potential

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When it comes to purchasing a new property, homebuyers are often on the lookout for attractive incentives that can enhance their investment. Builders strive to entice potential buyers with various incentives. The most common incentives offered are capped development levies, assignment discounts, and the right to lease during occupancy. Let’s delve into these incentives and understand their benefits for homebuyers.

Capped development levies are one of the most sought-after incentives offered by builders. Development levies are charges imposed by municipal authorities to fund infrastructure projects in the area. However, these levies can significantly impact the final purchase price of a property. To alleviate this burden, some builders opt to cap the development levies, ensuring that homebuyers will not be subjected to any additional increases beyond a predetermined amount.

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By capping the development levies, builders provide homebuyers with cost certainty and protection against escalating fees. This incentive proves advantageous for buyers, allowing them to budget more effectively and avoid unexpected financial strain. Moreover, capped development levies can result in substantial savings, making the overall investment more attractive.

Assignment refers to the transfer of the purchase agreement from the original buyer to a new one before the property’s completion. This incentive provides flexibility for buyers who may have changed their plans or circumstances since entering into the agreement. It is also attractive to investors who purchase pre-construction homes with the sole purpose of assigning it once the value of the property increases.  

The right to lease is an appealing incentive offered by builders, particularly for investors looking to generate rental income. This provision permits buyers to lease out their property before they take occupancy. It allows them to start earning rental income immediately upon completion, mitigating any holding costs or mortgage payments.

For investors, the right to lease provides a lucrative opportunity to secure tenants in advance and establish a rental stream. Additionally, it grants flexibility by allowing investors to choose whether to reside in the property themselves or continue renting it out for long-term gains.

Unsure of whether you should go the resale or pre-construction route? Give us a call today to speak to a real estate agent that can help you make the right decision.

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Options traders buy calls when they believe prices will increase and purchase puts when they think prices will drop. But is there a way to profit if traders believe either that the price will remain stable, or the price will be unstable but the direction of movement is unclear?

Enter the butterfly spread strategy.

Butterfly spreads, depending on how they’re constructed, allow you to profit from either price stability or instability. In addition, they have the advantage of allowing traders to know their maximum gains and losses over the life of the trade.

Before engaging with a butterfly options trade, it’s best to learn how the myriad parts of a butterfly trading strategy works — and how to make that strategy work for you.

Butterfly Spread Defined

The butterfly spread — so named because of its “two wings on a butterfly” structure to the payoff graphs — is a go-to strategy for seasoned options investors looking for leverage while limiting downside risk.

Butterfly spreads are an advanced trading strategy, but if you’re a beginner there are other options strategies for you to explore.

Recommended: 10 Options Trading Strategies for Beginners

A butterfly options spread is an investment strategy that aims to profit from changes in volatility, take advantage of time decay, or both.

The object is to garner big trading returns on an asset whose price remains close to the strike price (when trading volatility is low) by the time the options contract expires. Butterfly options trades can be complicated in nature, but unlike many derivative trading strategies, butterfly trading strategies offer limited (i.e., known) gains and losses.

That “limit factor” derives from bull and bear spreads that in combination provide a price neutral strategy that keeps costs low, limits losses, and hopefully generates outsized returns.

Even so, butterfly options spreads do come with investment risk. Such trades should not be deployed by an investor unless the price of the underlying asset (such as a stock, bond, mutual fund, or exchange traded fund) remains fairly stable over the option contract’s entire time period.

💡 Quick Tip: If you’re an experienced investor and bullish about a stock, buying options online (rather than the stock itself) can allow you to take the same position, with less cash outlay. It is possible to lose money trading options, if the price moves against you.

How Does a Butterfly Spread Work?

Like any options trade, a butterfly spread trade is based upon the option’s underlying asset. The option contract itself spells out how the trade is structured.

Typically, when a trader looks at calls and puts in options they are concerned about the following key elements:

•   Whether the trader is interested in call or put options.

•   Will the trader be buying or selling/writing options.

•   The strike price

•   The options premium

•   The expiration date (i.e., when the options contract ends).

With a butterfly spread, the contract owner typically forges a bullish and bearish price spread. The contract represents a neutral trading strategy with a quartet of options contracts that hold the same expiration date, but have three different strike prices (one option at a low strike price, two at-the-money options, and a fourth option at a higher strike price).

Recommended: What Are Stock Spreads?

The options at the higher and lower strike prices are equidistant from the at-the-money contract price — this represents the proper balance of the two wings attached to the butterfly’s body (i.e., the neutral options contract).

For example, if the asset is trading at $50, the higher and lower strike prices should be equally distant from the $50 strike price — at $40 and $60, for instance — each “wing” of the butterfly trading strategy would be $10 away from the current $50 asset price.

Finally, user-friendly options trading is here.*

Trade options with SoFi Invest on an easy-to-use, intuitively designed online platform.

Butterfly Spread Example

Here’s an example of a long call butterfly spread, one of the most common forms of butterfly spread trading.

An investor decides to invest in XYZ stock where prices are stable and five-year pricing fluctuations are minimal.

