fbpx
Plage Saint-Pierre Beach & Campground

Now you can invest in oceanfront real estate with as little as $1,000

Co-own a Nova Scotia beach destination through FrontFundr with Forge & Foster

Soaring real estate prices have locked many Canadians out of the market — and the wealth gains that come with ownership.

“For too long, real estate has been behind closed doors and not accessible to everyone,” says Joe Accardi, Partner & CEO of Forge & Foster. “We want to bring real estate to all Canadians, and FrontFundr is something that we’re really excited about.”

 

WHAT IS FRONTFUNDR?

FrontFundr is Canada’s leading online private markets investing platform and an exempt market dealer. 

Founded in Vancouver in 2013, the startup’s mission is to democratize the private sector investment model by offering companies an alternative to venture and private equity investing.

FrontFundr provides investors with the opportunity to invest in startups and growth companies. Their online platform allows all Canadians — from professionals to first-time investors —to support the ideas and initiatives they want to see succeed. 

 

 

The company has built up a community of over 34,000 users, run over 100 successful funding campaigns, and helped businesses raise more than $120 million so far.

“You might think you can only invest in Wealthsimple and public stocks, but you can also invest in early stage companies from the very beginning.”

“We’re missionaries to spread the word around equity crowdfunding, in general,” says Peter-Paul Van Hoeken, the founder and CEO of Silver Maple Ventures, FrontFundr’s parent company. “Creating awareness has been a huge job for our company in the last five years. You might think you can only invest in Wealthsimple and public stocks, but you can also invest in early stage companies from the very beginning.”

 

TELL ME ABOUT THE PROPERTY

The Plage Saint-Pierre Beach and Campground in Cheticamp, Nova Scotia, sits on 2,500 feet of private beach along one of the province’s warmest bays.

The nearby Cabot Cape Breton Golf Club is a popular destination. Visitors also enjoy hiking, whale watching, berry picking, stargazing, kayaking, cycling, dining on fresh seafood and more.

The popular destination boasts quaint cabins, RV rentals, and sites for tents and RVs. However, there is plenty of opportunity for improvement and expansion.

Situated at the gateway of the world-famous Cape Breton Highlands National Park and just off the Cabot Trail, this real estate investment property is packed with potential. And Forge & Foster is ready to unlock that potential through its unparalleled expertise in real estate management. 

“Never before have people had the opportunity to invest in spectacular real estate like this, starting at just $1,000.”

Joe Accardi, Partner and CEO at Forge & Foster Investment Management, said, “This is a very special opportunity for investors and we’re excited to offer it through our trusted partner, FrontFundr. Never before have people had the opportunity to invest in spectacular real estate like this, starting at just $1,000.”

WHY FRONTFUNDR? 

Here are the main benefits of investing in real estate through FrontFundr:

  • No fees
  • Pride of ownership
  • No need to qualify for a mortgage
  • No down payment required
  • None of the pain of managing a property
  • No closing costs
  • No need to find tenants or maintain the property
  • You’ll get a share of rent and gains on the property when it’s sold
  • You’ll receive ongoing oversight and support
  • Every investment project undergoes a detailed due diligence process

“Join FrontFundr. Take a look at their projects. You can invest in a project that you’re excited about,” says Accardi.

⭐⭐⭐⭐⭐
Great platform to invest in early stage enterprise
The investment process was straightforward and well explained.
Jean-Philippe Deblois, Trust Pilot

⭐⭐⭐⭐⭐
Great platform that is intuitive and easy to use!
Good access to detailed prospectus and pitch info. The digital signing process is simple and efficient. Private company investing has never been this easy or accessible.
Ken Smith, Trust Pilot

⭐⭐⭐⭐⭐
I feel fully confident that I am making sound investment decisions for myself. FrontFundr is an essential platform to democratize investing into early stage companies that have huge potential to add value.
— Leon Lie, Trust Pilot

 

WHAT ARE THE EXPERTS SAYING?

“Small investments in multiple projects add up over time. That makes it appealing for young people who want to get in the habit of investing.”

“I feel that real estate crowdfunding can be a viable tool for those who want to invest in real estate but are restricted due to a lack of money or credit,” says Mark Ting, CBC’s finance columnist. “Small investments in multiple projects add up over time. That makes it appealing for young people who want to get in the habit of investing.”

“A crowdfunded model comes with transparency and tangibility,” Tina Tehranchian, an Assante Capital Management Ltd. senior wealth adviser told the Globe and Mail. “You can drive by the property and boast to your friends that you have a share of ownership of this property.”

HOW DO I JOIN?

Sign up for FrontFundr now — there’s no fee to join!

