real estate investing

7 Different Income Streams You Need To Create Without an income stream, your business will fail. A simple fact. Many small businesses have a single income stream, such as an electrician or plumber. Having multiple streams of income is a good way of safeguarding your business against a downturn in one particular stream. It can give your business stability and the opportunity to grow. If you are a tradesperson, such as an electrician, it may be challenging to figure out how you can generate multiple streams of income. Hopefully, reading this short article will give you some ideas on different income streams. Active and Passive Income Streams There are two types of income streams, active and passive. Your business is most likely using an active income stream. This is where you do some work or provide a service, and someone pays you for it. Very simple and a direct connection between the work and payment. Passive income is where the income is not directly tied to the work you do. Don’t be fooled. Although it says passive income, there is still work required to generate the revenue. It doesn’t come for free. In general, the work needed for a passive income stream takes place early on, and the income comes later. An excellent example of this is an online store. The work at the beginning is to build the website, upload your products, and then promote them. The passive income comes later as people begin to buy products from your store. It’s passive, as people can even buy products when you are asleep. Another example is real estate rentals. You should be actively involved making sure the asset is performing and maintenance issues are taken care of timely or they turn in to bigger and more expensive issues. Diversification Big business has been diversifying its income streams for centuries. They expand their business operations into different sectors to generate new streams of income. Almost any company can diversify. A flower shop can develop a separate wedding flower business, for example, or offer mail orders. The most potent diversification is into a completely new business sector. But that takes a lot of effort and expense. An excellent study of a company that has grown and diversified is the Virgin Group. Initially started by Sir Richard Branson as a record label, Virgin has since expanded into aviation, holidays, mobile telephony, and much more. An example of a good way for an electrician to find other streams of income is to work with property management companies. His core business may currently be private homeowners, but management companies often need additional tradespeople. Another route could be to start offering courses to people on basic electrics and how to stay safe with electricity. Aside from diversification, there are other ways to generate income known as the seven streams of income; Earned Income Profit Income Interest Income Dividend Income Rental Income Capital Gains Income Royalty Income Many of these are not available to everyone. You need to have money already to benefit from some of these income streams. Earned Income Earned income is your primary income stream through a job. The majority of us start here, and many go no further. For most, earned income is very limiting and has attracted the acronym, Just Over Broke! In other words, you earn just enough to survive. Of course, some jobs pay exceptionally well, but these are exceptions, not the norm. To go beyond a job and start your own business requires taking risks and moving into profit income. Profit Income By selling a service or product for more than they cost, you use the basis of profit income. You could open a retail store and sell products, offer professional services and charge for your time, or combine the two. It is one of the hardest steps to move from earned income to profit income, but it is the dream of many employees. Becoming self-employed or an entrepreneur can be a difficult road, and there are risks. Interest Income If you or your business has spare cash sitting in the bank account, it is losing money. There are many ways you can put your money to work and earn a passive income stream. Maybe invest it in a savings scheme and use the power of compound interest to gain a passive income. Buying government bonds is another safe investment that will generate interest. Dividend Income When you buy shares in a company, you become part-owner of that company and entitled to dividend payments. Well-timed investments in companies can generate excellent passive income streams. Rental Income Property investment is an excellent way of protecting your money and generating an income from rent. There are two downsides to this income stream. First, it requires a substantial investment initially, unless it is part of an investment scheme. Second, releasing the cash can be time-consuming and costly, so if you may need the money quickly, this is not for you. Capital Gains Income Buying and selling assets can provide you with an income known as capital gains. For example, if you buy stocks and shares worth $100 and then sell them on for $120, the capital gain is $20. It is essential to consult an accountant first about capital gains, as each country has different rules. Depending on the asset sold, the capital gains tax may wipe out all of your profit. Royalty Income This is a passive income stream generated by designing, building, or making something unique and charging people and businesses to use it. Musicians are a prime example. In most cases, musicians are signed to a particular label, such as Virgin Records. The record company pays to record the musicians, produce the records, market them, and sell them. The musicians receive a royalty payment for every album sold and every time it is played to the public. Famous musicians, such as Elton John, make millions from the royalties for playing his music. Conclusion An old English is saying, … Read more

