Why Invest in Multi-Family Apartments

Are you finding it difficult to decide between a single-family and a multifamily apartment for an investment? While most people would go for the single-family, I advise that you opt for the multifamily apartments. Here is why.

1.    Multi-family apartments have a different valuing system from other apartments. These apartments are valued based on their potential to generate income. It is possible that the value of a multifamily apartment continues to rise while that of single-family apartments in the same neighborhood falls. The key word here is income-driving components of the market. Those of multifamily apartments are different from those of single-family apartments.

2.   Higher ROI

Multifamily apartments have a strikingly big price tag that discourages many buyers who do not consider the return on investment. Each unit will cover that cost entirely and give you a good return on your money. It is like buying many houses on wholesale and selling them on retail!

3.   Financing options

Unlike single-family apartments, lending institutions calculate the possibility and extent of financing a multifamily investment based on the ability of the investment too generate a desired amount of income. Even the bank will advise you on which markets give you most profits! For single-family apartments, it solely depends on your creditworthiness.

4.   Higher Cash Flow

Multifamily apartments have several units under the same roof. This guarantees higher cash flow at the end of every month, the amount that one would get from a single-family apartment multiplied by the number of units that you own, economies of scale. It also diversifies the risk associated with the market. More money for less risk, there is no better bargain.

5.   Income reliability

Multifamily apartments are rarely vacant. When they are, they give you just enough time to do repairs and renovations as you choose the best tenant. The demand for multifamily apartments is such that as one tenant leaves, another is already asking to rent the house. You can use this window to achieve the most from your rent rates and improve on your standards. Most tenants seek a place to settle down with their family and so spend considerably more time in the same house. This implies that you have more tenants that are familiar for a longer time, which guarantees steady income flow.

THE BENEFITS ASSOCIATED WITH RENTAL PROPERTIES

It is definitely true that for some people, investing in rental properties is a marvelously clever financial move that will reap some extremely good looking profits – especially for someone who is already in great financial shape, aren’t leading a terribly hectic life and enjoy tinkering around as a landlord.

Unfortunately, not everyone is blessed enough to be in those circumstances. After all, there might be some of you who don’t really enjoy those tenant – landlord encounters, or some might not really feel like they are in the right financial shape to tackle a rental property at the moment, while others may feel like they don’t have enough time to delve into their local Real Estate market.

However, that is totally fine. There are so many other alternatives when it comes to Real Estate investment. But, at least, just for today, we will be focusing on rental properties, the benefits it brings and perhaps this will allow any of you who are on the fence have a clearer understanding over the benefits associated with it.

The Advantages

While the number of advantages isn’t great, the effects of them are highly powerful. So, to put it in plainer terms, as long as you play the game right, you will still be able to reap in a very attractive profit off a rental property.

Tenant Income

One of the most obvious advantages that comes with the ownership of a rental property is the fact that having a tenant renting your property will ensure that you have a constant stream of cash flow income.

Property Appreciation

Not to mention, since you are the owner of the investment property, you have the chance of facing property value growth over the course of the period in which you own the property. This is due to the ever-changing circumstance surrounding your property such as its demand, its improvements and the trend of the market. The best thing about rental properties is that the value often holds pace with inflation, so this is definitely something to celebrate about.

Sweat Equity

Also, keep in mind that one of the other great things that will likely add extra value to your property is sweat equity. After all, if you constantly maintain it and perhaps add some value adding upgrades such as doing some basic landscaping, repainting the house, refurnishing the indoors etc. this will allow you to increase the worth of the property without costing you too much financially. Not to mention, with good maintenance and useful improvements, this may very well let you increase your rental rates in addition to increasing the value of the property itself.

Multifamily Real Estate

Multi Family Property Classes

When Looking for Multi Family Properties, we look at them b y classes. So you have Class "A,B,C & D". Now all classes are good, it just depends on what you strategy and buying criteria is. So for me our company criteria is 100-250 units class B & C, with a value -add opportunity, where we can do some upgrades and add value.

