When it comes to homes built off-site and then transported to their permanent location, the terms mobile home, manufactured home, and modular home are often used interchangeably. However, while these types of homes share some similarities, there are distinct differences between them that affect their construction, placement, and financing options. Here’s a breakdown of what sets each type apart.

Mobile Homes

A mobile home is a structure built in a factory and then transported to a chosen location. Once it arrives, it is often placed on a foundation made of metal piers or tie-downs instead of a traditional concrete foundation. Historically, “mobile homes” referred to homes built before June 15, 1976, when federal regulations for manufactured homes were standardized.

These homes were designed for mobility, and some may still be moved after they are set up, though this is not always the case today. Mobile homes tend to be less expensive compared to their manufactured or modular counterparts but may not offer the same long-term durability or value retention.

Manufactured Homes

A manufactured home is very similar to a mobile home in that it’s also built in a factory and delivered to its permanent site. However, the key difference lies in its regulatory framework. After 1976, homes built to meet the U.S. Department of Housing and Urban Development (HUD) standards are considered manufactured homes, even if they are still mobile.

Manufactured homes are usually placed on blocks, piers, or a permanent foundation and are typically not designed to be moved after installation. They are generally more expensive than mobile homes, with prices often averaging around $118,000, according to the U.S. Census Bureau as of 2024. Manufactured homes are more likely to hold their value over time compared to mobile homes, but they still depreciate faster than traditional homes.

Modular Homes

A modular home is another off-site constructed home, but with a significant difference: it is built to meet the same local building codes as traditional, site-built homes. Modular homes are often assembled in sections or “modules” in a factory, then transported to their designated site and assembled into a permanent structure.

Unlike mobile and manufactured homes, modular homes usually rest on traditional foundations, which can include basements or crawl spaces. This allows for greater flexibility in terms of customization and design. Modular homes typically cost between $180,000 and $360,000, according to Angi, and are considered more similar to site-built homes in terms of quality and stability.

Factors to Consider When Buying a Mobile or Manufactured Home

When considering whether to buy a mobile home, manufactured home, or modular home, there are several important factors to keep in mind. These include location, size, whether to buy new or used, and the long-term costs of ownership.

Location

The location where you will install your home can have a big impact on the overall cost and feasibility of your purchase. You may choose to:

• Buy a piece of land where your home will be located
• Rent a plot in a mobile home park
• Install the home on land you already own

If you decide to buy land, you must also research zoning laws, utility hookups, and the availability of infrastructure in your area. Neighborhood quality is also important, as the location affects both your living experience and potential property value.

Size

Mobile, manufactured, and modular homes come in a variety of sizes, so it’s important to decide what suits your needs. Larger homes require larger plots of land and are more expensive to purchase.

Mobile homes are usually categorized by width, with two common sizes:

• Single-wide homes: Typically under 15 feet wide
• Double-wide homes: Around 30 feet wide

Single-wide homes can be a more affordable option, but some towns or cities have restrictions on placing them in certain areas. Research local zoning laws and regulations to ensure your home type will be allowed.

New vs. Used

Another key decision when buying a mobile or manufactured home is whether to purchase new or used. Used homes are often available at a lower cost, but they may show signs of wear and tear, especially if they haven’t been properly maintained. Additionally, homes built before 1976 may not meet modern HUD standards, which can limit your financing options.

If you go the used route, it’s essential to have a professional inspection to assess the home’s condition and avoid costly repairs down the road.

Long-Term Costs

Owning a mobile or manufactured home comes with a unique set of long-term costs. One key consideration is mobile home insurance, which provides coverage for your dwelling and personal property, much like traditional homeowners insurance.

Mobile home insurance policies generally cover:

• Damage to the home
• Loss or damage to personal belongings
• Liability coverage (if someone is injured on your property)

However, standard mobile home insurance might not include coverage for disasters like hurricanes, earthquakes, or floods. You may need to purchase additional coverage, depending on where you live. As with any insurance policy, the cost will vary based on the coverage you select, your home’s location, and its condition.

Conclusion

Mobile, manufactured, and modular homes can offer a more affordable alternative to traditional site-built homes, but each type has its own set of advantages and disadvantages. Whether you’re looking for a budget-friendly option or a more permanent housing solution, it’s crucial to research your financing options, determine the right location for your home, and choose the size and condition that fits your needs. By considering all of these factors, you can make a well-informed decision that aligns with both your financial goals and lifestyle preferences.

Securing financing for a mobile home can be a bit more complex than traditional home loans. Since mobile homes are often considered personal property, many standard mortgage options are not applicable. However, there are several loan programs specifically designed for mobile homes that can help make the financing process easier. Here are some key options to consider when financing your mobile home purchase.

FHA Loans for Mobile Homes

The Federal Housing Administration (FHA) offers two primary loan programs for mobile home buyers: Title I and Title II. Both have distinct features that make them a good option depending on your circumstances.

Title I Loans

FHA Title I loans are designed for mobile homes that may not include land or are located in a manufactured home park. These loans can be used to:

• Purchase a new or used mobile home
• Refinance an existing mobile home
• Buy the land where the mobile home will be placed (or finance the home and the land together)
• Fund repairs or improvements to a mobile home

Title I loans do not require the borrower to own land. If the home is situated on rented land, such as in a mobile home park, you’ll need to provide a lease agreement with a term of at least three years.

Title II Loans

FHA Title II loans are more comprehensive and are typically used when the borrower wants to purchase both a mobile home and the land it sits on. This loan type offers benefits like low down payments (as low as 3.5%) and longer terms (up to 30 years). To qualify, the home must be:

• At least 400 square feet in size
• Built after June 15, 1976
• Classified as real estate (although not necessarily for tax purposes)
• Permanently affixed to a chassis
• Intended as a primary residence

One drawback of Title II loans is that they cannot be used to finance homes located in mobile home parks or on leased land.

Conventional Financing Options

Some conventional financing options are available for mobile homes through private lenders, such as Fannie Mae and Freddie Mac. These options often offer more flexibility, though they may require more stringent qualifications than FHA loans.

