Most real estate investors start by buying property as individuals. But there’s more than one way to own and operate rental properties. As your portfolio grows, it might be time to consider two other potential options: trusts and LLCs.

Choosing the right legal structure for you will depend on your financial goals and risk tolerance. Here is what you should keep in mind when deciding between trusts and LLCs as potential ownership entities for your properties.

What Is an LLC?

LLC stands for “Limited Liability Company”, and it is a legal business entity that offers liability protection to its owners and members. In real estate, an LLC can be used to purchase commercial property or a rental property occupied by tenants.

An LLC is one of the easiest ways to separate your personal and business finances. Requirements will vary by state, but you’ll typically need to get an employer identification number (EIN) from the IRS, come up with a name for your LLC, and designate members who are protected under this structure.

An LLC can have just one member, or it can be owned by a group of individuals. LLC members are not typically personally liable for business debts. They also cannot be directly named in lawsuits. Profits and losses usually “pass through” to each member’s personal tax return, thereby avoiding corporate taxes.

The Pros of Using LLCs

The biggest advantage of using an LLC for real estate investments is liability protection. If a disgruntled tenant brings a lawsuit against an LLC, its members’ personal property and assets are not usually at risk.

The ownership structure of an LLC is also flexible. It’s easy to add members, customize profit distribution, and create decision-making systems. Property held by an LLC has a more professional and business-like image than property held by individuals. This can attract investors and ease lenders’ fears.

LLCs are also easier to manage than corporations. There is no restriction on the number of members an LLC can have, so if you are looking to invest with a large group of people, this is a good option to consider.

Investors who use an LLC can also take advantage of certain tax benefits. You don’t need to pay corporate income taxes with an LLC. Instead, you pay taxes at a lower self-employment rate. Talk to a tax professional about how this will affect your specific tax situation, real estate investments, and income from other sources.

The Cons of Using LLCs

As with all types of business entities, LLCs have specific paperwork and forms that need to be filed annually. Each state has its own administrative requirements and may charge annual fees, which may make LLCs more expensive to maintain than a trust. While it’s possible to have an LLC that operates in multiple states, each of those states may have different requirements.

Although an LLC may look more professional on paper, it can be challenging to get financing, especially if your lender has limited experience working with LLCs. Lenders may also invoke a “due-on-sale” clause when a mortgaged property is transferred to an LLC. This is rare but not unheard of.

A final disadvantage of using an LLC is potentially higher taxes. Depending on how the LLC is structured, you may need to pay self-employment tax. In 2025, the self-employment tax rate is 15.3%, which includes both the employee and employer share of Medicare and Social Security taxes. While this is still lower than the corporate tax rate, it is usually more expensive than simply owning a property in your personal name.

What Is a Trust?

A trust is another type of legal entity that’s often used by investors to own rental property. Trusts were specifically designed to simplify the transfer of a property or other assets from one person (called the “grantor”) to another (called the “beneficiary”), when the first person passes away.

There are two main types of trusts: a land trust and a revocable living trust.

A land trust allows a specially-appointed trustee (like an attorney or a trusted individual) to hold the legal title to real estate that you (or your beneficiary) controls and receives income from. Land trusts are a way to maintain the privacy of ownership since the trustee is listed in public records, but you are not.

In a revocable living trust, the grantor puts real estate holdings into a trust but retains control of it while they are alive. Upon their death, assets are transferred to a trustee, who will then manage the assets and eventually transfer them to the beneficiaries of the trust.

The Pros of Land and Revocable Trusts

A trust has less to do with a property’s location or use and more to do with the management of the property. Land trusts and revocable trusts both simplify the transfer of property from one person to another when its owner dies, with a land trust maintaining the grantor’s management and the revocable trust allowing the beneficiary to manage the property immediately.

Trusts are often used to avoid a long, drawn-out probate process upon the death of the grantor. They can also be modified at any time when the grantor is still alive. This simplifies estate planning and increases privacy because the grantor’s name is not part of the public record.

If a grantor becomes incapacitated, a trust ensures the real estate can still be managed without interruption. This type of legal structure allows you to retain complete control while you are alive, while also preparing for the property to be transferred to your beneficiaries.

The Cons of Land and Revocable Trusts

The biggest drawback of a trust is that it does not shield you from personal liability because it is considered a “disregarded entity”. This also means that all income, expenses, and losses are reported directly on the individual’s tax return. Trust income is still fully taxable and doesn’t reduce your overall tax burden.

Trusts also have some administrative complexity. They need to be correctly funded and maintained, and if you don’t have professional help, it’s easy to make mistakes that may nullify the benefits of a trust.

Lenders without specific experience working with trusts may be reluctant to lend to them, or may charge higher rates. If you are working with a realtor to find a property, ask for a list of lenders with specific experience in financing properties purchased by trusts.

Is an LLC or a Trust Better for Rental Properties?

Choosing between an LLC and a trust depends largely on your specific goals. Both have their pros and cons, but the main thing to consider is the purpose of your investment.

Trusts are most often used when an investor wants to pass real estate on to their heirs or beneficiaries without paying inheritance taxes and avoiding a lengthy probate process. LLCs are more commonly used to protect investors from personal liability or to buy real estate with other investors.

If you are selling a house and want to reinvest the funds into rental properties, an LLC might be a better choice. You will be protected from personal liability as you manage your rentals and can take on partners or investors who will also be protected from liability.

If you are an investor who is looking to retire and have less hands-on involvement in your portfolio, a trust is a good option. This ensures a smooth transfer of ownership to your heirs and offers some inheritance tax protection, depending on your state. Only five states currently impose an inheritance tax on trusts.

