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MARKET & TRENDS

What These 5 Trends Mean For The 2024 Market

OPERATIONS

What to Look for in a Property Management Company

FUNDING

Understanding the "Game" Players

Key Factors for Success in 2024 EMBRACE THESE 5 FACTORS TO MAXIMIZE YOUR OPPORTUNITIES IN 2024. FEATURE

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4 | think realty magazine :: march – april 2024

LETTER FROM THE EDITOR

Seek Out Industry Thought Leaders T hought leadership refers to a strategy through which individuals or organizations establish themselves as experts and authoritative voices in their respective fields. It involves consistently providing valuable insights, innovative ideas, and expert opinions on industry trends, challenges, and best practices. Thought leaders are perceived as a trusted resource of information and guidance. They often influence the direction of individuals seeking their knowledge and can influence an industry. As with any trusted source, due diligence is a must. Saying you are an expert and being one are two different things. Thought leaders with credible reputations and a resume to support their business practices can be useful in providing support to take businesses to the next level. A few key components to recognize around business thought leadership are: EXPERTISE. Thought leaders possess knowledge in their chosen field. They demonstrate their level of subject matter mastery through independent research, analysis, and real-world experience. CONTENT CREATION. Thought leaders consistently create high-quality content that is available on multiple platforms. This information should be relevant to current industry trends, and thought leaders include case studies to share their insights. NETWORKING AND ENGAGEMENT. Thought leaders use their knowledge to actively engage with their audience through various channels such as social media, industry events, webinars, podcasts, blog posts, and articles. Through engagement, they participate in active discussions and share valuable insight that allows them to build relationships with their peers and industry influencers. This engagement is what helps establish their role as a thought leader. CONSISTENCY AND AUTHENTICITY. Transparency is key, and reputation is vital. Thought leaders must consistently deliver valuable insights and maintain credibility over time. No one is an expert overnight. Those who are transparent about their experiences and value integrity as a key factor in their success are often perceived as authentic thought leaders. IMPACT AND INFLUENCE. This may be the most important facet for thought leaders. They strive to create change, shape conversations, and influence current and future decision-making processes. Through experience and expertise, they leverage their credibility and influence to advocate for new ideas and to inspire others to take action to achieve their goals. Align yourself with thought leaders in your industry. Reflect on areas where you want to grow, and learn from others who have been in similar situations and can guide you. As I often say in business, more people want to help you than see you fail.

CARMEN FIELDS MANAGING EDITOR

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XXXXX: XXXXXXX INSIDE THIS ISSUE

Key Factors for a Successful 2024 BY EMBRACING THESE KEY FACTORS, REAL ESTATE INVESTORS CAN NAVIGATE THE INDUSTRY’S COMPLEXITIES AND MAXIMIZE THEIR OPPORTUNITY FOR SUCCESS IN 2024 AND BEYOND. FEATURE PAGE 36

JOHN V. SANTILLI

6 | think realty magazine :: march – april 2024

C O N T E N T S

The Remote Work Revolution FLEXIBLE WORK ARRANGEMENTS ARE RESHAPING REAL ESTATE MARKETS. by Luke Babich

MARKET & TRENDS

DESIGN

PAGE 46

Door Design Decision YOUR CHOICE OF CABINET DOORS WILL HAVE A BIG IMPACT ON THE OVERALL DESIGN OF ANY KITCHEN OR BATHROOM DESIGN. by Michele Van Der Veen

Falling Prices Won’t Stop Local Investors MORE LOCAL INVESTORS EXPECT A PRICE CORRECTION IN 2024. THEY’RE STILL BUYING. by Daren Blomquist

How to Maximize ROI by Using Professional Real

Property Inventory Services ORGANIZATIONS THAT DON’T USE PROFESSIONAL REAL PROPERTY PORTFOLIO INVENTORY SERVICES COULD BE HARMING THEIR RETURN ON INVESTMENT. by Michael Nichols PAGE 48

PAGE 8

PAGE 28

FUNDING

Correction Cascade WHEN WILL HOME PRICES REALIGN WITH INCOME LEVELS? by Ingo Winzer

Financing Your Real Estate Investment: Debt vs. Equity AN ARTICLES SERIES ON NAVIGATING THE PRIVATE LENDING WORLD by Damon Riehl PAGE 14 Understanding the Funding Game Players—and Changing the Paradigm as a Real Estate Professional