Fannie Mae MH Advantage

The MH Advantage program offers financing for buyers of manufactured homes that meet certain construction standards. These homes must be similar in design and quality to site-built homes, with features like a driveway, carport, or sidewalk. MH Advantage loans come with:

• Low down payments (as little as 3%)
• Competitive interest rates
• 30-year terms

The benefits of this program include lower interest rates compared to traditional mobile home loans, but it does require the home to meet specific construction and energy efficiency standards.

Freddie Mac CHOICEHome

Freddie Mac also provides a financing option called the CHOICEHome program, which is designed for high-quality manufactured homes. Homes financed through this program must meet specific requirements and be permanently affixed to land. The Home Possible program offers low-down-payment options as well, with terms as low as 3%.

VA Loans for Military Veterans

For military veterans and active-duty service members, the U.S. Department of Veterans Affairs (VA) offers home loan options that can be used to finance a mobile home. VA loans for mobile homes can be used for:

• Purchasing a mobile home and land
• Purchasing just a mobile home (if you already own land)
• Refinancing an existing mobile home loan

VA loans offer 100% financing, meaning no down payment is required. The VA loan also comes with favorable terms, including low-interest rates and no private mortgage insurance (PMI). However, the home must meet certain standards, and the borrower will need to provide an affidavit of affixture proving that the home is permanently attached to land.

Chattel Loans

A chattel loan is another financing option for mobile homes, particularly if the home is not on purchased land. These loans are considered personal property loans and are commonly used to finance mobile homes in parks or communities. Chattel loans are generally easier to secure than traditional mortgages, but they tend to have some trade-offs, such as:

• Higher interest rates than traditional mortgages
• Shorter loan terms (usually 15-20 years)
• The loan is typically secured by the mobile home itself rather than land.

Chattel loans are often insured by the FHA, VA, or the USDA, and their application process is usually faster and less cumbersome than a traditional mortgage.

Personal Loans

In some cases, buyers may choose to use a personal loan to finance a mobile home, especially if the home is relatively inexpensive. Personal loans are flexible and can be used for various purposes, including buying a mobile home. They come with a few distinct advantages:

• No collateral required (the loan is unsecured)
• Faster approval and fewer fees than traditional mortgages
• No need for title, escrow, or appraisal fees

However, personal loans come with some downsides as well, including higher interest rates and shorter repayment periods (usually 3-7 years). Personal loans typically offer smaller loan amounts, ranging from $25,000 to $50,000, and sometimes up to $100,000.

How to Get Mobile Home Financing

Once you’ve decided on the financing option that works best for you, it’s time to prepare for the application process. Here’s how to get started:

1. Check Your Credit Report Before applying for any loan, it’s a good idea to review your credit report. Lenders will evaluate your credit score when determining your eligibility and interest rates. Clean credit histories can help you secure more favorable loan terms.
2. Decide Whether You’re Purchasing Land If you’re planning to buy land in addition to the mobile home, the stability of your property may increase your loan options. Homes on rented land typically qualify for fewer financing options than those on owned land.
3. Define the Home You Want to Buy The type of mobile home you plan to purchase will influence the financing options available to you. Older mobile homes, for example, may not qualify for FHA or VA loans, while newer, larger homes may require a conventional loan.
4. Compare Financing Offers Take the time to compare interest rates, terms, and fees from various lenders. Each loan option has different requirements and benefits, so it’s important to shop around to find the best deal.
5. Submit Your Application Once you’ve selected a loan, gather all necessary documentation (proof of income, credit report, down payment, etc.), and submit your application. Be prepared to make a down payment if required.

Conclusion

There are a variety of mobile home financing options available, each with its own benefits and requirements. Whether you’re looking for an FHA loan, VA loan, or personal loan, it’s important to understand your eligibility, financial goals, and the type of home you’re purchasing. With the right preparation and research, you can find the financing solution that suits your needs and helps you secure your new mobile home.

As demand for affordable housing continues to soar, the spotlight on Manufactured Housing Communities (MHCs) is intensifying. With rising rents, high occupancy rates, and growing interest from institutional investors, MHCs are positioned to be one of the most appealing investment opportunities in the housing sector in 2025 and beyond. Let’s dive into why manufactured housing will remain a key player in the market and where the opportunities lie for savvy investors.

The Rising Appeal of MHCs

Manufactured housing has been attracting increasing attention due to its affordability, low operating costs, and self-sustaining nature. Over the last decade, occupancy rates in MHCs have seen consistent growth, with national occupancy rising from 86.5% in 2014 to higher levels today. Rent increases have also been notable, reflecting strong demand. According to experts, these factors suggest the sector’s continued growth.

“Since 2014, occupancy has increased by about 90 basis points each year,” explained Anthony Pino, a manufactured housing expert at Northmarq. “In addition, rents have gone up by 7.7% in the past year alone, which is a clear indication of the sector’s ongoing strength.”

This growth has caught the attention of institutional investors and Real Estate Investment Trusts (REITs), resulting in more consolidation and investment in the MHC space. One of the key factors driving interest is the land-lease model, which significantly reduces capital expenditures for operators. Unlike traditional housing, MHCs operate without direct government subsidies, creating a market-driven, stable approach to affordable housing.

Mike Nissley, co-founder of the Manufactured Housing & RV Group at Colliers, noted, “Manufactured housing often provides the most affordable primary housing option available, aligning perfectly with key investment trends such as affordability and the rising demand for senior housing.”

Why Investors Are Flocking to MHCs

One of the primary reasons for the strong investor interest in MHCs is the operational efficiency they offer. Unlike traditional homes, MHC operators don’t have to manage the habitable dwelling itself. Instead, they lease the land, which reduces expenses and provides an attractive profit margin. Danny Douglas, a senior managing director at Marcus & Millichap, estimates that MHCs operate with an expense load of just 40-55%, depending on the state’s property tax structure. Additionally, with falling interest rates, MHCs are becoming an even more attractive option for long-term investors seeking stable yields.

Furthermore, as interest rates decline, the appeal of MHCs will only grow, especially for investors who are looking for steady, long-term returns. With the increasing demand for affordable housing and a steady stream of new buyers looking for cost-effective solutions, MHCs provide a unique opportunity for investment that combines affordability with stability.

