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Today’s top stories…
3 things real estate investors should avoid in 2024
Fannie Mae and Freddie Mac clarify real estate commission rules
Tech venture funds invest in coworking real estate that isn't WeWork
💰 Deal of the Day!: 6 bd | 5 ba | Kanab, UT
Today’s mortgage rate (30 Yr. Fixed): 7.41%
3 Things Real Estate Investors Should Sidestep in 2024
Don't be a deer in the headlights when it comes to real estate investing in 2024. Map out your strategy, including property types, affordability, and ROI goals. Rental properties can yield $27,500 to $121,000 annually, so do your homework! Don't let stigmas cloud your judgment—take mobile home parks, for example. Expert Justin Donald swears by their unbelievable cash flow, so crunch the numbers before you write off an investment.
Plan for the unexpected, like a $5,000 roof leak or a $3,000 furnace failure. If you're flipping homes, allocate an extra 10-20% for renovation surprises. Leverage tech tools like Zillow's Zestimate (median error rate of 1.9% for on-market homes) and BiggerPockets' ROI calculator to make data-driven decisions.
Aim for properties with cap rates between 5-10% for a solid mix of stability and growth, and don't forget the 1% rule: monthly rent should be at least 1% of the purchase price. Eco-friendly upgrades can boost property values by 5-10%, and look for opportunities to positively impact local communities—it's a win-win!
Balance risk and reward by diversifying your portfolio. Consider investing in a mix of single-family homes, multi-family properties, and commercial real estate. According to the National Association of Realtors, the median price of a single-family home in the U.S. was $363,800 in Q1 2024, while the median price of a multi-family property was $329,000.
Don't forget about the power of networking! Attend local real estate investor meetups and join online communities to learn from experienced professionals and discover new opportunities. The BiggerPockets forum, for instance, has over 2 million members and countless discussions on various aspects of real estate investing.
Lastly, stay informed about market trends and economic factors that can impact your investments. Keep an eye on interest rates, job growth, and population shifts in your target markets. According to the U.S. Bureau of Labor Statistics, the unemployment rate in March 2024 was 3.6%, indicating a strong job market that can support housing demand.
By following these tips and staying vigilant, you'll be well on your way to maximizing your real estate investing profits in 2024 and beyond!
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⏰ Quick Tips
You asked. I answered.
How much money do I need to start investing in real estate?
The amount of money required depends on your investment strategy and target properties. While some investments, like REITs, can be started with as little as $500 on platforms like Fundrise, purchasing a property typically requires a down payment of at least 20% of the purchase price. Explore financing options, such as conventional mortgages, FHA loans (which require as little as 3.5% down), or partnering with other investors to pool resources.
Fannie and Freddie's Cosmic Clarification
In light of recent legal developments, like the National Association of Realtors settlement, our beloved GSEs have decided to clear the air about their policies on interested party contributions (IPCs). This settlement is expected to shake things up in the realm of sellers paying buyers' real estate agent commissions, potentially leading to some unconventional arrangements.
Now, you might be wondering how these changes could impact the limits Fannie and Freddie have on seller contributions to borrowers' closing costs, which typically range from 2% to 9% of a property's value. Well, fear not! The dynamic duo has taken a cue from the Federal Housing Administration and clarified that they won't count buyer fees towards IPC limits, as long as they align with the regional norm.
Fannie Mae's selling notice states, "If a seller or seller's real estate agent continues to pay the buyer's real estate agent in accordance with local common and customary practices, these amounts are not required to be counted toward the IPC limits for the transaction." Freddie Mac echoed this sentiment in their industry letter, noting that if these fees remain customarily paid by the property seller based on local convention, they won't be subject to financing concessions limits.
But wait, there's more! Both GSEs are keeping a watchful eye on the Burnett et al. and Moehrl et al. cases, leaving the door open for potential policy updates as these lawsuits unfold. Fannie Mae and Freddie Mac have pledged to continue monitoring and assessing the impact of the proposed NAR settlement and other real estate agent commission lawsuits to determine if any requirement updates are necessary.
Meanwhile, the Department of Veterans Affairs is still mulling over how to handle potential changes to buyer real estate commissions for the loans it partially guarantees. The National Association of Realtors has urged the VA to allow commissions amid these changes, ensuring that borrowers with guaranteed loans can make competitive offers in a market with limited inventory.
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Coworking Craze: Tech Venture Funds Bet on the Next Big Thing
Well, well, well, what do we have here? It seems like some tech venture funds are getting in on the coworking real estate game, but they're steering clear of the WeWork trainwreck. That's right, folks, Bullpen Capital and Overline have joined forces with Cercano Management to pump $5 million into Atlanta-based Switchyards. This startup is on a mission to expand from a measly 15 locations in the South to a whopping 200 or more over the next five years. Talk about ambitious!
Switchyards founder and CEO Michael Tavani is all about capturing that "one to two days a week across the globe up for grabs." And he's not alone in this quest. Portland-based Radious and London-based Jarvo are also making waves in the U.S. coworking scene, offering a fresh take on the Airbnb model sans the overnight guests.
These startups are banking on the hybrid work model sticking around for the long haul. Even though some CEOs were hoping for a full-time office return, KPMG's latest survey shows that 46% now believe hybrid is here to stay. It's all about that work-life harmony, baby!
The key to success for these neighborhood work clubs? Location, location, location. Switchyards is all about leasing space in the most iconic, buzzy, and walkable spots they can find. And let's not forget the luxury hotel lobby vibes they're going for with their interiors. Fancy!
But even with all this hype, potential investors had to see Switchyards' spaces firsthand to really get it. Turns out, 95% of their members had never even used coworking spaces before. Talk about untapped potential!
So, while WeWork might be struggling to keep its head above water, these scrappy startups are making moves and shaking up the coworking scene. Who knows, maybe we'll all be sipping lattes in a swanky neighborhood work club soon enough!
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💰 Deal of the Day!
Price: $1,425,000
Address: 1286 S Knoll Ave, Kanab, UT 84741
This property would make an excellent vacation rental due to its perfect combination of rustic charm, ample space, and income-generating potential, all nestled in the stunning natural beauty of Kanab, Utah.
Airdna data:
Estimated monthly payment: $8,725/month (if financed)
Estimated monthly revenue: $8,291/month
Cashflow excludes additional operating expenses. Always confirm local regulations, HOAs and permits before purchasing a property.
Thanks and see you tomorrow!
✍️ Brett