The Art of Networking: A Realtor’s Advantage NETWORKING IS IMPORTANT TO GROWING YOUR BUSINESS, BUT NOT FOR THE REASON YOU MIGHT THINK. by Neil Timmins

PAGE 32

5 Real Estate Investment Trends for 2024

DESPITE THE CHALLENGES AHEAD, MAKING INFORMED DECISIONS CAN LEAD TO GOOD RETURNS IN 2024. by Kiavi

PAGE 50

What to Look for in a Property Management Company A PROPERTY MANAGEMENT COMPANY CAN TAKE THE STRESS OUT OF OWNING A RENTAL PROPERTY. by Real Property Management

PAGE 34

IF YOU ARE GOING TO MASTER THE FUNDING GAME, YOU HAVE TO KNOW WHO IT IS YOU’RE PLAYING WITH. by Merrill Chandler

OPERATIONS

PAGE 52

The Power of a Good Mentor WORKING WITH A GOOD MENTOR NOT ONLY HELPS YOU SUCCEED BUT ALSO RAISES THE ENTIRE REAL ESTATE INVESTING INDUSTRY. by Jeff Roth PAGE 38

PAGE 18

Be Wary of Experts AVOID MARKETERS WHO MAKE FALSE PROMISES; INSTEAD LOOK FOR PROFESSIONALS WHO OFFER HONEST EXPECTATIONS ABOUT YOUR MARKETING STRATEGY. by Skyler Wilson

INVESTMENT STRATEGY 1031 Exchanges for Mineral Rights

PAGE 54

A Mentor's Perspective on REI Education REAL ESTATE INVESTMENT DOES NOT HAVE TO BE A SOLITARY PURSUIT; IT CAN BE A COLLABORATIVE EFFORT. by Chris Ragland PAGE 40

Squatter’s Rights: Protecting Against Adverse Possession

The Advantage of Working Interest Investments MAKING A WORKING INTEREST INVESTMENT IN THE OIL AND GAS SECTOR HAS ITS ADVANTAGES. by Derreck Long PAGE 24 UNDERSTANDING TAX DEFERRAL TOOLS LIKE 1031 EXCHANGES CAN HELP YOU GET THE MOST FROM YOUR MINERAL RIGHTS INVESTMENT. by Derreck Long PAGE 20 How Mineral Rights Work UNDERSTANDING MINERAL RIGHTS CAN OPEN YOUR EYES TO THEIR BENEFITS. by Derreck Long PAGE 22

A LOOK AT THE DIFFERENCES IN ADVERSE POSSESSION LAWS IN THREE STATES CALLS OUT THE IMPORTANCE OF KNOWING YOUR RIGHTS AS A LANDLORD OR OWNER. by Taylor Miller PAGE 56 The Age of Smart: IoT Technology and Smart Buildings YOU’VE HEARD OF SMARTPHONES, SMART TVS, AND EVEN SMART CARS. THE NEXT WAVE OF “SMART” WILL HIT COMMERCIAL BUILDINGS. by Taylor Miller PAGE 58

Using Your Business Operating System to Be a Thought Leader THOUGHT LEADERSHIP IN REAL ESTATE INVESTING

IS ABOUT SETTING THE AGENDA, SHARING INSIGHTS, AND OFFERING A PERSPECTIVE THAT GOES BEYOND THE NUMBERS. by Jim Tannehill PAGE 42

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DESIGN: CABINET DOORS

8 | think realty magazine :: march – april 2024

Door Design Decision YOUR CHOICE OF CABINET DOORS WILL HAVE A BIG IMPACT ON THE OVERALL DESIGN OF ANY KITCHEN OR BATHROOM DESIGN. MICHELE VAN DER VEEN

SHAKER? RAISED PANEL? RECESSED PANEL?

right look and feel for your design rests on only a few key factors.

through the use of color, texture, shape, and finishes. Most other designs have more distinct elements that make them stand apart. To give you a starting point, here are just a few of the most popular cabinet door styles. SHAKER Shaker cabinet doors are the most popular style cabinet doors on the market today. With their straight, clean lines, they work well in modern kitchens yet also can

It may feel like cabinet door styles are endless, but choosing the one that ties your overall design together is a vitally important design decision. Learning what to pay attention to and selecting the style that goes best in each home is the key to success for your kitchen or bathroom project.

