When you’re considering any act with respect to your real estate investments, it’s important to carefully evaluate every aspect of the decision or transaction. Due diligence is a common term borrowed from the legal profession. It describes the process involved in fully researching any issue or decision. Due diligence is vital in real estate due to the personal and financial ramifications of the choices we make. Poor decisions lead to damaged credit, investment losses, poor cash flow, bad tenants, breaching buyers, defaulting borrowers, and a plethora of other problems.

Due Diligence Risk Factors in Evaluating Investments

There are numerous factors to consider in the process of conducting your due diligence when investigating a potential investment. Depending on the type of investments you’re pursuing, you need to consider factors related to the profitability of the project. Also examine the solvency of the project sponsors and the condition of the market. Using common financial metrics including cap rate, IRR, debt to equity ratio, and more, you can objectively measure the suitability of the investment and develop a basis for comparing competing properties. Insist that the project sponsors provide accurate and comprehensive financial statements including:

  • Balance Sheet
  • Statement of Cash Flows
  • Income Statement, Profit and Loss
  • Statement of Retained Earnings

Carefully examine these documents, employing professional finance assistance where necessary. Identify the data needed to perform the various financial metric calculations. Ensure that the data is reliable by questioning the method and thoroughness of its preparation. The results of your calculation will indicate if the project has sufficient growth and profit potential to merit its selection over other projects. They will also indicate the solvency of the sponsors by considering the balance of debt leverage, equity financing, and liquid capital.

The other things to consider are the credit scores, liquid assets, and degree of experience that the sponsors represent. Even if the project itself is promising, weak project leaders can lead to missed milestones and eventual default. Also, thoroughly research market factors including labor supply, unemployment, housing starts, industry growth, regulatory influences, and population expansion.

Reviewing Property Manager, Tenant, and Buyer Credibility

If you’re managing your existing portfolio, you’ll also need to continuously monitor the financial performance of your investments. Ensure that your property managers are professional, experienced, and maintain complete and accurate records for every aspect of the operation of your property. Before you hire a property manager, interview a variety firms. Be sure to call references and visit other properties they manage. Whether you do it yourself, or delegate to a professional property manager, devote extra due diligence to screening tenants and selecting only the most reliable and qualified.

Poor tenants can cause excessive maintenance costs, eviction proceedings, higher vacancy rates, and diminish demand for your property. It’s preferable to allow your unit to remain vacant until a qualified tenant is found, rather than enter into a contractual obligation with one that will likely cause issues. If you’re pursuing an exit strategy, it’s equally important to evaluate the qualifications of your prospective buyers. Much as you would with a seller, request complete financials for the entity making the offer.

Consider the credit scores, debt to asset ratio, and their prior experience in closing transactions of comparable class and magnitude. Protracted and failed escrows increase your holding costs, hinder your investment strategy, and lead to lost opportunity costs.

Ethical Finance Partners

Don’t forget to devote the same level of due diligence in evaluating the lenders and other financial partners you’re considering. Ask questions about their experience and success in funding projects such as yours. Do they have experience with your asset class? How long do their closings typically take? What rates do they offer, and what are their underwriting criteria? Forthright answers to these questions will help establish their credibility and level of interest in following through on funding your project. Don’t assume that a fancy website or extensive marketing equates to reliability. Demand proof and trust your best judgement.

Fortunately, recent legislation has helped regulate the finance industry. Congressional Acts such as Dodd-Frank and the close oversight of the SEC has helped improve transparency and accountability in the industry. While regulation has improved, it’s still important to conduct personal due diligence, read professional reviews, and get all your questions and concerns answered. Additionally, don’t accept the first financing approval you get, if the rate and terms don’t fit your investment objectives. Financing is a key component of your overall wealth building strategy. Accordingly, only utilize the most appropriate and favorable funding products and sources.

Managing the Task

Due diligence is a critical aspect of real estate investment, and while time consuming, can yield much greater results for the growth of your portfolio. It can also decrease your investment and borrowing risk and build your confidence in directing the future of your investments. If you’re looking for the benefits of a sound due diligence strategy, without the personal investment of time and energy, consider working with a financing and investment platform that can help you achieve your objects with minimal risk and enable you to achieve the greatest results.

