Big changes may be on the way for real estate investment professionals all across the country. While affordability is always key to great investing, changes by major financial regulators could introduce new avenues for some.
At the moment, many people search for great deals by scanning listings of foreclosed houses or other distressed properties. Recently, the Securities and Exchange Commission proposed a new rule which could drastically alter the funding landscape for this industry.
SEC backs crowdfunding
According to Kerri Ann Panchuk in an article for HousingWire, the SEC has proposed a new rule which would allow some businesses to participate in equity-based crowdfunding. Essentially, this change would let unaccredited investors back real estate transactions that they couldn't have before.
The idea behind the changes would be to get more investors active in bigger deals, Panchuk explained. If the new rule happens, those involved could then invest $2,000 or 5 percent of their annual income, as long as that and their net worth are below $100,000. For those worth more than that, the numbers increase to 10 percent of their annual income.
Jilliene Helman, founder and CEO of crowdfunding platform Realty Mogul, told HousingWire that despite uncertainty about the changes, it could open up an entirely new market for real estate investors.
"The macro change is that for the first time in 80 years they are adopting new regulations to securities law that are going to enable more investors to get involved in offerings," Helman told the news source.
Regardless of how real estate investors fund their projects, they'll need the best information. Courthouse Retrieval System can provide that, with access to a comprehensive collection of mortgage records, property data and much more.
Important steps before investing
How does a real estate investor know it is time to move forward? This answer can vary depending on the person, but there are several key elements professionals should consider before investing in more properties.
For starters, everyone should have a plan, according to RealEstate.com. Without one, it could be easy to lose money and end up in a bad deal. Clear, concise directions will help everyone figure out where they need to go and how they can get there.
In addition, the type of property matters, the news source noted. There are a lot of different ways to make money, from buying foreclosed houses for a quick resale or becoming a landlord. Choosing a strategy depends on preferences and finances, and a person's lifestyle will often dictate the appropriate direction.
Expenses are perhaps the most important aspect of real estate investing. RealEstate.com explained that there are many other costs that come into play besides general maintenance. These could include water and sewer, garbage, legal fees, accounting, office supplies and capital improvements. In order to make a profit, investors should try to keep expenses equal to 50 percent of their monthly income.
Once a real estate investor determines how they want to finance their property, they can move forward with an acceptable plan. This profession opens up many avenues and unique opportunities, which means nearly everyone could try their hand within the industry.