BiggerPockets Daily

It’s that time of year when you’re either super happy that your team made it to the big game, or you’re frustrated with your team’s performance throughout the season (such as my Panthers) or still recovering from a playoff blowout (I’m talking to you, Cowboy fans). Or you could be an Eagles fan and question your existence after what’s happened over the last 365 days (much to my delight). At any rate, life goes on, and only one team can win the trophy. What we do have more control over, though, is where we place our money in real estate. Learn more about your ad choices. Visit megaphone.fm/adchoices

What if we told you that you could use a credit card to pay the mortgages on your investment properties? And that you could earn points while doing so, which you could then use for free travel, down payments, or even for improving your ROIs? This is what the Bilt Rewards Mastercard could soon allow you to do. (We promise this isn’t an ad.) Bilt recently announced that the company raised an additional $200 million from investors, putting the company’s valuation at an impressive $3.1 billion. Bilt said in a recent statement that the fresh investment money ‘‘will fuel further expansion of the Bilt Rewards Alliance across multifamily, single-family, and student housing sectors nationwide.’’ More specifically, the company ‘‘plans to venture into mortgage payment rewards.’’ Learn more about your ad choices. Visit megaphone.fm/adchoices

The multifamily and commercial real estate crash is in full swing. As much as $2.7 trillion in wealth has been wiped out with a historic surge in cap rates and plummeting asset values in the commercial real estate world, with multifamily and office leading the charge with estimated 30% and 35% peak-to-trough declines in asset value and even larger percentage declines in equity value. Learn more about your ad choices. Visit megaphone.fm/adchoices

The multifamily and commercial real estate crash is in full swing. As much as $2.7 trillion in wealth has been wiped out with a historic surge in cap rates and plummeting asset values in the commercial real estate world, with multifamily and office leading the charge with estimated 30% and 35% peak-to-trough declines in asset value and even larger percentage declines in equity value. Learn more about your ad choices. Visit megaphone.fm/adchoices

The multifamily and commercial real estate crash is in full swing. As much as $2.7 trillion in wealth has been wiped out with a historic surge in cap rates and plummeting asset values in the commercial real estate world, with multifamily and office leading the charge with estimated 30% and 35% peak-to-trough declines in asset value and even larger percentage declines in equity value. Learn more about your ad choices. Visit megaphone.fm/adchoices

The significance of earning passive income in today’s economy cannot be emphasized enough. Steady, reliable passive income serves as a cornerstone for achieving financial independence, offering a multitude of avenues for growth and prosperity. A plethora of new passive income generation opportunities offered by innovative digital platforms have emerged in recent years. From real estate short notes to high-end art, the landscape is ripe with prospects waiting to be explored. Learn more about your ad choices. Visit megaphone.fm/adchoices

Choosing a real estate investment strategy can be challenging. There are risks no matter what avenue you choose, but understanding all options, including a ground lease, is important. A ground lease can be a good option for landlords or property owners who want prime locations, but not understanding what a ground lease is and how it works can be detrimental. We’ve broken down everything there is to know about the ground lease and what landlords and tenants must consider. Learn more about your ad choices. Visit megaphone.fm/adchoices

Rental properties have been one of the largest real estate industry sectors to be hit by the increase in interest rates. Investor purchases of single-family homes tumbled 29% in 2023, according to the Wall Street Journal, citing data from Parcl Labs, a real estate data and analytics firm. Realtor.com concurred that last year saw the largest annual drop in investor buying activity in at least 20 years. However, for those who can buy with cash or hold their nerve (and pay the mortgage) during the current cycle, now is an ideal time to strike a deal with sellers stranded by high rates. When rates eventually fall, investors will flood back to the market and prices will increase, allowing intrepid investors to refinance, looking like financial geniuses. Learn more about your ad choices. Visit megaphone.fm/adchoices

At the beginning of 2023, we reported on the advent of #Airbnbust, a term coined by Amy Nixon and amplified by vacation property operators on social media to describe falling revenues per host due to a rapid increase in the supply of rental homes. Last July, we also dug into conflicting data that sparked a viral debate on whether the short-term rental market was crashing or reverting to normal. Did the trending term correspond to an industry-wide shift in vacation rental performance that would put most rental property owners out of business? Or did it merely reflect the sentiment of eager, inexperienced hosts who fully expected the rapid growth in demand and average daily rates (ADRs) to keep pace without any impact to the supply side? Learn more about your ad choices. Visit megaphone.fm/adchoices