Hot Markets for MHC Investment

Much like traditional multifamily housing, certain regions of the U.S. are prime for MHC investment. The Sun Belt, which includes states like Florida, Texas, Arizona, and New Mexico, continues to be a hotspot. These areas attract significant numbers of retirees and residents seeking affordable housing options in regions with a lower cost of living and favorable climates. States in the Mountain West, including Utah, Colorado, and Montana, are also seeing increased investor interest.

Dustin Wilmer, a first vice president at Marcus & Millichap, notes that the Mid-Atlantic region is another key area, where many mobile home communities are owned by private “mom-and-pop” operators, offering consolidation opportunities for institutional buyers. These regions share common characteristics—robust demographics, job growth, affordable housing, and favorable economic climates.

Another important trend is the growing demand for manufactured housing development. As the need for affordable housing intensifies, the supply of manufactured homes has struggled to keep pace. However, barriers to entry persist, especially in states like California, where high land costs and regulatory hurdles make new MHC development exceedingly difficult.

“In California, developing new MHCs has become nearly impossible due to prohibitive costs and bureaucratic challenges,” said Wilmer. “Many areas still perceive these communities as lower-class trailer parks, and developers face resistance from local municipalities that are hesitant to embrace this type of housing due to outdated perceptions and concerns over tax revenue.”

Challenges and Opportunities for Development

Although the demand for affordable manufactured housing is growing, the ability to develop new MHCs is limited. The high cost of land and stringent regulations on zoning and permits in certain areas make new developments rare, especially in desirable urban and suburban markets. As a result, much of the investment in the sector will focus on upgrading existing properties rather than building new ones.

Robbie Pratt, CEO of Havenpark, a mobile home park operator and developer, notes that although new developments are rare, operators are investing heavily in improving their existing assets. Havenpark, for example, plans to invest more than $30 million across its portfolio in 2024, with further investments anticipated in 2025.

“We see limited development right now, but the focus is shifting to improving the amenities, infrastructure, and overall appeal of existing communities,” Pratt said. “The challenge is not in developing new communities but in enhancing the ones that are already established.”

What 2025 Holds for MHCs

As we move into 2025, many industry players are optimistic about the sector’s future, particularly with the potential for a new administration to bring changes to tax laws that could benefit the industry. After a turbulent period marked by unpredictable market conditions, experts predict that the manufactured housing market will stabilize as capital returns and interest rates ease.

“Based on past experience, I believe owning or investing in mobile home communities will be one of the best choices for 2025,” said Danny Douglas. “The market conditions will be ripe for investors looking for a solid, long-term play.”

As borrowing costs decrease, it’s expected that deal flow will increase, especially in the form of consolidations among REITs and other large investors. At the same time, MHCs’ unique advantages—such as limited competition in desirable areas and their role in providing affordable housing—will continue to drive demand.

“They’re rare, irreplaceable, and in incredibly high demand,” explained Robbie Pratt. “Less than 1% of homes in most major markets are manufactured homes, and getting zoning approval for new MHCs in desirable urban areas is extremely difficult. As such, these communities represent an untapped opportunity for investors, and the demand for affordable homeownership will continue to rise.”

Conclusion

The manufactured housing sector is poised for significant growth in 2025 and beyond. With its affordability, operational efficiency, and steady demand, MHCs present an attractive opportunity for investors looking for long-term stability in a changing market. While challenges remain, such as the difficulty of developing new MHCs in high-demand areas, the sector’s fundamentals—low operating costs, high demand for affordable housing, and increasing institutional interest—ensure that MHCs will continue to thrive in the years to come. For those looking to invest, the time is now to capitalize on the growing appeal of manufactured housing communities.

 

 

​

When deciding between purchasing a mobile home or a traditional house, there are several factors to consider, from cost savings and convenience to depreciation and potential resale challenges. Mobile homes can offer certain advantages over traditional, stick-built homes, but they also come with unique disadvantages. To help you make an informed decision, let’s take a closer look at both the pros and cons of buying a mobile home.

What Are Modern Mobile Homes?

Modern mobile homes—also called manufactured homes—are constructed in factory settings and then transported to their designated locations. These homes are typically placed on a chassis with wheels for mobility, although they are often installed on a permanent or semi-permanent foundation once positioned. Mobile homes may be set up on land that the homeowner owns or rents, or they may be situated within a mobile home park, where the homeowner rents a lot but owns the home itself.

Advantages of Buying a Mobile Home

1. Affordability One of the main draws of purchasing a mobile home is its affordability. These homes are generally less expensive than traditional, stick-built houses, which makes them an attractive option for those looking to become homeowners without the hefty price tag. Since mobile homes cost less per square foot, you can often get more space for your budget.
2. Flexibility Mobile homes offer a level of flexibility not typically seen in traditional homes. If you own land, you can place a mobile home there and even move it later if you change locations or decide to sell. While it’s not as simple as just picking up and relocating (due to the complexities of plumbing, electrical systems, and more), the ability to move your home is still an option that isn’t easily available with stick-built houses.
3. Faster Construction & Fewer Delays Because mobile homes are built in controlled factory environments, they are less prone to construction delays caused by weather or subcontractor scheduling issues. This means that once you’ve purchased a mobile home, it can often be set up more quickly than a traditional home, allowing you to settle in sooner.
4. Lower Initial Investment The initial cost of a mobile home is typically much lower than that of a traditional home. For many buyers, this reduced upfront expense makes mobile homeownership an achievable goal, particularly when compared to the much higher price tags of new homes.