The Basics of Real Estate Investing If you are someone who has recently gotten a taste for real estate investing, you are probably looking for a great real estate 101 crash course. Although it is impossible to learn all of the pertinent real estate investing basics in a short amount of time, by actively searching for a resource, you have already set yourself up for success. Read on to receive an overview of the basics of real estate investing and how to get started. What Is Real Estate? Real estate is any piece of land with or without a manmade structure, including anything from farmland to an apartment complex. Real estate includes anything permanently associated with a piece of land, such as roads or utilities. This also consists of the various rights that come with a piece of land (including water or mineral rights). The definition of real estate is likely broader than what you had in mind, but it is important to understand how each of these components plays a role in the value of real estate. What Is A Real Estate Investor? A real estate investor is someone who seeks to profit from the real estate market by buying, selling, leasing, or renting a piece of land or property. There are numerous real estate investing strategies available, and many real estate investors will combine one or more to build the portfolio they want. As I mentioned above, the definition of real estate includes much more than what you might initially think. The same applies to real estate investors. This could include anyone who owns raw land, wholesales, flips houses, rents commercial properties, or more. Risks Of Real Estate Investing It’s important to understand that real estate, like any investment type, has a certain level of risk. The exact risk depends on your strategy and market. Generally speaking, the biggest risk is a loss of income or assets. Fix-and-flip investors risk profit margins if projects do not go to plan, while rental property owners risk vacancies if the rental market slows down. Other forms of real estate investment, such as REITs or crowdfunded platforms, carry an inherent level of risk as well. Investors may see assets depreciate over time if the market dips. While there is no way to avoid risk completely as a real estate investor, there are ways to mind your due diligence and minimize unexpected losses. Why Should I Get Started Investing In Real Estate? You should consider getting your start in real estate investing if any (or all) of the following statements resonate with you: “I have a genuine interest in real estate” “I want to achieve financial stability” “I wish to create wealth for myself and my family” “I am interested in changing or supplementing my career” “I need a way to secure my financial future” If you agreed with any combination of these statements, getting into real estate 101 and exploring the basics of real estate investing can be a great way to get your feet wet. Real estate investing is an effective way to build wealth, either as a career or as a side hustle. However, it will demand your time and research to be successful. For those worried about how much money they need to invest in real estate, you should know that getting started with little to no personal capital is possible. Part of learning real estate 101 includes getting to know the various kinds of financing strategies, including how to invest in real estate with no money and bad credit. However, it is important to reflect upon and identify your personal and financial goals before getting started. Since the realm of real estate investing is so vast, it can be easy to lose focus if you do not have a clear vision. By being mindful and aligning your investing strategies in such a way that will help you meet this vision, the more likely you will be to find success. If you are still unsure why you should start investing in real estate, there are several important benefits to consider. While most investment types can promise some profitability, real estate offers a unique combination of perks. Read through the following potential benefits of real estate investing to learn more: Control: Many investors are attracted to real estate because of the ability to control their own portfolio. While other investments will demand some level of involvement, you will likely be relying on a portfolio manager or financial advisor for day-to-day responsibilities. With real estate, investors have complete control over how much or how little involvement they want. Tax Benefits: Real estate offers investors unprecedented tax benefits. First, investment property income is typically taxed as capital gains instead of as employment income (resulting in a lower tax rate). Real estate also offers numerous tax deductions, including benefits for rental properties and even depreciation. To learn more about the tax benefits of real estate investing, be sure to read this guide. Leverage: Today’s most successful real estate investors have gotten to where they are by utilizing leverage. In real estate, leverage refers to using borrowed funds to acquire new properties and build up your investment portfolio in the process. It is crucial to understand how to use leverage properly and manage the risks associated with putting your properties on the line. Hedge Against Inflation: According to Nate Tsang, founder and CEO of WallStreetZen, “real estate is one of the best hedges against inflation.” As prices go up, those who own physical real estate will benefit from the increases in the form of rent or appreciation. “It won’t make you financially bulletproof, but it goes a long way toward wealth security,” says Tsang. Types Of Real Estate Investments There are three main types of real estate that most investors will start their portfolios with. While these are not the only way to make money investing, they are great places for beginners to start. Read through the following types of real estate investing … Read more