If you’ve been paying attention to news in the real estate sector, you will know that new construction has faced many challenges since the beginning of the COVID-19 pandemic. From rising prices of construction materials to labor shortages and, most recently, high mortgage interest rates, the homebuilding industry has had more than its fair share of hard knocks. Indeed, homebuilder confidence dropped for three consecutive months in 2023. And yet one of the most respected, successful investors out there invested in three big construction companies last year. Warren Buffett’s Berkshire Hathaway disclosed investments in D.R. Horton, Lennar, and NVR, with a total investment of $814 million. And that’s against Berkshire’s overall wait-and-see approach. Learn more about your ad choices. Visit megaphone.fm/adchoices

Pittsburgh-based investor and house flipper John Walker of Turnkey Investment Properties and his business partner, Jim Auten, usually have around 10 flips on the go at any time. When rates were low, and business was booming, that number doubled. However, high rates and low inventory have seen many of their fellow flippers exit the market. “It’s a case of the last man standing right now,” Walker says. According to recent Bank of America research, it’s a scenario played out across the country, with sellers staying put for fear of sacrificing a low mortgage interest rate. About 80% of outstanding U.S. mortgages are at interest rates below 5%. Learn more about your ad choices. Visit megaphone.fm/adchoices

In the ever-changing landscape of the sharing economy, the concept of home sharing has undergone significant transformations. With the rise of short-term rental platforms like Airbnb, travelers and hosts alike embraced the idea of unique, short-term stays. However, the question that now looms large is whether the Airbnb dream is dead. While challenges persist, the evolution of the industry tells a different story—one of adaptation and innovation. Real estate investors, in particular, are exploring new avenues, with a growing interest in mid-term rentals. Learn more about your ad choices. Visit megaphone.fm/adchoices

I often hear new investors ask: “What types of properties are the best? “What should I look for when evaluating rental properties?” They are starting at the wrong point. As with any major venture, real estate investing starts with clarifying your goal. And every investment decision you make must align with your goals. Learn more about your ad choices. Visit megaphone.fm/adchoices

A new report from Redfin finds that 26% of investor purchases in Q4 2023 were in “low-cost” properties, up significantly from previous years. The increase comes as housing prices remain elevated and mortgage rates stay locked around the 7% range. Meanwhile, a new bill has entered committee in Congress, where senators are deliberating whether to set on track a new law that would tax real estate investors at a graduated rate on every new property that they purchase. We’ll cover both of these stories and why investors must pay close attention to this bill. https://www.biggerpockets.com/blog/how-the-affordable-housing-and-homeownership-protection-act-will-impact-investors https://www.biggerpockets.com/blog/highest-share-of-investors-on-record-are-buying-low-value-homes Learn more about your ad choices. Visit megaphone.fm/adchoices

“You’re making too much money.” That’s what echoed in Missouri native Ryan Haywood’s ears after his boss decided to slash his commissions—a “sales haircut,” as it’s bitterly known in the industry. This notion of being penalized for success was perplexing for Ryan. Out of all the downsides of his job—the after-hours calls from his boss that he was expected to answer, dealing with poor management, and working up to 80 hours a week—this pay cut was the last straw. He didn’t realize it at the time, but this setback was about to unveil a path that would lead his family toward the future that Ryan and his wife Megan had dreamt about. Learn more about your ad choices. Visit megaphone.fm/adchoices

As everyone knows by now, rising interest rates and low supply have been the most significant factors shaping the real estate market since 2022. The Federal Reserve began raising key interest rates in March 2022 in response to skyrocketing inflation. Following the pandemic-era sharp rises in the cost of materials and products across several industries, inflation in the immediate aftermath shot to its highest levels in 40 years. To tackle these high inflation rates, the Fed raised rates 11 times between March 2022 and July 2023, from almost zero to 5.5%. Learn more about your ad choices. Visit megaphone.fm/adchoices