Recently, more television shows surrounding the fix and flip niche have become extremely popular. In reality, you can make money fix and flipping homes. These shows highlight the “good”, such as an amazing renovation and big profits. However, keep in mind each project is different and it’s not all glitz and glamour. Fix and flip projects are a huge undertaking and come with ups and downs.This article will highlight a few of the most common mistakes newbies make when fixing and flipping and how to overcome them!

Cheap Contractors

People from every business are trying to make a profit and get a good deal. With that being said, beware that most people are not as qualified as they seem. According to Sharestates CEO & Co-founder, Allen Shayanfekr from a realtor.com article, “In one of the first houses we ever flipped, we used the cheapest contractors we could find instead of the most qualified. I came to regret that decision while hosting our first open house when a prospective home buyer visited the restroom and found out the hard way that the bathroom pipes had actually been rerouted to the kitchen sink. When he flushed the toilet, its contents started spewing out of the kitchen faucet. It doesn’t get more horrifying than that!”

 

Unfamiliar Areas

Finding a house to flip is a great feat, finding the property in a familiar area is another. Many experienced people in the industry know where they like to purchase homes and where to conduct their fixes. No matter how experienced someone is, it is impossible to know everything about every single neighborhood. Such as knowing who the neighbor is next to the property or that in the summer months the house across the street rents to college students. Since the project will more than likely be worked on during the day and not at night consider purchasing some type of alarm system. This way when you leave the property you know that when you return the next day everything will be as it was left. Security systems are important not just to prevent intruders from entering the house but to protect your investment from fires and carbon monoxide poisoning.

 

Luxury Appliances and Features

Buying the best appliances and features for your fix and flip sounds like a great idea when remodeling a home, right? Wrong! It is very easy to go over budget when it comes to designing a home. Budgeting is one of the easiest parts of a renovation project that can be miscalculated. To avoid a budgeting nightmare try and be mindful of the items you choose. Typically you want to aim to buy quality, low cost products to ensure that you stay within the means of your budget. Saving money on items such as paint, flooring and appliances can also allow a greater earning potential!

 

To prevent fix and flip disasters from happening do your due diligence and understand what kind of a project you are getting into. Any house can be turned into a masterpiece with the right planning, budget and people involved.

Stay updated on the latest real estate industry trends and news!

Cash flow is important for any type of business, but real estate crowdfunding is a different kind of business that requires a carefully thought out plan for the end game. It’s more like investing than a traditional business, but it still requires an attentive eye to business technicals like cash flow, forecasting, and profit-loss analysis. Otherwise, you could end up losing your shirt.

The alternative to investing in real estate online using cash flow forecasting is debt. It isn’t recommended to invest in any vehicle, including real estate crowdfunding, with debt.

Capital Is King of the Marketplace

Businesses of all types need capital. In real estate investing, developers need capital so that their projects can be completed on time and put on the market. Like many businesses, if a real estate developer doesn’t have the capital to fund their projects, they may seek out a loan. Real estate crowdfunding offers them a marketplace of investors who will fund their projects in hopes of seeing a return on their investment. That said, like any kind of investing, real estate investing carries a certain amount of risk. The risk involved is dependent on a few details such as whether you have performed the proper due diligence, the nature of the project you are funding, and where you sit in the capital stack. The riskier the investment, the more important it is that you be able to adjust your portfolio, if necessary, to offset potential losses.

If you were around during the mortgage crisis, then you likely know that a ripple effect in the economy led to banks going belly up after using risky home mortgage instruments to fund even riskier asset-backed securities. They were borrowing money from Peter to pay Paul instead of using their own capital to make the risky investments. The crisis illustrates perfectly well why cash flow is important for real estate investing.

How to Navigate Cash Flow to Reach Your Real Estate Crowdfunding Goals

Everyone wants to see their investments grow. But it’s important to manage growth and to manage expectations. If you are new to real estate crowdfunding, start small. Keep some of your cash in reserve until you are comfortable with the platform and with the underwriting process used by the platform. Put a small investment on a few projects first and monitor those for a few weeks or months until you understand the nature of the investment vehicle.