Commercial Real Estate Financing Options You Should Know If you feel ready to enter the niche market of commercial real estate investing, now is the perfect time to develop an understanding of commercial real estate financing basics to determine if this unique industry is a good fit for you. Use the information below as your commercial real estate financing basics guide, and before you know it, you’ll have a better understanding of how commercial property loans differ from residential loans, the different types of loans and lenders that are available, and a broad overview of how commercial real estate financing works. What Are Commercial Property Loans? Commercial property loans are mortgages specifically delegated to purchasers of commercial properties. Properties are considered commercial if they produce income and are used for business purposes only. A common example of a commercial property is a retail or an office space through which a business is operated. To acquire such a property, an investor can select from several commercial real estate financing options, but should be prepared to guarantee the mortgage via a lien, or more simply, collateral. If the investor fails to meet the commercial property loan’s repayment terms, the creditor reserves the right to seize the property. Experts at HostPapa suggest that “developers, trusts, funds, and corporations are the most common recipients of commercial real estate loans. The loan terms span from 5 to 20 years, with an amortization period that is longer than the loan duration”. It is also important to note that commercial property loans are made out to business entities and not individuals. In other words, financing commercial real estate usually requires the formation of a business entity, such as an s-corporation or a limited liability company. Anthony Martin, the founder of Choice Mutual, says that “the main difference between residential and commercial loans is what they’re for. For example, commercial loans are for business properties, multiple investment properties (surpassing 5 -10–depending on the lenders you had before), and other specialty properties. In contrast, residential properties are meant for personal properties”. Commercial vs. Residential Loans While residential loans are typically assigned to individual borrowers, commercial loans are typically granted to business entities. Residential loans require high loan-to-value ratios of up to 100%, while commercial loan-to-value rations range within 65% – 80%. In addition, commercial loans range from 5 to 20 years, while the most popular residential loan is a 30 year fixed mortgage. Commercial Real Estate Financing Options Understanding commercial real estate financing basics requires a working knowledge of existing commercial property financing options, and being able to identify which option might work best for you. Commercial property loans will not only help finance the property, but can also help fund any construction projects as needed. Also, investors can leverage commercial property financing to help keep properties fully operational and maintained so that they may be fully leased. The following are several commercial real estate financing options that are offered by various financial entities, including banks, private lenders, insurance companies, pension funds, and the U.S. Small Business Administration: SBA 7A Loan: The U.S. Small Business Administration (SBA) offers some of the least expensive loans for investing in commercial real estate and guarantees repayment of a portion of the loan. SBA-backed loans help the borrower by increasing credibility and reducing risk for the lender. 7A loans work best for smaller projects and are the quickest and easiest of the SBA loan programs. Although 7A loans have slightly higher interest rates than SBA 504 loans, they are the SBA’s most popular loan option. SBA 504 Loan: As mentioned above, loans backed by the Small Business Administration are favored by lenders. The 504 loan program works best for larger investment projects, such as those valued over $1 million. The investor must put down 10 percent of the loan amount as the down payment, while 40 percent of the loan is sourced from an SBA Certified Development Company. The remaining 50 percent is borrowed from the lender. Conventional Bank Loan: A majority of commercial real estate loans are made by banks, who prefer to lend to entities with strong credit histories. Individuals with a credit score of at least 660 and are working with mid-to-large-sized projects will find conventional bank loans as a viable commercial real estate financing option. Bank loans offer competitive interest rates and do not require the property to be occupied by the owner. However, most bank loans require a 20 percent down payment and oftentimes will charge a penalty if the loan is paid off early. Hard Money Loan: For investors looking for a quick solution to commercial real estate financing may look to a hard money loan. Hard money lenders usually offer short-term loans at high-interest rates, and evaluate the loan based on the perceived value of the property and not on the borrower’s credit history. Investors will often utilize hard money loans to quickly finance deals in the interim while negotiating a longer-term bank loan. Because of this, hard money loans are also referred to as “bridge loans.” Online Marketplace Loan: Sometimes referred to as “soft money loans,” online marketplaces now help to match borrowers with private investors who help finance commercial properties for a return. This type of loan is referred to as a soft money loan because interest rates are still higher than conventional bank loans but are lower than loans from hard money lenders. Online marketplaces usually match borrowers with shorter-term loans ranging from six months to a few years. Joint Venture Loan: In cases in which an investor cannot obtain commercial real estate financing, or in cases where it is unappealing to bear risk solely, pursuing a joint venture may be the best option. Two or more properties can apply for financing via a joint venture loan, and involved parties will equally share the risks and returns in the commercial property. The joint venture loan ties the parties together solely around the specific property and does not require the entities to enter … Read more

