Categories
Shortterm Rentals

Post-Pandemic Challenges and Opportunities

If you have a short-term rental, COVID-19’s travel restrictions likely had a negative impact on your short-term rental investment.

The pandemic challenged everyone’s travel plans all across the globe last year. In turn, travel-related businesses, such as short-term rentals, initially took a major hit and saw business declined. Many markets rebounded relatively quickly, but COVID challenges haven’t fully disappeared yet.. 

Although we are finally regaining our freedom to travel, the World Health Organization (WHO) still advises that individuals and business owners engage in their COVID-19 safety measures. This includes avoiding crowds, spreading high traffic areas out, and cleaning surfaces which many people touch. 

With all this in mind, there are new challenges for short-term rental investments in the post-pandemic world. But, there may just be some new opportunities as well. 

Challenges for Short-Term Rentals

COVID-19 has brought an increased focus on hygiene, cleanliness, and even crowd density. These days, people are still advised to avoid public places, where cleanliness and social distancing can be compromised. 

This means that if your short-term rental property does not meet the current standards for cleanliness and safety, you may find it challenging to rent out your property. You’ll need to make your rental property a desirable option for people and that it keeps their health and safety in mind.

We suggest you prioritize the following aspects:

  • Cleanliness: Now more than ever, having a clean rental property is a key factor in getting booked in the post-pandemic world. Since the spread of COVID-19 can occur due to unsanitized surfaces, people want hosts who go the extra mile to make sure it’s well cleaned. 

Make sure to highlight your cleaning policies in your posting, and in great detail. You want to show them you care about their needs and will go above and beyond to make their stay with you safe.

  • Pandemic Measures: Another consideration is how your property provides safety measures for the pandemic. Onlookers feel safer when they know that rental property owners promote practices to mitigate COVID-19. Leaving extra bottles of hand sanitizers in different rooms, Lysol wipes, bottles of surface disinfectants, and even complimentary masks, can help your property stand out in the sea of online options.

For the general safety of your guests and yourself, there must be a strict adherence to these standards of cleanliness and safety. More so, even if you do your part, your guest might not. So another set of challenges are the ones presented by guests themselves.

  • Unsafe Guests. To keep yourself and your rental unit safe from COVID-19, you have to examine your guests thoroughly and pick them wisely. For example, Airbnb’s COVID-19 guidelines align with the current advice provided by authorities. Guest bookings for a stay after exposure or after testing positive are not allowed. 

Always keep yourself updated with the guidelines and advice regarding COVID-19 and apply these measures when booking guests. 

Opportunities for Short-Term Rentals

While there are some new difficulties for STRs, there are also some opportunities for short-term rental property owners. Here are some things you can promote about your rental property to make it a hot pick for people’s vacation or business plans in a post-pandemic world:

  • Preferred Lodging. As you already know, the way people travel has changed immensely due to the pandemic. Locations that involve high-traffic areas where the virus can easily spread are still advised against by the WHO. As such, places like hotels, restaurants, and public markets are categorized as higher risk.

Luckily, when weighing the pros and cons of hotels versus STRs, an STR is considered safer and more preferable. Due to an STRs exclusive nature, it minimizes the risk of contracting COVID-19 from strangers staying at the same location. 

In addition, guests don’t share facilities and spaces with other guests, so both airborne and surface contamination is far less of a concern. As long as you do your part and keep your rental unit clean and safe, your rental unit will be the preferred choice for bookings.

  • Local Attractions: Most short-term rental properties cater to people looking for lodging while they’re on vacation. And when rental properties are designed to cater to these people, the surrounding area usually provides options for all sorts of activities for guests to enjoy. 

Some may look to retreat in nature, while others want to explore a new city. Whatever options and activities your short-term rental property provides, you can advertise. 

Since short-term rental properties are a safer option to stay in for holiday, more people are shifting to this option. Pair that with the resurgence of traveling, and you can expect that your short-term rental property will be fully booked!

Want to keep doing business? Keep up with the changes!

COVID-19 has brought many unexpected changes in the way people travel—including what kind of short-term place they want to stay in during vacations and trips out-of-state. But these changes aren’t all bad, as the safety measures that go along with COVID-19 can actually heighten the attractiveness of your short-term rental properties if you can make them stand out from the crowd.

The pandemic may have negatively impacted your short-term rental investment, but that’s all about to change. If you deal with the challenges and seize the opportunities given the travel changes, your investments can make a comeback. 

Did we miss anything? Let us know in the comments below!

Categories
Uncategorized

Wholesaling Real Estate With Minimized Risk: Reverse Wholesaling Strategy for Surefire Deals

Image by Scott Webb from Pexels

Are you looking for different opportunities to generate more income? Taking on similar real estate projects that use a skill set you already have is an advantageous way to create more avenues of income. So, if you’re a seasoned wholesaler, you might want to consider reverse-wholesaling.