Get the Best of Both Worlds

One way experienced investors take advantage of the benefits of both structures is to own investment real estate in an LLC and set up a trust that owns the LLC. This provides liability protection through the LLC and also incorporates estate planning through the trust.

Both of these entities will need to be properly set up and managed to be effective. Consult a financial advisor or real estate attorney to ensure you have set up everything correctly for both your LLC and the trust.

The post Trust vs. LLC: What’s the Best Way to Hold Rental Properties in 2025? was originally published by Luke Babich on DealCheck. Get our latest updates via Facebook or Twitter.

After several years of booming sales and profits, the house flipping market has finally started to cool off. A recent ATTOM report looking into flipping activity found that sales of flipped homes have declined to a six-year low, and profit margins in many markets have shrunk significantly.

Digging into the numbers reveals that while an average flipped home (defined as any property purchased and then later sold within a year) was bought for $260,000 and sold for $325,000, this 25% return on investment (ROI) represented a steep decline from the 50% ROIs investors were seeing in late 2020.

The reasons for this are relatively clear: in a “hot” real estate market, it may be easier to sell your house for a premium price, but it is also a lot harder to find undervalued bargains that make successful flips. Additionally, higher mortgage rates have made financing harder and more expensive.

Still, flipped homes accounted for 8.3% of all US home sales in the first quarter of 2025, so it remains a significant segment of the market. That means there’s still a lot of profit to be made from flipping in today’s hypercompetitive, high-rate market – it’s just going to take a smarter approach.

Here are a few tips to help you adjust your flipping strategy, find better deals, and increase your take-home profit:

Follow the Money

The ATTOM report highlights big differences between two types of markets. On one hand, you have mature, established areas that have reached a plateau. Investors saw very low ROIs in markets like Austin, TX (1% ROI), Houston, TX (5% ROI) and Dallas, TX (3.7%). There simply aren’t many cheap, undervalued homes left in these cities.

On the other hand, some “Rust Belt” and Midwest cities are still delivering strong returns. For example, Buffalo, NY, had the country’s highest average ROI, at 102.1%, while Pittsburgh, PA came in second at 100.4%. In Illinois, cities like Rockford (87.7% ROI) and Peoria (89.1% ROI) are showing high returns as well.

If you are an investor operating in a market with declining ROIs, you may want to consider relocating your operation to a city with greater growth and return potential, if the costs of such a move make sense in the long run.

Get Creative With Deal Sourcing

The foundation of any house flipping operation is to buy low and sell high. While it can be harder to find great deals in this environment, they’re still out there.

Try monitoring social media websites for fixer-uppers, and search online for distressed properties and pre-foreclosures. Look for sellers who are selling their home without an agent, and research Airbnb neighborhoods where declining popularity might be pushing short-term rental investors to sell. Motivated sellers are an excellent source for undervalued properties.

Another great strategy is connecting with local wholesalers in your market, who can often provide a great way to acquire off-market properties at a discount.

Go for Higher Volume

While flipped homes made up just over 8% of all sales nationally, some markets saw much higher concentrations of flipping activity.

In Macon, GA, a stunning 21% of all home sales were flipped properties, while over a fifth of all home sales in Warner-Robins, GA (20.6%) were flipped. Even Atlanta, GA, which has been booming for years, saw a 15.9% share of flips being sold.

While in the past, some flippers may have preferred to focus on a few methodical flips per year, many are switching to a volume-focused strategy, where they flip 10 or even 20 homes per year. A higher volume of flip projects can help offset lower ROIs that many flippers are seeing nowadays.

Be Flexible

Many successful house flippers tend to have a well-established routine and set rules. They work with the same contractors on the same types of projects, target specific neighborhoods consistently, and adhere to rules such as the 70% ARV standard. However, in a changing market, your strategies often need to be adapted, and it’s important to remain flexible.

The 70% rule, for example (which states that you should cap your purchase price at 70% of a home’s after-repair value, minus renovation costs), isn’t always effective in every situation. In more competitive areas, when you are bidding against other investors, you may need to aim for something like an 80% ARV target.

On the other hand, if you find yourself in a slower market or season, that target could be adjusted down to 60% to increase your profit margins. It’s very helpful if you have a deep, up-to-the-minute understanding of your local market to make these kinds of adjustments on the fly.

Crunch Your Numbers

Investors can sometimes forget that every dollar they spend on renovations, holding costs, or other expenses is a dollar lost in profit. You should regularly review your expenses to identify opportunities for cost savings.

Are your contractors charging reasonable rates? Are you paying people to do simple work like painting or landscaping that you could potentially handle yourself? How close are your final profit numbers to your initial projections? How accurate are your budget estimates? Are you taking into account rising insurance and financing costs?

If you find yourself repeatedly over budget or are finding it difficult to analyze potential flips with your existing tools, try DealCheck’s house flipping calculator, which is used by hundreds of thousands of flippers and investors on a daily basis. Not only will it help you itemize and forecast your rehab costs, but it can also assist with property valuation and calculating the maximum allowable offers to sellers.

Time the Market

While nobody can predict the future, it is often helpful to review the latest economic forecasts and buyer sentiment surveys, and compare them to typical buying patterns in your local market.

For example, if you finish a flip during an unfavorable time or season, it may be worth holding on to the property for a few months longer. The increased holding and carrying costs will often be offset by a higher final sale price.

You can even explore short-term rental strategies to generate some cash flow from your newly renovated properties, while you wait for the right time to sell. While this strategy isn’t for everybody, it can be a creative way to boost your returns.

