RealNews RoundUp
Each week I round-up the best real estate articles and break them down for you in an easy to digest format. Here are the articles I’ve found most interesting over the last couple weeks:
The Article: Inman: Why Self-Storage and Real Estate Leap-Frog Traditional Investments
The Highlights: Many people know about the benefits of buy-and-hold residential real estate investment but if you’re looking to invest on the commercial side, self-storage facilities may be a hot new market to watch!
More Americans than ever are utilizing self-storage facilities. According to 2018 statistics, there are more than 23 million individual storage units in the United States--1 for every 14 Americans and the existing infrastructure was at 90% capacity. 5 years later the industry has only grown. Self-storage was one of the only commercial real estate investment fields that actually experienced growth and thrived during Covid.
If you’re looking to diversify your investment portfolio investing in self-storage facilities will provide returns and benefits that traditional investments may not offer including:
· Low costs for maintaining the property
· High demand for storage units
My Take: It’s always prudent to think about diversification when it comes to your investment portfolio. Commercial real estate is an interesting choice, and the self-storage industry does seem nearly risk-proof given the high demand and that almost everyone will need/utilize a storage unit at some point in their lives, either long-term or short-term.
Some of the cons of commercial real estate investment, namely the maintenance costs and vacancy risks, don’t seem like they’d be a hurdle here.
The things that may be lingering challenges are the legal and regulatory requirements that accompany commercial properties, and that commercial properties are often more expensive than residential ones of comparable size making them more attainable for high-earners/ seasoned investors. Interesting food for thought for sure!
The Article: Norada: Millionaire Millennial Who Saves 80% of His Income Refuses to Spend on These Two Things
The Highlights: Todd Baldwin became a millionaire when he was 25 thanks to a mix of income from rental properties, his day job working in commercial insurance sales, AND one job that allows him to get paid while being entertained—he’s a secret shopper!
As a result, he’s about to make money on things most people spend on. He never pays for movies or for dinners out. As of 2020, he had made about $30,000 since he started mystery shopping. He fills out a survey after his experience, and that’s it! Thanks to secret shopping, Baldwin and his wife spent about $25 a month on food as of 2020.
The other thing he will never spend on: Unnecessary bank account/credit card fees. He utilizes credit cards, but he never racks up a balance and makes payments on time to avoid late fees.
My Take: This was a fun story, and I love hearing about people who have acquired wealth but continue to live frugally—Warren Buffett paved the way on this mentality!-- “Do not save what is left after spending, but spend what is left after saving”
I also love to hear how people get creative when it comes to making money. From passive income from rental properties, to finding ways to get paid for things you’d otherwise be spending money on. The lesson here—creativity pays!
The Article: Keeping Current Matters: Saving for a Down Payment? Here’s What You Need to Know
The Highlights: A home purchase is one of the biggest expenses you’ll make in your life, and as a result, many homebuyers are focused on the cost—What costs money? How much do you need to have saved? When do I need to have the money, etc…
Many homebuyers believe they need 20% for a down payment—this can be an intimidating amount to save, especially for first-time homebuyers. If you purchase a median priced home today for $455,000, 20% down is nearly $100,000!
The good news is that a required 20% down payment is a common misconception! Unless specified by your loan type or lender, it’s typically not required to put 20% down.
According to NAR, the median down payment hasn’t been over 20% since 2005. In fact, the median down payment for all homebuyers today is only 14%, and it’s even lower for first-time homebuyers at just 6%. This means you’d be putting down $27,200 on a median priced home as a first-time buyer. A much more manageable amount to save.
My Take: This is something I discuss with my first-time homebuyer clients all the time! There are so many loan options and even some down payment assistance programs that can make entry into homeownership much more attainable. Don’t count yourself out of the game until you’ve had a conversation with a realtor and a loan officer! Get in the game and start earning equity.
For those who already own a home and are interested in investing in real estate, check out this video which breaks down how you can qualify for multiple mortgages as you build your portfolio. Real estate investment is attainable for everyone!