What is reverse-wholesaling?


Reverse-wholesaling is when you focus on finding out what a flipper or landlord wants and then start prospecting for motivated sellers with properties that match. Just like in wholesaling, the motivated buyer will purchase the property as is, without any repairs or touch-ups. And just the same, reverse-wholesalers earn through the margins they make from linking a buyer to a seller.


How is reverse-wholesaling different from wholesaling?


You might not even know it, but you could have already done a reverse-wholesale deal! The difference between reverse-wholesaling and wholesaling is that the order in which you look for deals reverses—instead of first looking for a motivated seller, then a motivated buyer, you first look for buyers/investors, then find a motivated seller that has what they want.


Are there benefits to reverse-wholesaling compared to traditional wholesaling?


Here are 3 benefits that you should know if you’re considering reverse-wholesaling.

No Mortgage Concerns. In traditional wholesaling, buyers sometimes try to purchase the distressed seller’s property through a mortgage loan. But here’s the thing: It’s not always approved. You got everything lined up and ready to go, only to disappoint yourself and the seller if the buyer can’t go through with the plan. It’s stressful for everybody in the process.

Reverse-wholesaling eliminates this problem, since the strategy requires you to build a list of serious buyers with the cash to purchase before bringing a seller into the deal. With one less factor for a deal to fail on, reverse-wholesaling provides more assurance that the deal will push through.

Faster Closings. With buyers ready to pay in cash and the motivation for a distressed seller to quickly get a full cash payment, reverse-wholesale deals close much faster than traditional wholesaling.

More so, since deals faster, you have more time to focus on other projects and investments. As the saying goes—”time is money.”


Less Concern Over ARV and Repair Estimates. Inspecting a property, noting down what needs repair, and calculating for the repair estimates and after repair value (ARV) can be a tedious process. Apart from that, what needs repair and how much you will budget for them depends on your subjective assessment.


In reverse-wholesaling, buyers are more involved. When inspecting the prospective property, they may even send their own contractor to take note of the properties’ state. Buyers also decide on the extent of repairs they want, which might not align with your personal assessment. If you come by an investor that works this way, it takes the burden of inspecting, assessing, and calculating off your shoulders.


In addition, you can also learn from contractors and how they inspect to improve your inspection and assessment skills.


Skip the Listings. If you didn’t already know, it’s illegal to advertise a property that isn’t yours unless you’re a licensed broker or a real estate agent. Sometimes when looking for buyers, you may resort to putting the property up online to attract buyers instead. With reverse-wholesaling, the deal starts with the buyer, so that eliminates the need for postings and listings.


Challenges. Really the only challenge is making sure you’re dealing with serious buyers that have the cash to buy once you bring them a deal. No one has an endless supply of funds, so you should expect a buyer to occasionally pass on a deal you bring them. But that’s why you should try to find 2-3 buyers for each category of property you end up looking for.


Conclusion.

Traditional wholesaling is a quick and lucrative business, but it’s not perfect. Reverse wholesaling, on the other hand, has the same characteristics, except deals close faster, there’s less tedious work, and more assurance of a deal pushing through.


It may sound simple, but it’s a very smart way to minimize the common risks that come with the usual wholesaling process. Who knew that doing things in reverse can have such a great impact on your profitability? Well, now you know!


Did we miss anything? Let us know in the comments below!

Categories
Landlords

5 High-Volume Influential Real Estate Investors to Learn From

There is no better way to become an investor than by learning from those who came before you.

When you are seeing an investment for the first time, it’s easy to get overwhelmed. But if you can learn from a mentor who has been around for a while—one who knows everything there is to handle the trickiest situations—you can be more confident with even the most complex of investment ventures.

So, here are five of the most popular rental investors that you can follow and learn from. We’re incredibly lucky that these experts are generous and open to share their experiences with us—and on a constant basis, too!


Brandon Turner
Brandon Turner is one of the most well-established rental property investors in the United States. As a host of the BiggerPockets Podcast, he shares tons of valuable insights regularly for first time real estate investors. You can also grab a copy of his book, The Book on Rental Property Investing, where he breaks down the basics of how to buy and hold real estate. If you’re just getting started in real estate, this is a great place to start since he covers everything like:

  • Repairing your rental properties
  • Choose quality rental properties
  • Calculating your return on investments
  • And the basic how-tos that are not easy to find

“Remember the story of the tortoise and the hare? While many investors have ‘sprinted’ toward their investment goals, success is most often found by consistent action, not big action.” —Brandon Turner


Follow him on his social media profiles to get more useful tips:
-LinkedIn – Brandon Turner
Twitter – @BrandonAtBP
Instagram – @beardybrandon

Image via Twitter


Gary Keller

Gary Keller is the author of the several best-selling books, most notably, The Millionaire Real Estate Investor. In his book, he talks about the basics of real estate investing, the common myths on real estate investments, and all the things that you should not do. The last bit is especially important if you’re only starting out in the real estate investment industry.

