston, Texas, as well as rental rates, all as currently listed at Zillow.com. Here are the home particulars:

• Listed selling price is $255,000.
• Each side of the duplex is approximately 1996 square feet in size.
• Built in 2007.
• Rents of apartments and one side of duplexes in the local area justify a conservative rent income of $1,100 to 1,200/month.
• Zillow’s mortgage estimator shows the payment will be approx. $1,497/month.

Let’s become the world’s worst negotiator and pay full price for this home. However, we’re going to take advantage of the FHA and our credit score is good, so we’re going to be able to get a 3.5% down payment. With closing costs, we’ll bring about $9,350 to the closing table. Let’s run the numbers:

• You’ll be paying approximately $1,687/month with taxes and insurance included.
• You can reasonably expect to rent out the home for $1,150/month.
• Your gross out-of-pocket to live there is now $537/month.

Source – Huffington post

Get Houston Texas Property Management

Once you get started with buying your first rental properties make sure you save the time, money and hassle of managing those rental properties yourself with our Houston Texas Property Management services.

Call Vestpro Residential Services at (832) 498-0016 or CLICK HERE to connect with us online. 

 

Is It Still A Great Time To Invest In Houston Real Estate?

 

Vestpro Residential Services - Houston Texas Property Management

Are you thinking about investing in Houston Texas Real Estate but are’t sure if now is still a great time for you to invest in local Real Estate? 

In this article we will share with you several reasons why you should consider investing in the Houston Real Estate Market.

Portfolio Diversification 

Unlike the stock market where your investments will gain or lose value if there’s a correction, Real Estate is a safer investment because your investments as a landlord will not be tied to any other vehicle like bonds, stocks or mutual funds so when the stock market has a correction you won’t have to worry about having your Real Estate investments lose value.

Excellent Hedge Against Inflation 

Thanks to your Real Estate investment you won’t have to worry about inflation because with your rental property you can just raise the rent annually if there’s a clause in your rental agreement or if you get a new tenant for your rental property.

Stable Growth

Last of all, but most important, when you invest in Real Estate you can depend on stable growth because the value of your property shouldn’t drop by a large percentage in a normal market compared to stock markets where it’s not uncommon to expect large drops like what happened in China last year. 

Cash Flow

The final reason to invest in Houston Texas Real Estate is the face that your investment will continue producing cash flow for you over the months and years to come.

More Investors Prefer Real Estate

Research any major investor including Warren Buffet and you will see that most investors prefer investing in Real Estate because of the excellent returns you will get from investing in rental properties. 

Get Houston Texas Property Management

For affordable Houston Texas Property Management contact Vestpro Residential Services by contacting us at (832) 498-0016 or click here to connect with us online. 

 

4 Tips for Successful Houston Texas Real Estate Investing

Are you thinking about getting started with investing in Houston Texas Real Estate?

Now is the right time to start investing in rental properties thanks to high demand for rentals and low mortgage interest rates nationwide.

Everyone from Robert Kiyosaki to Warren Buffet are advocates for Real Estate investing thanks to the steady cash flow you receive from your rental properties each month and the wide variety of other benefits which come from owning rentals like tax deductions and equity.

To get you started with Real Estate investing right here are our 4 tips for successful Houston Texas Real Estate investing.

Tip #1 – Continue Your Houston Texas Real Estate Education

This tip is vital to follow because once you stop learning about Real Estate investing you won’t continue to see the same success that you’re enjoying when you’re learning about Real Estate investing.

Establish a set daily time for studying and following what other Real Estate investors are doing so you can stay ahead of other investors and even find great deals no matter what shape the economy is in.

Tip #2 – Establish Goals For Acquiring Houston Texas Real Estate

Once you get started in Houston Texas Real Estate investing don’t get satisfied with just one property, set clear goals for yourself on how many properties you want to buy so your net worth will grow every year.

For example: one of your goals could be to save $20,000 and use that profit from your rental property to use as a down payment on one new Houston Texas Rental each year.

Tip #3 – Don’t Start Speculating

Although the market may be up, or down, NEVER speculate on where you think it’s going to go or speculate on what your short term gain will be if you purchase a new rental property in Houston Texas now.

Always use wisdom backed up by hard data when you’re investing because these are the two things which will ultimately contribute to your long term success as an investor.

Tip #4 – Make Cash Flow Your Primary Goal

When investing in a Houston Texas Rental property your primary question should be “what is the cash flow I will get from this property” because cash flow is king and also the key to your success if you’re trying to build cash flow for your retirement.

Get Houston Texas Property Management

For more information on how to get started with Houston Texas Real Estate Investing, or to get a property management quote, contact Vestpro Residential Services today by calling us at (832) 498-0016.