Everything You Need to Know About Real Estate Crowdfunding

Crowdfunding is a relatively new concept in the real estate industry; however, crowdfunding defined as new is only true to the degree that it is now open for the average person. Everything real estate begins with the desire of individuals to invest in properties without personal liability for the entire speculation. Before the Jumpstart Our Business Startup Act of 2012, businesses could not directly solicit investors to participate in funding real estate deals because of the restrictions of the Securities and Exchange Commission (SEC).  Now, because borrowers, especially flippers, need investors for real estate deals, the practice of marketing directly to the public is more prevalent, and investors find that they can profit well in crowd funded loans. Borrowers need private investors to accomplish their goals of property development.

Steps to investing in real estate may involve a private real estate investor, crowdfunding accredited investors, crowdfunding non accredited investors, crowd investors, or a bank loan for real estate investment. Securing good real estate deals requires real estate know how, and accredited investor crowdfunding is one way of putting together borrowers with investors. The importance of real estate investment to the person looking to get into the business hinges on understanding real estate investing terminology and the risk factors that are involved. The Capital Stack definition can be thought of as a pyramid describing total invested funds and how they trickle down from high to low risk investments. While this model is often found in commercial investments, it would behoove any investor to understand how it works.

Accessibility 

It is now possible for small investors to get in on a piece of the pie for a relatively small outlay. Investments, as small as $1,000, can easily be obtained with a few strokes of the computer keyboard. Regardless of whether the stakeholders are on the investment end of the transaction or the borrowing end, all parties should be aware of any pitfalls that might occur. The ability to scan pre-screened properties makes it a lot easier to get into this type of private funding for real estate investors. Actually, real estate private funding is competing strongly with traditional lenders for real estate investment deals.

The burgeoning real estate market is a hot bed of activity. Social media has been a major player in this new entrepreneurial effort, and traditional methods of real estate investing are competing with more “mom and pop” type of investors. While there are pros and cons in the industry, an astute investor will look at the odds and do his due diligence in determining well-capitalized companies with a good track record who are likely to have staying power.

Diversification 

Equity investments and debt investments are the two core types of products from which to choose. Equity investments involve purchasing an equity share in a property that generates rental income, and the investor receives a share of the rental proceeds. Debt investments are more associated with mortgage loans where the investor shares in the interest as the loan is repaid.

An investor’s holdings depend on how the investments are structured, so it is imperative that potential investors research the performances of the different proposals before making a commitment. Considerations to bear in mind beforehand include the length of time they will be locked into the deal, whether the deal has been thoroughly vetted, and the potential risk involved. The same regard should be taken whether they participate in debt or equity investments. Investors should understand the meaning of crowdfunding and whether the deal is for long term real estate or whether they can expect an immediate return. The crowdfunding process should be undertaken with the same diligence as investing in any other speculative venture.

Transparency 

Crowd funding platforms give today’s investors access to more information about the investment’s progress, and they can acquire frequent updates. Vetting properties beforehand allows investors to have enough information to make informed decisions about any property before they invest, and they can keep track of their interests to see how well they are performing. Investors should look for companies that admit it if there are risks and do not offer a “pie in the sky” approach.

Understanding return on investment is critical. Novices should seek out an investment advisor and be especially vigilant about his knowledge of what is transpiring. Veteran investors have people in place to help them decide if an investment is worthwhile. Just because it is easier to invest in this way does not mean that anyone should take the plunge. Stakeholders should take all aspects of the investment into consideration, and if there is anything that is confusing or uncomfortable, they should bow out. There are always other platforms to research and possibly invest.

Conclusion

With today’s large group of investors, more deals can be offered to a greater portion of the population. Tax benefits that generally would only apply to outright ownership can be appealing to an investor. As an accredited investor, the shareholder should consider how to begin real estate investing, and seek answers to questions, such as, “What is real estate and what does it mean to invest in real estate?” What to know about real estate and understanding private real estate are important concepts to grasp. What you need to know about real estate is that you need to be as careful as you are with any other investment.

What is it about real estate that is so alluring? For one thing, it is usually a hedge against inflation, and that alone, makes it a valuable asset in the investor’s portfolio. Investors can search out sites where connected investors review the various offerings and make informed decisions about their investment choices.

A real estate company meaning usually relates to all aspects of a transaction being under one roof, but it does not really fit the profile of crowd funding. A typical real estate company, such as Act One Realty, performs duties of helping clients buy or sell property, but crowd funding strictly pertains to investments. Generally, experience, timing, and knowledge provide all you need to know about real estate.

 

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Source: realtyevest

Everything You Need to Know About Real Estate Crowdfunding

How to get a bridge loan to develop your property

How to get a Bridge Loan to Develop your Property

What is a bridge loan and how does it work? This type of loan has increasingly become more popular within the real estate market due to the advantage it has in easing over buying and selling property, as well as putting a home on the market.

So, who does bridge loans and how much does bridge financing cost? How does a bridge loan work real estate and can I get a bridge loan? Considering this form of financing might be a good option depending on multiple factors.

 

What is a Bridge Loan and How does it Work?

When a buyer is in the process of purchasing new property before a current property has been sold, a home equity loan or a residential bridge loan investment is most commonly used. Often times it is advised that a buyer waits to sell a current property before moving, but depending on personal situations, such as taking on a new job or helping a family member in need, this may not always be an easy thing to accomplish. Borrowing for property development from bridge loan investors has increased in popularity due to the negotiation available in terms.

What is a bridge loan in real estate? With the certainty that a current property will sell, getting a bridge loan can help alleviate stress. Speaking with trusted bridge loan investors and learning about this form of financing is the best way to find the right type of financing in bridge loan real estate.