As your real estate crowdfunding portfolio grows, and you get more familiar with the platform and the projects available, you can begin to invest more of your capital in projects that have the highest potential for return. I’d also encourage you to start with the more conservative investments first. Analyze the types of projects available for investing and don’t go deep into the capital stack on your first investments. Another way to protect your portfolio, and to ensure a positive cash flow, is to invest in different types of investments. Diversify your overall portfolio as well as your real estate crowdfunding assets so that maturity dates stagger and you tie up your capital in different types of deals (multi-family, single-family, industrial, commercial, etc.). This will help you manage your cash flow long term.

Finally, maintain some liquidity in your portfolio, and never invest more than you can lose.

“It’s not what you know, it’s who you know.”

While this old saw is not entirely true, it’s not completely wrong either. After all, business is done between people who work for companies, not between companies by themselves. Inter-personal relationships are and always will be an important aspect of any business, especially real estate. Effective networking, getting to know people, is as important in real estate as understanding the local market.

Join Now to Discover Simplified Real Estate Investing

Naturally, a new real estate investor will look to benefit from the knowledge offered by other, more experienced real estate investors. However, there is actually a wide range of professionals that can add value to a real estate portfolio and increase the investment rate of return. This list includes real estate agents, contractors, appraisers, inspectors, mortgage brokers and real estate attorneys, just to name a few.

Meeting Real Estate Professionals Online

Meeting this wide range of real estate professionals is very straightforward on the internet. There is a wide range of discussion forums available that focus on specific areas of real estate investing, real estate lending and real estate management. Of course, like online dating online networking brings the risk that what is being presented is not real. Always be careful when sharing personal information.

Another fantastic place to network is the discussion forum of your favorite real estate podcast.  They often offer a menu of forum topics, such as this list of over a dozen specialties from BiggerPockets.com, a popular podcast. They offer forums from General Information and Investor Basics to such specialty topics as Financial, Tax and Legal and Real Estate Technology and the Internet.

Locally Building a Real Estate Network

Like politics, all real estate is local, and at some point in the real estate investment process the best way to build a network is to work locally. There are a wide variety of real estate investment clubs, and like the online forums they often have a specific focus. Attending a special focus club is a good way to learn more about that area of real estate investing.

Another way to build a local network is to attend real estate auctions. These are typically attended by real estate investors and professionals. In particular, look to build relationships with those who won the auction. There are several ways to learn where and when auctions will be held. There are subscription services for auctions, and notices are printed in local papers and online.

Stay updated on the latest real estate industry trends and news!

Networking Tips for Real Estate Investors

Keep in mind that networking is an important part of real estate investing. It is an investment of time that contributes to success as a real estate investor. Although any individual networking event may not produce immediate results, over time networking is worthwhile. Keep this in mind if attending local events seems unproductive and fruitless at the beginning.

The other important aspect of networking to remember is that it is a two-way street. It is as important to contribute as it is to receive. In discussions, offer only helpful comments. Offer to help put chairs away or straighten up the room after a networking event. Remember that networking is about building professional relationships, so behaving professionally is important.

One aspect of networking that might not be worth the time is attending real estate seminars, particularly seminars that charge for attending. The ready availability of information on the internet and through discussion forums means that more quality information is available for free than ever before. In addition, seminar selling is still as prevalent as ever.

Like other aspects of the real estate investment business, successful networking takes time and effort. It may come easier for some people than for others, but everyone can build a robust network. The time spent in creating a network will result in a more profitable career as a real estate investor.

Remodeling a home is a great way to add value to a property, but unfortunately it is also a great way to dig a financial black hole. In order to avoid the pitfalls of pending money that will never be recovered, keep a simple rule in mind. Focus on renovations that someone else will value. A renovation is valuable only if it is valuable to someone who will buy the house.

Join Now to Discover Simplified Real Estate Funding

Keeping the Right Potential Buyer in Mind

Focusing on a potential buyer means understanding who the house would appeal to in the first place. Is it a smaller home in a community of smaller homes?  Then imagine a first time home buyer who is starting a family. A household with a new baby may value a fence around the yard more than a whirlpool bathtub. Although a stressed out new mom might disagree.

