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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 3858
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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what is your opinion on buying real estate to safeguard in

Resolved Question:

what is your opinion on buying real estate to safeguard in regard to the weakening dollar and or possible inflation increasing? I read an article ( XXXXX XXXXX of shadow stats) that recommended hard assets in case of a bad economic reset. my question is whether homes prices will rise from inflation or falter as no one will be interested in home ownership as much as when food and gas goes dramatically higher.
Submitted: 10 months ago.
Category: Finance
Expert:  Rakhi Vasavada replied 10 months ago.

Rakhi Vasavada :

Dear Friend,

Rakhi Vasavada :

Hello and welcome. Thank you for requesting me.

Rakhi Vasavada :

Kindly remain online for a while as I prepare your reply.

Rakhi Vasavada :

I believe, home prices are set to increase in inflation times.

Customer:

do you believe it will outpace inflation or just be a parity?

Rakhi Vasavada :

There, in my opinion, in times of weakening dollar, it is always better to invest in real estate than investing in financial instruments.

Rakhi Vasavada :

You will certainly safeguard your investment with this strategy. In my opinion, home prices are set to remain stable with up ward bias.

Rakhi Vasavada :

It should outpace inflation, in my opinion.

Rakhi Vasavada :

Are you there? Is there anything more I can assist you with?

Customer:

what would be better lower priced single family homes, to rent than later sell or multiple families? I fear in some multiple families people with low paying job who rent small units might default on rent?

Rakhi Vasavada :

To have single family homes would be better. They can be properly managed.

Customer:

in other words have the tenants maintain the whole house for themselves

Rakhi Vasavada :

Yes, that is what I mean. You can have rental property, but preferable single family homes.

Customer:

are there companies that manage realestate for group participants?

Rakhi Vasavada :

Yes, there are companies that do property management for you.

Rakhi Vasavada :

For example,

Rakhi Vasavada :

http://www.jmzmanagement.com

Customer:

how can one find what the strongest us cities have the best markets for this type of investing?

Rakhi Vasavada :

http://www.narpm.org


 

Rakhi Vasavada :

Talk with these management companies. They would be the best people to guide you.

Rakhi Vasavada :

http://www.managementone.com

Customer:

what part allocation of a portfolio would you place in real estate? do you think a major economic reset is coming?

Rakhi Vasavada :

You can safely bet 50% of your portfolio in real estate in order to effectively spread the risk.

Customer:

will investing in real estate over seas be of any advantage?

Rakhi Vasavada :

No, I do not think so. US is a better market, price wise to begin this. It has more room to appreciate in future.

Customer:

do you believe gold/oil will decline if the market declines from here?

Rakhi Vasavada :

No, Gold and Oil would rise, in case of declines in the Markets.

Customer:

would reits be better than buying actual properties?

Rakhi Vasavada :

No, REITs would give you relatively lower returns. This would be like buying a mutual fund as against directly investing in stocks.

Customer:

so can I assume that commercial retail property would also be less desirable in this case as would condos with hoa fees?

Rakhi Vasavada :

Yes, that is right.

Customer:

How can I offset my risk if a family I rent a home to defaults on the rent? if I have a multifamily I have some other tenants to contribute to expenses.

Rakhi Vasavada :

The effective way to offset this is to have a sound, proper and strict agreement drafted. A local attorney would assist you with this. Beyond this, this is a little hypothetical situation.

Customer:

would land be also the least desireable form of real estate investment?

Rakhi Vasavada :

Yes, because, that will not generate any significant income. You should concentrate on family homes.

Customer:

do you have anyway to measure when it is the best time to sell homes? like an indicator? I am concerned of a double dip scenario of late

Rakhi Vasavada :

No, there are not such indicators and that would be wrong method to do it as well. If the value declines, you should hold your investments, and if the value increases,then you should exit once you have got your desired rate of returns.

Rakhi Vasavada :

Otherwise, there are no such tools, indicators, like in stocks, which show entry and exit prices.

Customer:

do you believe interest rates will rise soon and what will this do to single family home prices?

Rakhi Vasavada :

Interest rates may rise moderately and this may cause the home prices to increase.

Customer:

why icrease if affordability goes down as payments are more?

Rakhi Vasavada :

Are you there? Is there anything more I can assist you with?

Customer:

yes why do you think highier interest rates will cause the home prices to increase?

Rakhi Vasavada :

Because, higher interest rates means higher cost of funds, and this means increased prices.

Customer:

what about the affordability of the buyer? would higher payments mean less home purchases at higher prices?

Rakhi Vasavada :

Not necessarily.

Rakhi Vasavada :

This will remain guided by demand supply gap, because, during inflation, even people will have more disposable incomes.

Customer:

would you think it easier to mange a few single family homes in one region.or to go to multiple cities to spread risk and hire local managers?

Rakhi Vasavada :

In my opinion, multiple homes in one region would be preferred and easier to manage.

Rakhi Vasavada :

You will not spread your risk if you go in multiple locations.

Customer:

I thought local economys may do better / worse in areas in this case

Rakhi Vasavada :

No, not much, in my opinion.

Customer:

ok thanks

Rakhi Vasavada :

Is there anything more I can assist you with?

Rakhi Vasavada :

You may pleas leave a positive rating if this helps, alternatively revert back wit a purely.

Customer:

would you place each home un a different llc company and why?

Rakhi Vasavada :

There is no need to put each home in different LLC. You will not serve any purpose by doing this.

Customer:

thank you

Rakhi Vasavada :

You are most welcome...!!

Rakhi Vasavada :

You may please leave a positive rating if this helps, alternatively revert back with a reply.

Expert:  Rakhi Vasavada replied 10 months ago.
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Customer: replied 10 months ago.


in regard to everything we discussed above, do you still prefer single family homes over triple net franchise type properties and why/?

Expert:  Rakhi Vasavada replied 10 months ago.
Dear XXXXX,

Hello and welcome again. Thank you for your follow up question.

See, triple net is a type of lease and not type of property. This is a lease agreement that designates the lessee (the tenant) as being solely responsible for all of the costs relating to the asset being leased in addition to the rent fee applied under the lease. The structure of this type of lease requires the lessee to pay for net real estate taxes on the leased asset, net building insurance and net common area maintenance. The lessee has to pay the net amount of three types of costs, which how this term got its name.

This type of lease can also be referred to as a "net-net-net lease" or a "hell or high water lease".

Having said this, even single family homes are leased out on this model. The reason for choosing single family homes is the privacy that people want while they take on rent as it offers more privacy to the families living in. Further, such homes are typically larger than apartments which get more rent and return more on your investments.

I hope this helps. You may please leave a positive rating if it helps as this is the only way we get compensated for assisting you. Alternatively please feel free to revert back with a reply if you need further assistance.

Warm Regards
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 3858
Experience: Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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