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How to Improve Cash Flow on Rental Properties

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How to Improve Cash Flow on Rental Properties

An essential factor in maintaining financial stability as a real estate investor is achieving the appropriate balance between the passive income your property is generating and net expenses to include bills, maintenance, and taxes.

It can be challenging to determine what is the correct rental fee to charge, but it’s even more challenging to optimize your cash flow without raising your tenant’s rent.

It is understandably tempting from a landlord’s perspective to simply increase rent when they want to increase their profit margin. Although reasonable annual rent increases that are accurately correlated with inflation and cost of living are perfectly justifiable, the key to long-term sustainability is to increase cash flow without having to rely solely on adjusting rent.

Our team at DG Pinnacle Commercial has years of experience providing expert analysis and advise to real estate investors to improve their businesses. We’ve leveraged that knowledge to provide you with the following insights on how to boost cash flow for your rental property.

Improve Your Cash Flow on Rental Properties With These Ideas

Plan Ahead

Nothing hurts your bottom line more as a landlord than a vacant property. Every passing day that a rental unit is unoccupied, your overall cash flow is taking a major hit.

An effective way to mitigate the potential for a vacant property is to plan in advance for tenant turnover. It’s never too early to start contingency planning for when the lease expires. Having a new tenant lined up or an agreement in place with the existing occupant to extend the lease are surefire ways to save you money in the long run.

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Every passing day that a rental unit is unoccupied, your overall cash flow is taking a major hit.

Emphasize Accountability

If you are a relatively new landlord, you may want to be the “nice” property owner and tend to overlook tenants missing payments or submitting them past the deadline. Although there are certainly situations with extenuating circumstances where it may be the right call to accept a late rent check, the best practice is to address any payment issues as soon as possible. Missed or delinquent rent is an immediate and substantial detractor when it comes to cash flow optimization.

Be sure to enforce late fees appropriately and send out timely notices for non-payment.

Retain Tenants

Retaining long-term tenants who exhibit the ability to pay their rents on time and not cause you any issues as a property owner will pay dividends when it comes to cash flow. Reducing your turnover rate means less marketing costs to find new tenants and less maintenance costs because you do not have to constantly touch-up rental units for showings. Focus on keeping communication lines open with your best tenants and be responsive to their requests to improve the odds of them renewing their leases.

Reducing your turnover rate means less marketing costs to find new tenants and less maintenance costs because you do not have to constantly touch-up rental units for showings.

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Smart Maintenance

Have minor plumbing issues that have needed to be fixed for a long time? Are you conducting routine maintenance inspections on all appliances? Taking a proactive approach to these preventative maintenance checks can save you tons of money down the road and have the added benefit of improving your overall cash flow.

Solving these relatively small problems now will prevent them from snowballing into bigger (and more expensive) problems in the future. Along the same lines, you may consider installing high-efficiency furnaces and air conditioners that can lower utility costs—which is particularly beneficial if you are the one paying for them.

Even if your tenant is billed for these costs, lowering them can entice them to renew their leases or give a favorable referral when it comes time to find a new tenant.

Add Amenities & Upgrades

Home improvements that are value-adds to your rental property are an ideal way to justify a rent increase. As an added bonus, certain improvements can also facilitate a smoother rental property turnover process. For instance, carpet is hard to clean in-between tenants, so replacing it with hard wood can save you the time and hassle as well as allowing you to charge a higher base rent—both of which will improve your cash flow as a whole.

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6 Benefits Of Investing In Real Estate

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6 Benefits Of Investing In Real Estate

Today is definitely an interesting time for real estate investors, and many investors have been able to use the recent record price increases to their advantage.

Even though today’s market presents a number of challenges, such as the current shortage of appraisers coupled with a huge demand for appraisers, supply chain issues such as a lack of construction, and the shortage of inventory that is having a major impact on property values, real estate investing has proven that it can serve as a wealth-building tool for savvy investors.

Investing in Real Estate is a great Opportunity

Given what’s happening in the world today, it’s easy to understand why so many investors want to put their money into real estate rather than the stock market, which can change in a second.

Investing in real estate is a popular career choice for good reason. It requires commitment and strategy, but when done right, real estate investing offers a variety of benefits over other career options. In this article, you’ll learn about the benefits that make real estate investing such an attractive career choice.