Commercial Real Estate Books You Need To Read https://youtu.be/_C064rmANlI Have you ever asked yourself, “should I get started investing in commercial real estate?” CRE investing is not just a great way to take your residential real estate career to the next level but also a way to set yourself up for future financial freedom. However, making a move will mean taking your self-education efforts to the next level. Luckily, today’s best commercial real estate books are ready to help you do just that. While commercial real estate investing’s technicalities differ greatly from residential, the basic buying and selling concepts are similar. Whether you’re already involved in the real estate industry or completely new to the field, learning more about the benefits of commercial investing will only help you succeed. Expanding and building upon your education is the key to success for any real estate entrepreneur. I started my career knowing nothing about real estate whatsoever. Still, I took it upon myself to listen to podcasts, read books, attend seminars, and network relentlessly so that I could stay up to date with the latest trends and technologies, and I recommend you do the same. So if you’re willing to take the challenge, these commercial real estate investing books are a great place to start. Why Every Investor Should Read Commercial Real Estate Books Every investor needs to consider reading commercial real books—if for no other reason than to gain more insight into an already fascinating industry. At the very least, learning about a subsequent niche in the real estate investing world will give you an idea of the direction you do or do not want to take your business; at most, it’ll open up your eyes to a completely new way of doing things. 10 Best Commercial Real Estate Books Whether you spend an hour or two reading first-thing in the morning or have 30 minutes to kill on the treadmill, these commercial real estate investing books should be at the top of your list: ”The Commercial Real Estate Investor’s Handbook: A Step-by-Step Roadmap To Financial Wealth” – Steve Berges ”How To Succeed In Commercial Real Estate” – John L. Bowman ”How To Win Friends And Influence People” – Dale Carnegie “Crushing It In Apartments And Commercial Real Estate: How A Small Investor Can Make It Big” – Brian Murray “Mastering The Art Of Commercial Real Estate Investing” – Doug Marshall “Long-Distance Real Estate Investing” – David Greene “The Real Estate Game: The Intelligent Guide to Decision Making and Investment” – William J. Poorvu and Jeffrey L. Cruikshank “Negotiating Commercial Real Estate Leasing” – Martin I. Zankel “A Master Guide to Income Property Brokerage: Boost Your Income By Selling Commercial and Income Properties” – John M. Peckham III “”The Millionaire Real Estate Agent” – Gary Keller 1. “The Commercial Real Estate Investor’s Handbook: A Step-by-Step Roadmap To Financial Wealth” Learn how to make money investing in several types of commercial buildings: warehouses, apartments, mobile home parks, shopping centers, hotels, and more. Discover everything you need to know about commercial property investing: how to identify opportunities, determine property value, acquire, finance, and manage commercial real estate. This book translates to every level of experience, from beginner to expert. Do you need step-by-step instructions taught by a pro? If so, The Commercial Real Estate Investor’s Handbook should be your next read. Presented in an easy-to-follow layout, Fisher makes his content relevant for both newbie and seasoned investors alike. The book jumps right into talking about different types of commercial real estate (i.e., apartments, office buildings, retail stores, shopping centers, strip malls, industrials sites, etc.) and explains different career and financing options within the sector. Fisher is concise and straight to the point. He defines exactly what you need to know and makes sure to highlight key concepts along the way. One of the most helpful aspects of this book (located right in the third chapter) is Fisher’s map for setting SMART real estate goals. If you are unfamiliar with the theory for this method of goal setting, know that SMART is an acronym for Specific, Measurable, Action-oriented, Realistic, and Timely. Fisher explains that investors who set goals using the aforementioned criteria will be far more likely to achieve those goals. After completing this publication, you will have a better understanding of budgeting, be more financially literate, and, best of all, be capable of handling whatever commercial real estate issue arises during your first deal. If you’re deciding whether commercial real estate investing is right for you and your business, Fisher’s anecdotes will lead you towards the best choice. 2. “How To Succeed In Commercial Real Estate” This book is a practical resource for anyone looking to break into the commercial industry. “How To Succeed In Commercial Real Estate” is also designed to help veteran investors strengthen their approach. Learn about the four main areas of commercial real estate: retail, office, industrial, and multifamily Avoid falling into another “get rich quick” scam by reading John Bowman’s How To Succeed In Commercial Real Estate. The book provides a straightforward overview of what it takes to pursue a lucrative career in buying and selling commercial real estate, but Bowman wants people to know that this line of work is not for the faint of heart. While beginner investors are welcome to indulge in this read, the content does get technical. After skimming over the basics, Bowman delves deeper into more intricate strategies for financing, sales, negotiations, and contracts. In doing so, he leaves no questions left unanswered. The heftiest chunks of the book cover both technical and practical knowledge (think laws, regulations, construction, technology, appraisals, environmental issues, leasing vs. selling, etc.), along with a step-by-step guide to running a winning marketing campaign (think cold call strategies, creating a buyers list, building relationships, generating leads, etc.). In my opinion, however, the most valuable portion of the book lies within the chapters that detail the importance of ethics and integrity. Bowman does a superb job defining professionalism … Read more