Making profitable real estate investments requires information and careful analysis. Before making any investment decisions, there are many critical questions you must ask yourself and at least five key metrics you need to review.
1. Population Growth Rate
Of all the metrics that predict future market volatility, population growth is probably the most important. The housing requirement — single-family homes versus apartments versus something else — will vary based on the components of population growth, but ultimately, more residents equals more demand.
The trick is that you don’t necessarily want to invest in a top-10 location for population growth, as that may only be the case for the short-term. What we care most about is steady population growth over the long-term — it’s one of the core tenets of our investment criteria at our firm. Average to above-average population growth is fine as long as it follows a positive trajectory that is expected to continue for the foreseeable future.
You can see how this plays out in multifamily pricing, new construction, rental rates, etc., with every major market. Where there are either rapid or gradual declines in population, there is also stagnant to negative-performing multifamily assets.
2. Employment Growth Rate
The largest driver of rental demand is population growth and, in turn, one of the largest drivers of population growth is employment growth. When analyzing a market, you want to understand its job creation trends. Ask yourself:
• Is it a steady jobs market?
• Does it fluctuate at a greater rate than the overall economy?
• Over what period of time has it been stable?
• If the employment growth rate is more volatile than the overall economy, what forces are driving that?
In general, the larger the market, the more stable the employment growth because there are many job creators, i.e., existing and new businesses.
Three factors to keep in mind are:
1. Healthcare, government and higher education jobs rarely relocate and tend to grow over time.
2. Military jobs can fluctuate based on base realignments and deployments. Be cautious of markets where military is the bulk of employment growth.
3. Manufacturing and virtual service jobs can be volatile regardless of the economy.
3. Components Of Employment Growth
In addition to the overall employment growth numbers, you must also study where jobs are being created. For instance, how stable is the job source? Be cautious of service and retail jobs. What types of jobs are they: white-collar educated jobs, blue-collar trades or minimum wage? What age group is the dominant employment growth attracting? For instance, the 18-34-year-old demographic is the largest group that rents.
4. Unemployment Rate
Looking at unemployment and components of unemployment is different than employment growth. While not typical, you could have a market with rising employment growth with no corresponding impact on unemployment. This occurs when job creation demographics are different than the current unemployed base.
In general, you should look for a market where unemployment is less than the overall U.S. market. If there is a steady trend there, then most likely this specific market will be comparatively better than those with unemployment rates greater than the U.S. average or volatile.
5. Landlord/Tenant Laws
Multifamily investments sit in the middle of several different local and federal policy influences:
• Federal equal housing laws.
• Federal, state and local business practices.
• State and local landlord/tenant laws.
Since shelter is a basic human need, there are several voices impacting how and in what way a multifamily property is operated. This can impact your tax bill, your allowable marketing practices, required property living standards and the landlord’s and tenants’ rights.
Evictions can and will happen, even in new A-grade complexes. The percentage of evictions and bad debt activity increases as you move down from Class A properties to Class D. You want to be in a state that provides favorable or, at the very least, neutral treatment for the landlord in eviction and bad debt scenarios.
In relatively neutral landlord/tenant states, evictions usually take 30 to 45 days, and if a tenant breaks a lease, they are responsible for the economic harm caused to the landlord. However, in some states, it can take up to six months for evictions, and during that time there is no rental income or no recourse to the lost rental income.
Analyzing a multifamily investment market can be complex. Reviewing key metrics can help you evaluate the potential profitability and risks. Long-term, steady population growth and stable employment growth are indicators of a promising investment market. Moreover, a market where unemployment is lower than the overall U.S. market is more favorable. Neutral landlord/tenant states may reduce the loss incurred from evictions or unforeseen circumstances. A thorough analysis of all of these factors can help you make informed decisions.
Shiba inu is up over 100% in the last 7 days—here's what to know before investing – CNBC
Another dog-inspired cryptocurrency called shiba inu, or SHIB, hit an all-time high of $0.0000594 on Wednesday.
Despite its price being below 1 cent, the “meme token” has garnered a lot of attention. Shiba inu now ranks No. 11 among the top cryptocurrencies by market value, according to CoinMarketCap. It is up more than 111% over the past seven says, as of 9:42 a.m. EST on Wednesday.
Though shiba inu is cheap to buy and it may be tempting to jump in, experts say investors should do their research first.
“Before investing in any cryptocurrency, it’s important to understand what you’re investing in and the associated risks, not just hype around it,” Douglas Boneparth, certified financial planner and president of Bone Fide Wealth, tells CNBC Make It.
Shiba inu is typically considered an altcoin, which refers to the multitude of cryptocurrencies aside from bitcoin. Cryptocurrency can be a very volatile and speculative investment in general, but experts say altcoins can be even more so.
Here’s what you should know.
Shiba inu was created in August 2020 by a pseudonymous founder called Ryoshi. As its name suggests, the token is inspired by shiba inu dogs.
Shiba inu is an Ethereum-based ERC-20 token, which means it is created on and hosted by the Ethereum blockchain, rather than its own blockchain.