To be successful designing any kitchen or bathroom, it is important to pay attention to the design of the home. Viewing the home as a whole will ensure it feels cohesive and has a natural flow. Pay attention to the colors that are or will be used in the home, the lighting selection, the decor style, and the hardware. Eclectic designs encompass a variety of periods and styles that meld

Although doors come in several styles, selecting a door with the

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DESIGN: CABINET DOORS

work well in traditional-style homes. The simple design of these cabinets allows the backsplash, hardware, and lighting to define the style of the home. Shaker cabinets can be stained to show the wood grain, painted in any color, or even distressed to give them a real rustic look. ARCHED Classic in their style, arched cabinet doors are versatile and timeless. They are perfect for any traditional, classic, Spanish, Mediterranean, or farmhouse-style home. Arched cabinet doors tend to give any kitchen or bathroom a softer feel and lessen the boldness of a design. Arched cabinet doors look great both stained and painted and can create an elegant and dramatic feeling for any room! RECESSED PANEL Recessed paneled doors add depth and texture to any kitchen or bathroom. Recessed cabinet doors are built with a frame that is raised on top of a smooth panel. Recessed paneled cabinet doors can come either with textured edges, steep arches, or deep groves. This cabinet door design works well in traditional, farmhouse, and even modern homes when a simpler frame is chosen for the home. RAISED PANEL Raised panel cabinet doors grab attention; they tend to stand out more. Raised panel cabinet doors are a solid choice for any traditional-style home. This style of door can be found with sharp lines as well as curved lines. Raised panel doors often add a more expensive feel to the design of any kitchen or bathroom because they

10 | think realty magazine :: march – april 2024

have a more ornate look and feel. These cabinets can be painted and stained, and they can be antiqued for a custom look.

GLASS PANEL

Glass panel cabinet doors are the go-to when your design demands a more open and larger feel. Glass panel cabinets feel clean and sleek. When you add lighting inside the cabinets and glass shelves, they give any kitchen or bathroom a more expensive feel. These cabinet doors are a great choice for showing off beautiful glassware and collectibles. Glass panel cabinet doors add interest and elegance to many styles of houses—French country, Mediterranean, English Tudor, traditional, and even modern. SLAB Simple in design, slab cabinet doors are quickly becoming a favorite for those wanting a sleeker for their modern, contemporary, industrial, and transitional style homes. These doors give rooms a minimalist feel, and they look great stained or painted. Their uncomplicated style makes them easy to clean and maintain. Further, they look great without hardware, providing a super clean look. High-gloss lacquered, matte-finished, or even laminated, this style

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DESIGN: CABINET DOORS

With endless styles and types of cabinets to choose from, there will be at least a couple of styles that will work within your design. Keep in mind that your cabinets will anchor the rest of your design ideas within the room. In a sense, the cabinets are a driving force in the overall design of the room. This is why it is so important to select a cabinet door style that is true to the style of the home. In the end, developing a kitchen or bathroom design starting with your cabinet doors will ensure your overall design makes the best statement and reflects the home’s style. •

MICHELE VAN DER VEEN

door gives you room for more creativity with the finishes that surround the cabinets.

is truly top-of-the-line and superior- looking and works well in minimalist, modern, and traditional-style homes. BEADBOARD OR GROOVE Cottage kitchen and rustic kitchen immediately conjure up visions of beadboard or V-Groove. In V-Groove-style cabinets, panel inserts are added to create detail and flair. Beadboard cabinet doors are constructed with vertical blankets that are separated by “beads,” or the ridges between the slats. Fun, unique, creative, and interesting are words that describe this cabinet door style. These doors look best when painted, and they can even be more appealing when painted in a fun color! Your decision about what design to use for cabinet doors is a major one. Cabinet doors will use up to 30% of a typical kitchen’s budget and 20% of a bathroom’s budget. That means there’s no room for mistakes. It’s worth educating yourself about which design will reflect the home’s style best.