Leverage Modern Tech

There are many ways you can use modern technology to increase your flipping profits and returns.

We’ve already mentioned using DealCheck to help you find, analyze, and compare potential investment properties and markets in seconds, and to help you forecast and understand your profits and returns.

You can also look into incorporating smart home features into your renovations. While installing these gadgets can be more expensive than a quick, basic cosmetic rehab, they have considerable appeal for many buyers.

Similarly, sustainable home features like low-flow kitchen and bathroom fixtures, energy-efficient doors and windows, solar panels, and heat exchangers can be pricey, but in many markets they can significantly increase your property’s appeal and after-repair value.

You can also utilize technology for tasks such as virtual staging when marketing your properties. Instead of spending thousands of dollars on a professional staging service, you can use one of several virtual staging apps for your listings and create attractive 3D house tours that’ll appeal to young, tech-savvy buyers.

Focus on Marketing

In prior years, which were often characterized as being a seller’s market, it was possible to run a successful flip operation without a strong focus on marketing or making a conscientious effort to attract buyers to your properties.

In today’s “cooler” market, however, it is often necessary to beef up your marketing efforts, increase outreach, and ensure that your property listings are seen by the largest number of potential buyers.

You can leverage social media to entice buyers by posting compelling listing photos, video walk-throughs or aerial drone footage of each property. You don’t even need to wait until the property is ready to sell – build anticipation by posting progress updates during a flip, and attract interest before the listing is even live.

Buyer incentives can also work well, such as a free home warranty or offering to cover some or all of the buyer’s closing costs. In uncertain and competitive markets, some buyers simply need a little nudge to commit to a deal.

Don’t Give Up – Adapt Instead

It can be discouraging to see your flipping profits and margins erode because of the lack of deals, higher interest rates, higher carrying and holding costs, and longer sale cycles.

But it’s important to keep in mind that the real estate market is dynamic and cyclical in nature, and it’s important to adapt your methods and strategies to the changing market conditions.

By staying flexible and creative, you can often succeed and thrive, while many other investors are throwing in the towel.

The post Flipping in a High-Rate Market: How to Adjust Your Strategy was originally published by Luke Babich on DealCheck. Get our latest updates via Facebook or Twitter.

Search Property Listings Nationwide

No need to use any third-party websites – you can now search for properties listed for sale anywhere in the US directly from DealCheck.

Filter listed properties by a variety of criteria, including their location, price, type, days on market and more:

View Investment Insights & Analysis

With DealCheck Plus, you can view (and sort by) the estimated rental and flip potential of each listing to help you find promising investment opportunities.

You can then save and analyze potential deals with just a few clicks, using the best-in-class analysis tools offered by DealCheck:

Other Updates & Improvements

Here are a few more features that made it in our latest update:

• We’ve added a new Townhouse property type to differentiate these properties from condos
• When available, public property records will now display information on any installed pools
• You’ll now see the owner type (individual or organization) when looking up property owners

We can’t wait for you to try our new property search feature and let us know what you think!

Get started by signing in through our website, or downloading our iOS or Android app on your phone or tablet:

The post New Feature: Nationwide Property Search was originally published by Anton Ivanov on DealCheck. Get our latest updates via Facebook or Twitter.

Here are some highlights of what we’ve accomplished, as well as some exciting new features we’ll be working on in the near future.

Highlights of Our Recent Updates

We’re always committed to improving our platform and this year was no different. Here are just some of the many features we’ve recently added:

• Comprehensive future refinance loan and scenario analysis
• Support for multiple loans and many new creative financing strategies
• Many improvements to our comps, including comparable reports and similarity scores
• New ways to personalize and brand your property reports
• Support for exporting properties, comps and projections to CSV and Excel

As always, if there is anything you’d like to see added to DealCheck in the future, let us know by sending us a message at any time. The vast majority of our future roadmap consists of features that were suggested to us by our users.

What’s New at RentCast

We’ve also had the chance to release many new features and improvements to our sister RentCast platform.

We’ve launched our property and rental data API, which allows you to retrieve real-time data for over 140 million properties nationwide in the US. Our API has been extremely popular with real estate app developers, and companies that need accurate property data to power their CRMs, business workflows and other tasks.

Along with this, you can now also use RentCast to track your actual rents and existing tenant leases, customize rental comp search filters, and connect our property and rental data to thousands of apps with Zapier.

What’s Next for DealCheck

Looking ahead, we have a few big updates coming in 2025 which we are very excited about.

First, we’ll be adding property and listing search, which will allow you to find investment properties for sale right inside DealCheck. This has been our most requested feature by far, and we can’t wait to see how it streamlines the process of finding and analyzing the best real estate investment properties through our platform.

A bit further down the road, we plan to expand our property search to include custom property and listing feeds, so you can receive a notification directly in your inbox as soon as new properties become available that match your search criteria.

With many other features and improvements planned as well, we hope to make DealCheck even better in the coming years, and solidify its position as a must-have tool for all real estate investors, rehabbers, wholesalers and other professionals.

On behalf of our entire team, we wish you a Happy New Year and hope 2025 brings you success, prosperity, happiness, and love!  🎉

The post Happy New Year! Highlights From 2024 and What’s Next was originally published by Anton Ivanov on DealCheck. Get our latest updates via Facebook or Twitter.

Check out the highlights of what’s new below:

Analyze Future Refinance Scenarios

You can now analyze future cash-out and term & rate refinance loans for rentals and BRRRRs.

This allows you to model a variety of complex financing strategies, including a mix of short and long-term financing, future HELOCs and home equity loans, as well as hybrid interest-only and amortizing loans.