XYZ is currently trading at $55 and the investor expects shares to remain stable, but doesn’t want to take on too much risk.

Here’s the butterfly spread options trade that takes full advantage of the situation but limits any downside losses.

The investor:

•   Buys an out-of-the money XYZ call expiring in two months with a strike price of $45

•   Sells two at-the-money XYZ calls with strike prices of $55 and the same expiration as above

•   Buys an out-of-the money XYZ call with a strike price of $65 also with the same expiration

Recommended: Guided to the Moneyness of Options

Note the equal balance between the three trades – each strike price is $10 from the $55 strike price on the two sold calls.

In total, the investor has purchased a pair of XYZ calls and has sold a pair of XYZ calls for the following amounts:

•   Purchase of one out-of-the-money XYZ call at $45 for $700.

•   Purchase one out-of-the-money XYZ call at $65 for $100.

•   Sell two at-the-money XYZ calls at $55, gaining $600 on the sale.

At the end of the transaction, the investor spends a net total of $200 ($700 plus $100 minus $600 equals $200).

If XYZ prices remain stable and close at $55 on the expiration date, the investor will achieve the maximum profit on the trade of $800.

Maximum Profit = Price of $45 call – Price of $55 calls + Price of $65 calls – Initial investment

Calls that are out of the money expire worthless, therefore:

Maximum Profit = ($10 – $0 + $0) * 100 shares per option – $200 = $800

If the price of XYZ moves significantly (for example, it rises above $65 or falls below $45, the butterfly spread yields the maximum loss of the $200 spent to initiate the trade.

Maximum Loss = Net Premium Paid = $200

Finally the butterfly spread has two break even points:

Lower Break Even point = Strike of Lower Strike Long Call + Net Premium Paid
Higher Break Even point = Strike of Higher Strike Long Call – Net Premium Paid

Lower Break Even point = $45 + $2 = $47
Higher Break Even point = $65 – $2 = $63

Should XYZ settle between $47 and $63 per share at expiration, the trade will be profitable. How profitable is summarized in the graph below.

Note: The calculations and graph above disregard transaction costs, but due to the complexity of the butterfly spread these can add up. The smart trader considers these costs when initiating and exiting trades.

Types of Butterfly Spreads

Investors looking to engage with butterfly spread trading have several types of spreads to consider.

Long Call Butterfly Spread

This type of butterfly spread has a trader purchase three positions; an out-of-the-money call option at a low strike price, the sale of two at-the-money call options, and another purchase of an out-of-the-money call option with a higher strike price as in the example above.

An investor may earn the maximum profit if the underlying asset’s price remains stable and is the same as the written calls on the expiration date.

The maximum loss is represented by the trade entry cost, with trading fees added into the final amount.

Short Call Butterfly Spread

A short call butterfly spread is the inverse of a long call butterfly spread and is initiated when an investor sells a single out-of-the money call option with a low strike price, purchases two at-the-money call options, and sells an out-of-the money call option that has a higher strike price.

The maximum profit is the same as the initial premium collected minus the cost of trading fees but can be achieved two ways. If the stock moves substantially higher or if the price moves substantially lower. In this case, the trader expects the stock to move significantly but doesn’t know in which direction. One market scenario might be before an earnings call where the market’s expectations of results are unclear.

The maximum loss on the trade is equal to the difference between the lowest strike price and the center strike prices less the credit received on trade initiation. This will occur if the price remains stable.

Iron Butterfly Spread

An iron butterfly spread is a four-position transaction constructed when an investor buys an out-of-the-money put option that has a lower strike price, sells a single at-of-the money put option, sells a single at-of-the money call option, and buys an out-of-the money call option that has a higher strike price.

Maximum profit is achieved when the underlying asset is equal to the middle option strike price, along with the premiums provided via the iron butterfly spread trading strategy. The maximum loss is represented by the strike differential of the middle strike price minus the lower strike price less any premiums earned.

Pros and Cons of Using a Butterfly Spread

All options trades have advantages and disadvantages and butterfly spreads are no exception.

Pros of Butterfly Spreads

While profit is always the primary hoped for benefit of engaging in a trade, butterfly spreads do offer more.

Flexibility. Butterfly spread options allow the trader to construct trades to take advantage of varying scenarios.

Risk is limited. With a butterfly options trade, the maximum risk is limited and cannot exceed the parameters laid out upon initiation of the trade. Many options strategies can expose traders to unlimited losses.

Few surprises. With a butterfly options trade, a trader goes in knowing the maximum profit and loss linked to the trade.

Cons of Butterfly Spreads

Like any securities trade (especially with options trading), risks are a reality with butterfly spread trading. These potential downsides should be considered before engaging in any butterfly spread trades.

Complexity. There are scenarios where butterfly spreads are built with three or four different positions. This complexity comes with added transaction costs which can eat into potential profits. Butterfly spread options trading is complicated and not recommended for new investors.

Limited Reward. Butterfly options partner limited risk with limited reward. Hitting a home run with an option that allows an unlimited payoff is not in the cards here.