 

So the Class A is typically new construction nice amenities and in great neighborhoods. The B Class property is about 10-20 years old may need some upgrades, has a few amenities and is in a good area. Class C is our favorite, this class in our opinion has the most opportunity in it. We look for a property needing a lot of rehab in a good area and we look for the opportunity and capitalize on it. Then you have the Class D, this property is usually in bad shape, bad areas with drugs and crime. We stay away form Class D.

 

So There You Go, The MultiFamily Property Classes  and what to look for when you're out looking for Deals.

 

Multifamily gains momentum

Here is a great article I came across on globe street.com

Enjoy the read.

DALLAS—US multifamily continues to gain strength—more than expected, in fact. In a report provided exclusively to GlobeSt.com, Dallas-based Axiometrics says annualized rent growth nationally reached 4.0% in the third quarter for the first time in nearly two years, while quarterly effective rent growth increased significantly over Q3 2013.

Occupancy also notched north of 95%, breaking the record of 95.0% set last quarter, which had been the highest since Q1 2001. Q3's quarterly growth in effective net rents increased to 1.6% from 1.2% the year prior, continuing a pattern of year-over-year improvements established at the start of 2014.

"That 1.6% growth is great for the summer season," says Jay Denton, SVP at Axiometrics. "The quarterly numbers this year show a stronger apartment market than we anticipated at the start of the year."

Three of Q3's top performing MSAs for quarterly effective rent growth are in California, led by Oakland-Fremont-Hayward at 10.7%. Not far behind is San Jose-Sunnyvale-Santa Clara with 10.5% for Q3, followed by Denver with 9.3%, Sacramento with 9.1% and Atlanta with 7.5%. Rounding out the top 10 were Miami with 6.7%, San Francisco with 6.6%, Seattle with 6.5%, West Palm Beach, FL with 6.3% and Charleston, SC with 5.7%.

While effective rent growth for Q3 was lower than the 2.7% rate measured in Q2, the quarterly decrease is in line with historical norms, Denton says. Typically, Q2 is usually the best of the year and rent growth moderates after June, according to Axiometrics data.

Since existing product is basically filled to capacity, new supply is needed to meet the demand. Currently, says Denton, demand exceeds supply.

"New supply is hitting when the apartment market is already full," says Denton. "We need units for people to simply have a place to live. Because of that, landlords are not under a lot of pressure to lower rents."

Demand is strong, Axiometrics says, because more people want to rent. Job growth has been high for most of 2014, millennials are delaying marriage and having children, and a fair number of Americans are disinclined to move out of apartments and purchase homes for reasons including mobility, proximity to work and play and more restrictive mortgage requirements.

A major change seen over the past year has been the decreasing rent growth in urban cores and increasing rent growth in suburban submarkets. "A higher concentration of deliveries is taking place in downtown/uptown/center-city areas, so existing properties are moderating rent to stay competitive and retain residents," Denton says. "While more total supply is being delivered to suburban markets, those units are more spread out, and the competition is not quite as keen."

Boston, for example, is seeing a building boom in the sector, as panelists at RealShare Boston made clear earlier this month. Yet across the metro area, annualized effective rent growth was 6.0% in the West/Northwest Suburban submarket, but  rent growth went into the negative column in the Central City/Back Bay/Beacon Hill submarket at -1.1%. In the Denver area, the Aurora-Central-Southwest submarket experienced 13.5% annualized growth this quarter, compared with 3.3% in the Denver-Downtown submarket.

www.TheCreccoCompanies.com

What is a Trust? Should you have one?

Trusts

It is a common misconception that trusts, or trust funds as they are commonly called, are only useful for wealthy people. When set up properly, trusts can be appropriate for people with minor children or those who want to avoid having their estate go through probate upon death. These are basic facts about trusts – but, be sure to consult a licensed attorney experienced with estate planning and trust matters before making any final decisions about if one is right for you.

How Trusts Work

Creating a trust (or trust fund) establishes a legal entity that holds property or assets for the person who created it. The person who creates the trust can be called a grantor, donor, or settlor. When the grantor creates the trust he or she appoints a person or entity (like the trust department of a bank) to manage the trust. This person or entity is called a trustee. The grantor also chooses someone who will ultimately benefit from the trust, this person is the beneficiary. In some situations the grantor, trustee, and beneficiary are all the same person. In this case, the grantor should also appoint a successor trustee and beneficiary in case he or she dies or becomes incapacitated. A trust is a helpful estate planning tool because after death a trust doesn’t go through the probate process like a will does.