LOUVERED Sophistication and ventilation describe the louvered cabinet door style. It’s a design that helps a room feel more spacious. This style conveys not only practicality but also timeless elegance. Louvered cabinet doors do demand a certain style of home (e.g., mid-century modern, contemporary, Polynesian, or Hawaiian) . They are commonly painted in mid-century modern and contemporary home styles and stained for the more tropical look of a Polynesian or Hawaiian-style home. INSET Set in the frame of the cabinet itself, this cabinet door style is custom, sleek, and smooth. Because the door sits inside the frame, the door must be meticulously fitted to work well within the frame. This style of cabinet door

Michele Van Der Veen is host of Good Day segments, including Flip It, Decorate Like a Designer, and Stage to Sell. She started her career in real estate investing more than 30 years ago. A published author, Van Der Veen has been recognized and featured in international magazines for her unique approach to interior design. Acquiring a formal education from the Interior Designers Institute of California, her experience stems from building custom homes to flipping more than 100 homes and working in commercial real estate development alongside her father at a young age. Not afraid to push the limit on her own designs and investments, Van Der Veen will often be heard reassuring her team about her decisions by saying “Don’t worry, we are the comps!” For more on Van Der Veen’s work or to contact her, visit iHeartHomescorp.com.

12 | think realty magazine :: march – april 2024

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thinkrealty.com | 13

FUNDING: DEBT VS. EQUITY

Financing Your Real Estate Investment: Debt vs. Equity AN ARTICLES SERIES ON NAVIGATING THE PRIVATE LENDING WORLD

DAMON RIEHL

Y ou’re itching to dive into the world of real estate investment, and you’re eager to make your mark in the property market. But before you start scouting for that dream property, there’s a crucial decision you need to make: How will you finance your real estate investment? Will you go the debt route, or is equity your chosen path to property prosperity?

hurtling straight into the thrilling world of property investment. This financial strategy involves borrowing money from lenders (i.e., banks or mortgage companies) to invest in real estate ventures. In essence, you’re taking on a financial obligation to purchase a property, and you’re responsible for repaying the borrowed funds along with interest over a specified period.

This means you can potentially control a larger asset with less initial cash outlay. FIXED INTEREST RATES. In the world of real estate, where market fluctuations can be as unpredictable as a squirrel on a sugar rush, having a fixed interest rate can be a game-changer. With debt financing, you often have the advantage of knowing exactly how much you’ll pay in interest each month, making budgeting a breeze. TAX BENEFITS. Ah, the sweet sound of tax benefits! Mortgage interest is typically deductible, which means you could lower your taxable income. This can be a significant advantage for real estate investors.

Let’s break down the pros, cons, and everything in between to help you make an informed decision.

Here are the pros of debt financing:

LEVERAGE YOUR INVESTMENT. Debt allows you to leverage your investment capital. You can take a relatively small amount of your own money and combine it with borrowed funds to buy a more expensive property.

DEBT: THE DAREDEVIL’S DELIGHT

Debt financing in real estate is akin to strapping on a high-powered jetpack and

14 | think realty magazine :: march – april 2024

PROPERTY APPRECIATION. Real estate values generally tend to increase over time. When you use debt financing to purchase a property, you benefit from the potential appreciation of that property’s value. So, as your property value increases, your equity (the portion you own) increases, and you can build wealth over the long term.

FREQUENTLY ASKED QUESTIONS ABOUT DEBT AND EQUITY FINANCING

QUESTION

WHICH OPTION IS BETTER FOR BEGINNERS IN REAL ESTATE INVESTMENT?

Debt financing can be more accessible for beginners because it requires less of your own money upfront. However, it also comes with higher risks, so it’s crucial to do your homework and assess your risk tolerance.

And here are the cons:

RISK OF DEFAULT. Borrowing money can be a double-edged sword. If your property’s value decreases or your rental income doesn’t cover your loan payments, you might be in a financial pickle. Defaulting on your loan can lead to foreclosure, which is like falling off that jetpack and crashing hard. MONTHLY OBLIGATIONS. When you choose debt financing, you’ll have regular monthly mortgage payments. If your property doesn’t generate enough rental income to cover these payments, you’ll need to dip into your own pocket. That can be a real buzzkill. LIMITED CASH FLOW. With mortgage payments to make, your cash flow might take a hit. If you’re counting on rental income to cover your expenses and provide additional income, be sure to crunch the numbers to ensure you won’t end up in the red.

QUESTION CAN I USE A COMBINATION OF BOTH DEBT AND EQUITY FINANCING?

Absolutely! Many investors use a blend of debt and equity financing to optimize their investments. This strategy allows you to leverage the benefits of both approaches while minimizing their drawbacks.