Should you aim for diversification in your real estate investments? What about your stock investments? Oddly enough, many real estate investors never bother to ask that question. They just assume that all real estate investments require a lot of money and that each niche requires so much skill that you can only master one. They’re wrong on both counts, and it adds risk to their investment portfolio. Learn more about your ad choices. Visit megaphone.fm/adchoices

House hacking is often one of the first strategies that many new real estate investors use because it’s a simple way to live for free while your renters cover your mortgage payments. House hacking involves buying a single-family or multifamily property and renting out the units or rooms you aren’t occupying. If you are considering dipping your toes into real estate investing with this strategy, it’s important to consider the tax implications so you will know how much profit to report. Underreporting rental income on your taxes could cause problems for you later if you are audited. Learn more about your ad choices. Visit megaphone.fm/adchoices

Flipping houses can be extraordinarily profitable, which is one of the reasons why it’s a popular real estate investment strategy. You go in with a competitive bid, invest some funds making repairs and sprucing up the place, and then sell. It’s rewarding, and when done well, it can be extremely lucrative. And while many people know about the potential expenses and risks that come with the actual acquisition, remodeling, and sale of house flipping, some investors are surprised to learn about the taxes involved. Learn more about your ad choices. Visit megaphone.fm/adchoices

The U.S. real estate market appears indestructible, with home prices nationwide continuing to increase. The latest report from analytics company CoreLogic shows impressive growth of 5.2% year over year in November 2023. It’s not an anomaly, either—home prices grew 4.7% year over year in October 2023. CoreLogic’s projection is a steady home price growth throughout 2024, forecasting a 2.5% year-over-year increase in November 2024 compared to November 2023. Learn more about your ad choices. Visit megaphone.fm/adchoices

Real estate offers plenty of strategies to avoid taxes. However, many require you to jump through hoops, hire third parties to help you, and otherwise make your life harder. This is why I use the “lazy 1031 exchange” strategy: no hoops, no hassles, no hiring custodians. But before explaining what a “lazy 1031” is, let’s make sure we’re all on the same page about how standard 1031 exchanges work. Learn more about your ad choices. Visit megaphone.fm/adchoices

Commercial real estate has had a few rough years, and it seems like things won’t be getting better anytime soon. The sector is set for a potential rise in defaults, as higher interest rates have increased the costs of refinancing. And with $2.8 trillion due between now and 2028, more landlords could be feeling the crunch. According to data firm Trepp, commercial debt maturities are expected to balloon in the next few years. While many loans were extended or refinanced, the clock is slowly ticking for the CRE sector as those extensions are coming due. Learn more about your ad choices. Visit megaphone.fm/adchoices

In a recent CNBC article, it was revealed that more than half of Americans earning over $100,000 a year live paycheck to paycheck. This eye-opening statistic highlights a fundamental truth: The road to wealth isn’t solely about income but depends significantly on transforming financial habits. In this guide, we’ll debunk the oppressive notion of budgeting, offering a transformative process to fix money leaks, cultivate strategic spending habits, and execute consistently for financial improvement. Learn more about your ad choices. Visit megaphone.fm/adchoices

Running a rental business comes with its fair share of headaches, but one upside is that just about every rental activity associated with buying, maintaining, and operating a rental property is tax-deductible. We’ll walk through a checklist so you remember to keep track of your actual expenses and get the maximum tax benefit. At the end of the day, the logic is that you should only have to pay taxes on your profits, which is your rental income minus all of your expenses. That’s the number that will be entered on Schedule E when you file your taxes. Learn more about your ad choices. Visit megaphone.fm/adchoices

This week's headlines cover the growing trend of investors switching their strategies from short-term rentals to medium-term rentals as Airbnb shows signs of instability and growing competition on the platform that’s eating away at occupancy rates and overall profits. We’ll also talk about the multifamily real estate market, which has faced a $1.2 trillion loss in valuations since its peak. We’ll cover the full story on multifamily and how the market got to this point, plus the silver linings that could make sense for the right investor to deploy their capital. https://www.furnishedfinder.com/stats Learn more about your ad choices. Visit megaphone.fm/adchoices