Assignment Risk. Options can be assigned at any time prior to expiration if an option is in the money. With so many moving parts the risk of assignment is real, with the other disadvantage that the butterfly spread collapses if any leg is assigned. This is manageable, but is a real risk.

Butterfly Spread Pros Butterfly Spread Cons
Butterfly spreads are very flexible ways to profit from volatility or the lack thereof Complexity comes with higher transaction costs
Limited Risk Limited Reward
Few surprises Assignment Risk

Use Your Options Trading Knowledge Today!

Investors looking to leverage butterfly spread options should know the trading strategy is complex and not without risk.

That said, a butterfly spread options strategy can yield significant profits if the expected scenario develops — and if the investor commits to the narrow options trading strategy that butterfly options trading demands.

Qualified investors who are ready to try their hand at options trading, despite the risks involved, might consider checking out SoFi’s options trading platform. The platform’s user-friendly design allows investors to trade through the mobile app or web platform, and get important metrics like breakeven percentage, maximum profit/loss, and more with the click of a button.

Plus, SoFi offers educational resources — including a step-by-step in-app guide — to help you learn more about options trading. Trading options involves high-risk strategies, and should be undertaken by experienced investors.

With SoFi, user-friendly options trading is finally here.

Photo credit: iStock/Kateryna Medetbayeva

SoFi Invest®
The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results.
Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or prequalification for any loan product offered by SoFi Bank, N.A.

Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.
SOIN1021448

Source: sofi.com

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Find the perfect pup for your apartment.

Dogs are more than companions. In small apartments they quickly become life’s little amplifiers, turning everyday moments into adventures and quiet evenings into the emotional recharge session you desperately needed. For renters, these breeds not only fit the physical space but also fill the hearts of their owners with companionship and charm.

If you’re searching for the perfect pup for your space, the best small dog breeds emerge not just as pets, but as partners. They weave tales of companionship in compact spaces and harmonize with the rhythm of metropolitan existence. Below you’ll find ten of the best small dog breeds for apartment life as well as some pros and cons of dog ownership. Today’s the day to find your four-legged roommate.

What makes a good apartment dog?

In a space bustling with energy, unexpected noises, and the ebb and flow of various moods, a dog’s character becomes paramount. The best small dog breeds for apartment life are those with inherent grace and adaptability. The likes of the Havanese or the cavalier King Charles spaniel, known for their mellow demeanor and innate charm, emerge as top-tier candidates.

The pragmatics of the breed, too, warrant contemplation. Urban living is not just a sensory experience, but also a logistical puzzle. Grooming needs cannot be overlooked. Consider the dainty elegance of the Pomeranian’s radiant coat or the silky finesse of the Yorkshire terrier. Beautiful, yes, but they come with the responsibility of upkeep.

Noise is a currency in the city, and its value fluctuates dramatically. Continuous barking can sour relationships faster than a brewing storm, and so breeds with quieter dispositions, like the gentle French bulldog or the composed Boston terrier, become priceless assets.

Choosing among the best small dog breeds isn’t just a task; it’s a journey through perky ears, curled tails and undeniably adorable furry faces. Just as every brick and tile in the city adds to its grand narrative, the perfect canine companion becomes an essential chapter in the dynamic story of urban life.

Navigating breed restrictions

In the winding alleys of apartment complex regulations, where every nook and clause tells a story, there lies the issue of breed restrictions. It’s common practice for apartment complexes to set weight limits, often stringent enough to sideline even some small dog breeds. It’s a careful dance of ounces and inches, with breeds just on the cusp — like a sturdy French bulldog or a hearty cocker spaniel — sometimes finding themselves in a liminal space, too hefty for some guidelines, yet small in the grand canine spectrum.

This choreography of policies can be difficult to navigate and is often best handled by giving the apartment complex a call and asking the experts about the status of your specific pup.

The pros and cons of having a dog in an apartment

Navigating the world of apartment living with a canine companion brings its own unique blend of joys and challenges. Let’s delve into some of the distinct advantages and disadvantages of sharing your compact space with a small dog.

Pros:

  1. Companionship: Apartments can sometimes feel isolated or confining, especially for those who live alone. A dog provides companionship, love and a reason to come home, making the space feel more lively and warm.
  2. Routine and structure: Dogs require a consistent routine for feeding, walking and play. This can bring structure to an owner’s day, promoting a healthier lifestyle and ensuring regular breaks from work or leisure activities.
  3. Security: Even small dogs can provide an added sense of security in an apartment setting. While they might not be highly prized guard dogs, their heightened senses can detect unfamiliar sounds or changes in the environment and their barking can deter potential intruders.

Cons:

  1. Limited space: Apartments, especially smaller ones, may not provide ample space for highly active dogs to move around and play. This can lead to potential behavioral issues if the dog doesn’t receive enough exercise or mental stimulation.
  2. Noise sensitivity: In tight living quarters, dogs might become more aware of noises from neighbors, leading to increased barking or anxiety. Similarly, neighbors might be more affected by the sounds of a dog, which can lead to tensions.
  3. Convenience: Unlike homes with backyards where dogs can easily be let out, apartment dwellers usually need to take their dogs out on a leash for bathroom breaks, regardless of the weather or time of day. This can be particularly challenging in high-rise buildings or areas without immediate green spaces.

