New Post! October 16, 2024 - #169

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Welcome Back,

Howdy, Happy Wednesday. Your already halfway through the week! Today we are back to discuss Real Estate. One topic in particular we will be talking about is how to house hack. Enjoy!

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Real Estate Investing

Market Snapshot:

Raleigh, North Carolina
The Raleigh real estate market is thriving, with the median home price hitting $415,000, a 5.1% year-over-year increase. Raleigh’s growing status as a tech hub, alongside its strong job market and high quality of life, has made it a prime destination for new residents. Inventory remains tight, with 3,800 active listings, which is down 7% from the previous year, pushing up demand and prices. The area’s booming research and education sectors are expected to keep driving growth, making Raleigh an attractive market for investors.
Median Home Price: $415,000
YoY Price Growth: 5.1%
Active Listings: 3,800 (down 7% YoY)

Deal Of The Day:

Multifamily Building in Raleigh, NC
Price: $6,950,000
Units/Homes: 7 (4-Bed, 4-Bath each)
Monthly Rental Income: $56,000
Cap Rate: 7.2%
This 7-Home Property is located in downtown Raleigh is a fantastic opportunity for investors. With each unit renting for $8,000/month, the property generates a total annual rental income of $672,000. The 7.2% cap rate makes it a strong cash-flowing investment, especially with Raleigh's steady population growth and demand for urban living. Its proximity to universities and tech companies positions the property for continued rental demand and potential long-term appreciation.

Real Estate Tip:

Investment Strategy:

Seller Carryback Financing
In a seller carryback arrangement, the seller finances part of the deal, allowing the buyer to pay them directly over time rather than securing traditional bank financing. This strategy is beneficial when buyers are having difficulty securing financing or want more favorable terms. For example, you could negotiate to pay 20% down and the seller finances the rest with a 5% interest rate over a set period, helping you secure a property without relying on the bank. This also provides the seller with ongoing income and potential interest profits.

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Current Interest Rates:

Raleigh, North Carolina
30-Year Fixed Residential: 6.6%
15-Year Fixed Residential: 6.1%
Commercial Rates: Starting at 6.3%
Mortgage rates in Raleigh remain elevated, with the 30-year fixed rate at 6.6%. However, commercial property loans offer slightly lower rates starting at 6.3%, which is attracting investors looking for cash-flowing opportunities in the multifamily sector.

Economic Conditions

Raleigh’s economy continues to expand, driven by its status as a leading tech hub, particularly in research and development. The city’s unemployment rate was seen to go as low as 3.2%, reflecting strong job growth across sectors like technology, education, and healthcare. Rising construction costs—up by 4.8% over the past year—are putting pressure on new developments, but Raleigh remains a competitive market compared to larger metros like Boston and San Francisco, keeping housing demand robust.

The Power of House Hacking for First-Time Investors

One of the most accessible ways to get started in real estate investing is through house hacking. This strategy involves purchasing a multifamily property—such as a duplex or triplex—and living in one unit while renting out the others. The rental income helps cover your mortgage, and you build equity over time. For example, if you buy a $500,000 triplex, you could rent two units for $1,500/month each, generating $3,000/month in rental income. This can significantly offset your living expenses, and in some cases, you may live nearly rent-free. As property values increase, you gain equity while potentially earning positive cash flow.

Key Takeaways:

  • Raleigh Market Update: Median home price $415,000, up 5.1% year-over-year.

  • Deal of the Day: 7-Home Property in downtown Raleigh, generating $56,000/month in rental income with a 7.2% cap rate.

  • Tip: Use a 1031 exchange to defer capital gains taxes and grow your portfolio tax-efficiently.

  • Investment Strategy: Consider seller carryback financing for flexible purchase terms and avoiding traditional bank loans.

  • Interest Rates: Residential mortgage rates at 6.6%, with commercial rates starting at 6.3%, making multifamily investments attractive.

  • Economic Impact: Raleigh’s 3.2% unemployment rate and tech-driven economy are keeping real estate demand high, despite rising construction costs.

Subscriber Q&A

Q: What is escrow, and why is it important in real estate transactions?
A: Escrow is a neutral third-party service that holds funds or documents on behalf of a buyer and seller during a real estate transaction. It ensures that both parties meet the agreed-upon terms before the transaction is completed. For example, the escrow agent holds the buyer’s funds until all inspections, paperwork, and legal requirements are fulfilled, then releases the funds to the seller to close the deal.

Q: What are the pros and cons of investing in real estate through crowdfunding platforms?
A: Crowdfunding platforms allow individuals to pool their money to invest in real estate projects, often with lower initial capital than traditional real estate investments. Pros include diversification, passive income, and access to large projects otherwise out of reach. However, cons include potential liquidity issues, platform fees, and the risk of project failure. Investors need to carefully research the platform and the specific projects they invest in.

If you have a questions regarding real estate reply to this email or email us at [email protected]

That’s All For Today

I hope you enjoyed today’s issue. If you have any questions regarding today’s issue or future issues feel free to ask. Come back tomorrow for information on how to grow your income and wealth. I hope to see you.

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