Ryoshi decided to launch shiba inu on Ethereum because it’s “already secure and well-established,” according to the shiba inu white paper, or, as its community calls it, “woof paper.”
What are the risks?
“Altcoins like SHIB are primarily community-based, meaning their success is largely dependent on the success and growth of its community instead of its utility,” says Boneparth, who has invested in bitcoin since 2014. Indeed, Ryoshi calls shiba inu an “experiment in decentralized spontaneous community building” in its white paper.
Experts warn that any cryptocurrency investment can result in the loss of your entire investment. They generally recommend that you only invest what you can afford to lose, regardless of which cryptocurrency you choose.
But altcoins may require additional caution due to their differences from something like bitcoin, including their structure, supply and utility.
Bitcoin, for example, launched in 2009 with the intent to have utility as a peer-to-peer financial system. Its blockchain was carefully created, with a well-thought-out ecosystem. Bitcoin also has a limited supply, which allows for built-in scarcity by design. Because of that, it’s seen as a store of value by its holders, who also hope it becomes a prominent decentralized digital currency.
Most altcoins lack these characteristics.
Shiba inu supporters argue that its ecosystem, which includes smart contract capabilities; NFTs, or nonfungible tokens; and opportunities for liquidity mining, to name a few, offer utility beyond community.
But nonetheless, “many altcoins can be extremely risky and may not have any inherent investment value, and retail investors should not trade these assets without research and due diligence,” says Brett Harrison, president of cryptocurrency exchange FTX US.
Rather than investing in a surging cryptocurrency based on hype, Harrison looks for crypto assets with specific utility.
“There are a number of crypto assets that can be suitable for retail users, whose investment prospects can be tied to their ability to provide a store of value, to facilitate an efficient mechanism for payment transfers, or to power a protocol used to build blockchain-based applications,” he says.
Toronto stocks slide as Bank of Canada signals early rate hike
Canada‘s main stock index was on course for its worst session in a month on Wednesday after the Bank of Canada signaled it could raise interest rates sooner than previously forecast.
At 10:33 a.m. ET (14:33 GMT), the Toronto Stock Exchange’s S&P/TSX composite index fell 0.73% to 21,018, with technology and healthcare stocks leading the declines.
The Canadian dollar and shorter-term yields jumped after the central bank’s decision to also move the pandemic-driven bond-buying program into the reinvestment phase, where it will purchase only enough government bonds to replace those that are maturing.
The BoC said it now expects the rate hike to happen “sometime in the middle quarters of 2022”, three months ahead of the previous forecast, and warned that inflation would stay above target for much of 2022 due to higher energy prices and supply bottlenecks.
“They’ve shifted that window sooner, so that is a little bit hawkish,” said Colin Cieszynski, chief market strategist, SIA Wealth Management.
“The ending of the QE program was pretty much as expected and they were going to do it before the end of the year. Now that the election is over, it seems like they had to do it.”
The energy sector dropped 1.2%, extending losses for the second session, as oil prices fell after industry data showed U.S. crude stockpiles rose more than expected. [O/R]
Meanwhile, the materials sector, which includes precious and base metals miners and fertilizer companies, lost 0.8%.
Capital Power Corp and Algonquin Power & Utilities Corp were the biggest decliners on the TSX.
The TSX posted four new 52-week highs and two new lows.
Across all Canadian issues there were 22 new 52-week highs and 40 new lows, with total volume of 87.92 million shares.
(Reporting by Amal S in Bengaluru; Editing by Shailesh Kuber)
Ping An Profit Falls on Investment Returns, Sales Slowdown – BNN
(Bloomberg) — Ping An Insurance (Group) Co., China’s largest insurer by market value, posted a 31% drop in third-quarter profit as stock-market declines weighed on investment returns and slower economic growth sapped premium income.
Net income dropped to 23.6 billion yuan ($3.7 billion) in the three months ended Sept. 30, from 34.4 billion yuan a year earlier, the Shenzhen-based company said Wednesday. That compares with a 16% decline in first-half profit.
Operating profit, which Ping An says better reflects performance because it strips out short-term volatility, rose 9.2% in the first nine months of the year, in line with a 10% first-half gain.
Ping An’s shares trading in China have slumped 40% this year, weighed down by investor concerns about property investments and the performance of its backbone life business. The company is turning to technology to bolster the productivity of its shrinking sales force at a time when demand for policies is weakening.
Impairments on its exposure to China Fortune Land Development Co., which became the first local developer to default since Beijing tightened controls on the sector last year, erased 20.8 billion yuan in profit in the first half, although management has said the situation is more likely to improve than worsen.
Nine-month net income decreased 21% from a year earlier, mainly because of impairment provisions related to China Fortune Land, the insurer said, adding that it made no major adjustment tied to the developer in the third quarter.
The benchmark Shanghai Shenzhen CSI 300 Index dropped 7% in the third quarter, erasing a 0.2% gain in the first half of the year.
New business value, which gauges the profitability of new life policies, fell 18% for the nine months, widening from a 12% decline in the first half. The firm is trying to boost long-term growth prospects by concentrating on higher-value products and reducing less-productive agents.
©2021 Bloomberg L.P.
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