While there are definite joys to having a small dog in an apartment setting, potential challenges should be considered and addressed to ensure the owner and the pup have a harmonious living experience.

The best small dog breeds for apartment renters

From the undeniably elegant Italian greyhound to the predictably goofy pug, these are ten of the top small dog breeds for apartment renters, regardless of the city they live in or the floorplan they inhabit.

French bulldog

French bulldogs are well-suited for apartment living because of their small stature and moderate energy level. They are content with shorter walks and indoor play, making extensive outdoor spaces less crucial. Additionally, their generally quiet demeanor and sociable nature make them pleasant companions for close-quarter living.

Boston terrier

Boston terriers are excellent for apartment living due to their compact size and friendly disposition. Their moderate energy level is well-matched to indoor play and short walks, making expansive outdoor spaces unnecessary. Furthermore, their affable nature and typically low tendency to bark ensure they fit seamlessly into close-knit apartment communities.

Cavalier King Charles spaniel

Cavalier King Charles spaniels are a perfect match for apartment renters because of their small size and gentle temperament. They thrive on human companionship, content with cuddling and indoor play. While they enjoy walks, their exercise needs are moderate, making them adaptable to the limited outdoor space typical of many apartments. Plus, their affectionate and sociable nature ensures they integrate well in communal living environments.

Dachshund

Dachshunds, with their compact size and charismatic personalities, are well-suited for apartment life. They have moderate energy levels that can be satisfied with short walks and indoor play. Their elongated yet small frame fits comfortably in tighter spaces, and their social and curious nature allows them to adapt quickly to the bustling environment of even the liveliest apartment communities.

Havanese

Havanese dogs are a superb choice for apartment living because of their small stature and adaptable nature. They possess a friendly and affectionate demeanor, thriving on companionship and bonding closely with their families. Their exercise requirements are modest, and they are content with indoor play and short walks, making them ideal for spaces with limited outdoor access. Additionally, their quiet and sociable traits make them delightful neighbors in apartment settings.

Pug

Pugs are ideal for people in apartments due to their compact size and easygoing nature. They are generally content lounging indoors and don’t require much exercise, making them well-suited for limited spaces. Their sociable and affectionate temperament ensures they bond closely with their families and their typically quiet demeanor means they’re unlikely to disturb neighbors in close-knit apartment communities.

Yorkshire terrier

Yorkshire terriers, often affectionately known as ‘yorkies’, are excellent for apartment living because of their petite size and spirited yet manageable energy levels. Their small stature makes them ideal for limited spaces, and while they enjoy playtime, they don’t require extensive exercise. Additionally, yorkies are known for their loyal and affectionate nature, forming strong bonds with their owners very quickly.

Italian greyhound

Italian greyhounds are well-suited for apartment life due to their slender size and serene disposition. While they enjoy short bursts of speed and play, they are equally content lounging and snuggling indoors. Their low-maintenance coat and typically quiet nature make them easy companions in tighter living spaces. Beyond that, their gentle temperament allows them to blend harmoniously into the close-knit dynamics of apartment communities without tension.

Pomeranian

Pomeranians, with their compact size and buoyant personalities, are a fitting choice for renters. Their small stature makes them comfortable in limited spaces, and while they are energetic, their activity needs can often be met with indoor play and short walks. Additionally, their lively demeanor and affectionate nature bring warmth and vibrancy to any apartment, making them endearing companions in all urban settings.

Bichon frise

Bichon frise dogs excel in apartments due to their petite size and cheerful disposition. Their moderate energy levels can be easily managed with indoor play and brief outdoor walks. Their fluffy yet low-shedding coat is suitable for indoor environments, and their friendly and sociable nature ensures they integrate smoothly into apartment communities.

Find the right pup for your apartment

As curtains draw and lights dim in apartments everywhere, the presence of these pint-sized companions becomes profoundly felt. The best small dog breeds, with their endless affection and lively spirits, redefine apartment living.

They offer comfort in solitude, joy in small moments, and a steadfast friendship that turns every corner of an apartment into a realm of shared stories and cherished memories. In the embrace of these tiny wonders, one discovers the vast expanse of love and connection.

Already have the perfect pup but need the perfect place? Start your search with Rent. right here.

Source: rent.com

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Whether you’re in the heart of Orlando, Florida, or the sprawling landscape of Oklahoma City, the dream of renovating or updating your property is nearly universal. And a project like building a detached garage combines practicality with creativity, providing space for your vehicles, storage, and hobbies. However, beginning this project requires careful planning and execution to ensure that your detached garage not only meets your needs but also adheres to local regulations and stands the test of time. 

In this Redfin article, we’ll take you through each step of the process and what to expect, from researching and planning to adding the finishing touches. Whether you’re aiming for a small workshop or a spacious multi-bay garage, this guide will serve as your roadmap to success.