Plage Saint-Pierre Beach & Campground is currently raising $595,000. Details of the offering can be found at frontfundr.com/forgeandfoster


Screen shot of FrontFundr website


To book a stay at Plage Saint-Pierre Beach & Campground, visit plagestpierre.com or contact plagesaintpierre@gmail.com or (902) 224-2112.

 

Crowe Valley Campground

Now You Can Enter the Real Estate Market With Just $500, Thanks to BuyProperly

“BuyProperly provides you with the benefits of investing in cities with huge capital appreciation — without bearing the brunt of high real estate costs,” says BuyProperly CEO Khushboo Jha. “Our mission is to enable investors like you to grow your wealth through alternate asset classes.”

With BuyProperly, you can enter the real estate market for just $500. As BuyProperly’s first commercial real estate partner, Forge & Foster will waive BuyProperly’s annual management fee. Use the promo code BEGIN@500 at BuyProperly.ca to get started.

What is BuyProperly?

Founded in Toronto in 2019, BuyProperly is a fractional real estate investing platform that lets you enter the real estate market through a quick and easy online transaction.

Through BuyProperly.ca, you can go online and complete a fractional real estate investment with expected returns of 20 to 40% in less than 7 minutes.

“There’s only one objective: to give the customer’s options to invest in good deals. That’s it,” Khushboo told Bay Street Bull.

“There’s only one objective: to give the customer’s options to invest in good deals.”

— Khushboo Jha
BuyProperly CEO

BuyProperly grows your wealth by identifying high yield properties with a cutting-edge proprietary AI model.

You’ll earn passive rental income alongside your long-term investments. When a property is sold, your investment principal is paid back to you, plus appreciation.

How does it work?

BuyProperly’s selection process has three stages:

  1. First, using an AI model that looks at 20 years of MLS data, BuyProperly finds assets listed for less than their fair market value. This is determined through 500 million data points, including information on nearby schools, banks, neighbourhood shops, local demographics and economic data.
  2. Next, BuyProperly’s investment committee reviews actual, up-to-date numbers and data to detect red flags not captured in the initial evaluation.
  3. Then, BuyProperly undertakes an in-person inspection. Only 1% of properties reviewed pass BuyProperly’s rigorous evaluation and appear on the BuyProplerly website for you to invest in.

BuyProperly rents the fractionally-owned properties to high-quality, AAA tenants, earning you passive income alongside your long-term investments. In a few simple steps, you can open up a free account and start investing!

The Switchyards, Niagara Falls
Properties like The Switchyard in Niagara Falls, Ontario — which you can invest in on BuyProperly — offer tremendous upside potential through redevelopment.

What Are BuyProperly’s Main Benefits?

    • No need to qualify for a mortgage
    • No downpayment required
    • None of the pain of managing a property or being a landlord
    • No closing costs
    • No need to find tenants or maintain the property
    • You’ll get a share of rent and gains on the property when it’s sold

Properties like The Switchyard, which is located at 4256 Carroll Avenue and 5900 Thorold Stone Road in Niagara Falls, Ontario, offer tremendous upside potential through redevelopment. And BuyProperly offers you an opportunity to invest in it.

These 92,800 square foot, multi-tenanted industrial buildings are situated on 3.8 acres.

The property’s “General Industrial” designation allows for a variety of uses, such as:

  • cold storage facilities
  • laboratories
  • warehouse space
  • offices

It’s in a great area with residential neighbourhoods to the west and north. Old downtown and Queen Street are a five-minute drive away, and the Clifton Hill tourist area is a nine-minute drive.

What are the experts saying?

“I’ve had the fortunate opportunity to be a part of BuyProperly and Khushboo’s journey since the beginning,” Saurabh Dutta, Partner at Nurture Ventures, said in a statement. “The market need for fractional real estate investing is clear through the customer growth BuyProperly has seen in only a short amount of time.”

“Khushboo and her team created the new hidden gem of real estate investing,” Margaux Perrin said on Bay Street Estate Bull.

“Khushboo and her team created the new hidden gem of real estate investing.”

Margaux Perrin, Bay Street Bull

Here’s How to Join BuyProperly and Enter the Real Estate Market for $500

It’s quick and easy for you to create an account at BuyProperly.ca. Then, use the promo code Begin@500 at BuyProperly.ca to get started with an investment of just $500.

Are you interested but have a few more questions? The folks at BuyProperly are happy to chat! It’s quick and easy to schedule a call with them. Just book a meeting and choose a time that suits you best!

How to Build Wealth in Your 30s: Simple Steps to Become Financially Free

How to Build Wealth in Your 30s: Simple Steps to Become Financially Free

“Financial freedom” is becoming a buzzword nowadays, but what does it actually mean? When it comes to learning how to build wealth in your 30s, patience, persistence, and a solid plan are at the root of this new financial freedom movement.