Some would argue that a home equity loan is preferable because it is less expensive but it may not be as advantageous. With home equity it is much more difficult to borrow money if the property is still on the market.

 

How does a Bridge Loan Work Real Estate and Property?

A residential bridge loan is a temporary form of financing that helps individuals ease the stress of buying a house though their current property has yet to sell. This form of financing is actually secured by existing property.

While some people think that they will not qualify for a bridge loan, the majority of lenders don’t abide by a certain set of guidelines in terms of credit score or financial history. Often times the buyers even have a first mortgage on their current property and for a period of time will own two separate properties. This variable does not affect one’s chances of receiving financing. By learning how to get a bridge loan it is often preferable.

 

Fees Associated with Borrowing

After understanding how a bridge loan works and bridge loans for residential real estate, it’s best to ask, how much does bridge financing cost? The rates are going to vary depending on the lender that is used.

Bridge loan real estate fees fluctuate depending on location, though most often, the lender will give the borrower leverage by not requiring payments for a few months after finalizing the loan (though this may accrue interest with some lenders.)

The amount of money that is borrowed may also create higher origination fees in bridge loans for residential real estate.

 

Advantages of Bridge Borrowing

After learning how to get a bridge loan, the main advantages of bridge loan financing is being able to purchase property without having any restrictions. Because the majority of this borrowing is short-term it is actually safer than if the lender were to agree on one for the long term. Those who buy and sell properties can also learn how to get a loan for property development.

With long term loans there is more opportunity for financial hardship while accruing interest or penalty fees. Getting a bridge loan is designed to be paid off completely without penalty while still giving the borrower time to prepare for the move and pay-off. It’s important to note these can run anywhere from multiple weeks, to six months to several years.

 

Qualifying for Financing

Bridge Loan Financing does require some qualifications from the borrower. One of the major components is the debt service coverage ratio which is the total income that is generated by the property yearly in comparison to annual mortgage debt.

Hard money lenders are also likely to look at the property itself, study it’s value and invested equity. Though credit may be looked at briefly, these details play a bigger role in approval odds.

The reason why this is more of a focus is because it acts as a safety net for the lender and it helps them eliminate risk associated with the loan. Keep in mind that the rate of equity is going to vary from one lender to the next.

 

Finding the Appropriate Lender

Who does bridge loans? There are a couple of different ways to find bridging loan providers. The first is going through a traditional bank, though, this may be a bit more challenging because they are wary in terms of loaning money because of the high risk involved. It’s always the best idea to compare bridging loans between banks and private financing.

Choosing to go through a lender that specializes in a real estate bridge loan may be a bit more receptive when it comes to the borrowers situation and current financial needs. Simply searching for these companies online will result in plenty of private bridging loan providers as well as crowdfunding. When it comes to buying and flipping it’s also beneficial to learn how to get a loan for property development.

If a consumer is asking “Can I get a bridge loan? or “Is it smart investing in bridge loans?” It would be best to gather information from bridge loan lenders, compare the fees, terms and rates and see which option would work best for you. Keep in mind that finalizing this with the wrong lender does have risky ramifications, which is why it’s best to do the most research on those investing in bridge loans.

Overall, a real estate bridge loan is going to support a consumer that is navigating through moving or property development projects. Traders can also greatly benefit from this type of financing.

If a buyer is borrowing for property development and looking to sell quickly this allows them to complete the renovation. The deadlines and amount of time for bridge financing real estate can be discussed with the lending company.

 

Bridge Financing Real Estate is more Advantageous than Risky

What is a bridge loan in real estate? Though borrowing money can be nerve-racking, a bridge loan investment is much safer than it is risky in comparison to other loans.

A bridge loan investment is malleable and most companies are willing to work with personal situations.

Choosing to do research, understanding how a bridge loan works and taking the time to compare bridging loans can significantly work in a consumer’s favor.

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Source: realtyevest

How to get a bridge loan to develop your property

Everything you need to know about REIT

What are REITs?
What are REITs? REIT is an acronym for Real Estate Investment Trust (REIT), which can be defined as a company that owns and operates real estate that is income producing, as well as owning assets relating to real estate. In 1960, Congress established REITs to allow investors and individuals the ability to invest in wide-ranging and large-scale income producing properties. REITs differ from other real estate investment types because REITs are required to develop and acquire investment properties with the purpose of operating them as part of an owned investment portfolio, whereas typical real estate investors resell properties after they have been developed or renovated, and/or after holding an investment for a profitable period. Income producing properties own and operated by REITs include a range of property types, such as apartments, shopping malls, hotels, manufacturing warehouses, office buildings, in addition to mortgages and mortgage-backed securities. Majority of REITs prefer to specialize in a specific property type, for instance, retail properties. There are multifamily REITs, office REITs, Retail, and REITs that specialize in healthcare facilities, in addition to others. REITs provide a way in which individual investors can reap the benefit of earning a portion of income produced through the ownership of commercial properties, without having to go through the process of purchasing one.

Types of REITs

REITS can be categorized as mortgage, equity, or hybrid. Most REITs are equity REITs, which normally operate and own income producing properties. Conversely, mortgage REITs provide real estate owners and managers with money directly as loans or mortgages, or indirectly as the purchase of mortgage-backed securities. Mortgage REITs on average, rely on more leverage than equity REITs, as they rely more on borrowed capital. In addition, mortgage REITs typically manage their own credit risks and interest rates through derivatives and other types of “hedging” techniques. Hybrid REITs are companies that utilize a mixture of investment type strategies from mortgage and equity REITs.

Public REITs, whether mortgage, equity, or hybrid are registered with the U.S. Securities and Exchange Commission (SEC) and are traded publicly on the stock exchange. REITs that are registered with the SEC but are not publicly traded are called non-traded REITs or non-exchange traded REITs.