1. Research and planning

Local building codes and zoning regulations: Research your local municipality’s building codes and zoning regulations. These guidelines will dictate aspects such as setback requirements (how far the garage must be from property lines), maximum height, size restrictions, and any necessary permits. For example, some areas might require a minimum distance of five feet from property lines.

Permits: Obtain the necessary permits before beginning construction. Common permits might include building permits, zoning permits, and possibly environmental permits if your area has specific regulations regarding construction on the land.

Design considerations: Think about the purpose of your garage. Will it simply be for parking vehicles, or will you need additional space for storage, a workshop, or other uses? Consider the number of bays, ceiling height, and any unique features you’d like to incorporate.

2. Design and budget

Layout and dimensions: Sketch out the layout of your garage, including the placement of doors, windows, and potential interior walls. Decide on the dimensions based on the space available and your needs. For example, a two-car garage typically measures around 20 feet by 20 feet, but you might need more space if you plan to include a workspace.

Roofing and siding choices: Choose roofing materials and siding options that complement your home’s design and suit your climate. Asphalt shingles, metal roofing, and cedar shakes are some common roofing choices, while options for siding include vinyl, wood, and fiber cement.

Cost estimates: Research the cost of construction materials, labor, permits, and other potential expenses. Obtain quotes from contractors for the work if you plan to hire professionals. Be prepared for unexpected costs that might arise during construction.

3. Site preparation

Choosing the location: Select a location on your property that is both practical and adheres to local regulations. Consider factors such as ease of access, distance from the main house, and terrain. For example, if your property has a slope, you might need to consider leveling the area before construction.

Clearing the area: Remove any vegetation, debris, or obstacles from the chosen construction site. This might involve clearing shrubs, trees, rocks, or other objects that could impede construction equipment or foundation work.

Excavation and grading: If your chosen site isn’t level, you’ll need to excavate and grade the area to create a flat and stable foundation. This might involve moving soil, adding fill dirt, and compacting the ground to ensure a solid base for construction.

Utilities and drainage: Check the location of underground utilities (water, gas, electrical lines) before digging. Ensure proper drainage by grading the area away from the garage site to prevent water accumulation around the structure.

4. Foundation and footings

Foundation Type: Choose the appropriate foundation type based on your garage’s design, local climate, and soil conditions. Common options include:

  • Slab-on-grade: A concrete slab poured directly on the ground surface. It’s cost-effective but lacks a crawl space or basement.
  • Crawl space: Elevating the garage slightly with a crawl space underneath for ventilation and access to utilities.
  • Full basement: Providing additional space and potential for utilities but is more complex and expensive.
  • Excavation and footings: Excavate the area according to the foundation type chosen. Pour concrete footings that will support the weight of the garage walls and distribute it evenly across the ground.
  • Concrete slab: If opting for a slab foundation, pour and finish the concrete to create a level surface. Ensure proper curing to prevent cracking.

5. Framing and structural work

Wall framing: Use the appropriate framing materials (wood or steel) to build the garage’s walls. Follow building codes and engineering specifications to ensure structural integrity. Place framing members at the correct intervals to provide stability and support.

Roof trusses or rafters: Depending on your design, install roof trusses or rafters to form the roof’s framework. These components should be accurately positioned and securely fastened.

Sheathing: Apply sheathing (plywood or OSB panels) to the exterior walls and roof to create a solid surface for siding and roofing materials. This also contributes to structural stability.

Bracing and reinforcements: Install diagonal bracing and reinforcements as needed to prevent sway or structural weaknesses. This is particularly important in areas prone to high winds or seismic activity.

6. Roofing and siding

Roofing material: Install the chosen roofing material, considering factors such as durability, aesthetics, and weather resistance. Common options include asphalt shingles, metal panels, clay tiles, or wooden shingles.

Weatherproofing: Ensure that the roofing material is properly installed, and all seams and edges are sealed to prevent leaks. Install appropriate underlayment, flashings, and ventilation to promote moisture control and prevent condensation buildup.

Siding installation: Apply the selected siding material to the exterior walls. Follow manufacturer instructions for installation and maintain proper clearances to avoid moisture-related issues. Different materials may require specific installation techniques, such as nailing patterns and overlapping.

Insulation: While not part of the traditional roofing and siding process, this is a good time to consider adding insulation to the walls and roof if it wasn’t addressed during framing. Proper insulation helps regulate temperature and improve energy efficiency.

By carefully executing these steps, you’ll create the foundational structure of your detached garage and establish the exterior shell. These steps are crucial for ensuring the stability, weather resistance, and overall functionality of your garage.

7. Electrical and plumbing

Electrical planning: Determine the garage’s electrical needs based on its intended use. Plan the placement of outlets, switches, and lighting fixtures. Decide if you’ll need dedicated circuits for power tools or other equipment.

Wiring installation: Install electrical wiring according to local electrical codes. This involves running wires through walls and ceilings, connecting them to outlets and switches, and ensuring proper grounding. Hiring a licensed electrician is recommended for safety and compliance.

Electrical fixtures: Install light fixtures, outlets, and switches as per your electrical plan. Consider energy-efficient lighting options for both interior and exterior spaces.