Here are 6 simple tips to get you started on the road to wealth-building and financial independence.

Let’s dive in!

1. Make a budget (and live within your means)

The first step to building wealth in your 30s (or at any age for that matter!) is to make a budget and stick to it.

Many people never realize how much money they’re actually spending each month and how much could be saved by simply creating a budget and learning to consciously live within their means.

How should you create a budget? Here’s a simple guide to follow:

  • Calculate your total net income for both you and your partner: make sure to build your budget based on your take-home pay each month.
  • Calculate all your fixed expenses: this includes all the expenses that are predictable and stay consistent each month like your mortgage, rent, insurance, car payments, etc.
  • Calculate all your variable expenses: variable expenses include all of your discretionary spending and bills that change from month to month like groceries, dining out, utilities, and leisure activities.
  • Set aside money for debt repayment and wealth-building: Ideally, you should be able to set aside between 10-20% of your net income for debt repayment, savings, and investing.

If you don’t have any wiggle room in your budget, start looking for fixed and variable expenses you can cut back on. Here are some ideas to keep in mind:

– Are there any subscriptions you’re not using? Netflix, Amazon, and that old gym membership may seem like nothing, but those monthly subscriptions can really add up! Take a look at where you can cut back to save some extra money.

– Are you paying high interest rates on any loans? Credit card debt can cost thousands in interest charges, so it’s always best to prioritize those high-interest loans when repaying debt. If you’re struggling to make a dent in your loan, call the bank and ask what your options are for lowering the interest rate.

– Have you shopped around for new insurance rates lately? Car, home, and life insurance premiums can creep up without us ever noticing. If it’s been a while since you’ve looked into those payments, it may be worth shopping around to see if you can find a better deal.

– Is dining out eating up all your extra cash? After work, it can be tempting to grab a ready-made meal or takeout from a local restaurant. If you’re spending a lot of your monthly income at restaurants, look into cost-effective options like batch-cooking and meal prepping.

Learning how to build wealth in your 30s isn’t always about making more money. Sometimes the quickest and easiest way to find extra money is to take a good hard look at what you’re spending and find creative ways to save!

How much money should 30-year-olds have saved?

There’s no right or wrong answer for how much you should have saved by the time you turn 30 since it depends on your income, lifestyle, and the wealth-building opportunities available to you.

Most experts suggest saving 10-20% of your pre-tax income each month for retirement. According to Statistics Canada, as of 2020, the average salary for Canadians was $54,630. This means $455-$910 would be an ideal amount to put towards savings each month.

If you’re just getting started at 30 and you’re able to invest $900 each month in accounts or investments that yield a 5% annual return, you would have just over $980,000 by the time you’re ready to retire at 65!

2. Pay off debt as quickly as possible

Debt can rack up some serious interest payments that eat into your potential wealth-building opportunities. According to BNN Bloomberg, as of December 2020, Canadians now owe $1.71 for every dollar of disposable income they have to spend.

What’s the hidden cost of high-interest debt? Let’s say you have credit card debt totalling $10,000 at an 18% interest rate. If you decide to pay $200 towards this debt, it will take 94 months to pay off AND cost you $8,622 in interest.

If you decide to increase that payment to $400 per month, your credit card will be paid off in 32 months and you’ll pay only $2627 in interest.

That means you’d be saving $5,995 which could be put towards savings, retirement, or investments that will help grow your wealth over time.

If you’re battling with high-interest loans and credit card debt, one of the fastest ways to pay it off is by focusing on the highest-interest loan first (a.k.a. “The Avalanche Method”). This method for debt repayment frees up more cash month-over-month as you continue paying down those debts.

3. Work on your money mindset

So many have us have been conditioned to believe we can’t be wealthy or that only a select few people are lucky enough to be financially secure.

Although it’s important to acknowledge the privilege of being able to work full time, earn an income, and invest in various financial markets, it’s also important to realize that it’s never too late to start investing and growing your wealth.

The first thing you can do to get comfortable with money is to start talking about it. Open up a dialogue with family and friends about savings and retirement. Talk with coworkers about financial resources available through your employer. Find financial advisors and professionals who can teach you how to build wealth in your 30s and deconstruct some of the money myths you believe.

The quickest way to change your mindset about money is to surround yourself with people, conversations, and thoughts that are different from your own.

If you’re willing to challenge some of the long-held beliefs you have about money, you’ll find new and amazing opportunities to start building wealth and take steps towards becoming financially free.

4. Learn as much as you can about investing

Everyone knows the power of smart investing, but many people are too intimidated to take the first step to get started. After all, where should you put your money? Stocks? Bonds? Real estate?

The fastest way to grow your wealth is to get educated about investing so you can make informed financial decisions.

What can you do to learn?

