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Jeff Remsburg

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Parking Cashflows From the Oldest Means of Income Investing

By Neil George

I have just had my book, Income for Life, published! Today, I’d like to share one of the 65 chapters of income-generating ideas that absolutely anyone can start using on day one.

One of the book’s themes involves one of the oldest means of generating income. To give you a hint, it’s one of the most desired Christmas gifts of the Peanuts character Lucy van Pelt in the 1965 film, A Charlie Brown Christmas.

Lucy tells Charlie Brown what she really wants for Christmas … Real Estate!

Real estate is no new investment. According to the Pew Research Center’s analysis of U.S. Census Bureau data, 37% of Americans rent out their homes. While real estate is a common way to make residual income, it comes with a laundry list of responsibilities.

But one of the easier and more lucrative means of generating rental income on a dollar-per-square-foot basis, rather than renting out your house or apartment, is found in leased parking places.

I remember that when I first lived in Manhattan, on the East Side between First and Second Avenues, my monthly parking was substantially more than the lease on my car.

More and more savvy real estate owners are waking up to capitalizing on leasing parking places and, in doing so, parking space investments are becoming more popular.

They are both low-maintenance and easy to occupy. The average landlord of a residential property must process tenant applications.

This includes background checks, proof of employment, credit score checks and past rental references.

And this process doesn’t include the general and specific maintenance and security of the residential properties.

If you’re looking for an out-of-the-box way to rent out real estate, parking spots are one of the simplest strategies.

Parking Spots vs. Residential Properties

Before buying every parking spot in sight, let’s first take a look at some of the advantages parking spaces have over residential rentals.

Easy Entry Points

Where I currently reside in the Washington metropolitan area, parking spots can be purchased for anywhere from $10,000 to $50,000.

While a parking space is typically not available to be financed, that’s a low bar to generate relatively easy income. Many folks have that in savings or can partner with others for a group investment.

High-Grade Returns

For prime residential real estate in Washington, DC, like an $800,000 condo, rent would have to be sky-high just for a landlord to make a decent profit.

A landlord would have to charge $5,000 just to cover home association fees and to generate a $3,000 profit. (That’s a 4.5% annual return on your investment.)

On the other hand, monthly parking rates average around $300 in DC. A $20,000 parking space (with a $300 monthly fee) yields an annual return of 18%.

Low-Maintenance Management

Unlike residential rentals, landlords and property managers have much fewer responsibilities with parking lot rentals. Landlords handle general maintenance and repairs (emergencies included).

If there’s a leaky faucet or a broken pipe, the landlord is the first one getting a call. Matters like parking lots are non-factors.

Also, residential landlords have to take care of mortgage, taxes, homeowner association (HOA) fees, accounting and legal fees.

No Rent Control

The last words a residential landlord wants to hear are “rent control,” which poses the risk that a landlord might collect below-market-value rent.

The chances of rent control affecting a parking space are slim to none. This means less restrictions for parking space owners.

And with more municipalities and even states moving to impose rent controls –parking space properties may well become even more valuable.

Less Personal

When renting out a property to an individual, especially one with a family, evictions can become a nightmare.

Not only do you have to be concerned with getting into the property, you also have to worry about getting tenants (and their belongings) removed.

If parking spot tenants don’t fulfill their end of the agreement, their cars can simply be towed. Squatter laws will never be an issue.

Now that we’ve covered the what and why, the next up is the “where.” Here are the top five cities where parking space landlords can get the biggest bang for their buck.

The Top Five Cities to Rent Out Parking Spaces

No. 1: San Francisco

Famous for many things, including the Golden Gate Bridge, San Francisco has become a major attraction.

Not only does the Golden Gate Bridge attract 10 million people each year, San Francisco has the fourth highest cost of living in North America.

This means a landlord can up the rate on his parking fees.

No. 2: Washington, DC

The capital of the United States is filled with attractions that allure people from all over the globe. Washington’s cost of living is the seventh highest in North America.