Plumbing (if applicable): If your garage requires plumbing for a sink, bathroom, or other utilities, this is the stage to install the necessary plumbing lines, fixtures, and drainage systems.

8. Doors and windows

Garage doors: Install the garage doors based on your design. Choose from single or double doors, sectional doors, or roll-up doors. Ensure proper installation and mechanisms for smooth operation.

Windows: Install windows to allow natural light into the garage. Choose window sizes and placements that enhance both aesthetics and functionality. Properly seal and weatherproof around windows to prevent leaks.

9. Interior finishing

Insulation (if not done earlier): If insulation wasn’t installed during framing, add it now. Proper insulation helps maintain a comfortable interior temperature and reduces noise transfer.

Drywall or paneling: Cover interior walls and ceilings with drywall or paneling, depending on your design preference. Proper installation and finishing techniques are crucial for a polished appearance.

Painting and finishing: Paint the interior surfaces to enhance the space’s aesthetics. Choose paint colors that complement the overall design and lighting of the garage.

Flooring: Choose and install the appropriate flooring material for your garage. Options include concrete, epoxy coatings, rubber mats, or even tiles. Consider durability and maintenance when making your choice.

10. Final inspections and touch-ups

Inspections: Schedule final inspections with local authorities to ensure that your garage complies with building codes and regulations. This may include structural, electrical, plumbing, and fire safety inspections.

Addressing inspection feedback: If inspectors identify any issues during the final inspection, address them promptly to ensure compliance. This might involve making corrections, adjustments, or improvements.

Landscaping and exterior: Complete any exterior work, such as landscaping, driveway installation, and exterior lighting. This enhances the overall look of your property and provides a welcoming environment.

Final touch-ups: Take care of any remaining cosmetic touch-ups, such as paint touch-ups, caulking, and garage cleaning. This ensures that your detached garage is ready for use and visually appealing.

By following these final steps, you’ll complete the construction of your detached garage and transform it from a construction site into a functional and aesthetically pleasing addition to your property.

Source: redfin.com

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Ally Financial dove headfirst into generative artificial intelligence after ChatGPT made its splash at the end of 2022.

The Detroit bank formed a working group around generative AI in early 2023. It met with both Microsoft and Amazon in Seattle in February and hashed out a contract with Microsoft to use its enterprise-grade generative AI software in April. The team started building Ally.ai, a proprietary cloud-based platform that developers will use for AI-related projects, in June, and launched a pilot for its first use case at the end of that month. The pilot moved to production on July 31. 

“We do not want to stand still,” said Sathish Muthukrishnan, the chief information, data and digital officer at Ally Bank.

Ally.ai is a bridge between external large language models (Microsoft’s GPT 3.5 right now; perhaps other large language models in the future), generative AI technology, Ally’s internal applications and data, its data security protections and — for now — human intervention. Ally’s early work demonstrates how a $197 billion-asset bank is handling risks such as hallucinations and protecting customer information. It’s also showing promise, with high approval ratings from the contact center agents that are part of Ally’s first use case.

Ian Watson, head of risk at Celent, finds banks are generally doing three things right now relating to generative AI.

One is cleaning up their data foundations and pulling bank data out of its siloes. Another is choosing which large language models they want to use, from the big names such as Microsoft and Google to smaller open-source models that Watson says have much of the functionality of the big ones but can be trained on less data. The third is experimenting with use cases.

“That is the part that most captures the imagination and paints a picture of what is possible,” he said. “It’s where a lot of people are focused in terms of getting funding for this or to show they are on the cutting edge. But the bulk of the investment is going into data foundations.”

Ally’s first use case focuses on the contact center. Normally, contact center agents take notes when speaking with a customer and summarize the contents of the call when it’s over. This is necessary for regulatory reasons, as well as ensuring good customer service. Ally piloted a system in June and July where AI technology transcribes the conversation in real time to the Ally.ai platform and creates a summary of the call. One goal is to relieve the agents of multitasking and let them be more present in the conversation.

“This has the potential to unleash productivity for us,” said Muthukrishnan.

For now, agents will manually review these summaries to ensure everything is accurate. The system is showing promise so far: When the pilot began in late June, the rate of agents approving their summaries with no changes was in the low teens. By the time the pilot wrapped up at the end of July, the approval rate was 78%. Now, it’s fully deployed to more than 700 agents.

Human intervention is still important as Ally refines its models. It’s also one of three principles that Ally adopted before using generative AI. The others are to learn and test on internal customers (employees) before deploying to external customers, and to keep personally identifiable information strictly within Ally firewalls.

These precautions are vital.

Celent groups the risks surrounding generative AI into two buckets. One is adverse outcomes, such as bias, hallucination and false output. The other is external threats, such as regulatory violations and cybersecurity.

“There is a real danger of the models developing complete falsehoods,” said Watson.

The team at Ally observed hallucinations when calls took less than one minute or the line was fuzzy, and had to refine prompts to prevent this from recurring. Other security measures include a secure pipeline between the bank and Microsoft and a dedicated GPT 3.5 model. Ally does not let PII leave its firewalls or let the foundational models learn from Ally data. Ally’s model will “forget” personal data after a session with a customer associate is over. The team conducts tests and evaluations to guard for model “drift” and bias creeping in.