Disadvantages of Buying a Mobile Home

1. Depreciation in Value One of the most significant downsides of mobile homes is that they tend to depreciate over time, much like vehicles. Once a mobile home is placed on the land, its value begins to decrease, unlike a stick-built home, which typically appreciates in value. A key reason for this is that mobile homes are classified as personal property (similar to cars) rather than real property (which includes land and anything permanently affixed to it). Even if you own the land beneath your mobile home, the home itself is unlikely to appreciate significantly unless the land itself increases in value.
2. Higher Financing Costs Because mobile homes are considered personal property, they are often more expensive to finance than traditional homes. If you opt for a loan to finance your mobile home, you’ll likely be looking at higher interest rates and shorter loan terms compared to a mortgage for a stick-built house. This could result in higher monthly payments or overall costs over the life of the loan.
3. Challenges with Resale Selling a mobile home can be difficult, especially if it’s located in a mobile home park. Because mobile homes are not easily moved, it can be hard to find a buyer unless they are willing to leave the home in its current location. The costs involved in relocating a mobile home can run into the thousands of dollars, making resale less attractive to potential buyers. Additionally, there is still a lingering stigma surrounding mobile homes that may deter some buyers, even though construction quality has improved significantly over the years.
4. Ongoing Fees and Restrictions in Mobile Home Parks If you place your mobile home in a park, you’ll need to pay lot rent to the park owner. This ongoing rent can vary depending on the location and amenities of the park. Additionally, you may be subject to park rules and regulations, which can sometimes limit how you use or modify your home. If the park owner decides to sell or redevelop the property, you may be forced to move, which can add to the uncertainty of living in a mobile home park.
5. Vulnerability to Natural Disasters Unlike stick-built homes, which are often constructed on permanent foundations, mobile homes are typically installed on temporary foundations or even just a concrete slab. This can make them more vulnerable to damage in natural disasters such as earthquakes, tornadoes, or floods. While newer mobile homes are built to higher safety standards, they still don’t have the same structural stability as a traditional home when exposed to severe weather.

Conclusion

Modern mobile homes can be a practical and affordable alternative to traditional houses, offering cost-effective homeownership options with flexibility and quicker construction times. However, there are several factors to weigh, including depreciation in value, more expensive financing options, potential challenges with resale, and the added risks if living in a mobile home park or enduring natural disasters.

Before deciding whether a mobile home is right for you, take the time to research local laws, land ownership options, and financing conditions. Understanding the pros and cons in your specific area will ensure you make a decision that aligns with your long-term financial and housing goals.

​

In this article, we’ll cover some tips for succeeding with your real estate investments despite a recession. Keep reading to learn how to make the most of your investments during a recession.

Invest in your existing properties

There are many reasons to invest in your existing properties during a recession. One reason is that the property is already paid for, so you don’t have to worry about obtaining new financing during an economic downturn. You also won’t have to worry about the hassle and extra time it takes to find a good property deal.

Another reason to invest in your existing properties is that you can increase the returns on your investment. You can increase the value of your property by enhancing the property and by increasing the occupancy rate.

Finally, investing in your existing properties is a good way to protect your investments. If the recession gets worse, home prices may decrease, but your property value is less likely to decrease if you’re actively making improvements.

Investing in your existing properties is a smart way to protect your investments during a recession. Not only will you see a good return on your investment over the long-term, but you’ll also mitigate any decrease in property value.

Continue learning the real estate business and networking with other professionals.

One of the best things you can do as an investor during a recession is to continue learning and networking. This will help you stay ahead of the curve and learn about new opportunities as they become available. It’s also a great way to build relationships with other professionals in the industry.

There are many different ways to learn about real estate:

Attend seminars and webinars

• Read books and articles
• Find a mentor
• Watch videos.
• Attend conferences an in-person meetups
• Take online courses.

Networking is also a great way to learn. You can meet other investors, real estate professionals, and lenders. These relationships can help you get deals done and learn about new opportunities. Networking can also help you build your real estate business.

It’s important to stay focused and continue learning and networking during a recession. This will help you stay ahead of the curve and be successful during these tough times.

Analyze your portfolio and make any necessary adjustments.

When it comes to real estate investing, it’s crucial to stay ahead of the curve. During a recession, it’s even more important to be proactive to protect your investments. Analyzing your portfolio and making necessary adjustments is one way to do this.

First, take a look at your overall investment strategy. Are you comfortable with the level of risk you’re taking on? Are you still seeing the potential returns you expect? If not, it might be time to make some changes.

Next, perform a stress test by considering how different scenarios could affect you for information purposes. For example, what would happen if interest rates rose? Or if a property remained vacant for 90 days? How would that impact your investments?

Making changes to your portfolio can be difficult, but it’s vital to always be prepared for the worst. By being proactive, you can help ensure that your investments are safe — even during a recession.

Create short-term goals that focus on your long-term success.

Creating short-term goals is important for long-term success in any industry, but it’s especially crucial for real estate investors during a recession. When the market is down, it can be difficult to maintain focus on the big picture when your investments are losing money. However, setting and achieving short-term goals will help you stay on track and continue to make progress toward your long-term success.

It’s essential to set realistic goals for yourself. When the market is down, it can be tempting to set extremely aggressive goals in order to try and make up for lost ground. However, this is often counterproductive and can lead to frustration and disappointment. Instead, set goals that you know you can achieve with hard work and dedication.

Furthermore, if you want to stay on track and achieve your goals, track your progress. This can be done in various ways, such as setting milestones and tracking your net worth over time. By tracking your progress, you can identify areas where you need to make adjustments in order to stay on track.

One of the best things about setting and achieving goals is that you get to celebrate your accomplishments! Be sure to take the time to celebrate each and every victory, no matter how small it may seem. This will help keep you motivated and encouraged as you continue working toward your long-term success.

Maintain success with your investments despite a recession.

Here at 23^rd Street Investors, we have a variety of options for you to help you learn about and invest in real estate so you can take advantage of the cash flow, equity, appreciation, and tax benefits. Below are a few resources to get you started.

Invest Now: If you’re ready to see investment opportunities and learn more about investing real estate, we invite you to join our Street Smart Investor Club.

Connect With Us: If there’s ever anything we can do to help you on your journey, feel free to email us at team@23rdstreetinvestors.com.

As real estate investors, we’re constantly riding the waves of market dynamics, and one of the most significant factors influencing our decisions is the movement of interest rates. Over the past 12 months, we’ve seen a rollercoaster ride in interest rates that has sent ripples through the real estate market, impacting everything from mortgage rates to property values. Let’s delve into what has happened and how it affects real estate investing.

