The Simple Benefits of Buy-And-Hold Real Estate

Managing rental properties can be a rewarding investment, but it also comes with its share of challenges.

In today's economic landscape, high-interest rates are posing a significant challenge for real estate investors. Traditional rental strategies might no longer yield the desired returns, necessitating innovative approaches to maintain or increase cash flow. One such strategy is renting out individual rooms in properties, particularly in college housing or rooming houses, which can be a game-changer in this climate. The rise of room renting platforms like PadSplit.com has revolutionized the rental market. These platforms cater to a growing demand, especially among college students and young professionals who prefer affordable living options. This shift isn't just about economy; it's about flexibility and community, appealing to a demographic that values both. Renting out individual rooms can be financially more beneficial than leasing entire properties. This model allows for higher rental yields and increased cash flow, as multiple rooms in a property can collectively command a higher rent than a single-family unit. Additionally, it opens up housing in high-cost areas to those who might otherwise be priced out, increasing your potential tenant base. While the financial upside is significant, room rentals come with increased operational demands: more tenants mean more leases, more maintenance requests, and more day-to-day management. To handle this efficiently, property management software or a professional property manager can be invaluable. Implementing clear rules and lease agreements is crucial in minimizing tenant conflicts and ensuring smooth operations. Personality clashes among tenants can be a challenge in shared housing. Screening tenants for compatibility is essential, as is establishing clear house rules and conflict resolution processes. The landlord's role in maintaining a harmonious living environment is pivotal, requiring both diplomacy and firmness. It's crucial to be aware of zoning laws and regulations related to room rentals. Each locality has its own rules, and compliance is key. Consulting with a real estate attorney can ensure you're on the right side of the law while maximizing your investment. Renting out individual rooms in properties presents a compelling strategy for real estate investors navigating high-interest rate environments. It offers the potential for increased cash flow and broader market appeal but requires careful management and legal compliance. As with any investment strategy, it's important to weigh the benefits against the challenges to determine if it aligns with your goals. Are you considering room rentals for your investment property? Share your thoughts or questions below. If you're looking for more insights or personalized advice, feel free to reach out for a consultation or explore further resources on our website.

Ryan appears on The Raw Talk with Glen Jacobson where he speaks on his hard work and success in the real estate investment world. He also gives some more insight into his personal life, giving listeners some tips when it comes to juggling business, fitness, fun, and family. The Raw Talk is a great podcast for anybody with the positive productive mindset we promote so after you listen to Ryan’s episode give the rest of the channel a look.

There are many different methods to investing in real estate. Our company specializes in buy-and-hold rental real estate. In this blog post, I am going to outline some of the greatest benefits we see in long term buy-and-hold real estate. Short term cash-flow Most investors do not have cash available to purchase a property so they take a loan from the bank or a private lender. Before purchasing a rental property, there is a lot of due diligence work necessary to make sure you will are able put money in your pocket after all expenses. This is referred to as positive cash-flow. Every market is different but there are a few general rules I follow when analyzing properties. First, I look for houses in the area that are currently up for rent and see how much people are asking in that area. Finding some properties that are currently rented helps gauge prices in the area. Next, I find out what the property taxes are because high taxes will cut into the monthly cash-flow. Where we invest, in Baltimore, we have found that houses priced over $150,000 do not cash-flow well so I typically try to find properties between $90,000 and $150,000. I also have found that houses that need cosmetic renovations are great for cash-flow. Finding a reliable contractor in your area to renovate your property is a great way to build some instant equity. The typical home buyer wants a turn-key property and building equity through renovation is extremely beneficial. Long term appreciation Real estate, just like any other investment, is subject to fluctuation but seems to constantly increase in value over time. There are more people trying to invest in real estate than ever before. My perspective is that there is a limited amount of land to build on. As the available land decreases, the prices trend up. Tax benefits In addition to the short term cash-flow and long term appreciation there are also many tax benefits to investing in real estate. The first benefit that comes to mind is the 1031 exchange. A 1031 exchange allows an investor to sell a property, to reinvest the proceeds in a new property and to defer all capital gains tax. This benefit increases the purchasing power by 15-30% depending on your tax bracket. There are also many tax write-off incentives when investing in rental real estate. If you have any questions please click here to contact us. Our team of professionals would love to walk your though any of your investing needs. -Ryan Greenberg

The BRRRR method is an incredible real estate investing strategy that has brought many investors success. Knowing how to properly finance properties is the quickest way to scale your portfolio and grow your wealth. Buy: Buy a property where you can renovate and gain some instant equity Rehab: Have a renovation team come and fix up property to get it “rental ready” Rent: Find a qualified tenant to rent the property Refinance: Pull out 80% of the appraisal value (ex. Total investment after renovations $80,000; value of home $100,000 you are able to pull out $80,000 in a 30 year fixed rate loan) Repeat: Use the same initial investment to buy another property This investment strategy allows you to use the same money to buy multiple properties in a short amount of time. The necessary points when using this method are buying properties for the right price and correctly estimating the rehab costs. If done correctly, you should be able to pull out all of the capitol you invested into each deal while collecting the monthly cash flow and principal paydown. Once a significant amount of equity has been raised; leverage that in the form of a HELOC to downpay on another property and maximizing your returns. -Ryan Greenberg