HOW DO I FIND INVESTORS FOR EQUITY FINANCING? Networking is key. Attend real estate events, join investment groups, and reach out to potential investors in your network. Building relationships and showcasing your investment opportunities can attract equity investors. QUESTION

QUESTION

WHAT’S THE BEST FINANCING OPTION FOR A FIX- AND-FLIP PROPERTY?

Debt financing is often preferred for fix-and-flip projects due to its shorter-term nature. You can secure a short-term loan, renovate the property, and sell it quickly to minimize interest costs.

EQUITY: THE SLOW AND STEADY APPROACH

In the world of real estate, equity financing is akin to nurturing a sapling into a towering oak tree over time. This financing strategy revolves around using your personal capital or attracting external investors to fund your real estate ventures, all without the encumbrance of debt. In return, these investors typically become partial owners of the property, sharing

in the benefits and risks associated with property ownership. Equity financing is characterized by greater flexibility in structuring deals and reduced financial leverage, making it an option for those who prefer a debt-free, slower, but steadier path to real estate investment.

Here’s a summary of the pros of equity financing:

NO DEBT, NO PROBLEM. With equity financing, you don’t have to worry about monthly loan payments or interest rates. Your investment stands alone, free from the weight of debt. It’s like

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FUNDING: DEBT VS. EQUITY

taking a leisurely stroll through the park instead of rocketing through the skies. SHARED RISK. If you bring in investors for equity financing, you’re spreading the risk. If your property doesn’t perform as expected, you’re not shouldering the entire financial burden. FLEXIBILITY. Equity financing offers flexibility in how you structure deals. You can negotiate terms with investors and craft agreements that work best for both parties. It’s a bit like customizing your order at your favorite burger joint. NO INTEREST PAYMENTS. Unlike debt financing, equity financing doesn’t come with interest payments. You don’t have to worry about siphoning off your profits to pay interest, leaving you with a more significant slice of the investment pie.

DAMON RIEHL

Financing your real estate investment is a pivotal decision that can shape your journey in the property market. Debt financing offers the thrill of leverage and potential tax benefits, but it comes with the risks of default and monthly obligations. On the other hand, equity financing provides a debt-free, flexible approach with shared risks and profits, but it may require more effort to secure investors. Ultimately, the choice between debt and equity financing depends on your financial situation, risk tolerance, and investment goals. Some investors prefer the high-octane rush of debt financing, while others opt for the steady growth of equity financing. And, of course, there’s always the option to mix and match to create a financing strategy that suits your needs. Before you take the plunge into real estate investment, do your homework, consult with financial experts, and consider your long-term goals. Whether you choose to soar with debt financing or take the scenic route with equity financing, the key is to make an informed decision that aligns with your unique circumstances and aspirations. •

Damon Riehl is the founder and CEO of Investment Property Loan Exchange. He has more than 35 years of lending experience in a broad array of asset classes, including commercial and residential mortgage, small business, and construction lending. Riehl held top leadership positions as head of commercial lending for Ocwen Mortgage, head of unsecured lending for Citibank, global mortgage leader for GE Capital, and head of construction products at Fannie Mae. He is a member of the Harvard Joint Centers for Housing Studies. Riehl has built six de novo lending platforms and used that knowledge to build and grow Investment Property Loan Exchange and the fintech platform LoanBidz.com. Now that you understand the benefits and considerations you need to take when investing in real estate, you may want to start investing in your first property. One of the first steps is to work out a budget and your financing options. Our team at LoanBidz.com can help you figure out affordable options from the most reliable lenders for your exact needs.

And on the flip side, here are the cons:

SHARED PROFITS. Equity financing often means sharing your investment’s profits with others. If your property becomes a goldmine, you’ll have to divvy up the riches with your investors. DILUTION OF OWNERSHIP. When you bring in investors, you might have to give up a portion of your ownership in the property. This is known as dilution. Although it can be beneficial for risk- sharing, it means you won’t have complete control over the property’s decisions. HARDER TO SECURE. Finding investors willing to put their money into your real estate venture isn’t always a walk in the park. It can be time-consuming and challenging, especially if you’re just starting in the real estate game.