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Real Estate investing has proven that it can serve as a wealth-building tool for savvy investors

1. Cash Flow

A major advantage of real estate investment is the ability to generate cash flow. In many cases, cash flow increases over time as you pay off your mortgage and build equity.

2. Tax Benefits and Deductions

A major benefit of investing is the tax breaks and deductions you can take. Generally, you can deduct the costs of operating, managing and owning your property from your taxes. Depreciation may also be deductible, as well as insurance. And while many may think it’s not worth it, it does add up over the years.

3. Equity

Positive equity is one of the best reasons to invest in real estate. That’s because it can help you buy more properties, increase cash flow and make more money overall. In addition, equity offers other benefits if you want to use it for retirement planning, refinancing or a loan.

A major advantage of real estate investment is the ability to generate cash flow.

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4. Protection Against Inflation

Real estate investments often provide a hedge against inflation. And they protect the value of your money when those goods or services go up. And when those costs go up, so do your real estate values. So your investment hedges against inflation, allowing you to earn more from your money in the long run.

5. Appreciation

Appreciation in real estate is when the value of your property increases over time. This can benefit you if you sell the property, or increase your monthly income if you rent the property. Normally, property values increase over time. So if the increase in value is large enough, you can make a substantial profit when you sell or rent it out.

6. Leverage

In real estate, leverage refers to using debt for the possibility of yielding a higher rate of return on your real estate investment, it is a technique used to expand the potential for returns, while equally expanding the downside of any risks involved if things don’t work out.

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Real Estate investments often provide a hedge against inflation. And they protect the value of your money when those goods or services go up.

Bottom Line

We recognize the potential financial benefits of real estate investing. It goes without saying that the many benefits of real estate investing outweigh the costs, and that as a real estate investor, you could earn a steady income that provides you with long-term financial freedom.

This year definitely looks promising for investors, and your real estate investments will indeed bring you high returns. The real estate market and housing conditions are in great shape, and you can be sure that you will make money if you invest in the right locations. It’s a simple equation: when the economy grows, the real estate market flourishes, and there is an abundance of real estate opportunities for you to take advantage of across the country.

We can help you put your strategies into action. Our programs and products are available to those who are willing to make the effort. Contact us to guide you along the way and take advantage of the many opportunities in the real estate market. Call or text us at 📲 305-851-5225

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No More excuses for Investing In Real Estate

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No More excuses for Investing In Real Estate

As many of us know, Real Estate development can be one of the most lucrative small businesses there is. A smart businessman who can take reasonable risks can build an empire that finances a comfortable, rewarding lifestyle.

Investing in Real Estate Requires Experience

Although no formal training is required to become a developer, successful residential and commercial real estate developers have certainly gained their training from experience. However, starting your own real estate development business and finding investing clients is not dependent on a certain level of education.

However, some real estate developers have had formal training in a specific field, such as commercial real estate broker, general contractor, or residential real estate broker, all of which require specialized training and licensing. Or they may have worked for a company that specializes in construction management or property management. Experience in different areas of the real estate market can certainly help you be the competent manager of an investment property that is being built from the ground up, especially when it comes to more diverse projects.

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Although no formal training is required to become a developer, real estate developers have certainly gained their training from experience.

Investing in Real Estate Requires Proper Funding

Nowadays, many people want to invest in real estate but are hesitant to take the plunge and do not know how to finance a real estate deal. Many assume that it is impossible to start a business without their own capital.

There are a variety of ways to finance a real estate business without using your own money. Not only are there real estate development loans, but there are many private lenders willing to take a risk on your business. Here are 4 ways you can finance your real estate development business:

  • Private Lenders: private lenders can be anyone who has access to capital and is willing to invest it. In other words, a private lender can be anyone from a close friend to someone you met at a networking event. As their name implies, private lenders are not institutionalized or licensed to lend money, but do so to get their money back with interest. The terms of private lenders are usually easier to meet, and the length of time they are willing to lend money for is much shorter, but at the cost of a higher interest rate.
  • Hard money lenders: hard money lenders are not institutionalized, but may be licensed to lend. Their loan terms are typically short and are leveraged to the asset in question. Hard money loans carry a high interest rate, but they can provide borrowers with quick access to capital.
  • Home equity loans and lines of credit: Home equity loans and lines of credit are a type of revolving credit – not unlike a credit card. However, home equity loans use the equity in your home as collateral.
  • Traditional Loans: Traditional loans are those you receive from a bank or institutional lender. Their interest rates are relatively low in order to remain competitive. However, the terms are usually long, and the lending is on a large scale. Most traditional loans have terms of 15 to 30 or more years and carry a low interest rate.