If you’ve been on TikTok recently—and perhaps even if you haven’t—you may have heard about the viral new concept of a ‘‘silent depression’’ that’s apparently overwhelming younger people in the U.S. No, we’re not talking about the country’s mental health crisis. We’re talking about what a few TIkTokers are referring to as the dire economic reality facing ordinary people trying to make ends meet. The term ‘‘silent’’ refers to the fact that, on the surface, the U.S. economy is doing well. We are not in a recession; unemployment rates are low. And yet, people struggle to afford the basics more than they did in the past. Learn more about your ad choices. Visit megaphone.fm/adchoices

Drawing from my background in regulatory compliance for global financial institutions, I have developed an appreciation for the intent of regulations that strive to safeguard public interests. Regulations are not limited to finance—as you may be aware, short-term rental (STR) laws are a hot topic. As cities aim to refine STR laws to suit their unique community needs, the landscape and laws continue to evolve. In this article, I will share my experiences and offer actionable advice for navigating these changing regulatory environments. Learn more about your ad choices. Visit megaphone.fm/adchoices

Before discussing how to calculate the number of properties needed to replace your current income, understand that retirement is not a one-time event. Retirement requires rental income that will enable you to maintain your current standard of living for the rest of your life. Learn more about your ad choices. Visit megaphone.fm/adchoices

Much recent news in real estate has centered on home prices, which appear to still be rising. But what about the profits from home sales? The latest Year-End U.S. Home Sales Report from ATTOM paints a less rosy picture of what’s going on in the real estate market. In fact, it’s showing that home sales profits dropped for the first time in a decade in 2023. So what are the figures, and what do they mean for investors? Learn more about your ad choices. Visit megaphone.fm/adchoices

Got kids? Then, eventually, you’ll (most likely) also have college bills. And spoiler alert: They will be big. While it’s certainly not a parental requirement, footing the college bill (or any part of it) and allowing your kids to graduate debt-free is an enormous gift—one of the biggest you can give your children. Conventional savings vehicles, like 529s, are amazing tax-free-withdrawal vehicles, but they’re not the only way to get to the finish line. You can also use your real investing superpower to build the college trove, and you don’t need to have started saving in utero (although that always helps) Here are two ways to fund college with real estate, whether you’re starting early or a little later. Learn more about your ad choices. Visit megaphone.fm/adchoices

Choosing between commercial and residential real estate is a big decision for investors. If you choose the wrong strategy, you could be in over your head and potentially lose money. We’ve created an investing in commercial real estate for beginners guide to help you understand what it means to invest in commercial real estate and what it requires. Learn more about your ad choices. Visit megaphone.fm/adchoices

With house flipping activity remaining high across the country, many investors are wrestling with this question: Is house flipping ethical? There are two sides to the argument, both of which we detail here. The Quick Basics of House Flipping There is more to house flipping than what you see on television. It takes money, knowledge, and expertise to flip a home for a profit. What is house flipping? House flipping involves purchasing real estate at a low price, renovating or refurbishing it, and then selling it for a profit. This process typically aims to complete these steps quickly to maximize return on investment. Learn more about your ad choices. Visit megaphone.fm/adchoices

As an investor, you have many options when it comes to where you put your money. Day after day, whether you are driving to work or watching your favorite reality TV show, you’ll see advertisements telling you to invest in gold, stocks, digital currency, mutual funds, etc. And because of those ads, people have become familiar with those types of investments. But very few people are familiar with trust deed investing, although it’s a form of investing as old as money itself. Learn more about your ad choices. Visit megaphone.fm/adchoices

As part of its goal to increase affordable mortgage access for homebuyers in the United States, Fannie Mae announced in December that it would accept attorney-opinion letters (AOLs) in place of title insurance with more mortgages. While AOLs have been allowed by the government-sponsored enterprise on select mortgages since 2022, the decision expands eligible mortgages to include condo units and properties with homeowners association (HOA) restrictions, potentially assisting more first-time homebuyers with the high costs of homeownership by trimming about $1,000 off their mortgage closing costs. The Community Home Lenders of America expressed support for the alternative as a way to tackle homeownership affordability challenges. But the American Land Title Association (ALTA), the nation’s largest title insurance trade organization, has consistently pushed back against attempts to allow title insurance alternatives, citing gaps in protection for homeowners and lenders. Learn more about your ad choices. Visit megaphone.fm/adchoices