  • Read books

One of the simplest ways to learn about investing is to go to the local library or book store to find some books on budgeting, saving, and investing. Here are some great books to start with:
– The Intelligent Investor: The Definitive Book on Value Investing
The Book on Rental Property Investing
– Investing in Your 20s & 30s For Dummies

  • Join supportive communities

Eager to dive in and talk about investing? Find local or online communities you can join to learn all about investing. If you don’t have any business clubs in your area, look online on Reddit or Facebook for supportive communities to join. Here at Forge & Foster Investment Management, you can engage with us on Twitter, Facebook, Instagram and LinkedIn.

  • Speak with financial professionals

Take advantage of all the professional wealth-building advice you can. Book an appointment with a financial advisor at your bank. Talk to your employer to ask about RRSP opportunities. Meet with an accountant to discuss ways you can find more money in your budget to invest.

  • Attend seminars and/or events

Going to local events is a fantastic way to learn valuable financial skills and network with like-minded investors. Not sure where to find events in your area? Simply head to Google and look for investment conferences, business groups, and meetups in your local area.

The more you educate yourself about money, the more opportunities you’ll find to build your wealth.

5. Diversify your portfolio

Many of us have heard of the saying “don’t put all your eggs in one basket” and this is absolutely true when it comes to building long-term wealth. Diversifying is one of the best ways to ensure you’re protecting your money.

What does diversification look like? Simply put, diversifying your portfolio means investing in a variety of different industries, sectors, and asset classes. This could include stocks, bonds, real estate, currencies, and more.

Diversification is a key component to building wealth because it allows you to spread your money around to mitigate risk and better predict expected growth.

While investing in something like Bitcoin may bring some temporary gains, it can also be extremely volatile. Balancing out those volatile investments with the long-term appreciation from rental properties, for example, would create a more stable portfolio.

BuyProperly helps new investors get started in real estate investing for as little as a $2,500 initial investment. Learn more at www.buyproperly.ca.

Speak with your financial advisor about different ways you can diversify your investments for maximum growth.

6. Remember to be patient

Building wealth doesn’t happen overnight: it takes time, dedication, and patience to see the best results.

One of the biggest secrets to wealth-building is the compounding effect that comes from reinvesting your money over time. The more returns you’re able to reinvest in the market, the higher your earnings will be! This snowball effect is what creates stable, long-term opportunities.

Don’t get discouraged if you can only invest a small amount of cash at the beginning, or if your investments don’t make you a millionaire overnight. The key is to make smart financial decisions that will set you up for long-term wealth and success.

If you follow these simple wealth-building tips, you’ll be one step closer to financial freedom.

Want to learn more about how to build wealth in your 30s?  BuyProperly is on a mission to make real estate investing accessible for everyone.

Why Invest in Real Estate: 7 Key Benefits to Know

Why Invest in Real Estate: 7 Key Benefits to Know

Investing in real estate can be an incredibly rewarding and lucrative endeavour, but if you’re like a lot of new investors, you may be wondering why you should be investing in real estate and what benefits it brings over other investment opportunities.

In addition to all the amazing benefits that come along with investing in real estate, there are some drawbacks you need to consider as well.

We’re going to cover the 7 top reasons why you should be investing in real estate (and a few reasons you may not want to jump in right away!)

Opportunity for Cash Flow 

Purchasing real estate to rent out for additional cash flow is becoming a very popular investment strategy, and it’s easy to see why.

Not only do rental properties give you the opportunity to generate additional cash flow month-over-month, but they allow you to build up a portfolio of long-term, stable assets and benefit from all that appreciation over the life of your investments.

There’s another big advantage to cash flow: it provides an opportunity for new real estate investors to “house hack”.

It’s no secret that real estate prices are going up and pushing a lot of new investors out of the market. When you decide to purchase a rental property, you can use the cash flow to fund your living expenses and pay your mortgage down faster to continue investing in more real estate!

Many newbie investors buy duplexes or houses with additional dwellings to make extra cash to fund their real estate business.

If you’re looking for a way to buy into the real estate market without having to spend hundreds of thousands of dollars, check out the properties at BuyProperly. They use a fractional ownership model that allows investors to start with as little as $2,500.

High Return on Investment

Another major benefit of real estate investing is the ability to make a high return from buying, renovating, and reselling (a.k.a. house flipping).

Although this requires significantly more upfront cash than rental properties, there’s huge potential for profit if you buy the right property.

Most flippers look for undervalued buildings in great neighbourhoods. These properties need work (and money!) to get them up to average market value, but, once renovated, the returns from these resales can happen relatively quickly.

Appreciation 

The wonderful thing about investing in real estate is that the value of the property is expected to appreciate. The principal amount that you invested in the property will grow over time and should be worth more than what you paid for it when you purchased it.