New Comp Reports & Improvements

Next, we’ve made several improvements to our sales and rental comp tools:

• We’ve added two new PDF report types for creating sales and rental comp reports
• You will now see similarity scores for each comparable property
• To support DealCheck users in other countries, we’ve made sure manually added comps respect your selected currency and units
• Comparable CSV exports and property reports will now display the days since a comp was sold or seen listed for rent

Other Notable Features

And here are a few more features we’ve added in this update:

• You can now export side-by-side property comparisons to CSV files for use in Excel or other apps through our website
• We’ve added the South Korean won as an available currency option in your settings
• We’ve improved the accuracy of our property insurance estimates nationwide
• You will now see days on market for properties currently listed for sale

All of these features are now available online, as well as in our iOS and Android apps. Sign in to your account to give them a try:

The post New Features: Future Refinances, Comp Reports and More was originally published by Anton Ivanov on DealCheck. Get our latest updates via Facebook or Twitter.

Every real estate purchase is unique, just as every purchase negotiation follows its own blueprint.

But deals take place in the context of the larger market, and whether you’re in a buyer’s or seller’s market can have a huge influence on how your negotiation unfolds. Millennials are learning this now, as they enter an uncertain market of sky-high interest rates and low housing supply.

Understanding each type of market — and turning it to your advantage — can be the difference between a difficult, expensive transaction, and a fast, profitable one. Let’s touch on some basics about seller’s and buyer’s markets, and how smart real estate investors adjust their strategies accordingly.

The Seller’s Market vs. the Buyer’s Market

The difference between a buyer’s and a seller’s market is determined by the ratio of supply and demand.

In a buyer’s market, there’s generally more supply. This could be due to a large amount of new inventory hitting the market (for example, a lot of new properties coming to market at the same time), or it could be due to a decline in demand (like when mortgage rates go up, driving many would-be buyers out).

The fact that supply surpasses demand means that buyers have the upper hand, since sellers know that if they don’t give the buyer the deal they want, the buyer can simply move on to another property.

A recent example of a buyer’s market was the market following the 2008 financial crash. In that market, buyer demand evaporated almost overnight, as banks pulled back on lending and Americans stayed away from an unstable housing market. Sellers who wanted to sell a property had to make big concessions to lure in buyers, and it often took months to finally close a sale.

In a seller’s market, the situation is reversed. Demand surpasses supply, and sellers have the upper hand. These conditions could be caused by a big jump in demand (caused, for example, by low mortgage rates that make it cheap to buy), or a constricted supply (as in our present market, where housing supply is very low following a decade of under-construction).

Sellers have the upper hand because they can pick and choose between multiple prospective buyers. A recent example of a seller’s market is the pandemic housing market, when historically low mortgage rates and a huge number of highly motivated buyers willing to move long distances from the city to the country sent home prices skyrocketing.

Unless you’re using a real estate investing app that makes choices for you, you’re going to have to adopt different approaches for each type of market (but having an app like DealCheck to help with property analysis is still the way to go!).

How Do You Invest in a Buyer’s Market?

A buyer’s market gives you, the investor, a big advantage at the negotiating table. So how do you use that advantage to pick up some great deals?

Make Sure You Get Preapproved

Buyer’s markets are formed when there are more buyers than available homes. You’ll have the advantage just by showing up, but if you can show that you have strong financials by getting a mortgage preapproval letter, you’ll maximize that advantage.

Target Properties That Have Reduced in Price or Changed Agents

If a property lingers on the market, the first thing an agent will suggest is a price cut. So it’s reasonable to assume that properties that have reduced their asking price have failed to get the level of interest that the sellers had hoped for — and that those sellers might be extra motivated to sell.

Sellers that have changed listing agents likely did so because their first agents wasn’t able to get the results they wanted. If they’re on their second (or third or fourth) listing agent, the seller will probably be eager to sell as well.

Negotiate the Price

This is probably a no-brainer, but if you’re a qualified buyer in a buyer’s market, you should negotiate pretty firmly on the price.

How tough you should get depends on the strategy you and your agent agree on. Look at how long the property has been on the market, as well as the final sale prices (and price reductions) of similar properties that sold in the past few months. That should give you a pretty accurate idea of how much of a discount you could get.

Ask for Contingencies

Contingencies are essentially protections for you, the buyer, that allow you to back out of a deal with your earnest money deposit. In a balanced market, sellers are generally reluctant to include many buyer contingencies in the purchase contract since they could sink the deal.

But in a buyer’s market, you should pursue as much security as you can. Ask for a financing contingency (which allows you to exit the deal if your financing doesn’t come through), an appraisal contingency (which protects you against a low appraisal), an inspection contingency (which protects you against any unpleasant surprises from the home inspection), and any others your agent suggests.

Negotiate Closing Costs

In a balanced market, buyers and sellers usually split closing costs. For example, sellers typically pay the real estate commission, and buyers typically pay appraisal fees and title insurance.

But the truth is that closing costs are fully negotiable. If you’re dealing with a highly motivated seller, you can ask them to cover some or even all of your closing costs.

Don’t Be Shy About Asking for Other Credits

If there’s anything you don’t like about the property, address it at the negotiating table.

If you think you’ll replace the wallpaper or the flooring, ask for a credit. If you like the kitchen appliances, ask the seller to throw them in. If you’re getting the appliances, ask the seller if they’d purchase a warranty that will cover the appliances against breakdown for your first year of ownership.

Talk to your agent about all the different credits and extras you can ask for in the closing phase of the home-buying process.

How Do You Invest in a Seller’s Market?