Despite the risks of generative AI, “The most obvious risk is actually not using it,” said Watson. “We think it’s going to change business models and the competitive playing field,” from reducing drudge work and employee turnover to customizing marketing materials.

Ally is evaluating other potential use cases, such as writing user stories for software features and answering basic questions about human resources benefits.

Further down the road, it could develop use cases for customers.

“This will give us the ability to truly understand customer needs and wants, and to personalize experiences that fit their financial needs at the right time,” said Muthukrishnan.

The debut of Ally.ai dovetails with its transition to the cloud. More than two-thirds of Ally applications are now cloud-enabled.

“AI by itself requires a massive amount of compute,” or processing power, memory and storage, said Muthukrishnan. “If you want horizontal scaling and infrastructure on demand, you want your applications running on the cloud.”

Source: nationalmortgagenews.com

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The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.

Some people collect luxury goods such as investment pieces. Think of a Birkin bag, art by the legendary Jean-Michel Basquiat or a Rolex. Anything considered timeless or high-quality and that appreciates in value can be called an investment piece.

The luxury market tends to be more resilient than other sectors during economic instability because of high demand, among other factors. That said, is this inflationary period a good time to invest in luxury goods?

Buying luxury goods amid inflation

The U.S. Federal Reserve has raised interest rates 11 times since March 2022 in an attempt to cool inflation. Interest rates are the highest they’ve been in 22 years, and consequently, we’ve seen the cost of borrowing increase and spending on nonessential goods decrease.

While Americans have cut back on spending, the demand for luxury goods is still strong. Research by J.P. Morgan shows a 7% year-over-year increase in the luxury goods market in the fourth quarter of 2022, despite significant price hikes.

Luxury brands raised the prices of their products by almost 17% in 2020 and early 2021 in response to lower sales during COVID-19, according to a 2022 study by KPMG International. This change is significant considering typical price increases are 5% to 10%. These price increases didn’t only benefit luxury brands; people who invested in these goods in prior years may have also seen gains.

Gloria H. Gill, a retiree who we spoke to on Facebook Messenger, said the value of her large classic Chanel bag has more than doubled in about seven years. Gill purchased the bag for $4,800 in Paris in 2016. It now has a market value of around $10,000.

“I have sold bags before, but I doubt I’ll sell this one,” Gill said. “It’s listed in my will, and my sons are aware of its high value.”

Luxury goods can sometimes hedge against inflation when they appreciate in value, says William Huston, founder of Bay Street Capital Holdings, which has offices in Los Angeles, New York and Fremont, California.

“These luxury goods, they do protect against inflation, but they don’t outperform the general stock market,” he says.

As with any investment, there are risks. As Huston points out, your money could potentially earn a higher rate of return elsewhere. Also, your item could get lost or destroyed, or it may be difficult to resell.

Assess your financial foundation first

Before investing in anything, assess your financial situation. For instance, is your emergency fund well stocked? Keep in mind that possessions are considered “illiquid assets” — not quickly convertible to cash if you need it in a pinch.

Also, saving for retirement comes before investing in luxury goods, says Dora Meyer, a certified financial planner at WellAcre Global Wealth Advisors in Santa Monica, California.

“Make sure you are taking advantage of any tax-advantaged accounts, so your 401(k), your Roth IRAs, before you look at investing in something like this. [And] your HSA,” she says.

Meyer also advises, “Be careful [with] buying on credit, especially in this environment when interest rates are a little bit higher.” And she recommends buying from a reputable source to avoid knockoffs.

Investing in timeless pieces

Valerie Schwank owns the Fashionista Consignment Boutique in Coconut Grove, Florida, where she buys and sells luxury goods. Schwank has seen a significant boom in her business since the pandemic began and is an advocate for investing in luxury pieces. She recommends buying timeless and high-quality pieces, as they tend to hold their value.

“I always recommend that you buy a staple,” she says. And by staple, Schwank means “the Chanel classic double flap, no-nonsense handbag, which has been around forever.”

Think about factors like the color and materials of items, too. That often differentiates timeless luxury goods from ones that won’t hold as much value over time. Keeping your items in good shape, especially if you plan to resell, is also important, Schwank says.

Calculating your potential returns

Research how an item has historically performed before purchasing to ensure it’s a worthwhile investment. You can go to luxury resale sites such as Vestiaire Collective, The RealReal and Rebag and check how pieces have appreciated over time.

Huston advises having a financial plan before making a luxury investment. “With the financial plan, you’d be able to see, ‘I’m 30 years old, I’m gonna save $300 a month,’” he says, as an example. That plan can give you context to decide, “’That’s a meaningful amount of money to me and I can afford that $300, and it’s better for me to save $300 in my 401(k) than to buy a watch,’” he says.

You can also improve your investment returns by negotiating when it comes to items like art, he adds.

“A lot of this luxury stuff is negotiable because again, it’s illiquid” and not easily converted to cash, he says. “So if you find the right person selling the right thing at the right time, you can get it for a really good value because they just want to get some of their money back.”