Real estate is a fantastic long-term investment because it’s almost always guaranteed to appreciate in value.

Investors patient enough to buy and hold their properties will benefit from predictable appreciation year-over-year. Depending on where you buy, you can expect annual appreciation rates anywhere from 2-8%.

In Canada, there’s been an average of 6.11% annual appreciation over the last 15 years.

Tax Benefits

Another major advantage of investing in real estate is all the tax benefits you’re eligible to take advantage of!

Many investors can write off costs associated with depreciation, mortgage interest, operating costs, repairs, and property tax. These incredible tax benefits are a fantastic way for investors to save and build wealth.

For example, if you are charging $2,000 rent per month and you incurred $1,500 in tax-deductible expenses per month, you will only be paying tax on that $500 profit per month.  That’s a large difference from paying taxes on $2,000 per month.

The profit that you make on your rental unit for the year is considered rental income and will be taxed accordingly.

It is vital that you keep good accounting records on your investment property. If you are claiming maintenance and repairs, for example, be sure to keep those receipts as proof. If you are to be audited by the government and can’t supply the proof of expenses in form of official receipts, chances are you will be disqualified from claiming those tax deductions.

The appreciation of the property will be assessed when you dispose of the property and capital tax will come into play.

You will be taxed on the capital gains that you earned on the property from when you invested and purchased the property to the day you sold it.  The difference between the sale price and the price you paid to purchase will be the capital gain, which will be taxed, but only in the year that you dispose of the property.

Low Volatility

Real estate isn’t subject to the same volatility as other kinds of investments. Unlike stock trading, the real estate market isn’t like to have the same massive overnight shifts.

For this reason, it’s an option for people who want something more stable and predictable. It’s a great addition to a more risk-averse portfolio, making it an all-around fantastic investment.

It’s important to note that real estate investment doesn’t come without risk. The US housing market crash of 2008 showed investors the importance of not over-leveraging and making smart investment decisions when growing their portfolios.

Leverage Your Investment

One of the most appealing aspects of real estate investment is the ability to leverage your assets. In a nutshell, leverage refers to “the use of debt (borrowed funds) to amplify returns from an investment or project”.

This means you can put 20%, 10%, or even 5% down and control an asset worth significantly more than that.

It also means you have the ability to borrow against your assets to continue investing. This creates a snowball effect and, when done effectively, can skyrocket the value of your investment portfolio.

Passive Income

This last point ties into the other benefits we’ve mentioned above. Rental income aside, real estate accumulates passive wealth through its inherent tax benefits and long-term appreciation.

In addition, the rental income you collect can be done with minimal involvement and effort. With the right property managers and rental team, the ROI on your investment becomes relatively passive.

At BuyProperly, they help investors start with as little as $2,500 and see projected annual (passive) returns of 10-40%! Find out how.

What are the cons of investing in real estate?

Real estate is a fantastic investment to add to your portfolio, but it doesn’t come without risk. Here are a few things all new investors should consider before jumping in.

Upfront costs

It’s no secret that investing in real estate the traditional way takes a substantial amount of money. If you’re buying a property to live in, expect a minimum of 5% down plus closing costs. Most investment properties and second homes may even require a 20% down payment to buy.

Real estate isn’t cheap, and it’s important for new investors to be prepared for the costs.

At BuyProperly, they leverage a fractional ownership model to allow investors to buy real estate for as little as $500. This means they can get started quickly without having to wait and save up huge lump sum deposits for investment properties.

Sourcing deals

In addition to financial costs, investing in real estate comes with a significant time cost when you take into account sourcing property deals

Unlike buying and trading stocks which can be done with the click of a mouse, property investment often requires more time, research, and preparation.

Not only do you need to find great deals, but you need to analyze them and gather the necessary paperwork to get the deal done. On top of this, if you don’t have a good team in place, managing your repairs, maintenance, and tenants can turn into an overwhelming process.

Fortunately, sourcing great deals doesn’t have to be complicated. At BuyProperly, for example, they’ve created an AI-powered platform that allows investors to view, buy, and sell real estate digitally (much like they would trade stocks).

Difficult to unload

As much as we love real estate for its security and predictable returns, it’s not the type of investment that can be bought and sold quickly. In fact, the highest returns are earned when investors are willing to buy and hold.

If you think you may need to free up cash quickly, or if you’re looking for an exceptionally quick profit, real estate may not be your main investment vehicle.

Conclusion

Investing in real estate has several major advantages. In addition to cash flow potential, you can also take advantage of steady appreciation, reduced volatility, and investor tax benefits.

It’s important to remember that real estate is a fantastic long-term investment, and not well suited to people who want instant returns. It’s a reliable, predictable asset with great cash flow and ROI potential.