Goals provide us with direction and purpose, acting as the foundation for every significant endeavor. Your goals should be written down, but they don’t need to be lengthy or complex. How to Get Started You can start with just the following items: Current situation: What is your current or anticipated financial capacity within a reasonable time frame? Get preapproved for an investor loan to determine your accessible credit limit. Financial end goal: Typically, this refers to an income goal, like earning $10,000 a month in today’s dollars. Time frame: The less time you have to reach your goal, the more initial capital and credit you will require. However, goals by themselves are not enough. Goals without an action plan are merely daydreams. Learn more about your ad choices. Visit megaphone.fm/adchoices

Are you searching for your next big wealth-building strategy? Looking for ways to strengthen your portfolio? If so, it may be time to add passive investments to your portfolio if you haven’t already, specifically through turnkey. Turnkey real estate is an increasingly popular option with a range of benefits, making it an appealing choice for individuals seeking passive income and long-term wealth accumulation. Typically speaking, a turnkey property is fully renovated and ready for immediate rental or occupancy, often managed by a property management company, either affiliated with your turnkey partner or a trusted third-party vendor. Learn more about your ad choices. Visit megaphone.fm/adchoices

Despite recent challenges in the commercial real estate space, one area has become surprisingly popular among institutional investors: retail. As demand for office space has declined, retail seems to have picked up, despite a tumultuous 2023. According to the Wall Street Journal, private investors snagged $1 billion more in retail assets than they sold in the third quarter of last year. Predictions for retail over the coming year are strong, with many expecting retail to be a bright spot in an otherwise lackluster CRE space. Learn more about your ad choices. Visit megaphone.fm/adchoices

Cash-out refinancing is pretty common in real estate investing. An investor will cash in on the equity they have on an existing property and then use those funds toward a down payment on their next property. Rinse and repeat. That complicated process may soon be unnecessary thanks to a new fintech company. Downpayments, a Miami-based financial tech startup, has come up with a way for investors to tap their existing property equity to buy new properties—no refinancing required. Here’s how it works and what investors need to know about it. Learn more about your ad choices. Visit megaphone.fm/adchoices

It’s been nearly four years since COVID-19 burst onto the global stage. We’ve returned to normal, but “normal” just doesn’t mean what it used to. Domestically, Americans are feeling worn out. Social tensions are high and have been for a couple of decades. Conservatives and the right wing waste no time in blaming it on the commander-in-chief. Meanwhile, the left repeatedly insists not enough is being done by the government, pointing to healthcare, education, and housing as some of the issues where further intervention is needed. However, both parties largely fail to grasp the full scope of the issue, including its root cause: money, and specifically, global money. Learn more about your ad choices. Visit megaphone.fm/adchoices

The 70% rule in real estate can be helpful when comparing properties and making a final determination on which one is the best investment. Understanding the ins and outs of this rule is imperative to using it to your advantage. What Is the 70% Rule? The 70% rule is a formula commonly used by real estate investors as a barometer when purchasing distressed properties for a profit. The formula calculates the maximum amount to pay for a given property once two key factors—the after-repair value (ARV) and estimated repair costs (ERC)—are considered. Learn more about your ad choices. Visit megaphone.fm/adchoices

ATTOM’s Year-End 2023 U.S. Foreclosure Market Report shows that foreclosure activity increased last year from 2022 levels, but is this a cause for concern for investors? The ATTOM report shows that foreclosure filings, which include default notices, auctions, and repossessions, stood at 357,062, up 10% from 2022 and 136% from 2021. These figures look much less alarming, however, when set in the context of pre-pandemic foreclosure levels. Foreclosure activity in 2023 was still 28% lower than it had been in 2019 and down a massive 88% from its peak in financial crisis-ravaged 2010. Learn more about your ad choices. Visit megaphone.fm/adchoices

In my previous article, we delved into the essential elements of development zoning. We explored key zoning designations such as R or C, critical parameters including setbacks, FAR, and building heights, strategies for enhancing density via affordable housing, the role of neighborhood ordinances, and the distinctions between by-right and discretionary review processes. In this article, we’ll delve into the crucial task of determining the development zoning for your project—an essential step to undertake before acquiring any development project. Mastering the intricacies of development zoning necessitates a strategic methodology, and we’ll unveil three pivotal strategies. Learn more about your ad choices. Visit megaphone.fm/adchoices

