Joseph D. Federico's Blog
Although most people think of real estate investments in terms of real property that they can see and touch, buy and sell, or rent and manage on their own, there is a popular form of real estate investment that is not as personal and interactive.
In many ways, it is easier, featuring the expectation of a steady, long-term income stream, and requiring less cash, almost no worry, and little concentrated effort. Buying shares in a real estate investment trust (REIT) is one way to create a diversified investment portfolio, and such investment opportunities are now widely available even to those with limited cash reserves and minimal investment expertise.
Instead of holding the deed to a specific piece of property, an investor in an REIT holds shares in a corporate entity that operates under strict guidelines established by the Internal Revenue Service. The law that governs such investment was actually passed in 1960. Today, it is estimated that about 80 million Americans own shares in the hundreds of REITs that are publicly traded through the SEC or offered privately by brokers and financial advisers. In recent years, there has been substantial growth in REIT investment through pension and retirement plans.
For the individual investor considering REIT investment, there are some cautions as well as some decided advantages.
Advantages of REITs
First, on the plus side, a relatively small investment is required. Buying individual properties either to rent or for resale typically requires a substantial cash outlay, but REIT investment can begin with little cash outlay. This may be the prime advantage. Because one of the regulatory provisions limits major shareholder presence in any REIT, there is a great deal of opportunity for small investors.
Additional advantages include:
- Liquidity: Particularly with publicly-traded REITs, buying and selling is as easy as contacting a licensed broker and issuing the order.
- Steady Income Stream: REITs are required to return 90% of taxable income to investors each year, in the form of dividends.
- Regulation & Transparency: Corporations operate under strict governance, and must be managed by trustees or a board of directors.
- Beneficial Risk-adjusted Return: With initial due diligence, the risk of loss over the long-term is very low.
- Minimal Growth: The possibility of capital appreciation is less than that of other investment types.
- Tax Consequences: REIT Dividends are taxed as normal income under IRS rules.
- Market Risk: All real estate value is market driven, and REIT's are no different. Investors should be aware of current trends, and take those into account when comparing various REITs. Certain segments are perennial high performers, while others are location and use-driven.
- Associated Fees: Pay attention to management and transaction fees, not only those charged by investment brokers, but also the operating expenses of the REIT itself.
Investment decisions should always be made following due diligence, and with personal goals and objectives in mind. But for investors who wish to get into the business of real estate investing, even on a limited basis, REITs can be a first step.
In the internet age, we’ve all seen dream homes on Google, Pinterest, or Instagram that seem to encompass everything we’ve ever wanted in a home.
Sometimes, obsessing over dream homes can be detrimental to us--making us feel bad about our own living situation or discouraged about ever being able to afford the home we truly want.
However, dream homes can serve a purpose when it comes to identifying what we really want out of a home.
In today’s post, we’re going to use the idea of a dream home “wish list” to help you narrow down what really matters to you and your family in your next home.
Step 1: Start by making a list of your dream homes
This is the easy part. If you’re like me, you probably have a Pinterest board or bookmark folder just for home inspiration.
Put all of the dream homes on your list. The order doesn’t matter, and you’ll find out why below.
Step 2: For each home, write down one or two of your favorite things
Is it the square footage? The location that’s perfect for your commute or for trips to your favorite places? Or, is it just the color scheme of the kitchen?
No aspect is too small for this list--it all depends on what you like, not what the price tag is.
Step 3: Go over your list and try to put the items in order of how much they matter to you.
An example would be:
A cheerful, bright colored kitchen
A cozy office to wok quietly in
A two-car garage
A playroom for the kids
A location that’s close to the water
Looking over these five things, there are only two items that can’t be found in most houses, a two-car garage and a location that’s near the water. And, this house-hunter didn’t even list those items as the most important.
So, what can we learn from this exercise? Oftentimes, the things we’re looking for the most in a home can be things that we can do later, like interior decorating or designating spare rooms to serve as an office or playroom.
Step 4: Use your top 3 when house hunting
Now that you have the top three things that you’d find in your dream home, take this list with you on your house hunt. Try to seek out a home that has a combination of these items and one that will be the most practical for your family.
You might find that these conveniences, such as being closer to your work for a shorter commute, will pay off in the long run, as they’ll let you spend more time with our family and make each day a little bit easier.
Listing a house may seem like a long, arduous process, especially for a first-time home seller. But with the right real estate agent at your side, you can receive expert support at each stage of the home selling journey.
What does it take to hire a diligent real estate agent to ensure you can sell your house? Here are three tips to help first-time home sellers employ the ideal real estate agent.
1. Conduct a Comprehensive Search
Search far and wide for a real estate agent – you'll be glad you did. With an extensive search, you can learn about the pros and cons of working with various real estate agents in your area and plan accordingly.
Don't hesitate to reach out to friends and family members for real estate agent recommendations. If friends and family members enjoyed outstanding experiences with certain real estate agents, it may be a great idea to contact the housing professionals who have helped your loved ones achieve their home selling goals.
