10 Essential Goals for People To Become Successful In Real Estate
The pandemic brought some genuine changes to the real estate market. First, many everyday people became interested in buying property, especially outside big cities and metropolitan areas, as remote work became the norm.
More started to take an interest in house flipping and making investments in real estate. Some people did more than think about it and entered the real estate business for real from their homes.
The home sales market has changed in the last year, but here are some tips from an online real estate investing forum on what investors plan to do in 2023.
1. Saving up for the End of the Year
Interest rates have skyrocketed in the last half of 2022, leaving many potential real estate investors feeling cautious in 2023. The most popular response was to avoid temptation and save money during 2023 so that the investor can buy more at the end of the year when interest rates may have stabilized. More comments affirmed that this wait-and-save attitude was one that many people have taken.
2. Buy One Property a Year
It’s not flashy, but one real estate investor said their plan had stayed the same. They typically buy one property yearly, as they always do, and stay within that commitment.
While the temptation is to buy heavily when the market is good and avoid doing so when the market isn’t great, keeping your expectations and purchases standardized and modest gets around the regular ups and downs in a market, especially in an unsettled time. Sometimes it is slow and steady that wins the race.
3. House Hacking
House hacking is a term that describes finding ways to create revenue streams from the house that you already live in or one you want to purchase for yourself.
This idea was elaborated on by someone looking to buy a four-bedroom single-family home near a local college that they could convert into lower-cost student housing while single. The other bedrooms could house college students looking for cheaper housing options, help pay for the purchase, and then roll into profit.
4. Use 1031 Exchanges To Defer Taxes
One investor planned to sell Single Family Rentals using 1031 Exchange or tax-deferred exchange where the seller sells one property and buys another similar property.
The requirements are that they must purchase another “like-kind” investment property, that the replacement property must be of equal or greater value; the seller must invest all of the proceeds from the sale, cannot receive any “boot,” it must be the same title holder, and the taxpayer must identify new property within 45 days; Finally, the buyer must purchase new property within 180 days.
If the properties meet the 1031 Exchange rules under the tax code, a property owner can defer capital gains taxes on their properties as they buy and sell them indefinitely.
5. Conversion
In many cities, one of the biggest problems is the need for more affordable housing units for low-income residents. One of the ideas that a commenter advanced in their plan for 2023 was converting a small office building into fifteen housing units.
Since working at home has become a viable option for employees in the last few years, office buildings have gone empty. So what better use for an unused office building than more housing that a city desperately needs?
6. Real Estate Syndication
When it is more challenging to finance property purchases, teaming up with other investors is the answer. Real Estate Syndication is a new way where property owners can invite other investors to pool their resources together to fund an investment, sometimes through a real estate crowdfunding platform.
With the power of so many investors and the extra capital, it puts larger purchases and multiple properties on the table. Another investor stated that they have been buying property through syndication for years with family members as partners, which has been profitable.
7. Learn More Before Starting To Invest
This commenter’s statement might have been aimed solely at themselves. Still, it is a solid reminder that everyone can benefit from reading up and studying the market before making rash decisions.
This advice should be a given, but it is always right to try and learn more about the latest changes in tax codes, requirements, and your municipality’s rules and market trends before entering the market.
8. Talk to the City
While advising another forum member, one person related the importance of communication and interaction with the city’s officials. They stressed that, especially if the process is new to the person, if they talk to the municipality, the officials can walk the person through the process step by step, saving time.
It’s a way to gain valuable knowledge and insight. A side benefit is building relationships with the city which can always be advantageous.
9. Travel Nurses Need Housing Too
Consider the potential of niche needs within the housing market to find other ways to make real estate profitable. For example, a poster discussed their plans to expand their travel nurse compound. With only three units and four days of vacancies within one year, the profit margin is $3,500 or $4,200 in rental fees versus $680 in expenses.
10. Think About Seller Financing
Usually, when purchasing real estate, people take it for granted real estate investors must buy a property through banks. There is a different option available for the more adventurous buyer. A final investor confessed they planned to purchase property through a seller-financed loan or SFR at a meager rate of 2.5%.
In a seller-financed loan, the two parties enter a private loan agreement or mortgage while the seller retains ownership until the private mortgage is fully paid. SFRs are an excellent option for those buyers who may not qualify for a regular mortgage due to bad credit and for sellers who want to rid themselves of a property that might be difficult to sell.
Like all mortgages, there are some risks, but overall they can be helpful to those who either don’t want to take out a mortgage with a bank or don’t qualify for one.