We all know real estate is a great investment, So why doesn't everyone do it? Many people never get started because they can not figure out how to fund their first deal. Also, trying to find funding for your first real estate deal can be very intimidating and difficult. Through our experience, we have figured out many creative methods for funding deals. Method 1: HELOC (home equity line of credit) Many people finance their home and pay into their mortgage for years and years building up equity. Most people will never see that equity perform for them. Taking out a HELOC is a great way to start funding your deals. Basically, the bank will have your house appraised and lend you the difference between the value and how much you owe the bank. Example: You owe $100,000 on your mortgage; your house appraised at $150,000; the bank will lend you between 80-100% of the $50,000 difference. The great part about using a HELOC is that you do not start paying interest until you actually spend the money. This is why I prefer the HELOC over a home equity loan which forces you to pay interest as soon as you receive the funds. Method 2: Private money lender Believe it or not some people make a living lending money to other people. This is known as private money lending. Finding someone with capital could be as easy as asking a relative or friend. There are also many services and databases online for private money. These lenders work just like a bank where they lend you money based on the value of the home. Method 3: Hard money lender A hard money loan is a specific type of asset-based loan financing through which a borrower receives funds secured by property. Hard money loans are typically issued by private investors or companies. Hard money loans are typically have higher interest rates and shorter terms. Click for hard money. Method 4: Business Credit Cards Business credit cards. If you’ve got decent personal credit, 0% interest business credit cards are an incredible way to purchase your next investment. There are companies such as Fund & Grow that help you apply and get the most bang for your buck when applying for business credit cards. Method 5: 401k 401k. If you have a 401k through your employer, most plans allow you to take out one loan per year. This is a fantastic strategy, because you’re in essence, paying the interest back to yourself. -Ryan Greenberg

Most people never get involved in real estate investing because the assumption is that you need a large bank account to do so. In this article I am going to explain how you can buy 4 houses in one year without using your own capital. Starting an LLC to protect your personal assets should be the number one priority. This will end up costing you a few hundred dollars depending on where you live. Step 1: Finding a deal In order to get investors interested in lending you money you will need to find a good deal. I will try to cover a few ways to find deals in this article. The first way is your traditional method of getting an agent and having them send you properties. This method may work in some areas but typically good deals are not listed on the MLS. We use people we call wholesalers.They find foreclosures, auction homes, tax liens and off market deals. They get those properties under contract and flip the contract to an investor for a fee. Another method is making low ball offers on a listed properties in hopes someone really needs to get out of their house. We need to be sure there is going to be room to build at least 20% equity so we can refinance properly and pull out all of our money. We like to buy properties that need cosmetic work that can quickly add some value. We suggest getting a licensed contractor to give you an estimate of renovations before making an offer. Step 2: Finding the Funds Finding someone to fund a bad deal is next to impossible, but if you find a good deal and have good credit, you can easily find funding. Hard money lending companies will often times lend you 100% of the money you need to buy and renovate the property. Usually hard money loans come with a high interest rate around 10-15%. Depending on how long it will take to renovate, a slightly higher interest rate is not a big deal. As long as you have 20% equity in the home after the renovation you can refinance, pulling all of your money invested back out in the form of a long term fixed rate loan. Step 3: Find a Qualified Tenant Finding a tenant is easy, finding a good tenant is a little more difficult. We use a program called “ Smartmove ” for screening potential tenants. This program screens for credit history, eviction history, job history, and current income. This saves a lot of time and headache trying to find out all of that information from different sources. Step 4: Refinance This, in our opinion, is the most difficult part of the whole process. If have been following our strategy, by this point you would have bought, renovated, and rented this property. If all of your analysis is correct, you should have at least 20% equity in this home. The next step is to find a lender that will give you a long term fixed rate loan, at a decent rate and 80% LTV. (loan to value). If executed correctly, you should be able to fully pay back the original hard money loan and start the process over again. This whole process should take no more than 3 months. You CAN buy 4 rental houses in 1 year! -Ryan Greenberg

Everyone knows the saying “two heads are better than one”, in real estate this proves to be true time and time again. Without a good team of professionals, investing in real estate becomes very difficult and much less accessible for many new investors. I would like to outline some crucial members of our team who helped us scale our business. Real Estate Agent Having a knowledgeable agent that understands your needs as an investor is critical for new as well as veteran investors. There are a number of residential real estate agents out there so be sure to shop around and interview them as if they were going to be your employee. In our situation, one of our operating partners became a licensed agent to capture the extra income when purchasing listed deals. Capital Investors Since most new investors will not have enough capital to buy properties in cash, they will need some sort of capital investment. This capital can come from the bank, hard money lenders or private lenders. Raising money is an integral step in finding success investing in real estate. When searching for investors it is important to have a deal ready that has been analyzed and vetted by any professionals necessary to complete the deal. Talking to your local banks and financial institutions is a great start when starting to raise money. It is important to shop around for interest rates and loan programs. We have found that loan programs for investors drastically vary from bank to bank so it is important to do your due diligence before signing any contracts or getting credit pulled. Contractors When investing in real estate it is important to find a good general contractor that will be able to estimate costs of potential renovations or repairs. It is extremely important to have reliable people that will handle the construction on your flip project or fix a leaking toilet at your rental property. Property Management Property Management is by far the most dreaded part of owning rental properties. The biggest reason people do not want to invest in rental properties is the potential tenant issues they may face. From the late night calls for a flooded bathroom or complaints from the neighbors about the lawn not being cut, this is an issue not many people want to deal with. Finding a good property manager will help keep your headaches to a minimum and help your investment stay passive. - Ryan Greenberg