Publicly Traded REITs

Publicly traded REITs differ from non-listed REITs in several ways. Publicly traded REITs are also referred to as listed REITs and are more liquid because REIT shares are traded and listed publicly on popular stock exchanges. Brokerage commissions are also the same as for other public traded stocks, and rules governing stock exchange require directors to be separate from management. In addition, Nasdaq and NYSE rules require independent nominating, compensation committees, and fully independent audit. In addition, the minimum investment amount for a listed REIT is one share and market prices are publicly available in real-time, as well as a range of analytic reports. Public REITs are also managed by company employees, and specific exchange rules are in a corporate governance.

Public Non-Traded REITs

A public non traded REIT files with the SEC, but their shares are not publicly traded on stock exchanges and are also referred to as non listed REITs. This causes shares to be more illiquid and share redemption programs do differ with respect to the company and are very limited on average. Individual investors typically must wait a number of years (typically 10) to receive a return on their investment until the company chooses to engage in a public transaction, such as listing shares on a stock exchange or liquidating company assets. Public non traded REITs broker commission differs as well. Fees are a typical 9% to 10% of the investment, as well as other upfront costs, management fees, and back-end fees may also be charged. Public non traded REITs also typically have no employees, a third party manages the company, and corporate governance is subject to North American Securities Administrators Association (NASAA) guidelines and state guidelines. In addition, many states have adopted NASAA guidelines and require majority directors to be separate from management. Public non-traded REIT share values are not transparent. Independent information concerning share values is typically not available. Although, companies may provide share values one and a half years after an offer has transpired.

Non traded REITs performance has been under scrutiny over recent years due to its illiquid nature, lack of valuations, and governance issues. According to the Gilbert, Ariz., a research company that tracts non-traded REITs, asserts that 2017 marks the lowest capital-raising activity over the last 14 years. According to Commercial Real Estate Direct, non traded REITs performance was up 11.3% during the fourth quarter, from the third quarter of 2017, bringing capital rising for 2017 to $3.9 billion, per the “Summit Investment Research” company. In contrast to 2016, in which non traded REITs raised $4.8 billion, approximately 23% more than 2017 figures.

Private REITs

Private REITs, also known as a private-placement REIT are non-traded and non listed REITs that are typically associated with strong risks. Private REIT requirements differ from other REITs because they are exempt from registration according to the Securities Act and are not subject to the same disclosure and requirements that non-traded REITs are subject to, making it very difficult for investors to get a sense of value or make an informed investment decision. Accredited investors and investors with an excess net of $1 million are generally the only groups that can buy private REITs, which makes them least popular. Private REIT requirements differ from listed REIT investments as they are less strenuous and unlike public REITs, such as venture capital funds and hedge funds, which do not necessarily have to give prescribed disclosures to accredited investors. The concept behind an accredited investor relies on the ability of a private REIT investor to bear any economic risk of investing in unregistered securities.

REIT Investment Caution

Like with any investment, with REIT investments one should take one’s own financial situation into account, consult a financial adviser, and do thorough research prior to making any type of investment. Public REITs’ quarterly and annual reports, offering prospectus, and disclosure filings are available for review at www.sec.gov. Public non-traded REIT investments that are listed on major stock exchanges can be purchased through a stockbroker, as with other publicly traded stocks. Non-traded shares can also be purchased from brokers, but brokers must have been engaged in the participation of the REIT offering. REIT exchange-traded fund and REIT mutual funds are also an option for investment. It is important that one understand the risks associated with different investment strategies prior to backing an investment in any type of REIT.

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Source: realtyevest

Everything you need to know about REIT

Everything you need to know about REO properties

Several investment opportunities exist, and one of them is buying REO properties. It is one avenue investors may want to consider, mainly because it has certain advantages for those who want to earn from real estate.
REO investing is entirely different from buying a property on the retail market. An investor needs to be patient and should be armed with the right information to achieve success in this venture.

What are REO Properties?

REO real estate term is not that difficult to understand. In its simplest form, REO or real estate owned property can be a residential or a commercial property repossessed by a mortgage lender or a bank. When someone asks, “What are REO properties?” to an investor, the answer is usually straightforward.

A property owner may fail to meet mortgage requirements or obligations, and this can lead to the lender initiating some foreclosure proceedings, which will help recoup the costs of the investment. Sometimes, the property will not sell during an auction, or in other cases, the lender is still the highest bidder. In such situations, the lender will assume ownership.

The property then becomes real estate owned (REO) and the mortgage company, or the bank will get ready to put it on the market and wait for a buyer.

Are REO Investments a Smart Option?

For many investors, REO investment is more attractive than a traditional property that is up for a resale. One of the reasons behind this is that lenders are highly motivated to get rid of the property, which means that investors have a huge chance of acquiring the property with favorable terms. They can negotiate some aspects of the sale, including the closing costs and the final purchase price.

Additionally, buying REO realty directly from the bank or the lender can be less of a hassle than purchasing other properties because it eliminates some problems that may arise. For instance, in a regular sale where a homeowner is involved, it can be an emotional procedure. Investors do not have to be concerned about sentiments linked to the property during the negotiations because they only need to deal with the bank or the lender.

Another advantage is that investors may pay less when they go for REO investing than when purchasing a seller-owned real estate. Often, these properties are below or at least priced at market value, which is indeed a great deal for the buyer.

How to Get REO Listings

For those wondering if finding REO properties is difficult, the good news is that it is quite easy nowadays. There are a handful of ways that investors can try if they would like to perform an REO property search. One of the first and probably the easiest is through searching online. Some websites offer built-in methods on how to get REO listings where interested individuals can use the search engine on a particular site to find the properties.

