# Entrepreneur of the Week Adi Gal # Post 3…
# Initiated week Adi Gal # Post 3
Investing at the tip of the fork….
Let's start with the fact that rental prices in the US are always on the rise. The American market is a capitalist market determined by supply and demand when prices are set by the free market and not by the state.
And what does this say about real estate in the U.S. and South Florida in particular? Unlike in Israel, the need to buy a home is not a milestone in progress in life. The race to buy an apartment does not exist. Lots of Americans live in rent all their lives and do not aspire to purchase a property. The percentage of homeowners in the U.S. as of 2019 is 65% and that includes people who bought homes to generate income and live on rent. When in a populated area there is always a demand for rent. I can say with confidence that the hundreds of housing units we manage are 100% occupied and when an apartment becomes vacant it is usually rented for no more than two weeks. And this is with an emphasis on blue-collar, working-class areas. Less true for the South Beach areas.
So what does that mean?
First rule - an investment property is not a property you are going to live in, so come up with different criteria. Lots of investors see a beautiful house that if it was copied to Israel they would be willing to live in it and they "fall in love" with the property. A good property is a mathematical equation. Know how to make money or not and how much.
If you are investing and looking for a property, make sure the property is in a place where there is enough population, the trend today of all the big real estate companies is to invest in the center, in the big cities. In central cities there will never be a rental problem. Centers will always be in demand and rising prices on a regular basis. In addition, there will always be an opportunity to improve the capital.
On the other hand you may have bought a "beautiful" house in the suburbs of Cleveland for a penny and a half and waited for a tenant who did not come, the property will remain at the original value you bought for years but at least there will be a beautiful picture of a house to show friends.
Rule Two - Check if the property is rented at market value. Many of the properties offered for sale are rented at less than the market value. Most apartment owners prefer a good tenant who pays a little less than a new and unknown tenant. Or they just did not make sure to raise rent over the years. This allows the buyer to negotiate with the seller according to the revenue but let us not forget what can really be obtained according to the market value.
Third rule - take into account all expenses, including time the property is not rented, insurance (mandatory) and repairs - and there are a lot of them. When tenants rent a property they don't exactly take care of it as if it were theirs, they know that if something breaks down it is the landlords responsibility. Here almost everything falls on the owner of the property - air conditioner, microwave, refrigerator, even a lamp!!! It should also be taken into account that most investment properties are not new buildings. Most customers are amazed at the amount of breakdowns and repairs that have to be invested in the properties in the partner. Here, too, the importance of a management company is reflected in reviews and strictness with tenants regarding the maintenance of the house.
If it is more than one unit (MULTI FAMILY) - ask who pays for electricity and who pays for water. Ask to see actual water bills lawn pruning expenses etc.
Another rule - keep in mind that the real estate market is completely local, what works in one place will not necessarily work in another. The population is different, the economy is different, everything is different. I know a lot of people who have invested in Europe and had great success and have come to New York trying to apply the same methods and have suffered big losses. Even between cities the difference is great. Miami Beach and Fort Lauderdale are two different animals. Anything needs to study an area or get help from shortcuts like a local agent or a management company. And it's time to say that ZILLOW is an excellent tool but also very dangerous for analysis.
Finally - a lot of people call me at the office and ask if to buy now or wait for a crisis or a drop in prices.
This is definitely a difficult question because if I had the answer then I would be a millionaire. But based on my experience and personal opinion only, right now the market is in a SELLER MARKET situation, the prices are high and most of the buyers are people who have to spend the money or who have a house for themselves to live in. The low interest rate in the market on the one hand tempts the buyers and on the other hand pushes the prices up so that if I myself had money available for the purchase I would wait until the wrath of the Corona and the elections in America passes. There are lots of homeowners in distress and the banks still haven't turned off the tap. In my humble opinion, there will not be a crisis similar to that of 2006, but there will be a drop in prices in the near future. Such processes read for a year or two so if you don't have to buy to wait patiently. And if you read my first post then remember that I am a master in short sale and foreclosure so remember me and contact me ??
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You wrote beautifully. Agree with you on all the points you touched ❤️ ??
Great post?
Just do not forget that South Florida is also one of the first to crash in a time of crisis.