You won’t have much leverage in a seller’s market, but there are still good deals to be found. In many ways, investing in a seller’s market is the reverse of investing in a buyer’s market — with a few notable exceptions.

Loan Preapproval Is a Must

In a seller’s market, the seller has the luxury of being picky about which buyers they entertain.

Buyers with preapproval for a loan will have a much better chance of making the cut than ones who haven’t been to their lender yet. Preapproval letters are only valid for 60 to 90 days, so make sure that yours is relatively fresh when you start making serious offers.

Brace for Competition

Seller’s markets have a surplus of buyers, so it’s a good bet that you’re going to be facing a lot of competition. Don’t be surprised if you’re drawn into a bidding war. Establish your absolute upper limit on price, and don’t let emotions draw you into blowing past it. Accept that you’ll probably lose a few properties before you win one.

There’s not much you can do to make your offer stand out — aside from making it an all-cash offer. If you can swing that, sellers find cash offers very appealing, and will almost always take a cash offer over a financed one.

Make a Serious Offer

On that note, you won’t have a protracted negotiating process to slowly inch toward your best offer. Make your initial offer an appealing one, or the seller may write you off right from the start.

One strategy that can be very effective in a seller’s market is to submit a high initial offer with an inspection contingency. What this tells the seller is that you’re serious about buying, as long as there are no major problems with the place. And if the inspection does uncover something like a faulty foundation or a leaky roof, you’re not on the hook to pay top dollar for a flawed property.

Keep Contingencies to a Minimum

Contingencies give you, the buyer, an out if the deal doesn’t go right. If your financing doesn’t come through, or if the inspection finds problems, you’re able to walk away from the deal with your earnest money.

But contingencies undermine a seller’s confidence and certainty, and in a seller’s market, many sellers may simply refuse to accept them. Make your offer more attractive by taking out any contingencies you can live without.

Be Patient

A seller’s market is, by definition, tilted in favor of the seller. As we touched on above, you may lose several bidding wars before you finally purchase a property. One of the keys to navigating a seller’s market — aside from deep pockets and great negotiating skills — is patience.

It may take a while for you to triumph over the competition, but you can’t win the game if you don’t stay in it.

Summing It Up — Know What Type of Market You’re In

Many successful real estate investors will attest that it’s completely possible to find and close on great investment properties at any time of the economic cycle, no matter if the real estate market is tilted in favor of buyers or sellers.

At the same time, savvy investors will understand the type of market they find themselves in, and will adjust their acquisition strategies and negotiating techniques accordingly.

By being a little more aggressive during buyer’s markets and more reserved in seller’s markets, you can continue growing your real estate portfolio and buying great rental properties or flips year after year.

The post Real Estate Investing in a Seller’s Market vs. Buyer’s Market was originally published by Luke Babich on DealCheck. Get our latest updates via Facebook or Twitter.

Townhomes (sometimes called townhouses) are not the most common form of housing in many areas. But they’re growing in popularity, with many would-be homeowners and renters recognizing the value of these multi-level units, which are typically attached to neighbors on one or both sides and often include front or back yards.

From their roots in the Northeast in the 1600s, to modern developments across the country, this affordable style of community living has become a solid investment as a rental or fix-and-flip.

But before getting to work, it’s critical to consider your return on investment (ROI) and ways to improve it.

Are Townhomes a Good Investment?

Some investors shy away from townhomes, believing they are a risky proposition due to their connection with other structures and homeowners’ association (HOA) fees.

But after single-family homes, townhouses offer the most bang for your buck on the rental market and may appeal to buyers with less to spend on a home. They can be more affordable than single-family homes, and because you aren’t responsible for as much exterior maintenance, some improvements are more affordable.

The same can’t be said of condos. Condominium ownership does not include the land beneath you — only the unit itself and a share of the condo’s common areas. In addition, many are only one level, a layout not suitable for all buyers or renters.

As with some townhouses, monthly HOA dues generally pay for some basic maintenance, including landscaping and exterior care, but these fees can sometimes soar into the thousands.

Meanwhile, some HOAs don’t offer much in the way of amenities or services but include significant restrictions on improvements or other changes you can make to the property.

How to Determine Which Townhome to Buy

It’s essential to do some research before investing in townhomes. Consider the initial investment, plus any renovations that will be needed before securing a tenant or flipping the property.

If you are buying a move-in-ready townhome, be prepared to pay a little more, but make sure you can rent it for a price that covers your costs.

In either case, you can use DealCheck’s free rental property or fix-and-flip calculators to help you analyze your potential profits and investment returns and decide whether a particular property is worth investing in.

15 Ways to Maximize Your ROI

While all investors want to maximize their profits, there are plenty of different ways to upgrade a property with ROI in mind. Here are 15 of the best strategies:

1. Understand the Rental Market

Like any real estate investment, a crucial part of buying a townhome (along with picking the right Realtor) is understanding local market trends and buyer preferences. When upgrading a townhome already in your portfolio, the same due diligence is critical.

Pay attention to what the prospective occupants of your home are looking for. New families may want improved outdoor areas, but a younger demographic might prefer smart features and inside space for entertaining.

Don’t make changes based on what you’d like to have — upgrade for your area’s potential tenants and buyers. You may like the idea of a chef’s kitchen with upscale stainless appliances, but if you’re renting in a college town, you might be upgrading yourself out of your tenant base.

2. Consider Eco-Friendly Materials

An often-ignored way to improve a project’s ROI is to consider using eco-friendly materials for renovations or remodels.