Many websites have an extensive database for both commercial and residential listings. Using a device and an Internet connection, it is quick to find these properties. Another option to perform an REO property search is to go and meet lenders directly.

Most large banks have a department solely dedicated to REO realty. To make sure that the banks have these properties, an investor can check the listings on the site of the bank first. If it is a smaller bank, contacting the local branch is one of the most straightforward methods to know if there are properties available for sale. It is also useful to talk to the person who oversees the sales process to understand how to buy REO directly from bank.

Often, the whole procedure can become stress-free with the help of a real estate agent. He or she will understand not only the REO real estate term but also the processes that go along with buying and handling the sale. The agent can provide guidance in REO investments, primarily if he or she specializes in this type of properties

Buying the Property

One of the best things about choosing to invest in an REO is that it is not a significant challenge to find a suitable property. Investors can go to REO properties corporation, and it is possible that they can locate what they are searching for. In short, finding REO properties is not a problem at all because the challenge lies in the negotiation process.

Whether the investor has decided to go for an REO properties corporation or a bank, there are a few things to be aware of, especially when negotiating the deal. First, the lenders have the right to set their own guidelines when it comes to the sale of the property. For example, the lender may ask the buyer to provide a large deposit, or he may stipulate that the deposit is non-refundable.

Another thing to know is that REO properties are normally sold “as is.” It means that the buyer is responsible for the expenses for upgrades or repairs. As for the appraisal and the inspection, these things are part of the purchase process, but they will not be carried out until the buyer makes an offer and the seller accepts it.

Therefore, it is wise to include a clause in the agreement that the seller should allow retraction if the inspection discovers that there are several issues with the structure. Otherwise, the investor will end up paying more than what he will get out of the transaction.

To formulate an offer, the buyer should understand the fair market value of the property, which can be used as a guideline. Most of the time, it is useful to get guidance when choosing to learn how to buy REO directly from bank.

The starting bid may be identical to the asking price, but this situation happens when there is intense competition for the property. On the other hand, if there are no interested buyers, a discount may be negotiated. However, investors should be careful of undercutting the offer too much.

Finally, financing should be considered. Buyers who do not plan to pay in cash will usually require pre-approval for the loan before they can make an offer. Unfortunately, if a property needs to undergo a substantial amount of work, obtaining the loan can be a bit more difficult than average – unless there is a large down payment offered.

Selling the Property

Some buyers choose to live in the REO property, while others see it merely as an investment opportunity. For investors who aim to make a profit through reselling, it is essential to make the property stand out to appeal to potential buyers. In such cases, the home may require some renovations on either the interior or the exterior, which means the buyer should be prepared for the costs involved.

An REO investment can come with risks and rewards just like with other types of properties. With the right knowledge and information, an investor can get huge returns with an REO property.

The post Everything you need to know about REO properties appeared first on RealtyeVest Crowdfunding News.

Source: realtyevest

Everything you need to know about REO properties

Crowdfunding vs. Hard Money Lending

We all know that real estate investing takes money. What you may not realize, however, is that there are many ways you can get the capital you need to buy that investment property you always wanted. These options include crowdfunding and hard money lending. Well explore both the benefits and drawbacks of both.

What is Crowdfunding?

Crowdfunding is a way to raise money by collecting large or small amounts of money from various people. These people may be family, friends, strangers, local private money lenders, customers or investors. The money is collected via a large pool of people on crowdfunding platforms (such as RealtyeVest) and social media. The private crowdfunding requires
no prototypes, intricate marketing plans or financial institutions to be involved on the part of the investor or sponsor. Instead, you are given a single platform to showcase a business idea or pitch for research. Therein lies it’s appeal and its differentiation from traditional ways of raising capital.

 

Benefits of Real Estate Crowdfunding 

  • You reach more potential investors: Depending on the platform used, thousands of investors are available to you. You can also access more than just local private lenders.
  • Validation of business concept: You present your business or concept to everyone and receive feedback as well as funds to validate your idea.
  • Streamline fundraising efforts: Instead of presenting your ideas to multiple investors at different times, you can have it streamlined which means it is accessible to every potential investor.
  • Market fundraising campaign: Crowdfunding allows you to promote the fact you are raising money for your potential investment through all social media channels.

Disadvantages of Crowdfunding 

  • Trouble finding funding: You have a great idea, but no one is rushing to give you money to support it. You may not receive any money for months or even one year. This can be frustrating and set real estate investment opportunity back.
  • Minimum requirement is a must for most crowdfunding: Many crowdfunding companies require a large minimum to participate on their platform.
  • Crowdfunding failure: If your crowdfunding campaign falls, it does not disappear from the platform. This means that future crowdfunding ventures may be harder to obtain because of past failures.
  • Crowdfunding is for large capital projects: Crowdfunding doesn’t discriminate, but the amount of money you want makes a difference. For smaller raises, the process could be futile.

What is a Hard Money Loan?

A hard money loan is a short-term loan secured by real estate. The loan is funded by one or more private investors, or hard money loan brokers, rather than conventional lenders like banks. These loans are for any type of property such as multi-family, single-family, and commercial property. Depending on the negotiated terms, the loan term could be two to five years. The loan does require monthly payments of interest. The monthly payment could include interest and principal with a one balloon payment at the end of the loan. The amount of the hard money loan depends on the value of the property. The property could property you already owe or the investment property you use as collateral.