Real estate is a great addition to any investor’s portfolio.

Interested in learning how you can get started in real estate investing for as little as $500? Learn more at www.buyproperly.ca

The Pros and Cons of Investing in Single-Family Homes

The Pros and Cons of Investing in Single-Family Homes

There is no doubt that investing in real estate is a smart move for anyone looking to secure their financial future. But when it comes to building a lucrative real estate portfolio, there are a few different options to choose from.

One of the most popular choices is investing in single-family homes. In this article, we will take a look at the pros and cons of investing in single-family homes to help you decide if this is the right type of investment for you.

First, let’s define the main types of residential investments:

Single-family: A property that has one available dwelling to rent.

Duplex: A property that has two available dwellings to rent.

Multi-family: A property that has three or more available dwellings to rent.

Let’s start by looking at all the pros of investing in single-family homes.

 

High Returns

 

Single-family homes are a great choice if you’re looking for steady appreciation with a good return on investment.

In most cases, you can expect to make around 12% on your investment each year. Don’t forget, you’ll have maintenance and operating expenses and potentially regular mortgage payments as well, which we’ll discuss in a moment.

That’s a pretty good chunk of change. And remember, investing in real estate isn’t just about getting rich quick — it’s about investing for the future.

If you plan on holding on to these properties indefinitely, then single-family homes are a great choice because they tend to appreciate quickly over time.

For instance, if you buy a property today for $100,000 and sell it 20 years from now for $200,000 then that’s an average of 12% appreciation per year.

If you held on to your investment property indefinitely, the value would continue to increase at this rate while other investment options (like stocks) might plateau.

Easier to Get Started

 

Another pro of investing in single-family homes is that it is a very easy way to get started. Unlike multi-family homes that may require hundreds of thousands of dollars to buy, single family homes are less expensive and therefore easier to acquire.

You don’t need a lot of money to start building your real estate portfolio and you can begin to see returns pretty quickly.

But perhaps you don’t have enough for the mortgage down payment. If that’s the case, then you could consider the opportunity to invest in a fractional share of a property. At BuyProperly, they help investors like you get started in real estate investing for as little as $2,500. Learn more here.

Stable and Secure

 

The market for single-family homes is always growing. Even if the economy takes a turn for the worse, you can still expect to make money off of your investment. Unlike investing in stocks or other forms of investments, real estate is something that normally retains its value no matter what the market is doing.

Maintenance and Repair Costs

 

A big benefit of single-family investing is that repair and maintenance costs are often lower than what you would pay with larger buildings.

Instead of having multiple units to look after, investing in single-family homes means you only have one unit  to worry about. Plus, you can often do the repairs yourself to save even more money.

More Control

 

Investing in single-family homes gives you more control over your investments.

For example, if you buy a single-family home and then decide that investing isn’t right for you anymore, you can sell it at any time. You have more control over the investment and how long to continue investing. Plus, since they appreciate quickly over time with little upkeep required from an investor point of view, this means less stress when investing.

Less Risk

 

Single-family homes are a great way to get started in real estate investing without taking on too much risk.

The market for single-family homes is always growing, so if your investment doesn’t go as planned, you can still sell it down the road and make most of your money back.

Easier to Manage

 

Another pro of investing in a single-family home is that it is much easier to manage than a larger property. It’s often easier to find a property management company and the fees are substantially less than you would pay with a larger building. You also don’t have to worry about hiring and managing staff, which can be a big hassle.

Less turnover

 

Single-family rentals tend to have long-term tenants with less turnover than lower-priced units in a multi-family building.  Long-term tenants are more stable and will pay their rent on time, which means less stress for you.

Multiple vacancies can become an issue with larger properties and can really eat into your profits.

Diversification

 

Because single-family homes are less expensive than large buildings, it’s easier to continue to invest and add more homes to your real estate portfolio. That means you can diversify and reduce the risk of sudden vacancies and non-paying tenants.

As you can see, there are several pros to investing in single-family real estate. But, like any investment, it doesn’t come without some risk.

Cons of Investing in Single-Family Homes

Now that you have a good idea of the many benefits of investing in single-family homes, let’s take a look at some of the cons of this type of real estate investment.

Sourcing Deals

 

The main con of investing in single-family homes is that it can be difficult to find good deals. Because this is such a popular choice, the competition is fierce. So you need to be prepared to do some digging and put in some work if you want to make a profit.

Takes time to generate a return

 

With single family homes, it can take a while to see a return on your investment. It’s not uncommon for it to take at least five years before you start seeing any real profits.

Remember that although you’re always able to collect rental income on your investment, much of the benefit in single-family home investing comes through the capital appreciation over time.