Considering the needs and values of a potential buyer can be a difficult challenge, but it is the most vital touchstone a renovator can have. Defining the potential buyer involves understanding the home, the neighborhood and the greater metropolitan area. Great healthcare facilities appeal to a different demographic than a great school district. The same difference can be seen between a ranch style house and a two-story colonial.

Kitchen and Landscaping Renovations

While it is difficult to generalize, there are two areas where renovations are always well spent. The first of these is the kitchen, where most homeowners spend the majority of their time. Following the same basic rule of focusing on the potential buyer is critically important when renovating a kitchen. It is one room where it is far too easy to spend more than is necessary, to increase the appeal of a house due to personal preferences.

Landscaping is the other place where renovation dollars are wisely spent. Landscaping adds to curb appeal, which is the all important first impression a potential buyer gets when they pull up to the house. Perfection is not the goal. A nicely maintained lawn punctuated with colorful flower beds expresses a pride of ownership that conveys value to a potential buyer.

Appropriate Renovations for the Property

Personal taste makes a house a home, but it does not necessarily add to resale value. Putting knick-knack shelves up as a type of crown molding might appeal to someone who collects Precious Moments or Disney princess figurines. Many buyers would just see another place that needs dusting. This rule is particularly true when considering wallpaper or wall borders.

The other significant mistake that is easy to make is to put amenities into a house that aren’t necessary. Although upgrades can increase the sale price, expensive bathroom fixtures or high-end kitchen counters and appliances are not always economically rewarding. The worst case scenario is to add features that make the home overpriced for the neighborhood, known as the proverbial “white elephant”.

Of course, there are exceptions to every rule, and every buyer is unique. However, it is a safer economical proposition to appeal to the greatest number of buyers. Renovations that will be valued by a crowd of buyers are more rewarding financially than those that are targeted toward a particular niche, such as model railroaders. After all, the time it takes to find a buyer is a factor in the economics of selling a home.

Buying a piece of investment real estate for the first time does not need to be a fraught situation. Understanding the basics of real estate and the terminology of real estate investing can make any beginner more comfortable and confident. Unfortunately, with all the details and things moving quickly, some of the fundamental terms and concepts can get lost, like the difference between “deed” and “real estate title”.

Limited Time Offer: Zero Servicing Fees on First Investment

It’s understandable that these two different things get confused because they both are related to the ownership of a piece of property, in this case a parcel of real estate. The difference is that a deed is a legal document that transfers ownership, and the title is the legal document showing who owns the property. Deeds are recorded in the public record.

What’s in a Real Estate Title?

So, the title to a piece of real estate is the important, go-to document to define both the property itself and the ownership. Defining the property itself includes both a full legal description of the property and all the rights that come with the ownership. This second point is important because when it comes to owning investment real estate the investors want to be absolutely certain that they can change or develop the property in the way they are planning.
Development rights, mineral rights and even air rights can be separated from the ownership of real estate. A farmer can sell the rights to construct and manage a cell phone tower on his land while retaining title to the land itself. Rights to the trees on a parcel of land are not necessarily on the real estate title. A careful review of what is included in the title is an important step in buying investment real estate.

What are Some Surprises on a Real Estate Title?

While a purchaser would expect a title to show that “all rights” are included in a title, there are a few things that should not be there. One of these bad surprises is a builder’s lien. This is a legal claim made against the title, and has the same effect as a mortgage lien. It is intended to protect the financial interests of someone who believes the owner of the property owes them money.
Easements are another surprise on a title. An easement gives someone else the right to use the property for some specific purpose. A conservation easement, for example, allows someone else to use the land to grow native plants or to be maintained in a natural condition. Some easements allow others to cross the land to get to their property.

Protection against Surprises on a Real Estate Title

[Protecting against financial] because of accidents or mistakes is the job of insurance. Protecting against mistakes regarding real estate titles is the purpose of title insurance. This is a small insurance policy taken out when the title is transferred that protects the financial interests of the new owner and lender, if any. It is the only form of insurance that protects against loss caused by something that happened before the policy was issued.