With decades of experience in the business, Keller is a highly respected real estate expert and motivational speaker. As a founder of one of the largest real estate companies in the world, Keller Williams, he’s won several awards over the years. If you want to learn from the best—Gary Keller is one of them.

Follow him on social media to get in touch:
LinkedIn – Gary Keller
Twitter – @kwri
Instagram – @kellerwilliamsrealty

Image courtesy of Wikipedia


David Greene

Another top real estate investor is David Greene who’s been featured in the media on Forbes, CNN, and, of course—HGTV. Since he started out in sales years ago, he’s now gone on to own several properties across the country and is also a host on the BiggerPockets Podcast.

Beyond all that, David Greene has authored several books: Long Distance Real Estate Investing, Buy, Rehab, Rent, Refinance, Repeat, and Sell Your Home For Top Dollar. As his clients often say, Greene has seemingly infinite real estate knowledge. And he’s sharing that knowledge with any and everyone. His popular real estate website, Greene Income, teaches you all about the basics of real estate investing.


Find him on social media to learn more:
LinkedIn – David Greene
Twitter – @davidgreene24
Instagram – @davidgreene24

David Greene Real Estate Expert
Image Courtesy of Forbes

Desiree Patno
Also the CEO of Desiree Patno Enterprises, but Patno was also a founder of the National Association of Women in Real Estate Businesses (NAWRB). She’s got over two decades of experience in the business and has even been featured in magazines, like Entrepreneur. Now, she’s sharing her knowledge to encourage more women to become leaders.

Patno also hosts the podcast, Know the Rules of the Game, where she invites guests to talk about life, equality of course, entrepreneurship. As one of the most influential women in real estate—her advice is worth listening to.
Check out her social media to learn more:
LinkedIn – Desiree Patno
Twitter – @DesireePatno
Instagram – @desireepatno

Desiree Patno Real Estate Investor
Image via Twitter

Barbara Corcoran
If you haven’t heard of Barbara Corcoran, you’ve got some catching up to do. While many know her as one of the sharks on the TV show, Shark Tank—she’s done a lot more than just that. Nicknamed the “NYC Real Estate Queen,” Cocoran started out with just $1000 to start her small business in the Big Apple. Just 25 years later, she turned that small loan ino an over $5 billion real estate business.


If you’re looking for someone whose footsteps you want to follow in, then look no further. She also hosts the podcast, Business Unusual, where she shares her “utterly candid and totally unfiltered” advice with listeners.


Follow her social media accounts to learn more:
LinkedIn – Barbara Corcoran
Twitter – @BarbaraCorcoran
Instagram – @BarbaraCorcoran

Barbara Corcoran Real Estate Investor
Image via Getty Images
So, Are You Going to be Next?


Real estate is a business that can be tough to break into—but following the advice of these experts is a good place to start. Reading their books, podcasts, and blogs will give you an edge and help boost your confidence if you’re a beginner.
With the right mindset and a little effort, maybe we’ll be writing about you next!

Still not enough? We also have another list of Influential Real Estate Investors where you can find more experts to follow and learn from.
Who inspires you the most? Leave us a comment below!

A—but following the advice of these experts is a good place to start. Reading their books, podcasts, and blogs will give you an edge and help boost your confidence if you’re a beginner.
With the right mindset and a little effort, maybe we’ll be writing about you next!

Still not enough? We also have another list of Influential Real Estate Investors where you can find more experts to follow and learn from.
Who inspires you the most? Leave us a comment below!

Categories
Flipping

Selling Flips at Top Dollar: How to Price Your Flipped Home Correctly

A house under renovation
Photo by immo Renovation

Flipping a perfect house is a feeling like no other. After hours of fixing it up and giving the property a facelift, you can sell it knowing you’ll get back all your hard work. And you’ve given an old property a new chance to become a well-loved home again.

Then, you get to walk away with a sizable return on your investment, and get started on your next flipping project.

Flipping has been a real estate strategy for decades, but is gaining serious popularity with the success of shows like Flip or Flop. But, of course, these fixer upper shows only feature the ideal scenarios, enchanting the audience with all the benefits of house flipping.

But the reality is that flips are sometimes flops. It’s not always easy to sell the home at a good price, which defeats the whole purpose of house flipping for a profit. In fact, profit margins from house flipping fell by 3.2% in 2019 due to increased competition.