Reasons To Set Up A Trust

Some common reasons for setting up a trust include:

• Providing for minor children or family members who are inexperienced or unable to handle financial matters
• Providing for management of personal assets should one become unable to handle them oneself
• Avoiding probate and immediately transferring assets to beneficiaries upon death
• Reducing estate taxes and providing liquid assets to help pay for them
• The terms of a will are public while the terms of a trust are not so privacy makes a trust an attractive option

Types of Trusts

Trusts can be living (inter vivos) or after-death (testamentary). A living trust is one that a grantor sets up while still alive and an after-death trust is usually established by a will after one’s death. Living trusts can be irrevocable (can’t be changed) or revocable (can be changed) although revocable trusts don’t receive the same tax shelter benefits as irrevocable ones do. The most popular type is the revocable living trust. If there’s a specific purpose in mind for the trust, dozens of different options exist. Some examples include charitable trusts, bypass trusts, spendthrift trusts, and life insurance trusts. New laws have even established a trust that will care for a pet after one’s death.

Setting Up A Trust

Once you’ve decided to set up a trust it is important to remember that a trust, by design, can be very flexible and a grantor has the right – and should take advantage of this right - within the law, to tailor it to meet the anticipated the needs of the beneficiary. Working with an experienced attorney that specializes in estate and trust issues and knows the specific state regulations can help get the maximum benefit from the trust.
Some things to consider when setting up the trust include:

• The grantor has the right to specify exactly how the money in the trust is invested. The grantor and the trustee might have very different ideas about investment strategies, so make sure this gets clearly defined.
• The grantor has the right to specify exactly how the assets should be divvied up down to details like including an annual cost of living adjustment for the beneficiary or paying for travel expenses for others to visit the beneficiary in the case of illness.
• Always be sure to include a “trustee removal clause” – trusts that don’t have this clause take away the beneficiary’s right to fire the trustee if unsatisfied with the service being provided. Remember that the grantor can always add a provision that requires the beneficiary to select a new trustee from legitimate bank trust departments. Contact your state Department of Financial Institutions to get a list of licensed trust departments.
• If the grantor wants to ensure that upon death any assets that remain outside of the trust are transferred to it, he or she should consider having a “pour-over” will to accomplish this.

Upon establishment of the trust the grantor must complete the process of setting up the trust by transferring his or her assets into the trust. Failure to do this properly makes the trust null and void. This means that upon the grantor’s death the state will decide who gets the assets and cares for minor children.

Protect Yourself From Trust Scams and Fraud

If someone approaches you to set up a trust be very cautious. Before signing any papers to create a living trust, will or other kind of trust make sure to explore all options and shop around for this service just as you would for any other. Also:

• Avoid high-pressure sales tactics and high speed sales pitches.
• Avoid salespeople who give the impression that AARP is backing or selling the product – AARP does not endorse living trust products.
• Do your homework and get information about local probate laws from the Clerk or Register of Wills.
• If someone tries to sell a living trust to you ask if they are an attorney. Some states restrict sales of living trusts by licensed attorneys.
• If you buy a trust in your home or another location that is not the seller’s permanent place of business remember you are entitled to take advantage of the Cooling Off Ruleand cancel the transaction within 3 business days.

What is a Self Directed IRA?

SELF DIRECTED IRA BASICS: WHAT IS A SELF DIRECTED IRA? WHAT CAN A SELF DIRECTED IRA INVEST INTO? WHAT IS AN IRA/LLC?

What is a Self Directed IRA? A self directed IRA is an IRA (Roth, Traditional, SEP, Inherited IRA, SIMPLE) where the custodian of the account allows the IRA to invest into any investment allowed by law. These investments typically include; real estate, promissory notes, precious metals, and private company stock. The typical reaction I hear from investors is: “Why haven’t I ever heard of self directed IRAs before, and why can I only invest my current retirement plan into mutual funds or stocks?” The reason is that the large financial institutions that administer most U.S. retirement accounts don’t find it administratively feasible to hold real estate or non-publicly traded assets in retirement plans.