Hard Money Facts

 

UNLOCKING THE VALUE OF SFR INVESTMENTS

When it comes to investing in single-family real estate (SFR), the best investors are focused, disciplined and strategic. In this article, we’ll explore the merits of two different investment strategies:

• Strategy 1: Fix and Flip (buy, rehab, sell)
• Strategy 2. Fix and Hold (buy, rehab, rent)

...and how combining these strategies can lead you down the path to wealth.

On the surface, these investment strategies seem quite simple, almost colloquial to the conversations held at almost every cocktail party or backyard BBQ. Who doesn’t have a friend or family member who told them the story of a house they bought low, sold high, and took the profit to the bank?

By that same token, with the maturity of the SFR asset class over the past decade, who hasn’t heard of the BRRR method—the Rich-Dad-Poor-Dad approach to wealth creation via real estate? Or, knows someone in their circle with a small portfolio of rental houses that provides passive income on the side. The investment in housing as a side hustle or full-time profession seems almost as old as the American Dream of home ownership.

But investing in single-family real estate is not as easy as the newest HGTV show would have you believe. As stated earlier, it requires focus, discipline, and strategy. And the best SFR investors combine the art of the flip with the science of the rental as they walk toward the finish line of wealth creation. If all we have is time and money, let’s explore how we can best utilize both for ultimate success in this game, otherwise known as single-family rental investments.

Demand for affordable single-family homes is (still) astronomical! If you're a seasoned rehab professional, you know that between sky-high prices and bidding wars, getting your hands on an affordable rehab has been challenging. The good news is that once you get a property under contract, your margins for profit are strong – short term and long term. But, given market conditions, now may be the right time to go long on single-family rental properties to build wealth over time. With interest rates rising, the cost of a mortgage may force prospective buyers to keep renting. And given the stark reality of inflationary pressures in this market, investors can use single-family real estate investment to hedge inflation while building wealth over time.

 

After years of low interest rates, it seems 2022 is the year we’ll see them on the rise. With the Federal Reserve planning to embark on a series of interest-rate hikes this year beginning in March, real estate investors are preparing for these predictions to potentially become reality.

Fortunately, smart investors work from a strategic point of view, and many apply the BRRRR model, which helps in situations like these. To refresh, the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) Method is a real estate investment strategy that involves buying and rehabbing a property, renting it out, and refinancing the leased up rental property over a 30-year term at a fixed rate of interest. This Method provides an opportunity for passive income and a diverse rental portfolio. If BRRRR Method is one of your investment strategies, now is the time to lock in for the long-term.

 

Welcome back to the second installment of our goal-setting series. If you missed the first installment on SMART goals, be sure to check out Part 1 and begin crafting your goals. Remember, these aren’t resolutions but actionable, achievable goals to help you grow your business. Journaling has a place within that story, and we’re here to help you get started.

 

 

JOURNALING to Success

Journaling allows you to take inventory of the past and present and forge a new path for the future. It’s a simple way to get all your thoughts onto the page, and it can help you sort through your priorities. This is a great exercise to help you refine your SMART goals or help you identify what you want to prioritize before you document them. There are no right or wrong answers in journaling; it’s all about getting your thoughts out of your head and onto paper.

Whether you're beginning this new year with goals to start investing in single-family real estate or you’re a seasoned investor who wants to continue expanding your single-family rental portfolio, it's essential to set actionable goals, measure progress, and seek the right guidance along the way.

 

 

Why Goals Matter

Goals are very different from New Year's resolutions. While resolutions may be well-intentioned, they are often thrown together without a plan or willingness to sacrifice what’s required for success. Statistic Brain analyzed New Year's resolutions and found that just 8% of people achieve their New Year's resolutions while a whopping 92% fail completely.

Goals, on the other hand, are usually more well-thought-out, and come with action items attached to them. Those action items help frame the decisions and direct the resources applied to accomplishing the goal. They are the milestones to the roadmap which leads to the accomplished goal!