I’ve encountered the question “Should I buy or hold?” on several websites for several years. All I have seen are opinions such as “only hold a property for X years.” Here, I propose a simple process for deciding whether to sell or hold. First, what should you base your decision on? That’s simple: your investment goal. Learn more about your ad choices. Visit megaphone.fm/adchoices

Buffalo, New York, will be 2024’s hottest housing market, according to a recent analysis by Zillow. While you may mainly know Buffalo as the place that regularly gets snowed in during the winter, it turns out that the city’s current combination of affordable homes, a thriving job market, and a multibillion-dollar federal regeneration project has produced market conditions every real estate investor should note. Zillow’s report uses several metrics to determine which housing markets are currently on the rise. In a nutshell, it looks at two of the most powerful draws for new residents—affordable home prices and the number of new jobs—and then zooms in on how these favorable conditions translate into moving patterns. Once it’s clear that people are actively moving to an area to buy homes and form households, you have yourself a perfect housing hot spot. Learn more about your ad choices. Visit megaphone.fm/adchoices

What is important for Real Estate investors to know this week? Managing Editor of the BiggerPockets Blog, Matt Myre is here today to share the top 3 headlines that Real Estate investors need to know about to make better investing decisions. We’ll cover a House bill that was passed last week that could potentially bring back 100% bonus depreciation if made into law, the “Silent Depression” that TikTokers are battling with economists over, and what the SEC is proposing for new accredited investor minimum qualifications and what that impact could mean for real estate investors. Learn more about your ad choices. Visit megaphone.fm/adchoices

A traditional home refinance involves replacing an existing mortgage with a new loan to secure better terms or a lower interest rate. This process can reduce monthly payments, change the loan duration, and/or provide access to home equity for other expenses or investments. What Is a No Closing Cost Refinance? A no closing cost refinance is a type of mortgage refinancing where the lender covers upfront closing costs in exchange for a slightly higher interest rate on the new loan. Learn more about your ad choices. Visit megaphone.fm/adchoices

Things are shaping up for homebuilders. In fact, one big name in the industry is projecting that 2024 will mark the “golden age” for homebuilding, thanks to falling mortgage rates and frozen existing home supply, among other factors. David O’Reilly, CEO of megalith developer Howard Hughes Corp., told CNBC last week, “We’re going to have the golden age of new home construction” in 2024, even calling the new home market “extraordinary” in its current form. Learn more about your ad choices. Visit megaphone.fm/adchoices

If you’ve been reading the BiggerPockets Blog for any length of time now, you’ll have noticed that the Midwest has often been named as one of the best places to invest in real estate right now. It offers reasonable home and rental prices and stable job markets in major cities. The result is a buoyant housing market that has so far avoided the post-pandemic slump seen in other areas. But what if we told you that, while all this is true, the Midwest is also the most at-risk area for flood damage over the next 20 years—with all the related consequences: abandoned communities, dropping house prices, and rising insurance costs that will make homes less attractive for both buyers and investors? Learn more about your ad choices. Visit megaphone.fm/adchoices

Well, 2023 has been another wild year in commercial real estate. The headlines continue to scream trouble for CRE. Many are getting increasingly fantastic. Some friends are asking me, “So…I hear it’s pretty tough in commercial real estate right now. How are you doing?” You may have wondered the same thing. Learn more about your ad choices. Visit megaphone.fm/adchoices

I’m really a pretty nice guy. I’ve met hundreds of you in person and spoken to a few thousand more prospects/investors by phone or on Zoom. So, hopefully, most of you agree. But as I write this, I’m a bit miffed. You see, our Wellings Capital team is like family. We love and care for each other. So, I hate to see anyone on our team taken advantage of. But it feels like that’s what happened here. Our team recently spent over five weeks heads-down on what should have been a straightforward preferred equity investment. I did the due diligence trip in the fall. It was a beautiful mobile home park, and we were eager to add it to our investment portfolio. Learn more about your ad choices. Visit megaphone.fm/adchoices