Sustainable materials such as bamboo flooring, recycled glass countertops, or paints with fewer harmful chemicals are attractive to renters and buyers focused on eco-conscious options.

3. Highlight the Curb Appeal

One of the easiest ways to boost the value of a home is to spruce up its exterior.

Because townhomes offer a more manageable amount of space to improve, this is often one of the most affordable upgrades relative to the returns it can generate. Add a coat of fresh paint and containers of flowers or perennial plants to make a front porch more inviting.

Owners can also upgrade the house numbers and light fixtures to a more modern style and consider replacing an old, dated front door. However, since many townhomes are part of HOAs that may have restrictions on exterior changes, owners should always ensure they’re not violating any community rules first.

4. Paint the Interior

A fresh coat of neutral paint throughout the interior goes a long way toward affordably upgrading a space. It gives potential renters or buyers a blank canvas on which they can mentally paint their own style.

Fresh paint also gives the impression that the home has been well cared for, another significant advantage when it’s time to sell.

5. Level Up Kitchen Appliances

While they’re often the cheapest, ordinary white appliances show their wear quickly and can make even relatively new kitchens look dingy. Look instead for energy-efficient, stainless steel appliances for a timeless appeal.

Some investors believe outfitting a kitchen cheaply is important because renters might damage it, but it’s often a better move to upgrade appliances to attract more responsible tenants.

6. Modernize Kitchen Materials

Don’t pair your sleek new kitchen appliances with low-end Formica and particleboard. Provide a kitchen makeover by updating countertops, cabinets, and backsplashes with more contemporary materials like quartz, soapstone, and even sealed concrete.

If new cabinets are out of budget, consider refacing the doors and replacing drawer handles.

7. Update Hardware and Fixtures

While you’re changing out the door and drawer handles in the kitchen, you might as well make similar small upgrades throughout the house.

Swap outdated door handles, knobs, faucets, and light fixtures for streamlined options that are more appealing to modern buyers or renters.

8. Reorganize the Floor Plan

Open floor plans can make smaller homes seem more inviting and spacious. However, this may not be a great idea if your tenants or buyers will likely need separate spaces for remote work or other purposes.

If open floor plans are popular in your area, talk with a contractor to locate non-load-bearing walls and get ready to move things around. Make sure you do the ROI math first, as this can be one of the most expensive and time-consuming upgrades.

9. Add Storage

Townhomes are an excellent option for young families and first-time homeowners, but these residents need plenty of space to store their stuff.

Add innovative storage solutions like built-in shelving, under-stair storage, and closet organizers to maximize space and improve functionality.

10. Improve Flooring

Outdated flooring is a hallmark of cheap rental properties and beat-up homes. But there are durable, affordable, attractive flooring options that can boost your ROI and provide a luxurious look and feel at the same time.

Hardwood floors are popular but sit at the upper end of many homeowners’ budgets. Meanwhile, laminate and luxury vinyl have come a long way in recent years in both appearance and price, proving you don’t have to break the bank to upgrade flooring.

11. Freshen Up the Bathroom

On average, a full bathroom remodel offers a 70% return on investment, but you don’t need to empty your wallet to revitalize this critical part of the home.

Simple upgrades to fixtures, faucets, and lighting give bathrooms a modern and luxurious feel. Bring a spa atmosphere to your property by adding a rain showerhead or soaking tub if the budget and space allow.

12. Get Better Lighting

Brighter spaces look cleaner and more inviting. Install LED light fixtures to lighten up spaces and reduce energy costs for you and your renters. Dimmer switches are another easy upgrade that most investors can take care of themselves.

13. Be Smarter

Smart home technology like programmable thermostats, keyless entry systems, and security cameras appeal to tech-savvy tenants and buyers. Look for options that accommodate multiple users and can be easily reprogrammed.

14. Upgrade Outdoor Living

Outdoor living came into the spotlight during the height of the COVID-19 pandemic as many looked to outdoor entertaining as a safer alternative.

If your townhome’s outdoor space has seen better days, plan to improve balconies or patios. Add built-in seating areas if possible, and consider a firepit, small garden area, and fencing to attract young families or people with pets.

15. Invest in Energy Efficiency

Some energy investments like Energy Star appliances or more efficient HVAC systems can cost thousands of dollars, but that doesn’t mean more wallet-friendly and ROI-focused options aren’t available.

While budgeting for major improvements, take small steps toward energy efficiency.

Upgrade the windows, add attic and basement insulation, and make sure all windows, walls, and doors are properly sealed. These small improvements are budget-friendly and appeal to environmentally-conscious tenants or buyers.

Plan Ahead — Upgrade Over Time for Maximum ROI

Upgrading an investment property to achieve the maximum ROI can be stressful — and expensive. If you’re upgrading on a budget and want to get the most out of your improvements, start small and save for larger ticket items that take longer but yield solid, reliable returns.

If you can’t renovate a bathroom right now, swap out the fixtures, paint, and be on the lookout for deals on tubs, toilets, and sinks for when the time is right. No room in the budget for a two-story deck off the back of the townhouse? Invest in a multi-stage, two-story building plan that can be completed in phases.

The key to a solid return on your capital investment is good research and careful planning.

The post Upgrading Townhomes for Maximum ROI: Renovation Tips for Investors was originally published by Luke Babich on DealCheck. Get our latest updates via Facebook or Twitter.

Purchasing a second home is a great way to start investing in real estate. Whether you’re using it as a vacation home, a seasonal Airbnb, or just a property to flip, a second home can be a springboard to build generational wealth through real estate.

But getting that second home can be a hurdle. Not everyone has the cash to purchase it outright, and some buyers won’t qualify for conventional financing. Fortunately, you have options. Here are nine alternative financing strategies for buying a second home.