 

Benefits of Hard Money Lending

  • Establish a relationship with a hard money broker: A hard money loan broker is more likely to establish a continued working relationship with you when you honor loan terms. This means you can make multiple hard money loans with one lender instead of loans with multiple registered private loan lenders.
  • Get your money quickly: You have fewer rules standing between you and your money. Hard money loan brokers are not as interested in the debt you have or your credit score. So, you can obtain the money you need to buy a property faster than working with a tradition bank.
  • Barrow a large amount of money: Banks require a five to 20 percent down payment on any loan they approve. Hard money lenders do not. Hard money lenders are willing to lend you about 100 percent of the property’s purchase price. This means you can borrow more money.
  • Hard money loans are good for first-time investors: Hard money loans aren’t for every investor or investment property. However, they’re often a great starting point. More than 100 hard money loans exist. If you are new to the investment business, a hard money loan will allow you to borrow more money and use less of your own money.

Disadvantages of Hard Money Loans

  • Interest rates are high: Hard money loans typically have an interest rate 10 to 20 percent. This is often higher than a traditional bank loan.
  • Short term loans: Bank loans for investment properties can span 15 to 30 years. However, a hard money loan terms are a couple of years.
  • Origination fees are higher: Hard money loans are considered a risky investment and investors are going to charge more for the loan. It could be as high as five percent of the total loan.
  • Loss of property: If you use the property as collateral and cannot make payments, you may end up losing the property in foreclosure. This means that property goes back to registered private loan lenders.
  • Not everyone does 100 percent hard money lending: You must do your homework regarding lenders. Some hard money lenders only work in hard money lending and no other types of loans, and they’ve had hard money broker training.  Whereas others do not.

Every investment option comes with both positive and negatives, and both crowdfunding and hard money lending are no exception. The investor willing to take a risk or the one starting out, may be more comfortable with a hard money loan. You receive the money first and must repay later. If you are the type of investor who does not want to pay a loan, crowdfunding is probably your best option because it revolves around securing investors that have private money to lend. Both funding opportunities are a great way to avoid the traditional real estate funding sources such as banks and credit unions. The best option to choose depends on your circumstances, current business needs and real state goals.

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Source: realtyevest

Crowdfunding vs. Hard Money Lending

How to Calculate Real Estate Returns

Often, those who aim to benefit from investing in real estate properties typically face navigating jargons and terminologies that may be unfamiliar to them. Among the most significant metrics and terms that investors need to understand involve the use of real estate yield calculation.

Return on investment or ROI is one of the most used terms in real estate investment. Agents today normally use various metrics that allow them to describe and promote their deals. It helps to understand how these methods differ so that the investor knows how to calculate real estate return on investment.

Three Real Estate Metrics of ROI Investors

The top three real estate expressions that investors may come across with include Internal Rate of Return (IRR), cash on cash yield, and cap rate.

1. IRR

Simply put, this metric is about the average annual return for a specific number of years. For instance, an investor can get the IRR by taking the net cash flow and using the appreciation calculator real estate expected within the period a property is held.

2. Cash on Cash Yield

With this metric, an investor can quickly learn what to expect on the annual return that he or she will receive before taxes – depending on the actual cash investment. Often, this metric is compared to cap rate since it considers the cost or the value of the property. Cash on cash calculation typically involves the cash investment and any debt on the property.

To know how to calculate cash on cash, here is an example: If an investor puts $300k to a deal and he receives payouts of $60k every year before taxes, the cash on cash calculation for this situation is 20%. When an investor learns how to calculate cash on cash, it should be noted that appreciation will not be included in the process. It could result in a much higher return on investment overall. It is also important not to include any ROI because this method of calculation is not about profit.

3. Cap Rate

When figuring cap rate or the capitalization rate, it frequently involves a commercial property. An investor may need a commercial property yield calculator to get the right numbers. Cap rate is also used on single-family home rentals. It offers a quick method of comparing investment opportunities, and a commercial property yield calculator can be used. In short, it is the yearly net income, and the best way to figuring cap rate is to divide the income by the value or the total cost of the property.

For instance, if a property is purchased for $1 million and produces an annual income of $110k will have a cap rate of 10%. The problem with this is that the property will have appreciated over time. The original purchase price of $200k for a real estate property that yields $100k will typically make the investor believe he or she receives 50% cap rate. The truth, however, is that the current cap rate is only 10% since the property is worth $1 million.

How to Know if the Investment is Efficient

The essential piece of information for real estate investors is the return on their investment. An appreciation calculator real estate, among others, can tell them how genuinely valuable and useful their investment properties have become. Some properties can help generate significant rental income, while others have low returns, which show that they are not good investments.

If an investor wants to know how the rental property is performing, he or she should know how to calculate real estate return on investment. There are different variables with various factors that mainly depend on the acquisition of the property. To know about real estate yield calculation, here are some methods that will allow the investor to determine how much he or she is earning:

1. Return on Investment

A real estate ROI calculator is often used as the standard for learning how much profit the investor has gained through the investment. In fact, the other methods of computing the returns are merely extensions of ROI. When you have a real estate return calculator, here is how you can get the return on investment:

ROI = (Yearly income from the rental property – Expenses and costs involved) / Total cost of the property

2. Cash Purchases

For investors who can buy a property in cash, using a real estate ROI calculator is not tricky, and it uses the same formula as above. Here is an example: A specific rental property has a value of $230K and the rental income every month is $850. The annual income for this particular property is $10,200. The missing amount now includes the costs and expenses, which can be a little confusing to obtain even with a real estate return calculator.

However, if you know the expenses involved, the process will be simplified. Some of the costs covered are property taxes, homeowner’s association fees, closing costs, vacancy costs, and renovation fees. The list can be exhaustive, but the majority of these expenditures are taxable. In this case, it reduces the financial burden on the investor.

Once you have the exact amount of expenses, you can start using the return on real estate investment calculator. For the mentioned example, if the final expenditure cost is $1k, the ROI will be computed this way:

ROI = ($10,200 – $1k) / $230k = 0.04 or 4%

An investor may now ask if a four percent ROI is good enough. The answer will depend on the property and the investor but in general at least 15% is considered favorable.