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FUNDING: GETTING APPROVED

Understanding the Funding Game Players—and Changing the Paradigm as a Real Estate Professional

IF YOU ARE GOING TO MASTER THE FUNDING GAME, YOU HAVE TO KNOW WHO IT IS YOU’RE PLAYING WITH. MERRILL CHANDLER

T he truth is funding is a game—one with the highest of stakes and where survival is paramount. Among the three crucial survival strategies lenders use to safeguard their interests, one particular strategy rises above the rest: the art of diversion. Lenders skillfully guide you, the borrower, and your

attention away from the genuine metrics in play, entangling your focus within the intricate web of credit scores rather than the meaningful metrics that help you win.

to spot the distractions. Then you must understand the key players and their roles in the credit system. BORROWERS. Borrowers are central to the credit system. The entire financial system relies on borrowers actively engaging in borrowing. However, many borrowers are unaware of

MEET THE PLAYERS

If you aim to master the Funding Game, you must first master the ability

18 | think realty magazine :: march – april 2024

their pivotal role, often feeling at the mercy of other players. This is you. LENDERS. Lenders, and institutions lending money, adhere to rules that have been in place for more than 500 years—borrowing at low rates and lending the same money at higher rates. Becoming a professional borrower is essential to gaining respect and navigating the Funding Game successfully. CREDIT BUREAUS. Consumer reporting agencies, known as credit bureaus, collect and report borrower behavior, shaping their credit profiles over 90 years. Understanding their role is crucial to comprehending how your financial behavior is perceived. FICO. Fair Issac Corporation (FICO), also known as “the evaluator,” has been assessing borrower fundability for more than 70 years. FICO interprets and scores your credit data, influencing lenders’ decisions.

approval. Lenders prioritize credit behavior and performance data.

they will give you that money. Then, they keep an eye on how you use that money and even tell others about it. Your credit score is just a tiny part of the whole funding game. The most important thing is how you’re handling the money and whether your behavior indicates high risk or low risk. That’s what determines whether you get the money you need or not.

HOW THE GAME IS PLAYED

When you borrow money, it’s like playing a game with the bank. Here’s how it works: When you ask the bank for a loan or line of credit, they check your borrower behavior history using FICO risk assessment software. This software looks at your borrower behaviors at that moment, not just your score. Most people think the number they hear as their “credit score” is the most important thing, but that’s not true. Your credit score profile is actually the last priority after the software evaluates your identity profile, your financial profile, your banking profile and your credit behavior profile. What’s really wild is that in as little as 30 seconds, using something called Automatic Approvals, the bank can determine how you’re treating money today and how you’ve treated it in the past. It can determine if you’re a good lending risk or a bad one—just like that. If there’s something that seems even a little off, the bank software might decide the bank needs to take a closer look, which is called manual underwriting. This is when a person, not a computer, looks at your borrower profile. When that happens, your approval or denial is at the mercy of the banker. THE BIG SECRET Here’s the big secret: What the bank cares about most is not how high your credit is scored but rather how you behave with money. If the bank thinks you’re good with money, they’ll say yes, and

You can’t win the game if you don’t know the rules! •

MERRILL CHANDLER

Merrill Chandler, a personal and business credit pioneer and co-founder of Lexington Credit Repair Law Firm, became dissatisfied more than 30 years ago with the ineffective results of credit repair. He discovered that getting approved for personal or business credit did not rely on a credit score but, in fact, was the result of having “fundable” borrower behaviors. With the right strategies, a borrower can “optimize” their financial behaviors to become highly fundable, increasing the frequency and amount of their credit approvals. He co-founded Get Fundable! to help real estate and business entrepreneurs nationwide grow their businesses the way they want, resulting in his students and clients becoming more fundable and getting more than $250 million in funding. If you want to learn more, check out www.getfundable.com.

THE GAME

The Funding Game involves a dynamic interaction among the players. When a borrower applies, the lender seeks data and evaluation from the credit bureaus, incorporating FICO software to grade the borrower’s credit profile in real time. Contrary to common belief, there isn’t a single static credit score. Multiple scores exist based on the FICO software used for evaluation. Automatic underwriting, which takes 30 seconds to two minutes, follows. If your data align with lender guidelines, you are approved. Manual underwriting occurs if red flags are triggered. Your credit score, although important, is only one of many factors for

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INVESTMENT STRATEGY: 1031 EXCHANGES