1. Tap Into Your Current Home Equity

Utilizing a home equity line of credit is one way investors can purchase a second home. If you have lived in your primary residence for a long time and have substantial equity, this can be a great way to get started.

A home equity line of credit comes with a few distinct advantages. You can use it to purchase a second home anywhere, even out of state. In some cases, interest rates are also lower than a conventional mortgage, so you’ll pay less to access that equity.

Finally, the payment plan for a home equity line of credit can often be restructured so you have an interest-only period. If you plan on flipping that second home, this keeps your payment low during renovations, decreasing your carrying costs and increasing your profit.

2. Take Advantage of Seller Financing

When you don’t have a lot of equity in your primary home, ask about seller financing. Instead of heading to the bank for a mortgage, the seller will act as your lender and collect your monthly payments.

This process is often faster than traditional financing, and the terms and conditions vary wildly. The trade-off is that only a few sellers are willing to consider seller financing, and those who are may charge higher interest rates or only offer short-term loans.

3. Borrow Against Your 401(k)

Although most financial advisors would counsel against using your 401(k) for anything except an emergency, this could be an option when your credit score and home equity aren’t sufficient to secure any other type of financing.

Borrowing against your retirement is risky, though. There may also be tax implications that can be shocking when you get your bill in April. Make sure you understand the risks before you tap into this fund, and consult a qualified tax professional.

4. Partner With Friends and Family

Almost as risky as tapping into your retirement fund is teaming up with friends and family to purchase a second home together. This strategy spreads the financial burden so you won’t be stuck paying all the upfront expenses out of your own pocket, but it can cause disagreements to arise in otherwise healthy relationships.

Co-purchasing a house is a great strategy for investors who don’t have a lot of cash to contribute. They may be able to throw their skills into the hat instead. For example, an accredited investor could pay the down payment and secure the loan for the second home, while you take care of the renovations and manage the property.

No matter how you divide labor and expenses, it’s critical to have a legal agreement drawn up before entering into this kind of arrangement. This outlines the responsibilities and rights of everyone involved, with clear exit strategies when it’s time to sell.

5. Use a Private Mortgage

A private mortgage is a loan from an individual or a private institution. They may have more flexible qualifications for investors with less-than-perfect credit or large sums of debt. In addition, these loans are often faster to close, with flexible terms and repayment plans.

Although a private mortgage can make owning a second home a reality for people who may not otherwise qualify for a loan, this money comes with a big caveat. Interest rates for a private mortgage can be many percentage points higher than those for a conventional loan. Consider this type of alternative financing if you are planning to flip the house or if you want to refinance it immediately after purchase.

6. Lease With an Option to Buy

Leasing with an option to buy is a relatively low-risk proposition for first-time investors who need time to commit and get their finances in order before buying another property. With this type of funding, you agree to lease a property for a period of years before you buy. A portion of your monthly rent goes toward the down payment, and at the end of the term, you apply for financing to close the sale.

You’ll also get a chance to lock in the current interest rate and set the price of the home before buying. If the area in which you are leasing experiences a significant upward market shift, you’re building additional equity on top of what you pay each month.

7. Crowdfund Your Purchase

You can turn a small investment into a large second home through crowdfunding. If you’re familiar with Kickstarter or GoFundMe, you already know how it works. Real estate-specific platforms like RealtyMogul and Fundrise can help would-be investors get more bang for their buck by pooling their money together.

This might be your best funding strategy if you’re looking at a second home as an investment, not a potential vacation spot.

8. Do a Cash-Out Refinance

Cash-out refinancing lets you refinance the mortgage on your primary home for more than the original amount. Once the loan balance on the mortgage is paid, you can use the extra cash however you’d like.

This is a great way to access money to purchase a second home, but there are some drawbacks. You’ll pay closing costs on the refinance, which can eat away at the extra cash, and the interest rates and payback period are often less than favorable.

9. Use a Reverse Mortgage

If you are 62 or older, a reverse mortgage might be the move toward a second home. It allows you to borrow against the equity you have in your current home, with one major difference from a home equity line of credit. The loan balance is only due if you sell the home or upon your death.

There are other restrictions besides your age. If your spouse is under 62, he or she cannot be on the title. You must have at least 50% equity in your home, and you can’t take out a reverse mortgage on a second or vacation home. These are only some of the guidelines, and they can be difficult to qualify for. Still, it’s worth considering if you meet the basic criteria.

Using a Second Home to Start Investing

Buying a second home can be complicated, with unexpected costs and tax implications, so it’s best to talk to a financial advisor or real estate professional to see which option might work best for you.

At the same time, it can be a great strategy to jumpstart your real estate investing journey with less risk and more favorable financing terms than buying rental properties outright. Together with house hacking, buying a second home and later turning it into an investment property is a great way for many real estate investors to get started.

The post 9 Alternative Financing Strategies for Purchasing a Second Home was originally published by Luke Babich on DealCheck. Get our latest updates via Facebook or Twitter.

If you’ve always wanted to invest in real estate but hate the idea of managing renters or handling maintenance, you might be interested in a real estate investment trust, commonly abbreviated as a REIT.

A real estate investment trust is a pool of money from several different investors. Instead of using their own money to buy a small rental house, several investors combine their money into a fund for a big purchase, such as an office building, apartment complex, or other real estate property.

If a REIT is publicly traded, you can buy shares of it on a stock exchange, just like any other stock or mutual fund. You can also sell your shares, which is a much quicker process than trying to list a house, prepare it for sale, and have several open houses.