Join Now to Discover Simplified Real Estate Investing

Title insurance does not pay valid liens. Rather, before the insurance company will issue the policy it checks the public records to identify any liens or other problems with the real estate title. The report is called various things including a “title search”, a “title commitment” or an “encumbrance report”. Any problems identified on the report have to be addressed by the seller before the title can be transferred.
Getting a clear title is the goal of every real estate buyer. A clear title is the first green light a real estate investor needs to move toward a profitable transaction. There may be other bumps in the road, but understanding what makes a clean title and potential problems can make the first time buyer significantly more comfortable when closing on the property.

Investopedia defines FinTech as a “portmanteau of financial technology that describes an emerging financial services sector in the 21st century.” In other words, FinTech is the use of technology to support electronic banking and financial services. With the ongoing increase in the use of technology, FinTech is a crucial part of the business world. In order for a business to succeed in this day and age, the art of financial technology must be mastered. Here are some of the leading FinTech trends of 2017.

Join Now to Discover Simplified Real Estate Investing

Instant Electronic Payments

A major FinTech trend is instant electronic payment. With PayPal being one of the dominant leaders in the peer-to-peer payment platforms, other companies have begun to create systems of their own. A subsidiary of PayPal, Venmo, LLC, has become very popular amongst millennials, as it allows an incredibly simple transferring of funds from one account to another. With its user-friendly interface, people have an easy time sending money to one another, whether it be a large amount for a good or service, or to split the check at a restaurant.

Accounting Software Automated

For centuries, companies have hired skilled personnel to do the accounting and business keeping for them. Recently, FinTech startups have created softwares to make accounting automated, rapid, and surprisingly easy. An example of this type of software that has grown over the past few years is Quickbooks by Intuit. This software allows the user to connect the company’s bank accounts to the application; from there, most of the data entry from the user becomes unnecessary. The application includes features such as categorization of expenses, profit and loss reports, learning the patterns of the user, and much more.

Marketplace Lending for Real Estate Investors

Essentially synonymous to P2P lending, marketplace lending (MPL) is the process of matching lenders and borrowers with each other through online programs. Marketplace lending has recently become popular due to people losing trust in traditional banking after the recession in 2008. MPL gives an individual, who may have not had prior access, the ability to take part in the investment of a property, whether it’s getting a hard money loan for a fix and flip or to crowdfund a real estate project.

This trend is continually growing and is advantageous for its users due to its financial incentives and availability of credit where it was limited in the past. An online platform, such as Sharestates, enables its users to invest in real estate online and reap the benefits.

Blockchain Technology

In addition to accounting softwares, blockchain is another useful method for measuring financial transactions, specifically in real-time. A sizable issue with digital currency is something known as double-spending. An electronic money transaction is essentially a line of code that can be accessed to represent a dollar amount. This code can be duplicated, and the money can be considered double-spent.

Blockchain technology, first used by Bitcoin, provides a database of electronic financial transactions that does not allow an exchange to go through unless approved by its extremely complex software. According to chargebacks911, wider adoption of blockchain technology could potentially help banks save as much as $20 billion annually by 2022.

The Future of FinTech

FinTech is relatively young and will continue to be integrated into all aspects of the business world. Whether it is used for a simple task like transferring money, or something greater like accounting and tracking budgets, financial technology is a crucial part of the work field. Every year there are new trends to be monitored and followed in order for one’s enterprise to be as successful as possible.

Savvy real estate investors know to watch mortgage rates the way a sailor knows to watch the sky. Changes in mortgage rates impact the market prices of homes in the same way changes in interest rates impact the market values of bonds. Fortunately, changes in interest and mortgage rates tend to be much less sudden and extreme than changes in the weather.

Join Now to Discover Simplified Real Estate Investing

Mortgage Rates at Historic Lows

Mortgage rates, and interest rates in general, are still at historic lows following the real estate and economic debacle of 2008. The average rate for a 30-year fixed rate mortgage in July is 3.45%. This is low in comparison to the average rate for the 10 years before 2008 of 6.55%, and even low compared to the average since 2008 of 4.21%.

The average rate includes rates charged those with poor credit and those with outstanding credit. Of course, those with poor credit pay a higher rate. The same is true for borrowers who have a high debt-to-income ratio, and those who make a smaller down payment as part of the home purchase transaction.