Also, look for real estate agents who boast many years of industry experience. These housing market professionals are likely to understand the ins and outs of selling a residence. As such, they may be better equipped than other real estate agents to help you optimize the value of your house.
2. Ask Plenty of Questions
If you find a real estate agent who seems like a viable candidate to help you sell your residence, it is important to set up a face-to-face meeting. That way, you can ask questions and determine whether this individual is the right person to assist you.
During a face-to-face meeting, find out what a real estate agent has to say about your residence. Typically, a diligent real estate agent will conduct extensive research before meeting with you and should be able to offer honest, unbiased home selling recommendations.
Furthermore, there is no such thing as a "bad" question, especially for those who are selling a house for the first time. And if you have questions for a real estate agent, a face-to-face meeting provides an excellent opportunity to get your queries addressed by a housing market expert.
3. Get Client Referrals
Ask real estate agents for client referrals. Then, reach out to past clients so you can better understand how a particular real estate agent has supported home sellers over the years.
If a client offers glowing recommendations of a real estate agent, this housing market professional may prove to be the best choice. On the other hand, a client who encountered problems with a particular real estate agent may help you avoid making the wrong decision as well.
Ultimately, the right real estate agent is someone who can help you sell your house and keep you informed as the home selling journey moves forward. And if you spend some time learning about the real estate agents in your city or town, you should have no trouble employing a top-notch real estate agent who can take the guesswork out of selling your residence.
If you have the opportunity to design and build your own home, you have the freedom to compile the features you desire and join them together into the perfect house. As you work together with a builder or architect, you may find that some details need to be cut from your plan to stay within budget. Even if you’re unable to complete everything immediately, it is wise to lay the groundwork for future improvements. Here are two major features you should plan for during the building process.
You may not be able to finish your basement as a game room or den right away. If your builder knows how you plan to use the space in the future, they can build in components that will make that transition easier to work through. If you are planning a walk-out basement, build the framing for an exterior door. If you plan to add a washing machine, utility sink or bathroom to your basement, running electricity and plumbing during initial construction can get you set up for success.
Installing solar panels will help you save on home utility costs over time, but the initial purchase can be a considerable expense. If you know you will add solar paneling to your home at some point, prepare for it by running electrical in your attic and roofing now. Invest in a solid roof structure so you can manage minimal upkeep and keep your roof in shape for adding in the panels when you’re ready.
If you can’t afford some of the home features you desire during your initial build don’t just forget about them completely. Always speak to your builder about what you want and get their advice on cost-saving measures you can take now to set yourself up for augmenting your home after the build is complete.
Life amongst the trees can be beneficial. You get plenty of shade, ample privacy, and can use some of the wood for heating, cooking, or camp fires with the kids. However, living in the woods can also present a few challenges that many aren’t prepared for when purchasing a home in a heavily wooded area.
In this article, we’re going to give you some advice on how to survive and thrive on a heavily wooded plot of land so that you can make the most of the trees you’ll grow to love.
While all of those trees in your yard may be beautiful, they can be dangerous to you, your home, and your vehicles if you’re not careful. Storms, especially in colder climates where ice is likely to form, can bring down large branches and cause a lot of damage.
They can also be a minor annoyance when you have to move branches before you back out of your driveway in the morning.
The best way to avoid potential danger is to take inventory of the branches that are within striking distance of your home, garage, vehicles, and driveway. Healthy branches on younger trees might not pose a hazard. But, if you notice dying or large, heavy branches that could fall somewhere dangerous, it might be better to remove them now than pay for the damage they cause later.
This brings us to one of the most important tools you can have living in the woods: a chainsaw.
Since you have a wooded property, it’s most likely best to buy a gas-powered or battery-powered chainsaw to avoid having to use several extension cords throughout the woods.
When it comes to the high sitting branches, you can buy a pole saw in the $150 range that will handle small branches.
One of the benefits of cleaning out some trees is that you get free fuel for your fireplace (if you have one). However, you’ll need a dry place to season your wood before you burn it. Ideally, wait at least a year for your wood to dry out before using it in your wood stove.
Embracing nature -- the good and the bad
To get the most out of your tree-covered yard, you’ll have to learn to accept some of the things that come with it. If you’re the type of person who picks up every stick on their lawn, you’ll come to realize that it’s best just to pick them up before you mow.
When it comes to mosquitos and other insects, you’ll learn the times when they come out to feed and learn to avoid exposure at those times. However, when you live in the woods, bugs and critters are a part of life. So, it helps to learn about them. You might find that the spiders you hate help keep your home free of other undesirable insects.
When you get fed up with the sticks you have to pick up and the insects you have to avoid, just remember that you have privacy from passersby, that it’s more calm and quiet from the trees blocking the sounds of the road, and that the shade will give you a cool place to sit outside and save you some on your air conditioning bill in the summer.