There are many different types of real estate investment trusts. They all do roughly the same thing — manage multiple property investments — but they are slightly different in terms of how they manage and select the type of real estate they invest in. It’s important to learn the pros and cons of each trust prior to investing, so you can choose the best investment for you and your risk tolerance level.

Advantages of REITs

Diversification

Real estate investment trusts have built-in diversification. First, you’ll own a share of multiple pieces of real estate, rather than just one. Additionally, a REIT might include properties from various industries, such as healthcare buildings, apartment complexes, grocery stores, or other commercial buildings. These investments might be spread across the US or across the globe as well.

The benefit of having a diverse real estate portfolio is that if one industry or geographic area struggles, there are still many other real estate holdings in the trust to offset any losses.

Accessibility

REITs are a great option for relatively new investors who might not have the funds to pay large down payments on investment properties. If REITs are public and traded on the open market, individual investors can purchase shares of them. Many of these shares are available for less than the price of a pizza.

However, there are private REITs, called non-traded REITs, that have a higher barrier to entry. Many of these opportunities are only available to accredited investors (those with high incomes or large amounts of assets).

Liquidity

REITs are also liquid, meaning you can sell your shares in the stock market if you no longer want them. By contrast, selling physical real estate can be tricky, depending on market conditions. It can take months to sell a piece of property. For that reason, many investors appreciate how straightforward it is to buy and sell REITs.

Dividends

Real estate investment trusts pay dividends to their investors. Although no investment is guaranteed, this can create consistent passive income. There are also tax benefits to the structure of these trusts, which are typically considered corporations.

Disadvantages of REITs

Risk

Investing in real estate comes with risks because the success of the market largely depends on macroeconomic factors beyond your control. If there are changes in interest rates or other economic conditions, it could negatively affect the assets in the trust.

Limited Control

Real estate investment trusts follow a specific real estate index or are actively managed. As an individual investor, you don’t have control over what the managers select in their actively managed funds. You have to research and decide if the underlying investments in each trust are properties you believe will yield a positive return.

How to Get Started Investing in REITs

Although REITs can be a great investment option for many, they do come with risks and drawbacks. It’s important to know about these pros and cons before investing. Before you start, take these steps.

1. Educate Yourself

It’s important to do as much research as possible before you start investing. There are many different types of REITs, such as triple-net REITs, paper clip REITs, index fund REITs, and REIT exchange-traded funds, among others. The amount of information about REITs and the investment market might be overwhelming at first, but it’s something you can learn and understand with time.

2. Know Your Risk Tolerance

Everyone has a different risk tolerance. Some investors prefer to make conservative investments, while others are more comfortable taking risks if it could lead to higher returns. Some investors are more aggressive when they are younger and more conservative when they get older. There is no right or wrong way to invest, but it’s important to know where you stand so you can make knowledgeable investment decisions.

3. Select a Broker

To invest in a REIT, you have to purchase shares through a broker or brokerage company. Many low-cost brokerages operate online and have been in business for decades, earning a solid reputation.

Opening a brokerage account is similar to opening a bank account. You’ll need to fill out an application to open the account and provide some identifying information, such as your name and social security number.

The difference between a brokerage account and a bank account is that with a bank account, you usually keep your money in cash in a checking or savings account. With a brokerage account, you use your money to invest in securities, such as stocks, bonds, or REITs.

4. Monitor Your Investments

Once you’ve invested in a real estate investment trust, it’s a good idea to monitor your investments. It’s normal for the value of assets to fluctuate over time, but it’s a good idea to evaluate your holdings, become familiar with the securities you own, and track their progress.

Final Thoughts – Are REITs Right for You?

Many people want to start investing in real estate, but they worry they don’t have the cash to get started. Traditional real estate investing typically requires paying for a down payment, closing costs, insurance, and maintenance issues as they arise.

That’s why, for many people, investing in a real estate investment trust is a good alternative. By investing in REITs, individuals can still invest in real estate without the hassle and stress of handling maintenance calls.

Of course, investments come with risk, and potential REIT investors need to do their homework and understand the investment before opening a brokerage account and purchasing their first REIT share.

The post Exploring REITs: A Viable Option for Real Estate Investors was originally published by Luke Babich on DealCheck. Get our latest updates via Facebook or Twitter.

Read on below for the highlights of this new product:

Nationwide Property Data API by RentCast

The new API offers access to 140+ million property records, owner details, value and rent estimates, comps, active listings, and market trends in all 50 US states.

Here are some examples of what you can do with this data:

• Retrieve dozens of data points for millions of properties, including structural attributes, features, tax assessments, and more
• Look up the names and contact information of current property owners
• Get real-time property value and rent estimates (AVMs), as well as recent sales and rental comps
• Search for active sale and rental listings in a specific city, or a custom search area
• Access historical rent trends, market averages, and listing statistics for nearly any US zip code

Our API comes with a free tier, no contracts or commitments, and a wide range of supported use cases.

Head over to our developer portal to view detailed guides to help you get started, and ready-to-use code samples in many popular programming languages.

Other Features We’ve Recently Added

And here are a few more features and improvements we’ve recently added:

• Quickly copy and analyze properties that were shared with you using a sharable link
• Re-order property photos from the Photos page of each property
• Connect your DealCheck account to Google, Apple or Facebook in your account settings to give you more ways to sign in

You can give the new DealCheck features a try online or through our iOS and Android apps, and get started with our new API on our developer portal:

The post New Feature: Introducing Our New RentCast Property Data API was originally published by Anton Ivanov on DealCheck. Get our latest updates via Facebook or Twitter.