If Mortgage Rates Go Up

Mortgage rates move with interest rates in the overall economy. They go up during an economic expansion. When people have jobs that they are confident they will keep, demand for mortgages goes up. Supply and demand are relatively straightforward, so interest rates tend to climb during economic expansions. This increase is also driven by the monetary policy of the Federal Reserve Board (the Fed).

A higher mortgage rate means a higher monthly house payment. This will cause some buyers to look at less expensive houses. Some sellers may need to drop their price in order to attract buyers looking for that type of home. A real estate investor planning on flipping a starter home may find the market price of their home dropping as interest rates climb.

Real Estate Market Sees Fewer Mortgage Apps

The reverse dynamic takes place when consumers are uncertain about the future, such as when the Consumer Confidence Index is weak. Fewer households apply for mortgages because they are concerned about making payments and mortgage rates fall. This is why mortgage rates are currently still historically low. The economy still has not recovered fully from the effects of the 2008 mortgage meltdown.

The lingering effects are shown by the current policy of the Federal Reserve Board. The Fed strongly influences the money supply interest rates through the discount rate. This is the rate the Fed charges banks to borrow money from it. A low discount rate increases the money supply and lowers overall interest rates. A high discount rate does precisely the opposite.

Real Estate Investors Watch the Current Forecast

The Fed is slowly increasing the discount rate from the historic lows it reached as a result of the 2008 mortgage crisis. However, these increases are being implemented very slowly, and the current rate of 1.75% is still very low. The average rate for the 10 years prior to the mortgage crisis, for example, was 4.04%. The rate since 2008 has averaged .78%.

The current CCI is giving off mixed signals, with some elements showing positive gains and others moving negatively. The month-to-month fluctuations are also small and often in opposing directions. This means the Fed is less likely to significantly increase the discount rate, but continue on a slow path toward historically normal levels. Demand for mortgages is also unlikely to show a significant increase so there will be little upward pressure from the private market.

An extended period of low mortgage rates that is slowly ending can be an excellent environment for real estate investors. Some buyers may feel that they have to purchase a home before a significant increase in rates. Rates that are low relative to historical levels mean real estate prices that are relatively higher.

However, the risk in the environment is an unexpectedly large increase in rates that pushes buyers out of the market and forces sellers to lower prices to lure them back in. Although the current outlook does not suggest this will happen, the economy has been known to surprise even seasoned observers. Even experienced sailors sometimes get caught in a storm.

Real estate deals come in a variety of packages from “ground up” investments to value-added or rehabilitation projects. Each type of investment has its own associated risks and rewards. A ground-up real estate investment typically involves more risk, but they may also provide better rewards. That’s because the developer has much more planning and work ahead of him than with valued-added or rehab projects.

Join Now to Discover Simplified Real Estate Investing

For instance, if a developer is taking an existing commercial building and adding a new wing to it, the project won’t take as long as building the building from scratch. There is already an existing structure to tie the new addition to, which makes the initial groundbreaking simpler and less complicated. By the same token, rehabilitating a building that has already been built involves a different level of thinking and costs much less than building from the ground up, hence there is less risk involved.

Common Risks Associated With a Ground-Up Real Estate Deal

Ground-up construction can often be risky because so many factors are unpredictable. The process can be long, and by the time a project is started and finished, many of the basic facts and assumptions may have changed. The following risks make ground-up real estate deals difficult to manage even for the most experienced managers:

  • Price of materials may change – Prices fluctuate. A real estate project expected to take months to complete may cost more than originally estimated due to changes in the price of materials, especially at the later stage of a project.
  • Weather conditions – Weather often interrupts ground-up real estate projects and could delay construction or building plans for days or weeks if seasonal weather patterns get harsh. This is one reason planning is extremely important in ground-up construction projects.
  • Subcontractor scheduling – Subcontractors could show up to work late or get in each other’s way. If one project is delayed, that could put an important contracting team out of sync with the rest of the construction crew, and in some cases it could lead to halting a project for a few days or weeks until the scheduling is worked out.
  • Change orders – Many times, architects or real estate owners change their minds about how they want a project to be developed. Multiple change orders can drive the timeline of a project backward significantly.