The Rollercoaster Ride of Interest Rates

The past year has been a whirlwind for interest rates. At the onset, the Federal Reserve took aggressive measures to combat the economic fallout from the pandemic, slashing rates to historic lows. This move aimed to stimulate borrowing and spending, providing much-needed liquidity to the market. As a result, mortgage rates plummeted, reaching enticing levels for both homeowners and investors alike.

However, as the economy showed signs of recovery and inflation concerns mounted, the Fed began hinting at tightening monetary policy. Speculation grew around the timing of rate hikes, causing fluctuations in the bond market. Consequently, long-term interest rates, including mortgage rates, experienced upward pressure, albeit with intermittent dips and plateaus along the way.

Implications for Real Estate Investors

For real estate investors, fluctuations in interest rates have far-reaching implications:

1. Cost of Capital: Interest rates directly impact the cost of borrowing, which is a crucial consideration for investors leveraging their acquisitions. When rates are low, borrowing costs decrease, enhancing cash flow and overall returns. Conversely, rising rates can erode profitability unless offset by corresponding increases in rental income or property appreciation.
2. Property Valuations: Low interest rates typically fuel demand for real estate assets, as investors seek higher yields in a low-yield environment. This heightened demand often translates into upward pressure on property valuations. Conversely, rising rates can dampen investor appetite, leading to softer valuations and potentially attractive buying opportunities for savvy investors.
3. Market Sentiment: Interest rate movements can significantly influence market sentiment and investor confidence. Sharp increases in rates may trigger concerns about affordability and economic stability, leading to cautious behavior among investors. Conversely, declining rates can instill optimism and fuel demand for real estate assets.
4. Exit Strategies: Interest rate trends also shape exit strategies for real estate investments. Investors may need to adjust their timing and approach based on prevailing rate conditions. For instance, in a rising rate environment, it might be prudent to expedite exits if an investment has a variable rate to avoid future increases. For investments with a low fixed rate loan, the prudent approach would be to hold on to the property until values come back. Remember, you need to sell to someone who will be looking for a loan at today’s higher interest rates and, thus, will not be able to pay as much for the property.

Navigating the Terrain

Given the dynamic nature of interest rates, successful real estate investing requires a proactive and adaptive approach:

• Stay Informed: Monitor economic indicators and central bank policies to anticipate potential interest rate movements. Stay abreast of market sentiment and adjust strategies accordingly.
• Risk Mitigation: Maintain conservative underwriting standards and factor in interest rate sensitivity in investment analyses. Consider implementing interest rate hedges or exploring fixed-rate financing options to mitigate exposure to rising rates.
• Diversification: Diversify across asset classes, geographies, and investment strategies to spread risk and capitalize on varying market conditions. A diversified portfolio can help cushion the impact of interest rate fluctuations.
• Long-Term Perspective: While interest rates play a crucial role in short-term decision-making, adopt a long-term perspective when evaluating real estate investments. Focus on fundamental factors such as location, demand drivers, and income potential to build resilient portfolios.

Conclusion

The past year has been a testament to the volatility of interest rates and their profound impact on real estate investing. By staying informed, mitigating risks, and maintaining a long-term perspective, investors can navigate the terrain effectively and capitalize on opportunities amidst shifting market dynamics. As we continue to monitor interest rate movements, let’s adapt our strategies and position ourselves for success in the ever-evolving real estate landscape.

​

Living abroad is no longer just a strategy to stretch retirement savings. It has become a lifestyle choice for remote workers looking for adventure, cultural exposure, and a way to accelerate their wealth building.

Traveling isn’t traditionally associated with saving money. We may think of spending a luxurious week at a resort in Hawaii, or a fun-filled week at Disney World with the family. We have to save money to travel in this way.

Digital nomads have found an alternative path to travel. They leverage their location-independence, or freedom from showing up at an office every day, to select cheaper destinations to live and visit. Or at least the financially savvy digital nomad will elect to leverage this powerful tool in building their wealth. It is, of course, possible to spend every last paycheck sent while traveling as a digital nomad. 

How Can Real Estate Investing Create More Opportunity For Digital Nomads

Every digital nomad eventually faces the reality that constantly traveling while also trying to get work done is a tough balance to maintain. Most co-work space conversations surround what exciting adventures are on the horizon – not on exciting work projects.

Digital nomads quickly discover that having passive income and a growing base of appreciating assets would support their travel dreams more than trying to squeeze in 40+ hours of work in beautiful destinations. 

While traditional real estate investing in residential properties often requires investors to be physically present, passively investing in real estate syndications allows digital nomads to grow their wealth, build passive income streams, and even provide tax benefits that put travel dollars back in their pockets. 

How Can Digital Nomads Build Wealth Faster

The traveling remote worker actually has a few advantages when it comes to investing passively in real estate. By leveraging these aspects of the digital nomad lifestyle, it could be possible to reach that full financial independence even sooner than you would if you were to live and work in a single location.

Leverage The Power Of Lower Cost Of Living

Digital nomads can leverage the power of saving more by living in countries with a significantly lower cost of living. Remote workers receiving an income from a company in America may find that they can save more than half of their paychecks each month while living in countries where the cost of a home or apartment is a fraction of that in America. Along with that may be lowered costs for groceries and transportation.

By saving more every month and investing that into real estate early, wealth building becomes exponentially easier. Opting to spend even just a few years living in a country with minimal expenses could accelerate the growth of their real estate portfolio, shaving years off their timeline to financial independence.

Invest Where It Makes Sense, Not Where You Live

Passive investing in real estate syndications also allows digital nomads to invest in real estate projects from anywhere in the world. They can invest in a project in a different city or even a different country without having to physically be there. This provides them with the flexibility to work and travel on their own terms without the hassles of maintaining a property or hosting potential tenants a vacant rental.

This freedom allows digital nomads to invest in the best markets rather than the one where they live. They can live in places where it may be cost prohibitive to purchase a rental property, but put their money to work in markets where cash flow is steady and reliable. 

Scale Quicker To Find More Freedom Faster

Passive real estate investing allows digital nomads to scale their investments without having to actively manage multiple properties. They can invest in multiple syndications or funds, and the income generated from these investments can be reinvested to grow their portfolio further.