Flip & Sell Risks

 

“Flipping” houses (buying and selling them quickly for a profit) can be risky.  If you’re not careful, you could end up losing money on a flip.

Another con to flipping is that it’s often difficult to find good deals – the same issue we mentioned before. Plus, if the market takes a downturn, you could end up losing money on the sale.

Vacancy rates

 

Unlike multi-family home investing with several units to generate income, single-family home investing means you’re buying only one unit to rent. If a tenant doesn’t pay the rent or leaves the property, you could suddenly find yourself with a 100% vacancy rate, which can significantly eat into your return on investment.

Management

 

Another downside is that it can take a lot of time and effort to manage all of the different aspects of owning and managing multiple single-family homes. Two or three properties can be extremely easy, whereas 10, 15, or even 20 single-family homes can mean a lot of traveling for your management company!

If you are planning on managing the property yourself, you’ll also need to be within a reasonable commuting time to this property to deal with any issues.

Less Leverage

 

Lastly, investing in a single-family home usually doesn’t provide as much leverage as investing in a larger property.

In the real estate investing world, leverage means using other people’s money to fund your investment.

For example, with single-family investing, you may only be able to get a loan for 50% or 60% of the purchase price. Whereas with investing in a larger property, you may be able to get a loan for up to 80% or even 90%.

This is because investing in larger buildings means investing more money, and investing more money means investing more risk.

The bank doesn’t want to be stuck with all the risk if something goes wrong. So they’re more likely to loan you money when you’re investing in a larger property.

This means you can’t make as much money on your investment if it goes up in value.

Are single-family homes the right investment for you?

 

It all depends on your goals and what you’re looking for in an investment. If you’re prepared to do some work sourcing good deals, investing in a single-family home can be a great way to get started in real estate investing. They are stable and secure, have lower maintenance costs, and are easier to manage than larger properties.

However, keep in mind that it can take a while to see a return on your investment. So if you’re looking for something that will generate income quickly, single-family homes may not be the best option for you.

Conclusion

 

Overall, investing in single-family homes is a great way to secure your financial future. It is a stable investment that has the potential to make you a lot of money over time. However, it is important to remember that there are some risks involved, and it does take some effort to manage everything.

If you are willing to take on these challenges, then investing in single-family homes is definitely something you should consider.

Looking for your first (or next) real estate investment? At BuyProperly, they use advanced AI technology to help match investors with lucrative investment opportunities. They use a fractional ownership model so you can get started for as little as $2,500 (and see projected annual returns of 10-40%).  With this approach, BuyProperly makes it easy to invest in multiple properties and locations to diversify your investment portfolio and build your wealth! Want to learn more? Visit BuyProperly.

How to Calculate ROI in Real Estate to Maximize Your Profit

How to Calculate ROI in Real Estate to Maximize Your Profit

If you’ve dabbled in real estate investing (or even if you’re brand new) you’ve undoubtedly heard of “Return On Investment” (ROI) and how important it is to consider when making your investment decisions.

But what exactly is it, and how do you calculate ROI in real estate? Is it crucial for investment success?

We’re going to break down the basics of ROI, how to calculate it, and how to use it to make smart investment decisions so you can grow your real estate portfolio with confidence.

Ready? Let’s dive in!

What is ROI?

Because ROI stands for “return on investment,” it’s a very important concept to understand when it comes to real estate investing.

It is a standard metric used to calculate the profitability of an investment on a case-by-case basis. It measures the financial return of a particular investment relative to its cost. The higher the ROI, the more profitable the investment and (presumably) the better it is.

Why is ROI so popular for measuring profitability?

Two reasons: first, it’s incredibly simple to understand and easy to calculate the ROI on almost any investment.

Second, it provides a simple way to get a financial snapshot of an investment, relative to other investments, so you know when to buy, sell, or simply measure whether or not your portfolio is on the right track.

Although it’s incredibly important to know the ROI of any investment, it often doesn’t take into account the complexities, nuances, and “life factors” involved in growing a successful real estate portfolio. For this reason, it should be used as a tool to give broad feedback on the quality of your investments.

Why is ROI in real estate so important?

Although many ROI formulas paint a simplistic picture of investing, they can also give a very quick and solid overview of a property’s profitability.

In a pinch, you can figure out the “health score” of any potential investment you’re interested in and ditch some of the lemons along the way. Properties with an obvious cash flow issue or negative ROI can be identified quickly.

When taken into account along with your overall investment goals, using ROI calculations will help you make smart financial decisions and build a solid real estate portfolio.

At BuyProperly, an online marketplace for fractional real estate investments, they calculate ROI for investors and use it as a benchmark to measure the profitability of their properties. Most of their investors can expect to see projected annual returns of 10-40% Take a look at their properties.