3. Out of Pocket

Some investors finance a certain property using a mortgage. Before using a return on real estate investment calculator, the investor should know about the method called out of pocket. It is quite popular since many investors buy a property with a mortgage. This tactic also results in better ROI because the property is not completely paid in cash.

The formula for this method is:

ROI = Yearly cash flow / Total amount of investment

Essentially, the yearly cash flow is the same as the rental income for the whole year minus the costs and expenses. With the formula above, the mortgage payment given every month is considered. The main difference lies in the total amount of investment. Typically, this calculation method ignores the price of the property. Instead, it takes the total amount of cash invested, which is the sum of purchasing costs including the down payment for the property.

In other words, the out-of-pocket expenses involve the total value of the currently owned investment property. The value obtained is much higher than the standard method’s ROI.

ROI is Not Profit

Before the ROIs become actual profits, the profits should be sold first. It is not unusual for a property to sell lower (or sometimes higher) than its market value. Often, the deal will be concluded at below the asking price of the property, so it reduces the final ROI calculation for that real estate.

It is crucial for investors to keep in mind that some costs are associated with selling the property, which may include the funds that will be used for landscaping, painting, and repairs. Additionally, advertising costs, along with the commission to the broker or the real estate agent and the appraisal costs should also be added to the total expenses.

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Source: realtyevest

How to Calculate Real Estate Returns

Funds and Close $6.0 Million Equity Raise in 30 Days

JACKSONVILLE, Fla., April 9, 2018- RealtyeVest was engaged by Miami developer Tzadik Management to raise $6.0M in preferred equity for its 1,000-unit multifamily acquisition in the Atlanta market. “RealtyeVest immediately understood the intricacies of our underwriting and was invaluable in the development of the capital stack and subsequent negotiations” said Adam Hendry, CEO of Tzadik.

The assets are located in the communities of Albany, Warner Robins and Atlanta, GA. “Although we have a very successful crowdsourcing platform, many of our capital raising engagements are completed off our site as preemptive investment opportunities” said Dan Summers, CEO of RealtyeVest. “We have a very deep and diverse investor database. Many of which prefer larger stand-alone opportunities.” continued Summers.

As a result of this success, RealtyeVest, has been re-engaged to raise $15.0M for a 2400-unit portfolio currently owned by Tzadik Management. The portfolio was recently appraised at $165.0M, there is 108.0M in debt, $15.0M in preferred equity would bring the total leverage to 75% of the portfolio’s value.

RealtyeVest is a real estate crowdfunding marketplace that connects investors and sponsors (real estate owner-operators) with exclusive real estate investments. The company uses digital technology to disseminate and fund investment opportunities, with their platform allowing RealtyeVest members to browse, research and make informed investment decisions. With a diligent and forward-thinking team of underwriters, they focus on the most viable segments of the real estate market in order to minimize risk and maximize every investment opportunity.

If you would like more information, please call Dan Summers at 904-501-7693 or visit  https://www.realtyevest.com

The post Funds and Close $6.0 Million Equity Raise in 30 Days appeared first on RealtyeVest Crowdfunding News.

Source: realtyevest

Funds and Close .0 Million Equity Raise in 30 Days

Real Estate No Longer Art, But Science

 

In a recent article by Min Suh about how Cloud-Based Software is Revolutionizing Commercial Real Estate Underwriting, Suh places insight into the current state of the real-estate industry as a whole, and the context for where technology fits into the ever changing environment of commercial real-estate.

Whilst no one can argue against the lucrative nature of the industry, everyone senses a change in the air. It’s a mix of pressure from other industries, and migration of millennials- all pushing the commercial real estate industry to embrace technology.

 

The first push can be seen with the emergence of crowdfunding. In 2012, with the JOBS Act, floodgates were opened for the general solicitation of securities; specifically, real estate securities. In an unprecedented and unanticipated fashion, crowdfunding exploded onto the real estate scene. The resulting millennial migration into the industry meant the integration of technology into the real estate industry. Workforce skill sets in code writing, web site design, SEO and PPC marketing meant the meshing of real estate technology with the artistry of customer service.

In 5 short years, crowdfunding has grown exponentially and so have the opportunities associated with it. Firms are aware that “dialing for dollars”, or “passing the hat at the cathedral” no longer work. Benefits of crowdfunding have become clear, as several top tier companies have had great success (with valuations in the tens of millions of dollars, having grown from a twinkle in one’s eye to a Wall Street Phenom, seemingly, overnight). Changes, however, occur quickly in business. Faster technological advances lead to industry saturation of data, and a lack of innovative ideas due to over-dependence on technology. This of course leads to an eventual loss of demand and enthusiasm. Technology that was once an industry disruptor, or game-changer, has now become a lifeless, boring bot of quasi-digital technology.

Having said that, crowdfunding (with all it’s benefits) is no longer enough, and the necessary change in the industry can’t stop with it alone. Technology has grown far beyond the digitization of 5 years ago, as presented on crowdfunding sites. It is time to adapt or die. It is time to innovate once again.

The opportunity to up its game was lost on Wall Street, as they were too busy with the grind to notice the impending change in status quo. Always chasing the next quarter’s P & L, they were too focused on the profits, and forgot about the sponsors and investors. They forgot how the customer service experience and satisfaction is tied to profitability.

As Suh asserts, “Nearly every industry is trying to figure out how to get on the data-driven bandwagon.” Real estate is no exception. Advanced analytic technologies are currently creating both a void and a niche in the real-estate industry- with those who insist on it being a void potentially getting left behind.