SPONSORED CONTENT

MAKING A WORKING INTEREST INVESTMENT IN THE OIL AND GAS SECTOR HAS ITS ADVANTAGES. DERRECK LONG The Advantage of Working Interest Investments

and gas assets can have a long lifespan, with some fields remaining productive for decades. This can provide investors with the opportunity to generate long-term passive income from their investments. ALWAYS SEEK EXPERT ADVICE Eckard Enterprises works with high- net-worth investors and investment companies to build and protect their portfolios through diversified alternative investments. Working interest investments make sense for some investors, but not for others. Contact us today for expert advice regarding your portfolio. •

M ost investors understand the value of diversifying their port- folios. Alongside traditional investments, there are some alternative investment options worth considering. One of those is a working interest investment. Making a working interest investment in the oil and gas sector can offer several

variation to an investment portfolio. Because the performance of oil and gas assets may be less correlated with other more traditional asset classes such as stocks and bonds, this can help to reduce a portfolio’s overall risk and increase the likelihood of steady returns over the long term.

PROFESSIONAL MANAGEMENT

potential advantages to investors who are not averse to some risk.

Many working interest investments are man- aged by professional oil and gas companies, which can provide those invested in working interest with the expertise and resources that are fundamental to identifying and developing promising oil and gas assets. These companies typically have a team or teams of geologists, engineers, and other professionals with the knowledge and experience needed to evaluate the potential of an oil or gas asset and determine the best method to extract and produce its reserves.

DERRECK LONG

POTENTIAL FOR HIGH RETURNS

Oil and gas investments can potentially generate high returns for investors, especially if the underlying assets are successful in finding and producing oil or gas. These returns can come from the sale of the oil or gas as well as any profits generated from the operation of the assets. The value of an oil or gas asset is generally based on the amount of recoverable reserves it contains, as well as the cost of extracting and producing those reserves. If an asset is successful in finding and producing a large quantity of oil or gas at a low cost, it can potentially generate substantial returns for investors. DIVERSIFICATION While this one might seem rather obvious, it is still worth stating that investing in working interest can provide some strategic

POTENTIAL FOR PASSIVE INCOME

Just like investing in mineral rights, working interest investments can generate passive income for investors because the assets are typically operated by professional oil and gas companies. This can allow investors to earn a steady stream of income without the need to be actively involved in the day-to-day management of the assets. Oil

24 | think realty magazine :: march – april 2024

membership that costs less than your streaming services

thinkrealty.com | 25

Real ROI

XXXXX: XXXXXXX

The real difference in using Real Property Management—optimizing your ROI.

Using the right professional property management firm can help you earn more, not less. As the largest single-family residence management franchise in North America REAL Property Management has more than 30 years of experience doing just that for clients. There are many ways REAL Property Management can help maximize your investment and even help you with ways to monitor financial goals for your real estate. That’s the Real Difference.

Visit www.realpropertymgt.com to learn how Real Property Management can put our experience to work for you, giving you real commitment, real ROI and real peace of mind.

26 | think realty magazine :: march – april 2024

Real Property Management is the trusted leader in reliable, cost-effective management of residential properties. With local expertise, highly-trained and responsive teams, independently owned and operated Real Property Management franchisees collectively manage tens of thousands of properties for individuals, investors, and institutions throughout North America.

We Offer:

Comprehensive Marketing and Advertising For each day a property is vacant, that’s

Online Reporting Owners maintain control of their property and keep tabs from afar using their own online account, with easy access to updates on property activity, including vacancies, leasing, maintenance, property evaluations and financial reports. Cost-Effective, Reliable Maintenance Relationships with preferred vendors result in discounted equipment and services. Maintenance staff is available 24/7 to handle emergencies and to make sure maintenance is timely, cost-effective and done in a professional manner. Timely Rent Collection Nothing affects cash flow more than late or missing rent payments. In addition to offering incentives for paying rent on time, our collection processes are professional but tough, and we are extremely diligent in collecting rent through a systematic, timely process. Strict and Compliant Evictions Even with careful placement there is occasionally a tenant who needs to be evicted. Our offices are knowledgeable in state and local landlord and tenant laws. If rents are not paid on time, we strive to minimize costs by following the legal steps quickly and efficiently to get the property leased again.

money lost. Professional management costs are easily offset by shorter vacancy. Our advanced planning and heavy advertising gets vacancies filled fast.