Nevertheless, the wind has shifted and we’re now seeing a huge increase in flipping profits. Home flippers are now garnering a massive average of 44.4% return on investment.

If you want to join in the fun and earn the highest flipping profits that you possibly can, read on to learn how you can price your home correctly and exit your investments with significant gains.

What to do After You’ve Finished Renovating Your Flipped House

So, you’ve gone through the process of renovating the house. You found a great property to work with, and all the renovations are complete. The next step is putting the property on the market and waiting for offers. But how, exactly, can you land on the perfect price?

Let’s take a look at some tips to price your flipped home according to its value.

Calculate the After Repair Value (ARV)

The after repair value—as the name implies—is the estimated value of a property after all the renovations are complete. For a house flip to be successful, you want this value to be higher than your total costs. You don’t want to have spent 80k for the house and 40k for repairs and renovations, only to have the property only valued at 100k. You need to have a good idea of your ARV in order to properly budget out your flipping project.

Having said that, there are two main methods to determine a property’s value.

  1. The Comp Method: This method is the most common way to determine the value of your property. This method is preferred due to how simple it is to compute your ARV.

You can also have an appraiser evaluate comparable properties that have recently sold in the neighborhood and set a fair market value for your flipped home. Alternatively, you can also use Realtor.com or Zillow to get ballpark figures on comps.

2. The Income Capitalization Method: This method of determining a property’s value is only suitable for large properties such as shopping centers and apartment buildings.

Simply divide your net operating income (NOI) by the capitalization rate (cap rate) to land on the property value. The NOI is what you expect to earn from the property, while the cap rate is the sales value of similar properties sold recently

Unless you’re flipping a large property, you’ll most likely use the comp method to determine your ARV. Only large properties have to take into consideration an NOI. Such as when the building rented-out is at 100% capacity. For smaller properties, the simpler comp method is preferred.


What Makes a Property Comparable

Now that you know how to calculate your after repair value, let’s discuss the details of running comps. When comparing properties, they need to be of similar status. For example, comparing a 3-bedroom house to a 12-story apartment complex would be useless. A comparison needs to fall under certain standards.

The basic criteria you see below are the most important:

  1. Property Size: Compare your flipped home to a property of a similar land and property area. The rule of thumb is to consider only the properties that fit within the range of 400 square feet smaller or larger than your property, and forget the rest.
  2. Property Age: Examine recent sales of properties that are similar in age to your flip to get a good estimate on price.
  3. Property Condition: Use recently remodeled or renovated houses that have similar conditions to your flip as a reference. Comparing your flipped home to another fixer-upper or a brand new, Class A home will only confuse your numbers—even if all other factors are the same.
  4. Other Properties Sold: It’s important to know the value of real estate sold recently. The real estate market is closely linked with the economy and interest rates. Prices fluctuate so sales from more than half a year. If the market is volatile, keep the date of sale in mind when looking for comparisons.

Ensure that you stay true to the criteria you’ll determine, so you compare your property to only the ones that will help you determine the best selling price.

Disregard Outliers

When comparing recent sales, you’re sure to find some extreme or stand-out sales. It goes without saying that these outliers could have extenuating circumstances that altered their sales price.

For example, a large property could be sold for cheap if there were unusual circumstances that occurred on the property, like a crime happening on the premises. In contrast, a small house can sell for above market value because it comes with a lot of amenities, like a huge backyard, an indoor sauna or a pool.

When you are looking for sales to base your property’s price on, you need to eliminate these extremes. Only when you get the real average on sales of similar properties will you land on the best estimate of your flipped home’s price.

Here’s a sample list of what you may have after running comps:

  • House 1: Sold for $100,000 at 1000 square feet
  • House 2: Sold for $150,000 at 1000 square feet
  • House 3: Sold for $110,000 at 1100 square feet
  • House 4: Sold for $105,000 at 995 square feet
  • House 5: Sold for $70,000 at 1200 square feet
  • House 6: Sold for $120,000 at 1180 square feet

Both houses 2 and 5 are outliers in this comparison and should be disregarded when scouting for a comparative price. We may not know why they’re priced so differently, but we still don’t want them to have an impact on our end result.

Conclusion

House flipping is one of the most lucrative and resource intensive projects in the real estate industry. If you’re not well-versed with the investment strategy, you can end up with a huge money sink that’s burning a hole in your pocket instead of walking away with the promised, coveted gains.


Nevertheless, there is a solution to flipping with confidence. And that’s to master the art of pricing your flips correctly—earning you high flipping profits with minimal risks in the process.


If you need any additional tips in flipping a house, feel free to drop us a message! Our team of expert property managers are more than happy to help house flippers price their fix-and-flip projects.

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