It’s a place where culture, history and politics meet along with a vastly improving culinary scene with a quick ascent in the number of Michelin-Starred restaurants.

No. 3: Los Angeles

It’s a place of glamour, fame and fortune.

Another of my former homes, Los Angeles is the home to many celebrities and aspiring stars, making it prime real estate for renting out parking spaces for expensive events and in expensive neighborhoods.

No. 4: Miami

Miami is a melting pot of its own because of the great tourist attractions and the attractive lifestyle it fosters!

Being a place where yachts and exotic cars roam wildly, it’s ideal for renting out a parking spot.

No. 5: Seattle

Seattle is booming for both leisure and business. Nearly 40 million people came to visit Seattle in 2017.

For 2016 and 2017, the rapidly growing city added a combined 33,803 tech jobs (outpacing Silicon Valley).

To keep up with the expanding businesses, employees and residents alike will have a high demand for parking.

Killing Two Birds With One Stone

If you already have multiple rental properties in major cities around the U.S., you can take advantage of your current parking spaces.

In some areas, parking spaces may not be for sale. However, you might have a condominium with two parking spaces included.

If you save one parking space for your renter, you can rent out the other parking space.

This is an effective way to maximize your current assets. The best part is, this strategy will not cost you any additional fees to get started.

This method is particularly useful if your investment properties are located near major tourist attractions, overpopulated areas or business clusters.

A word of caution: Some HOAs have bylaws that prohibit subletting of any kind. Be sure to stay abreast of such rules and regulations.

Get a Piece of the Action

For those looking to put their spare parking spaces on the market ASAP, here are a few websites and mobile apps to consider.

SpotHero: In the information age, mobile apps have made doing business that much easier. SpotHero allows individuals to post their current parking spaces and rent them for hourly, daily and monthly fees.

ParkingPanda: Acquired by SpotHero in April 2017, Parking Panda tag-teams parking from a different angle. It focuses on business-to-business for event parking. If you’re already the owner of a parking lot, here’s another opportunity.

CurbFlip: Here’s another “do it yourself” option for those looking to rent out their parking spots. This app even allows you to rent out your driveway. This might be a complete game changer if you live in a townhouse or single-family home.

Pavemint: Pavemint allows parking spot owners to rent out their spaces without lifting a finger. The app does it all, and the cash goes right into your PayPal or bank account.

Craigslist: Everything is on Craigslist. You can post your parking spaces on this popular third-party platform.

For those looking for prime real estate (parking included), consult a nearby real estate agent. Their services are free. Real estate agents are only paid a commission through the seller’s proceeds.

Your next investment with ample and rising income streams is just a click or call away.

Now, generating cash from your existing parking space or new ones might not seem like my usual ideas for income, but it is just one of the 65 income stream ideas — from investing to side hustles that anyone can easily achieve — that I’ve written about in my new book, Income for Life.

If you’re looking for better returns in the market or just want to make some extra cash, I highly encourage you to check out Income for Life. It includes nearly 400 pages of income-producing investment strategies for all economic conditions as well as additional income-generating “side hustles” that anyone can use successfully.

Author: Jeff Remsburg

Source: Investor Place: A Less-Costly Way to Invest in Real Estate

Two big uncertainties are fading from market-memory. Why that bodes well for how we’ll close out 2019

When you’re watching a scary movie and the monster suddenly jumps out from behind the door, what do you?

Most likely, you startle in your seat. The reason why is simple — you weren’t expecting it.

But when you’ve seen the same scary movie 20 times and the monster jumps out from behind the door, what then? Nothing. That’s because you knew what was coming. Expectations met reality. Ho hum.

This dynamic plays out similarly in the investment markets, pointing toward an interesting takeaway …

The thing or event that actually happens in the market — whether good or bad — isn’t what drives price-action. Instead, the real driver is the difference between what actually happened and what was expected to have happened.