Add in an accelerated savings rate and scaling a real estate portfolio of passive investments can quickly lead to freedom from having to work. 

Conclusion 

Digital nomads can benefit from passive investing because they know the value of having passive income to live life on their own terms. They’ve already taken the step toward living a life full of travel and adventure, which is a major hurdle to overcome in designing a life of intention. Adding in real estate investing and they could quickly find more freedom and security to live their ideal travel life.

Investing in real estate can be a lucrative way to build wealth, but deciding where to invest can be a challenge. Many investors began investing in real estate using single-family homes. As they accrued more properties, they also likely implemented a property manager to take over management tasks. 

However, even with property management, many single-family home investors find themselves wanting to scale up, or do more investing, but are tired to the work it takes to add these properties to their portfolios.

They inevitably look toward multifamily properties.

While both options have their advantages, there are several compelling reasons to scale up from single-family investing to multifamily investing. In this blog post, we’ll explore those reasons and help you make an informed decision about your investment strategy.

Reason #1: Higher Potential Returns

One of the primary reasons to invest in multifamily properties is the potential for higher returns. Multifamily properties typically generate more rental income than single-family properties because they have multiple units. This means that even if one unit is vacant, there are still other units generating income. 

Expenses are also spread out across many units. Costs associated with landscaping or management are less per unit compared to single family properties, which can mean a higher NOI, or Net Operating Income.

Reason #2: Less Risk

Investing in multifamily properties can also be less risky than investing in single-family properties. With single-family properties, if the tenant moves out, the property is vacant, and the investor is responsible for covering all expenses until a new tenant is found. 

With multifamily properties, however, the risk is spread across multiple units. If one tenant moves out, the investor is still generating income from the other units. 

Additionally, multifamily properties can be less susceptible to fluctuations in the housing market. While single-family properties may be affected by changes in the local housing market, multifamily properties are influenced more by the local rental market, which tends to be more stable.

Your risk as a passive investor is also less. You enter the team as a limited partner, which means you have limited liability if anything were to happen at the property. Be sure to read your legal documents carefully and speak with your attorney to fully understand your liability risks.

Reason #3: Greater Control

Investing in multifamily properties can also provide greater control over the investment. With single-family properties, the investor is at the mercy of the local housing market. If property values decline, there’s not much the investor can do other than wait for the market to improve. This is because the value of a single-family home is based on comparables, or the value of similar properties in the same vicinity.

With multifamily properties, however, the investor has more control over the value of the property. By implementing value-add strategies such as renovations, upgrades, and property management improvements, investors can increase the value of the property and generate higher returns. The value of a multifamily property is based on the NOI, or Net Operating Income. If the NOI increases, so does the value of the property – no matter what is happening in the neighborhood.

Reason #4: Easier Financing

Financing a multifamily property can also be easier than financing a single-family property. Multifamily properties are typically viewed as commercial properties, which means they can be financed with commercial loans. Commercial loans often have lower interest rates and longer repayment terms than residential loans, making them more affordable and easier to manage.

Even better, as a passive investor in a real estate syndication, you don’t have to deal with any lenders or qualification processes. In single-family investing, you have to qualify for a new loan with every subsequent property, and are eventually limited in the total number of loans you can have at all. This process is also not known for being smooth and easy, to say the least. 

Reason #5: Economies of Scale

Additionally, multifamily properties benefit from economies of scale. For example, expenses such as landscaping, maintenance, and property management can be spread across multiple units, resulting in lower costs per unit. This can lead to higher net operating income (NOI) and cash flow, which can translate into higher returns for investors.

Conclusion

While investing in single-family properties can be a great way to get started in real estate investing, scaling up to multifamily properties can provide even greater potential returns, less risk, greater control, and easier financing. If you’re ready to take your real estate investing to the next level, consider exploring the multifamily market and taking advantage of the benefits it offers. 

As a passive investor in a real estate syndication, you can take advantage of all the benefits of multifamily investing with none of the headaches associated with being a landlord. 

​Most investors have some familiarity with the big 3 traditional types of investing: stock market investing, REITs, and real estate. Many will only be familiar with the type of real estate investing that involves sacrificing your time as a landlord.

However, you’re here because you’ve discovered passive real estate investing in real estate syndications. So how does this type of real estate investing compare to stocks and REITs?

In this article we’re going to dive into the pros and cons, benefits and risks, advantages and disadvantages of these 3 types of investing.

Stock Market Investing Compared To Passive Real Estate Investing

We’ll start with looking at how investing in passive real estate investments compares to growing your capital in the stock market. From there, we’ll take a look at REITs specifically and see how they stack up against real estate syndications.

Long-Term Returns and Continuous Cash Flow

When assessing traditional assets like stocks or bonds, you typically encounter one-time cash payouts. However, in real estate syndications, you have the opportunity to invest in properties that generate positive cash flow without the need to sell them. This ensures a continuous stream of income, allowing you to keep the cash flowing over the long term.

Immediate Income through Real Estate Cash Flow

While stocks may pay dividends, few provide returns above 4%, barely keeping up with inflation. In contrast, real estate investors seek cash-on-cash returns of 7-10% or more, surpassing the meager 4% return offered by stocks.

With real estate syndications, you can enjoy immediate income through cash flow, sometimes starting in the first quarterly distribution. You’re then able to either use that income immediately or redeploy it in other investments to compound the growth.

Becoming an Expert Made Easy

Becoming well-versed in your desired real estate asset class or market doesn’t require a degree and can easily be achieved as a passive investor. By utilizing public information, such as population and job statistics, area rents, economic conditions, and real estate market trends, you can swiftly gain insights and identify potential markets to invest in and evaluate an asset.

Once a passive investor feels comfortable evaluating a market and a particular investment offering, it is easy to rinse and repeat.

It is much more challenging to become an expert in an individual company’s business plans for investing in the stock market. Most investors rely upon a financial planner to do the heavy lifting of identifying stocks to purchase that will out-perform the market. This seemingly solves your problem. However, this often comes with hefty (and hidden) fees that will greatly diminish your portfolio value over the long term.