There are a variety of ways to finance a real estate business without using your own money.

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Bottom Line

As you can see, financing problems are no longer an excuse not to invest in real estate. We can help you put your strategies into action. Our programs and products are available to those who are willing to make the effort. Contact us to guide you along the way and take advantage of the many opportunities in the real estate market. Call or text us at 📲 305-851-5225

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Who Can Become a Real Estate Investor?

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Who Can Become a Real Estate Investor?

Becoming a real estate investor can seem like a challenging and ambitious career choice as it seems like it is only open and accessible to an exclusive and experienced group. But, here’s the catch, anyone can become a real estate investor. That’s right, anyone! When it comes to becoming an investor in real estate, anyone can sign up.

There are no prerequisites, such as holding an undergraduate degree, or specific barriers, such as having prior years of work experience. There is no license! Anyone can become a real estate investor; the key to becoming successful is understanding the market, doing the proper research, and knowing how and where to acquire the necessary funds and resources.

Finding The Right Property

Now, if you wish to join the market, you should know a few things that could be very helpful. One is that finding the right property to invest in is a lot harder than you might expect. If you want to become successful as a real estate investor, you must be willing to do research and be very patient. There are a lot of factors that can determine the success of a property, such as the type of property itself, the location, the neighboring community, the sustainability of the current structure, the potential renovation costs, the logistical constraints of acquiring permits or supplies and resources in a timely fashion, and the market valuation in relation to its true sense of value, which is at the heart of real estate investing and something that will itself be difficult the most challenging to figure out. Additionally, the market moves quickly and often unnoticed, so even if you find a suitable property, you might not be able to acquire it in time or even for the right price.

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If you want to become successful as a real estate investor, you must be willing to do research and be very patient.

Are There Any Specific Requirements?

Another thing to keep in mind is that even though there are no specific requirements listed that prevent someone from becoming a real estate investor, the more knowledgeable you are about the ins and outs of the real estate market, the better your chances of success are. For example, do you know the difference between a single-family rental property and a multi-family rental property? If not, then you should be aware that not all properties are the same if controlling for all the other variables, such as location, schools, transportation, etc. There are a lot of nuances within the categories of real estate that ask investors to have a more specified understanding of their work so that they can avoid making costly investment decisions. The differences in types of properties can impact everything from the amount of equity and income generated, the types of permits required, and even the level of funding you could receive for a property. To be successful, it is not enough to simply find any property; you must also know which type of property you want to invest in and know which steps to take next.

Build Your Team

Ok, let’s say you are reasonably knowledgeable about the real estate market and are still dying to enter the industry. Well, what else might be important besides being well-informed and educated? How about the ability to create relationships between investors, suppliers, and service providers. This is where your studies can only get you so far, and you would need to rely on your ability to acquire enough social goodwill to build up a strong team of investors and suppliers. Having strong relations with investors is essential to one’s success because they are your peers. They can give advice or even provide funding for your projects. And if you want to impress them, you would need to prove your credibility, track record, and ideas adequately to help you live out your dreams. Making these relationships can be very helpful if you intend to make real estate investing a continual endeavor.

Additionally, it is also important to have a substantial list of suppliers and service providers you will rely on whenever you need to work on a property. As a real estate expert, you would want to find the suppliers with the best sense of quality and reliability to live up to the standards you outlined in your properties. You should also consider where you can find these people and how that may relate to the location of your investment property, as some suppliers may be more reliable and efficient in only certain parts of the country. Overall, finding a sizable and detailed list of investors and suppliers will get you one step further to succeeding in the real estate market, but it too asks for a lot of hard work and patience.

The more knowledgeable you are about the ins and outs of the real estate market, the better your chances of success are.

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Bottom Line

Lastly, if you are persistent enough to do the appropriate amount of research and acquire the right network of people and resources, there is nothing left to do but put your money where your mouth is and work. However, like most things, real estate investing can arise unforeseen challenges that make or break your operation. Those are the moments when your knowledge and skill will persevere and guide you towards success or failure. But, at the very least, even though anyone can become a real estate investor, the more you study, research, and reach out to people to help you figure out how to survive, the more likely you will become to see success.

This article was originally published in www.strattonequities.com