Take a company’s earnings report …

If analysts are calling for $10/share of earnings, but that number comes in at $8/share, that underperformance is going to take the market by surprise. Expect a sell-off.

However, let’s say analysts were actually expecting a loss of $3/share, but that number came in at a loss of just $2/share. This time, the surprise was positive. The stock will probably surge.

But notice the nature of these “events” themselves — the first company profited $8/share yet its stock suffered. Meanwhile, the second company burned through $1/share, yet its stock rose.

In a vacuum, does that make any sense?

No, but it illustrates our point — market events themselves aren’t the driver of short-term prices — it’s surprises to our expectations.

Last Friday, and continuing Monday morning as I write, the Dow is at a new all-time high. Why? Well, in large part, it’s because in recent weeks, three of the most significant issues on investors’ minds — interest rates, earnings, and China — have either met expectations or been mildly surprising in a good way.

Sprinkle in some smaller positive surprises, such as last Friday’s unexpectedly strong October jobs report and you have the makings for a bullish market environment.

So, in today’s Digest, let’s do a brief recap of where we are with these three market influencers, and then take a look at why things are looking good for a strong finish to 2019.

***Whether or not the Fed “got it right,” at least it met expectations

One of the most significant movers of the market is the Fed. Specifically, what it does with interest rates, including its language about what it might do with those rates in the future.

If the market doesn’t like the Fed’s decision — watch out.

Take last December, when the Fed signaled that it planned to keep raising interest rates. The market — not expecting this — had been up 300 points before the announcement, only to abruptly reverse, and drop 650 points, ending that day down 350 points.

Last week, we had another Fed meeting, resulting in a quarter-point cut, lowering the target rate to 1.50% to 1.75%. Now, whether or not this was the right move for the economy is beside the point. The bottom line is it met the market’s expectation.

John Jagerson from Strategic Trader noted this in his recent update to subscribers:

We expected some more volatility because the FOMC’s statement indicates it is ready to pause the rate cuts for now. The sanguine reaction to the announcement probably means the Federal Reserve met expectations, which is usually a good thing for the market in the short term.

Fed Chair Jerome Powell also took steps to be clear about what markets should expect going forward. In other words, he told us exactly which doors will have monsters behind them, and which won’t.

He did this by signaling that the Fed was stopping rate cuts for now. On more than one occasion, he said the Fed would keep its policy steady as long as there are no threats to its outlook for a moderately growing economy.

Given this, as we stand today, there’s far less room for the Fed to surprise the markets in some way as 2019 rolls forward. In other words, “green light” from the Fed.

***Earnings haven’t been the overwhelming disappointment many had been fearing

As I write, more than 350 S&P companies have reported earnings. Of them, 76% have topped estimates, according to I/B/E/S data from Refinitiv. That said, earnings are down about 0.8% for the quarter, based on companies that have reported already and estimates.

Here’s John for more color on this:

According to Zacks Research, the first 205 reports show earnings from the S&P 500 have declined since this quarter last year, but revenue has grown by 4%. In both cases, that is mostly in line with recent estimates.

However, it is worth noting that regardless of whether the reports are meeting expectations, investors are paying more for each dollar of revenue and earnings than they were at the same time last year.

Now, the fact that earnings are down isn’t good — nor is it good that multiples are increasing.

But remember, what moves prices? It’s not what actually happens, it’s whether or not what happens surprises market expectations. And in this case, the majority of earnings have either met expectations or even topped them.

Though we’re past the halfway mark of Q3 earnings season at this point, we still have a good amount of companies left to report. That said, what we’ve seen so far is a tentative “green light” from earnings. Assuming we don’t get too many nasty disappointments as we wrap up this earnings season, that’ll cross a very big “room for dangerous surprises” item off our list for the remainder of 2019.

Author: Jeff Remsburg

Source: Investor Place: 3 Positive Market Signals for the Rest of 2019

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