Aug 11, 2009
Baby Boomers Will Drive Real Estate Growth
Baby boomers, baby boomers, baby boomers; we all hear this term over and over again. So who are the baby boomers? Baby boomers are people in the United States who were born between 1946 and 1964. Approximately 78.2 million people fall into this category.
As a group, baby boomers comprise the largest population cohort in the history of the United States. The size of the group gives it vast influence over American politics, popular cultural, and of course, real estate. To evaluate the influence of the baby boomers on the future of real estate, the National Association of Realtors (NAR) conducted a study in 2006. The findings of the research were published in report entitled Baby Boomers and Real Estate: Today and Tomorrow. Below are some highlights from the NAR study.
AGE DISTRBUTION
According to the NAR report, baby boomers now range in age from 42 to 60 years old. The typical baby boomer is 50 years old, and the oldest of the baby boomers turned 60 in 2006. About 46% of baby boomers are in their 40s, and about 25% are at least 55 years old.
HOUSEHOLD INCOME
As a group, baby boomers are in their peak earning years. In 2005, baby boomers had a household income of $64,700, and about 25% them had a household income of at least $100,000 per year.
HOME OWNERSHIP
About 78% of baby boomers own a home, which is higher than the national ownership rate of 69%. About 96% of baby boomers believe that home ownership is a good financial investment.
FUTURE REAL ESTATE PURCHASES
About 10%, or 7.8 million of all baby boomers, said they were likely to purchase additional real estate in the next 12 months. Of these potential buyers, two-thirds were planning on buying a primary residence, 26% want to buy land, 19% want rental property, 15% want a vacation home or seasonal home, and 14% want a commercial property.
WHAT FEATURES ATTRACT BOOMERS
When baby boomers were asked about what features are most important to them, 38% wanted a lower cost of living, 38% wanted to be near family, 38% wanted easy access to quality health care, 37% wanted a better climate, and 36% wanted to be near a body of water.
PREFERRED COMMUNITY AMENITIES
When baby boomers were asked about the type of community amenities that interest them most, about 18% wanted to be near cultural offerings, 9% wanted to be closer to their family, 4% wanted to be on a golf course, and 3% wanted easy access to educational facilities.
WHERE DO BOOMERS WANT TO RETIRE
When baby boomers were asked about where they want to retire, 33% of them want to retire in a rural area, 30% in a small town, 25% in a suburban area, and only 12% in an urban community.
BOOMERS AND THEIR REAL ESTATE AGENTS
Baby boomers consistently use the services of a real estate agent. Approximately 60% of homebuyers and 79% of home sellers used a real estate agent in their last transaction.
SUMMARY
The baby boomers have had and will continue to have a significant impact on the real estate market. As the boomers near retirement, they continue to value real estate and will continue to invest in properties and land. Real estate agents would be well served to understand what baby boomers want in terms of their real estate investments, and design strategies that target the needs of this enormous population cohort. For more information, read the NAR report entitled, Baby Boomers and Real Estate: Today and Tomorrow
Watch the video related to real estate investment
Financial Markets (ECON 252) Real Estate is the biggest asset class and of great importance for both individuals and institutional investors. An array of economic and psychological factors impact real estate investment decisions and the public has changing ideas of real estate as a profitable investment. People’s demand to buy a home by taking on long-term debt, called a mortgage, is often tied with the overall health of the economy and financial markets. In recessions, home buying tends to …
Help answer the question about real estate investment
Can anybody answer this real estate investment company advice?
I’m almost 90% sure that i want to start my real estate investment company as a corporation not a LLC. I was wondering is this a good idea. Also, can’t i sell shares of my company to private investors to raise capital. Any advice on starting a commercial real estate investment comapany will help.
Seller’s pay the agent’s commission. So the REO company already has that figured into their price. So if you can somehow circumvent the Realtor the REO company is just keeping that commission. In other words the seller keeps the profit, not you.
I think you are right on starting as a corporation.
HOWEVER…as legalities vary from state to state on private investors, I think you really need to find a good small business attorney in your area, pay him a fee, and find out the in's and out's from there. A lot to consider with investors. 1) Are they going to be silent partners? Or 2) Are they going to have an equal say in how the company is run? Would be worth the fee.to find a good business attorney to lay it all out for you. Or find a book on amazon about starting a business. Once you are using someone elses' money, the company is no longer yours exclusively, unless you have a proven track record and your investors are willing to leave you in full control.
I'm in the same boat and looking to buy my first property as well.
I set it up as an LLC.
Sole Proprietor is generally a bad move in my opinion as it offers no protection of personal assets should something happen to that property.
If you want to send me an email through the system here, I'm more than happy to chat about what I've done, who I've talked to, and what contacts I've made.
REITs have had a great run these last several years. Be aware it may not continue. I do not know the best one. But there are some index funds of REITs. Think about investing in those. They were among the best performing REITs this year.
RWR and VNQ and IYR. Each is up about 38% ytd. Sort of a broad brush approach to picking the best. Just pick them all.
Profits based on pre arrangments made at time of investments.
Normally 1/3 each, after costs are settled.
Profts are divded after all actual costs involved. So first, all receipts must be settled. Investor 1, and even 2 and 3 may have made payments necessary (preferrably as agreed), and will be paid off.
Investor one received quid pro quo benefits by living at the site and in turn was responsible for a degree of on site presence (such as overall supervision and being on site daily). But investor 1 is entitled to receive compensation for actual trade work at a rate prearranged to. Some people would say that investor one should not get a bigger cut, and they would be right. But investor one can file a receipt for payment of actual work (such as building something, or doing certain specific measurable jobs, like laying tile, carpentry, even painting). Cleanings, supervising, worrying, running errands, grappling with issues, and being a hero do not count as tangible work, unless pre-arranged to as the "general contractor" payment.
You need a team.
See if there are any real estate investment groups in your town. Google it.
Then go to yahoo groups, msn groups and google groups and search for real estate investment groups in your community.
Find out when they meet and go sit in on the meetings. Don't discuss your plans until you know who you're dealing with. You're there to learn first, network second, and do business third.
Your goal is to build your team (investors – contractors – etc)
Your best bet, and it is a bet since gambling is involved, is to start an investment club. This would probably be local and you could have meetings etc. Just open a bank account under the name to be used. Collect investment money and go for it.
Now an investment fund would give the idea of a mutual fund. A lot of time and red tape involved with selling stock on the market. This would also cost you the start up and leave nothing for investing.