These are just some of the risks associated with ground-up real estate projects. In the end, you want someone with experience and a track record working on such projects to ensure that risks are mitigated and investor dollars are protected against unnecessary risks.

The Most Important Considerations for Investing in Ground-Up Construction Projects

Every construction project is different. In general, however, you want to pay particular attention to the following considerations when evaluating a ground-up construction project as an investment.

  1. Loan-to-Value Ratio – It is very important that you crunch the numbers right on any real estate investment, but if millions of dollars are at stake, you don’t want to miscalculate LTV.
  2. Lien Position – The best position to be in on a ground-up project is in the first lien position. You want your profits before everyone else or you run the risk of losing your investment.
  3. Borrower Track Record – It is best if you invest in a borrower who has managed ground-up construction before. The more experienced the borrower, the less risk you are taking as an investor.
  4. Borrower Experience – Even if a borrower has a good track record with project management, you want to ensure he has the requisite experience to see your ground-up construction investment through. A borrower who has spent 20 years on residential construction but has no experience in commercial could prove to be a high risk if you are looking at a commercial real estate investment.
  5. Credit Score – The borrower’s credit score is also important. If a borrower is sub-prime and is borrowing millions of dollars for a project, that increases the risk.
  6. Location – Finally, location is very important. Ground-up investments in rural or emerging markets are higher risk than core urban markets like New York City and Chicago.

Every investment should be evaluated on the merits of the project as well as the experience and track record of the borrower.

As a real estate investor, imagine showing the Addams Family home to potential buyers. The snarling gate, the encroaching, thorny vines, the crumbling, rambling exterior skirted by the dead trees and lawn. Folks would run for their lives instead of placing offers. First impressions are lasting impressions which is why the following 2017 curb appeal dos and don’ts include all of these offenses and more.

Join Now to Discover Simplified Real Estate Funding

Do Preen the Lawn and Pathway

Nothing is more inviting than a green, manicured lawn. Especially when patterned with the clean lines of a curving pathway. Cement paths regularly become coated with mold and mildew. Renting a pressure washer or hiring someone with a washer easily cleans away the grime. Consumers can also clean mold with spray-on products and brushes.

In snowy climates, keep paths shoveled for a more inviting façade and curb appeal. An inexpensive but quality lawn-care program includes fertilizer, extra plugs of sod, and weed killers.

Don’t Get Carried Away with the Landscape

Buyers prefer low-maintenance landscapes. Many buyers see dollar signs with elaborate gardens bursting with a variety of plants, shrubs, and trees. As tempting as it is to showcase that green thumb, keep the garden simple. A hedge of evergreen bushes balanced with a low row of flowers is a simple, yet attractive look.

For an easy, weed-free garden, install professional grade weed fabric throughout the landscape. Cover this with a few inches of red cypress mulch. Weeds have a tough time fighting their way through the weed fabric and mulch. Also, it’s best to stay clear of adding water features to the landscape. While appealing, these structures require regular upkeep that may deter potential buyers.

Do Clear Clutter, Replace Bulbs and Trash Bins

For properties with front overhangs and porches, clear away any décor and furniture obstructing the view of the structure or impeding foot traffic. Less is more regarding exterior décor. Some suggestions include small benches, swings, bike racks, and appealing trash cans that fit the façade.

Remember to replace or repair light fixtures and bulbs. Opt for trendy fixtures featuring LED bulbs. They’re brighter and last much longer than standard incandescent counterparts.

Don’t Paint Bold Colors

When selecting paint colors, choose shades that will appeal to the broadest audience. Buyers need to envision themselves occupying the property. Covering the exterior with flashy pastels will deter more buyers than draw in. Select neutral colors that complement exterior features like columns, bricks, paths, and gardens.

On a side note, also select neutral colors for interior painting. Giving the entrance of a building a bold facelift is the latest curb appeal trend. This includes bright red, yellow, and green doors. Pick the shades on the lighter end of the color spectrum. Dark colors project negative, ominous tones.

More Curb Appeal Dos and Don’ts

  • Do light up the gardens and paths
  • Don’t use dimly light solar lights
  • Do refresh address numbers
  • Don’t break the budget on curb appeal
  • Do repave cracked driveways and sidewalks