The Ability to Inspect Real Estate

When investing in real estate, you have the advantage of inspecting the property before making a purchase, even as a passive investor. You can literally go to the property and do a “secret shop” to see the facility and experience the building as a tenant would experience it. You can also inspect the property, or the business plan and market, virtually. Most real estate investors become familiar with basic market evaluation tools, like population growth or job growth statistics. You can also perform basic searches for crime in the region, or other mentions of the property online. Most real estate syndications will additionally have extensive due diligence performed to ensure your capital preserved over the holding period.

On the contrary, scrutinizing every aspect of a company to validate its stock valuation is virtually impossible. By investing in real estate syndications, you gain the confidence of having personally assessed the property, ensuring that it aligns with your investment goals.

Straightforward Valuation of Real Estate

Unlike intangible assets with subjective valuations, real estate is comparatively easier to value due to its inherent comparability. Even if you lack expertise in property valuation, the process is not daunting, and there are numerous resources available to assist you in understanding if properties are over or under valued for a given market.

By utilizing online data, comparing properties to similar ones in the area, assessing overall conditions, and asking questions to the sponsor, you can derive a reasonably accurate ballpark understanding of the property values in your market.

Opportunities for Value Addition in Real Estate

Outside of corporate roles in public companies, it is challenging to significantly influence stock value. However, real estate offers ample opportunities to add value to your assets. Just as flippers enhance property value by making repairs or renovating properties to meet current buyer standards, a real estate syndication can greatly increase in value with specific upgrades and renovations.

Even better than a rental property, these upgrades often lead to direct increases in rent, which in turn increases the net operating income. This amount is used in the valuation of commercial real estate, unlike residential properties which are valued based on other houses in the area (called comparables or comps). With real estate syndications, you have the freedom to actively participate in value-adding activities.

Investing passively in real estate syndications presents a host of advantages, including long-term returns, continuous cash flow, easy valuation, inspection opportunities, and the potential for value addition. Embrace the world of real estate syndications and unlock the potential for financial growth and control over your investments.

Non-Traded and Publicly-Traded REITs: Understanding the Risks and Rewards

Non-traded REITs, also known as non-exchange traded REITs, offer investors an alternative to traditional stock exchange investments. These are private offerings, and can be harder to access for the everyday investor. As they do not trade on a stock exchange, investors may face challenges finding buyers or sellers when they want to transact.

Publicly traded REITs are open to any investor and are listed on major stock exchanges. You may invest in them directly, through mutual funds, or via exchange-traded funds, quickly and easily online.

REITS can have benefits when compared to traditional real estate investing and passive investing in real estate syndications. However, it is essential to be aware of the risks associated with these investment vehicles as well. Let’s take a look at both.

Confusing Liquidity

For a publicly traded REIT, you can buy or sell shares of your REIT at any time. However, for non-publicly traded REITs, which are some of the most lucrative, capital is less liquid. These often have minimum investment periods of 7 years or more. However, REIT managers may even limit the withdrawal of capital beyond that. Certain events or market conditions may cause a REIT to block withdrawals, or essentially render your liquid capital illiquid at the drop of a hat. One such time was during the interest rate increases in early 2023 when so many investors went to cash out of their shares at the same time.

However, it is essential to understand the fees associated with REITs, as there may be some associated fees if you elect to withdraw your funds early.

Real estate syndications are accompanied by a business plan that often defines holding the asset for a certain amount of time (often 5 years), during which your money is locked in, or illiquid.

Distribution Requirements And Tricky Loopholes

REITs are legally required to return 90% of their taxable income to you, the shareholder. This is why they can offer a higher yield compared to the rest of the stock market. However, they sometimes do distribute in tricky ways that may not reveal any distress they may be experiencing.

For instance, REITs may sometimes pay dividends using funds from other investors rather than property-generated income. This practice can impact the REIT’s cash flow and potentially decrease the value of shares.

The Hidden Fees Of REIT Investing

Savvier stock market investors know to look for the expense ratio of any fund they’re investing in. Often, the fees of these funds (in the ballpark of 1-2%) can significantly hinder your portfolio’s growth.

For REITS, fees are also a consideration. Non-traded REITs often charge upfront fees ranging from 9% to 10%, and sometimes as high as 15%. Additionally, if the REIT has an external manager, these fees can further reduce investor returns. Understanding the fee structure and management practices is crucial before investing in a non-traded REIT.

There are fees associated with real estate syndications, but they are baked into the underwriting and projections for the deal. In other words, the return projections (such as the 8% preferred return or 1.8x equity multiple you’re seeing in the investment summary) already include those fees.

Publicly Traded REITs: Risks to Consider

While publicly traded REITs offer a safer investment option compared to their non-exchange counterparts, it is essential to be aware of the potential risks associated with these investments.

Interest rate risk is a significant consideration for publicly traded REITs. When interest rates rise, the demand for REITs often decreases. This can cause a cascade of difficulties for managing the properties inside a REIT or even allowing full withdrawals of capital. Remember what I mentioned in the above paragraph on liquidity?

Investors tend to gravitate towards safer income plays, like U.S. Treasuries, when interest rates are high. Historically, REITs have not performed well during periods of rising interest rates.

Real estate syndications can also be impacted by rising interest rates. You can mitigate this risk by taking a look at the debt source for any potential investment offering. Is there an interest rate cap that will prevent rising interest rates from eating into your cash flow? Or is there fixed-rate debt on the property that won’t be impacted by rising rates?

The Big Tax Disadvantages Of REITs

Lack of tax advantages is one of the biggest downsides to REITs, and the biggest reason to grow your capital through syndications instead.

Although not necessarily a risk, it’s important to note that REIT dividends are taxed as ordinary income. This means that the tax rate on REIT dividends is the same as an investor’s income tax rate, which is typically higher than dividend tax rates or capital gains taxes for stocks. This can make your tax bill bigger.

Real estate syndications, on the other hand, have the potential to decrease your tax liability. When you invest directly in any property (real estate syndications included), you receive a variety of tax deductions, the main benefit being depreciation (i.e., writing off the value of an asset over time).

Oftentimes, the depreciation benefits surpass the cash flow. So, you may show a loss on paper but have positive cash flow. Those paper losses can offset your other income, like that from an employer.