 

Enter, Artificial Intelligence (AI). It is here and now. We currently see this technology all around us, driving Amazon, Netflix, Facebook and Google. AI is able to aggregate trillions of data points and correlate them into an instant outcome for your enjoyment and deployment. Until now, AI has been used in almost every industry except CRE. The Industrial-Era mindset and culture is, however, shifting as those in the industry are recognizing the need for change. We are re-thinking real estate- no longer labeling it as strictly an art, when it can become a science. A science driven by Artificial Intelligence.

Rather than being reactive to the changes that are sure to come- eVest has seized the opportunity to be proactive by staying on the cutting edge. RealtyeVest’s White Label Platform (eVest Technology) is essentially the RealtyeVest crowdfunding platform on steroids. It introduces a public facing design with financial modeling, automated accounting and a real-time CRM dashboard, and it is presenting an AI tool for the first time ever that will be available for use by both the Sponsor and the Investor.

Developing and scoring probabilities for successful investing is no longer a dream, ripped from the pages of The Sci-Fi genre. Decision-making can now extend beyond a short list of data-points. Utilizing algorithms, eVest has designed software to aggregate Big Data and develop correlations to generate a specific outcome. Sponsors can now make acquisition decisions based on science and statistics- big picture drawn by a wealth of data. Investors gain peace of mind, knowing that Sponsors are utilizing this data-centric decision-making process. Welcome to the Fourth Industrial Revolution: eVest Technology.

 

The post Real Estate No Longer Art, But Science appeared first on RealtyeVest Crowdfunding News.

Source: realtyevest

Real Estate No Longer Art, But Science

Why Real Estate Investors Love Commercial Real Estate

There are many different investment options that a person can make, and choosing the right one can be a matter of extreme wealth vs. living in the poorhouse. Some people make wise decisions with their finances, while the majority of people make foolish decisions. In this article I will explain the reasons that I love real estate and know that it is a great investment to make. It will keep your money ahead of the game and make huge profits. The time is now to take advantage of this amazing investment opportunity. Don’t miss out!

Lately I’ve been giving a lot of serious thought to the best investments to make with the extra cash I have lying around, and I’ve really come to love real estate but not the stock market. There is so much cheap commercial real estate to be gobbled up in today’s market that it is truly a no brainer between real estate or stocks. Real estate and stock markets have been competing for a long time, but the commercial real estate return on investment is so high right now that you just can’t miss this opportunity. The playing field is ripe for smart investors who love real estate as much as I do. Are you one of those people, who can think outside of the box and is a smart investor wanting to take advantage of the best investments out there at a time when everyone else is convinced that the same old boring thing is the way to go? Well then, keep reading and I will explain how to make money with this wonderful investment opportunity.

One of the reasons that cheap commercial real estate wins over stocks every time is because the stock market is so highly overvalued. When choosing between real estate or stocks, many people are blindly dumping their savings into the stock market when they really should love real estate as a safer option. Most people just don’t pay much attention to the commercial real estate return on investment, which is much higher than the stock market’s return on investment. The stock market still has a long way to fall. Just because it is looking good right now does not mean that we should turn our noses up at cheap commercial real estate.

Many companies purchased real estate at the wrong time because they did not understand how to make the biggest commercial real estate return on investment. These companies are now trying to stay afloat by selling the cheap commercial real estate that they purchased at the height of the market. Here is an example of how one company’s poor decision was the gain of another company looking to make a high commercial real estate return on investment:

This company was poorly run and did not understand even the basic fundamentals of investing, especially not in real estate or stocks. The leadership of this company decided that instead of purchasing the cheap commerical real estate in the downtown area of their city that they would instead build a brand new, LEED certified building with all the bells and whistles. It was top of the line and the envy of many who love real estate. However, this company should have looked for cheap commerical real estate instead of building a brand new building. Let me explain why. You see, after a couple of years in this building, work slowed down. The company hadn’t invested in cheap commerical real estate and instead had a hefty payment to make each month. Because work had slowed down, they couldn’t afford the high mortgage on their building. They began to lay off employees and cut spending in as many areas as possible, but because they had failed to purchase cheap commerical real estate and were instead committed to a high mortgage payment, they were unable to cut spending in that area. Now the company has closed its doors and liquidated everything, including the beautiful LEED certified building. Now someone who truly loves real estate and was trying to choose between investing in real estate or stocks has capitalized on the opportunity to own cheap commerical real estate. This person who truly values and loves real estate will now make a huge commerical real estate return on investment, all because they understood how to find a great deal on cheap commerical real estate.

Some investors may be trying to decide between real estate or stocks. While stocks may look lovely right now, they can’t keep going up forever. There must eventually be a correction in the market, which is why, when choosing between real estate or stocks, a person should definitely choose real estate, because who doesn’t love real estate? The real estate and stock market dilemma has been going on for awhile, and now it is time to put an end to the difficult decision between the real estate and stock market. When one looks at real estate and the stock market, one needs to look no further than the 1987 stock market crash. That’s one of the reasons why I love real estate! The commercial real estate return on investment has been extremely consistent, while the stock market has crashed time and time again.

We have looked at investing in real estate or the stock market, and the commercial real estate return on investment is much higher than the stock market or any other investments that one may find. What is not to love about real estate? When choosing between real estate or stocks, please, choose the option that will protect your assets and move you forward in the coming years. The real estate and stock market are both options for any investor, but why would someone choose the one that will not bring in the highest possible profit. The commercial real estate return on investment is so high that you just can’t sit back and allow other investors who better understand the advantages of real estate to the stock market to gobble up all the good properties out there. The commercial real estate return on investment is so high, a person would be missing huge gains for not getting into this market.

