Why You Should Be Investing Your Money In Real Estate
Here are eight reasons why investing income producing real estate is an excellent choice for protecting and growing your wealth:
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.
8. Feeling the pride of ownership.
The right property in the right location with the right tenants and ownership mindset can produce a tremendous pride of ownership factor that is highest among all asset classes. Homeownership is out of reach for most people. Imagine owning thousands of multi-family housing units instead?
No one can ensure the future of rental of income properties’ values, but this asset class seems positioned to continue to benefit from many other socio-economic issues that I will save for another time.
Spending money on online real estate advertising can do wonders for any agent’s business — if you understand how it works. In this post, we delve into all of the important facets of real estate advertising that beginner agents should know to secure more traffic, leads, and clients.
Beginner real estate agents need to understand everything about online advertising before spending a dime. This means knowing what types of ads work best, where to publish ads, how much to spend, and how to measure your return on investment (ROI). Here, we offer some of the basics you’ll need for online advertising.
The Most Popular Types of Advertisements
Social media has proved to be a great marketing medium for various small and medium businesses and real estate is no exception. Social media allows you to instantly connect with existing clients, potential clients, previous clients, and real estate peers.
However, this type of marketing is only effective if done correctly. We will look at not only why it is important for you to use social media for marketing, but also some of the most successful methods for doing so.
One of the major reasons you should use social media to promote your business is to build your professional reputation. Positioning yourself as an industry expert attracts new clients. To do so, make sure each post on social media sites is applicable to your followers. Ask if what you are posting will engage and interest your readers.
Networking – linking with individuals and building a trust relationship building to increase business connections – has always been recognized as an excellent way to build a customer base. Social media marketing and other real estate marketing apps has taken networking to a new level. Twitter, Facebook, and Google Plus all help you connect with clients and other real estate professionals.
There are many other benefits to using social media to promote your real estate business, such as:
• Assisting you in targeting the right audience for the homes you have listed for sale
• Enabling you to quickly and easily contact potential clients
• Helping potential customers who are surfing the net to find a home or an agent to help them buy or sell a home find your website faster
• Increasing traffic on your website to generate more prospective buyers and sellers
• Staying ahead of your competition as you make the most of marketing opportunities
Do not rely completely on your office or brokerage web site. Create your own site to showcase your listings and build strong relationships with both current and potential customers. Make sure your website is clean, uncluttered, navigable, and easy to access. Use easy to read fonts, large enough to be read easily. As well remember that content marketing is king, so make sure you have a blog on your website to promote property you have listed.
Some suggestions for your personal real estate website include the following:
• Common questions of both buyers and sellers with answers
• Community information – schools, government, transportation, etc.
• Include periodic blogs on real estate topics geared towards buyers and sellers
• Local business highlights
• Neighborhood and property video tours
• Profiles of sellers and buyers with some testimonials
• Studies, statistics, and surveys related to real estate with explanations for your site’s visitors
• Tips for buyers, such as information about mortgage types and approval, how to choose an agent, and the importance of an inspection.
• Tips for sellers, such as staging, home improvements that increase property value, appraisal information, etc.
Of course, you will not be able to do all of this at once. Be sure you add fresh content frequently – at least once a week – and make sure everything on your site serves those with whom you wish to do business.
Don’t forget to include a call to action to get information from those who visit your site. Make sure you include contact forms along with your contact information.
Probably the most attractive feature of a simple Facebook or Twitter is that it costs nothing and has the potential of attracting hundreds of potential prospects and direct them to your other social media. It is important to post frequently on Facebook. A daily promotion of an open house or new listing, an excerpt from a blog on your website, or even a humorous cartoon or saying all work well.
Your website service provider can tell you how to embed a shop code on your Facebook page, creating a virtual office and boosting your sales and listings. A one-stop shop like Facebook, where your followers can communicate with you and each other, learn about your listings and sales, and request a showing or listing, takes convenience to a new and higher level.
Twitter works best with short, multiple posts each day. Try one of the following:
• Schedule tweets for each of your open houses a few days before they take place.
• Queue your tweets to go out later so you can work on other projects.
• Communicate directly prospects and clients, and make it possible for them to communicate with you.
• Answer questions on current real estate topics with which people have expressed an interest.
Remember to include hash tags (i.e. #realestate) in your tweets so readers can find and follow trending topics. Also, include links in your tweets when you recommend a site and repost useful and interesting posts from other users.
Use Google Plus for search engine optimization, as posting on Google+ allows your site to be indexed much faster than how search engines usually file the existence of new online material. Additionally, Google Plus posts retain high SEO (Search Engine Optimization) longer than other social media networks. Google+ puts you in front of many people who never would have found you in any other way.
Posting videos of your new listings on YouTube allows you to show potential buyers a virtual tour, extremely effective in generating interest. You can ever create and upload a virtual tour as you walk through a home, narrating as you go and them upload the video to your YouTube channel for potential buyers. Don’t forget to share a link to your YouTube video on Twitter, Google Plus, and your Facebook page.
Information sharing is another useful YouTube tool. Let your clients know how to find a mortgage, common real estate terms, and other useful information. Create articles for other real estate professionals to help them improve their business acumen.
Consider creating an “about me” video to place on your website and Facebook page. Potential buyers and sellers are social media users and often prefer a video to a written biography.
It is important for real estate companies to use social media for marketing, making it an important part of the public relations and advertising strategy. Have a consistent style for all your social media. Repeat profile pictures, use the same font and colors, and develop a voice your visitors will recognize. Engage in social media daily, or at least once a week and you will find that interacting on social media will significantly increase leads.