The formula for calculating ROI

There are a few different ways to calculate ROI depending on the type of real estate investment you have. Let’s look at how to calculate ROI for real estate investments that are resales or rental investments.

Here are some examples:

Resales

When calculating the profitability of resale real estate investments, use this simple formula:

Your equity in the property (total gains minus your total costs) divided by total costs

There are two methods real estate investors can use to calculate their gains and costs:

  1. the Cost Method
  2. the Out-of-Pock Method

Let’s look at them both in detail.

1. The Cost Method

This method for calculating ROI uses the total equity in a property divided by that property’s costs (renovations, repairs, and sale price). The Cost Method works for properties purchased with cash and/or financing.

For example, say you purchase a home for $250,000. After putting in an additional $100,000 for repairs, you sell the property for $500,000.

First, you need to calculate your equity in the property. If it sold for $500,000 after your total costs were $350,000 for the purchase and repairs, you had $150,000 left of equity.

Next, calculate the total costs. As mentioned above, the total costs for the property were $350,000 ($250,000 purchase price plus $100,000 in repairs).

After you divide your equity ($150,000) by the total costs ($350,000), you get 0.43, which is a 43% ROI.

2. The Out of Pocket Method

The second popular method for calculating ROI looks at only what you’ve spent out-of-pocket for property costs and expenses and doesn’t take into account the property financing.

When would investors use this method? The Out of Pocket Method can be used to calculate ROI only when investors purchase a property with a mortgage. Both the down payment and financing on the property are calculated as equity, making the overall ROI higher.

Let’s use the same example as above.

You purchased the property for $250,000 and put in $100,000 of repairs, only this time, let’s say you put a 20% down payment on the house and used a traditional mortgage to finance the rest.

This means your out-of-pocket expenses are only $50,000 (your down payment) plus $100,000 (repair costs).

If the property is worth $500,000 after repairs, this means you have $350,000 of equity (including your bank financing as leverage). After you divide $350,000 by the total sale price ($500,000), you’re left with an ROI of 70%.

Rental properties

Calculating ROI on rental properties is slightly more complex since we need to factor in year-over-year profitability.

For this ROI, we use the following formula:

Net operating income (annual rental income – operating expenses) divided by the total out-of-pocket expenses.

Using the example from above, if you purchased your property for $250,000 with a 20% down payment, that means your out-of-pocket expenses would be $50,000. Add in closing costs ($5,000) and some money you spent on repairs ($20,000) your total expenses are $75,000.

Now, let’s say your monthly rent is $1,200. Multiply this by 12 to get the average yearly rent. Subtract operating expenses (let’s assume these are $500 a month). This leaves you with a yearly net operating income of $8,400.

Divide $8,400 by your out-of-pocket expenses ($75,000) and you’re left with an ROI of 11%.

Other important factors when considering ROI

When you’re trying to paint a more detailed picture of your ROI on a property, there are two other important factors to consider:

  1. home equity
  2. year-over-year appreciation

Using the above example, if you buy a $250,000 property with a $50,000 down payment and a $200,000 mortgage, your equity grows over time as you pay down the principal balance on your loan.

Let’s say that, according to your mortgage amortization schedule, you paid $2,300 on the principal balance of your loan in the first year. This $2,300 now becomes equity and can be used in your ROI calculation.

Furthermore, it’s important to consider year-over-year appreciation. If we assume your $250,000 property appreciates at 6% each year, then next year, your property will be worth $265,000, adding an additional $15,000 to your equity.

At BuyProperly, they calculate ROI using net cash flow, mortgage repayments, and capital appreciation to paint a more accurate picture of the returns investors will make over time.

What is a good ROI for real estate?

Determining your acceptable ROI for real estate investments depends on your personal goals and your ability to tolerate risk, which means there’s no right or wrong answer.

Investors looking to rent will normally be content with lower yearly ROI numbers knowing they plan on holding the property as a long-term investment. For rental properties, it’s common to expect a 5-10% ROI.

Property flippers, on the other hand, are more interested in the immediate ROI and are looking for a property with the potential to generate higher returns. In this case, an ROI of 20% or above is ideal.

At BuyProperly, they help real estate investors get started for as little as $2,500 and see projected annual returns of 10-40%. Want to know how? Learn more >>

Conclusion

ROI is an important consideration when investing in a property. Whether you’re looking for a quick return or long-term cash flow and appreciation, calculating ROI can help make your next investment decision easier.

Remember, since ROI is a simplistic method of sizing up your next real estate investment, it’s important to analyze it alongside your risk tolerance profile, as well as your long-term and short-term goals ,before making any investment decisions.

Looking to get started in real estate investing without feeling overwhelmed? Check out BuyProperly’s properties and see how they use a fractional ownership model to help investors build their real estate portfolios.