Thorough Tenant Screening and Selection

Placing the wrong tenant can quickly cost you more than professional management fees. We make every effort to find tenants who will pay rent on time and take care of the property with the use of criminal, credit, and employment checks. Full-Service Leasing In addition to advertising properties and screening tenants, our full-service leasing process also includes rent-ready guidance, market rent analysis, professional showings, move-in property assessments, and professional tenant education at lease signing. Routine Property Evaluations Regular assessments of both the inside and outside of your rental property ensure tenant compliance with the lease and identifies maintenance needs to preserve your property.

thinkrealty.com | 27

MARKET & TRENDS: FALLING PRICES

Falling Prices Won’t Stop Local Investors MORE LOCAL INVESTORS EXPECT A PRICE CORRECTION IN 2024. THEY’RE STILL BUYING.

DAREN BLOMQUIST

A n increasing number of local real estate investors buying distressed properties on Auction. com expect home prices and rents to fall in 2024, but most still plan to bid at least as aggressively at auction as they did in 2023, given stubbornly low housing inventory. Forty percent of more than 400 Auction. com buyers surveyed in January said they expect home prices to decrease in 2024 in the markets where they operate. That was up from 32% in a 2023 survey and up from 17% in a 2022 survey. Buyers located in the Southeast region of the country were the most pessimistic in terms of home prices, with 46% saying they expect home prices to decline in 2024—the highest of any region and up from 37% in 2023 and up from just 12% in 2022.

SHARE OF LOCAL INVESTORS EXPECTING HOME PRICE DECREASE

2022 SURVEY

2023 SURVEY

2024 SURVEY

46%

43%

40%

38%

37%

35%

33%

32%

29%

21%

17%

13%

12%

Central

Northeast

Southeast

West

U.S. Source: Auction.com buyer surveys

28 | think realty magazine :: march – april 2024

Buyers located in the West region of the country were most optimistic in terms of home prices, with 35% saying they expect home prices to decline in 2024—the lowest of any region and down from 43% in 2023. The West region was the only one in which buyers became less pessimistic about home prices in 2024 compared to 2023, although West-region buyers were still much more pessimistic about prices in 2024 than they were back in 2022, when just 7% said they expected home prices to decline for the year. “My colleagues and I feel that we have to offer more than asking price to get a property in good condition,” said Han Zhang, a real estate investor in Southern California who referenced a recent retail market purchase he and another investor made. “The seller received multiple offers, and we had to outbid another cash offer. The asking price was $1.02 million, and we got the deal at $1.08 million.” “It is not an uncommon situation in my area,” Zhang continued. “I feel the inventory is still too low … and I think this situation will remain for the rest of 2024.” Buyers who primarily employ the renovate- and-rent strategy for properties purchased on Auction.com were more optimistic about home prices, with 37% expecting home prices to decrease in 2024 in their local markets. Buyers employing renovate-and- resell as their primary investing strategy were more pessimistic about prices, with 41% expecting a decline in 2024.

SHARE OF LOCAL INVESTORS EXPECTING HOME PRICE DECREASE

2023 SURVEY

2024 SURVEY

35%

32%

29%

27%

25%

22%

17%

16%

15%

14%

Central

Northeast

Southeast

West

U.S. Source: Auction.com buyer surveys

INFLATED HOME PRICES

in 2024, with 31% expecting a decrease compared to 23% of renovate-and-rent buyers expecting a decrease in rents. Overall, local investors purchasing on Auction.com were more pessimistic about rent appreciation in 2024 than they were in 2023, with 29% expecting a decrease in rents in 2024—up from 16% in a 2023 survey. Although buyers located in the West region were least pessimistic about home price appreciation, they were most pessimistic about rent appreciation, with 35% saying they expect rents to decrease in 2024 compared to 2023. That was the highest of any region and up from 22% in 2023. Buyers located in the Northeast were least pessimistic about rent appreciation, with 27% saying they expect rents to decrease in 2024. That was still nearly double the 14% that expected rents to decrease in 2023.

In line with the increasingly pessimistic home price appreciation and rent appreciation expectations, nearly half of buyers surveyed (49%) described their local markets as “overvalued with a correction possible.” That was up from 42% who described their local markets that way in 2023. Slightly more than half of renovate- and-resell buyers (51%) described their local markets as overvalued, and 45% of renovate-and-rent buyers described their local markets as overvalued. Buyers located in the Northeast region were most likely to describe their local markets as overvalued (58%), and buyers located in the Central region were least likely to describe their market as overvalued (41%).

RENT APPRECIATION OUTLOOK

Renovate-and-resell buyers were also more pessimistic about rent appreciation

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