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Real Estate

Filling a Need: Finding Success in Today’s Real Estate Investment Market

July 11, 2019
The rental market over the last several years has been amazing! Many factors have led to this strategy becoming one of the hottest for real estate investors.
Rebecca McLean, Executive Director, National REIA

On an interesting note, many renters move from an apartment to a single-family rental because they not only want more space, but a yard for their pet.

Rental property owners across the country have seen increases in occupancy, less time with vacancies, and significant increases in rents. Hot markets like San Francisco have seen as much as a 60-percent increase in rents!

As I see more and more building permits for A and A+ multifamily properties, I believe that as the market turns investors who have been consistent in acquiring, fixing and maintaining B to C level rentals will have ongoing opportunities even in a downturn.

There is also good news for “reno to retail” investors. Part of the challenge for investors that purchased and rehabbed in the past is that there was a glut of new single-family homes with which they had to compete. Lenders also doled out loans on these new properties so easily it became somewhat difficult for investors to build a business.

After the “crash,” lenders tightened their lending standards, making it harder for Americans to purchase homes. This gave the flexible investor a much larger target market. Creative financing techniques and the ability of an investor to cut pricing by customizing the rehab allow investors to once again provide truly affordable housing (and in this case attainable) to those who need it.

Ultimate Real Estate Investing Resource Guide

Real estate investors are offering housing that is affordable to a wider range of incomes. In addition, these options play an important role in housing the workforce. In fact, investors have been providing “workforce housing” for decades, long before the term was even coined.

In one of my previous articles, I outlined some of the challenges of affordable housing as a true supply problem. I commented on the challenge of not having enough starter homes available in the market.

The starter homes that do make it to listing don’t stay on the market very long, and prices continue to go up and up because so few of these types of homes are available.

Investors are the answer to that dilemma! Large builders cannot make good business sense out of building smaller, more modest homes. There just isn’t enough margin to make it worthwhile – especially when they can build them bigger, better-quality and at much higher price points.

But we, investors who work in communities that are beginning to be desirable (again) and are full of houses that have been previously neglected, can rehab an old gem into a more modern family home and still make the numbers work. This is a bona fide win for the investor, the family and the community who gains a new neighbor and taxpayer.

Real estate investors are vital to a community as they provide more housing options both in selection and price as well as providing a healthy balance.

The current environment seems to offer great conditions for the real estate investor. They can build a successful and profitable business and help strengthen the communities in which they do business (and often live themselves). From National REIA’s perspective that is truly a great win-win!

Yes, all income generated by an IRA-owned property must return to your IRA. This ensures that you retain the tax-deferred or tax-free status of the investment.

With a self-directed IRA, your investments are up to you, within the bounds of the IRS rules and guidelines. The IRS does note provide guidance on what investment types are permitted, but dictates only what is NOT permitted. Examples of prohibited IRA investments include collectible (such as artwork, stamps, rugs, antiques and gems), certain coins and life insurance. See IRA Publication 590 for more information about prohibited investments.

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