There are always naysayers out there who will say that real estate but not the stock market is a horrible investment. They say that the commercial real estate return on investment is lousy. Don’t listen to them! They just haven’t done their research and don’t truly understand the value of investing in real assets such as real estate and not the stock market. These people may be doing well for awhile as they watch their stocks go up. But eventually, “POP!” The bubble will burst and the commercial real estate market will be left standing while stocks will fizzle. So if you choose to invest in real estate or stocks, just remember that the commercial real estate return on investment is a great place to put your money and shield it from the coming storm of the stock market.

So in conclusion, which should one choose? Real estate or stocks? The answer is obvious! Between real estate or stocks, real estate wins ten times out of ten! And that, my friends, is why I love real estate!

The post Why Real Estate Investors Love Commercial Real Estate appeared first on RealtyeVest Crowdfunding News.

Source: realtyevest

Why Real Estate Investors Love Commercial Real Estate

Securing Real Estate Debt Through Peer to Peer Lending

Peer to peer lending is a wonderful way to make a monetary investment and build you financial standing, without having to go through a bank. With peer to peer investing, you know what your money is going toward instead of handing it to a bank teller to watch it disappear. When you lend peer to peer you are loaning to a person.

Peer to peer lending is a method of lending where your money goes straight to the borrower instead of to a large group. You may be asking, “What is peer to peer lending real estate?” It is a method of investing that can help both you and your borrower. You loan them money and they set their property as collateral, giving you the security you need not to worry about your investment as they use it to build their dreams. Peer to peer lending can be a borrowing method for an individual to receive a loan, by borrowing and receiving through a peer to peer lending real estate plan. The borrower agrees to return the loan with interest and if they can not, the lender receives the borrower’s property.

Peer to peer lending is one way to help an individual achieve success instead of helping a bank or large corporation hang someone by debt. It is no fun to have a large corporation following you waiting for you to fail, so peer to peer lending can be great for the borrower. They are using money that came from a fellow human being rather than a overwhelming group that they feel doesn’t care. At the same time, the lender knows where his money went, he knows what is happening with it, and how it is being applied to make everyone’s dreams come true. This is an opportunity you don’t get through other types of investments. You will be closer to the holder of your loan, giving them less pressure so that they can concentrate on getting you your money back to you. You will receive an above average interest rate using PTP (peer to peer) Lending over other types of financial investments. Because large amounts of the interest your money is making with traditional lending methods is going in to the bank where it stays instead of your pocket, the one who fought and sweated for it. Using this method of investing you chose who can use your money and you don’t have to give it to anyone that seems untrustworthy.

Peer to peer lending is not as frightening a prospect as the world thinks since securing peer to peer lending is possible by securing your loan with property. Your borrower will give you the right to foreclose on his property if he can not pay you back. This type of lending can be profitable to everyone involved. Someone can buy a new house for their family using the real estate as collateral and if they cannot pay the money back they lose nothing but the house they already borrowed the money for, and the loaner will still have the money and the interest he made through the peer to peer investment. You won’t be loaning to a dark hole; You can now loan safely to people.

Peer to peer lending is not always the best method of investing. If you have no collateral, you have no insurance that you will receive your money back, but with a secured loan you have the protection you need to make sure your money won’t vanish.

Real estate secured loans are one way to make sure everyone comes out on top. Debt investments can be intimidating and frightening but this is one way to back your own success. You are guaranteed that no one can take your money and run because you have the protection you need to keep yourself safe.

There are many types of financial investments, but peer to peer lending is definitely one of the debt to consider using. This is one plan that can leave your money secure unlike most debt investments. Peer to peer lending will give both the investor and the borrower a feeling of freedom since neither has to fight with a middle man like with most types of debt investments.

What are the benefits of peer to peer lending over other types of debt investments? The answers are simple: more profit for the lender and less interest for the borrower. The lender is not the only person getting ahead by this method; the borrower is able to shave part of the bank’s overhead from their financial burden. And since protecting the lender is possible through a real estate secured loan, everyone wins. Loaning real estate to back your finances is a responsible way to make a debt investment, because there is little worry of not receiving your debt investment back. You are trading real estate with another person for the cash they need to attain their goals; as soon as you get your money back, they will be given all rights to their property back.

Peer to peer lending makes real estate secured lending much easier because everyone is given more freedom. You are for once in your life your own banker, you decide what investments seem good to you and then you reap the benefits of your investments.

And as we already stated, with real estate secured loans the investor does not have to worry about whether he will get his money back or not. Peer to peer lending is easy and for once you don’t have another person in charge of your finances. No more putting your money in a bank and not knowing what good it is doing; it will be with someone who is using it to do big things while it is still growing interest for the lender –
You.

Peer to peer lending is different than most types of real estate secured loans but the benefits stay the same for everyone involved. The investor is in charge of their own money until it is given to the borrower. And through real estate secured lending, the lender is still in charge of the protection of their investment.

Using real estate secured loans makes securing peer to peer investments a breeze. Few things hold their value as well as real estate; this is why real estate secured lending is one type of investment you might want to consider. This is your chance to direct your own finances without having to run a major corporation.

Securing peer to peer lending with a real estate secured loan is a method of protecting your money while allowing it to grow. Your money is picking up interest as you go about your day to day life. It is also helping someone else make their dreams become a reality.
Now you know what the benefits of securing peer to peer loans with real estate are in compare with traditional debt investments. Many people believe a real estate secured loan using peer to peer investing is the best way to protect their money, while keeping everything close and secure. If you are considering some way to lending money out or are wondering about securing peer to peer lending, then peer to peer lending real estate might be the type of investing you would appreciate.

The post Securing Real Estate Debt Through Peer to Peer Lending appeared first on RealtyeVest Crowdfunding News.

Source: realtyevest

Securing Real Estate Debt Through Peer to Peer Lending