When you invest in a REIT, because you’re investing in the company and not directly in the real estate, you do get depreciation benefits, but those are factored in prior to dividend payouts. There are no tax breaks on top of that, and you can’t use that depreciation to offset any of your other income.

Conclusion

It is up to you and your specific investing goals to determine which type of investing is right for you. You may prefer a mix of the asset classes described in this article, or be drawn to one in particular.

By understanding the risks associated with investing in REITs, the stock market, and real estate, investors can make informed decisions that align with their investment goals and risk tolerance. As with any investment, thorough due diligence, proper research, and seeking advice from experienced professionals can contribute to making prudent investment choices.

Medical professionals work incredibly hard, with their minds, bodies and hearts. We’ve seen this even more as they’ve showed up to care for patients through a global pandemic, during extreme natural disasters, and more incredibly intense events.

It’s no surprise that these people need to take a vacation more than most.

Running a practice and caring for patients, especially when dealing with operational stresses of managing a business, doesn’t leave much space for traveling more and spending quality time with friends and family. Yet, these individuals may need it more than most.

As a doctor, dentist, or nurse, It’s easy to get bogged down by the daily demands of your work, leaving little time for leisure or travel. Fortunately, there’s a solution that can help you reduce your workload, prioritize your well-being, and achieve greater financial freedom: passive income from real estate investing. 

Real estate investing does more than build wealth. The passive income, tax benefits, and equity growth can allow doctors and dentists, among others, to travel more and maintain a healthy well-being. 

But how? In this article, we’ll explore the benefits of using passive income from real estate investing to travel more, even as a medical professional, and show you how even medical professionals who own their own clinics can take the time to travel more.

Common Objections From Doctors And Dentists To Traveling More 

As a medical professional working in someone else’s practice or managing your own practice, it can be hard to think about traveling more. You are used to working countless hours, making high-level decisions, and have to continue paying the bills at home and in your business.

Each of the following objections are absolutely valid. However, every limitation starts with a limiting belief, or an idea that prevents you from seeing a solution. Let’s take a look at these common reasons why traveling more can be daunting for doctors and dentists, and see if we can find the limiting belief. 

#1 Objection: My Responsibility Is Too Great 

As the owner of a medical practice, you have a lot of responsibility for your patients, staff, and the overall success of the practice. If you left to travel, how would it all get done? This idea can make it difficult to take extended time away from work, as you may worry about the impact of your absence on the practice and the loss of income from not working.

This is an objection common among business owners. The truth is that every business can be built to run without the daily input from the owner. In fact, that is why most of us start businesses to begin with. 

By investing your income into passive real estate investing, your wealth continues to grow and your income can even be replaced by cash flow. As you develop systems to delegate management duties, you’ll begin to find that your true responsibility is to live your life with intention. If that means taking more time to relax and travel, then your business will likely benefit from your prioritization of your own health. Your patients may even get better care as a result of you traveling more.

#2 Objection: I Have Too Many Financial Obligations At Work And Home 

Owning a medical practice can be expensive, with overhead costs that must be paid regardless of whether or not you’re working. This can make it challenging to justify the expense of traveling, especially if it means taking time away from work and potentially losing income.

Being wealthy is really about having time. You likely became a doctor or dentist partially for the financial security promised in the medical field. Now that you have reached a higher income bracket, you may find that your health has been sacrificed to maintain your financial obligations.

Getting your money to work for you is the first and most important step in releasing your financial obligations from their control over you. The cashflow from real estate can eventually replace your income and the tax benefits can reduce your tax bill – putting more money back into your pocket. Real estate investing can provide freedom from the financial stress of earning a high income and running your own business.

#3 Objection: My Workload Is So Big That I Can’t Take Meaningful Time Off 

Running a medical practice can absolutely be a demanding and time-consuming job, leaving little room for leisure activities like travel. You may feel overwhelmed by the workload and worried about falling behind on important tasks if you take time away from work.

First, recognize that taking time away from work is not a sign of weakness, but rather a necessary part of maintaining your health and well-being. Remind yourself that you deserve time to relax, recharge, and pursue your personal interests.

Consider using time management strategies such as blocking off specific times for patient care or administrative tasks, prioritizing urgent tasks, and scheduling regular breaks throughout the day. This can help ensure that you make daily shifts that open your mind to the possibility of taking larger blocks of time off.

With real estate investments supplementing your income, you can reduce the financial burden of taking time off so that you can focus on shifting your workload.

Finally, Plan your travel well in advance, delegate tasks early, and communicate your plans with your staff and patients. This can help manage expectations and ensure that everyone is on the same page.

#4 Objection: My Personal Values Are To Help Other People First 

As a healthcare professional, you may feel a strong sense of duty to your patients and your community. It is probably why you became a doctor or dentist to begin with. You may worry that taking time away from work to travel could be seen as neglecting your responsibilities or betraying your professional values.

However, what type of care are you providing when you are stressed about running your business, paying high taxes, or neglecting your physical and mental health? Probably not great. 

Your patience deserves care from a medical professional who is living life to the fullest.

This may mean that you need to shift your belief about how much time you need to spend delivering quality care to patients. Perhaps by prioritizing your own health and travel goals, you can serve others even better? Along the way, you may find your own relationships and health improve.

Use The Lever Of Real Estate Investing To Travel More

Overall, it can be challenging to balance the demands of owning a medical practice with the desire to travel more. However, with careful planning, delegation of duties, and a strong support system, it’s possible to achieve both personal and professional goals.

By investing in real estate you are adding a significant lever to many of the challenges with traveling more for medical professionals. Passively investing in real estate can reduce the financial stress associated with business owners and high-income professionals. This happens through ongoing cash flow, appreciation of assets, and significant tax benefits – something every high income earner can use more of.

It’s important to address these objections and concerns in any discussion of the benefits of traveling more as a doctor or dentist. It may be daunting initially, but living your life with more intention can have positive ripple effects in the way you show up for your patients, your family, and yourself. It is possible to overcome every one of these limiting beliefs. Start with learning more about how passive income can give you more of your freedom back and you’ll start to see other objections to traveling more dissolving.