This article was written by NerdWallet and was originally published by The Associated Press.

Source: nerdwallet.com

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Pricing, Internal Audit, CRM, Home Insurance, Lead Generation Tools; Comp Survey; MBA’s Cost Per Loan Stats

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Pricing, Internal Audit, CRM, Home Insurance, Lead Generation Tools; Comp Survey; MBA’s Cost Per Loan Stats

By:
Rob Chrisman

Fri, Aug 18 2023, 10:49 AM

As numbers approaching a thousand head to Orange County, CA, for the California MBA’s Western Secondary, keeping an eye on the remnants of a hurricane, it is not an easy lending environment with mortgage rates at 20-year highs, firmly in the 7’s. Thomas Edison believed, “Vision without execution is hallucination.” Many owners of lenders and vendors had very good vision and execution some years ago when creating their companies. But thinking that 2020 and 2021 would continue indefinitely would have been classified as a hallucination, and obviously things have become much more difficult with many wondering where things go from here. I don’t have a crystal ball, but a certain percentage of those owners who deferred being serious about exploring a sale, waiting, until after the cycle was obviously on the downside, they’ve perhaps undermined an opportunity for negotiating more favorable deal terms. It can be argued that the smarter entrepreneurs engaged in company sale negotiations while industry mindset is mostly driven by prosperity. (Today’s podcast can be found here and this week’s is sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, technology and other services to the mortgage industry for almost four decades.)

Lender and Broker Software and Services

“No time for social media marketing? Introducing… Social Media Marketing for Busy Loan Officers. Tired of stressing over what to post on Facebook or LinkedIn? Want to grow your audience on Instagram without spending hours each week crafting the perfect post? With Be Loangendary, we do all of it for you. Here’s how: 1) Our team of mortgage copywriters and designers craft your social posts every week. 2) Once they’re perfect, we schedule and post to your social accounts. 3) You sit back, relax, and watch the “likes” start rolling in. With Be Loangendary, you get engaging mortgage content without breaking a sweat. That’s social media done for you. Want to get started? Enjoy a 14-day free trial on us!”

“Salesforce is committed to partnering with mortgage lenders to drive their technology transformation with modern solutions that are already in practice and serving many of the top mortgage lenders in the country. As part of its efforts to drive the industry forward through the adoption of a modern tech stack, Salesforce identified UMortgage to establish the precedent of utilizing its mortgage and lending software to its fullest potential to facilitate better client experiences. Using customized task management systems and automations within Salesforce, UMortgage has been able to achieve 300% year-over-year growth and near-perfect 95 net promoter score (NPS), an indicator of a best-in-class client experience. Check out the following link to learn more about the innovative technological systems that are helping UMortgage Loan Originators maximize their lead generation & conversion. With an investment in intuitive solutions, UMortgage is driving the mortgage industry towards a better future that enables brokers to thrive.”

We’re hearing that lenders are ramping up their tech stacks and (most importantly) focusing on the quality of the data powering that technology. If you’re considering taking your company’s tech stack to the next level, look for a property data provider that delivers the most comprehensive data through the best channels to meet your unique business needs. That’s why we’re highlighting First American Data & Analytics and its repository of more than 8+ billion recorded documents. First American is more than just a data provider. It offers end-to-end solutions for the mortgage lifecycle. From detecting fraud and risk to providing valuation solutions, First American powers lenders to make informed, data-driven decisions. If you’re ready to have access to the most accurate, complete, and current data, reach out to the team and get a data sample now.

“Lenders, the home insurance market is facing unprecedented volatility. We want to hear if it’s affecting your business and the closing process. Take our five-minute survey to share your thoughts. As a thank you, you can select to be entered to win a $100 Amazon gift card, compliments of Matic Insurance. Click here to begin the survey. Matic is a home insurance marketplace built for the mortgage industry. Learn how mortgage enterprises can implement a new revenue stream that helps borrowers navigate the insurance buying process. Book a demo today.

Wholesale lending is undergoing a transformation that will leave those who cling to outdated processes behind. Using bargain CRMs as electronic phone books or even worse, spreadsheets to track brokers, is a clear sign that your sales process is holding you back. Modern CRM technology like OptifiNow provides a comprehensive, out-of-the-box solution that helps wholesale lenders create a sales and marketing process that drives broker engagement and significantly increases loan volume. Download our guide to finding the right CRM for wholesale lenders to learn how to transform your wholesale business and stay ahead of the competition!

What’s an internal audit anyway and do you need one? An internal audit acts as a third line of defense for your mortgage operation. It provides comprehensive assurance based on the highest level of independence and objectivity to evaluate the effectiveness of management’s internal controls. This function should advise your mortgage operation on plans to achieve the company’s strategic, operational, financial and compliance goals. An effective internal audit should go far beyond just checking a compliance box; it should be an integral part of protecting your company. If you want to ensure you’re adhering to regulatory requirements and demonstrating good faith business practices, a Richey May internal audit is a good fit. If you’re looking to be Fannie Mae approved in the future or want to maintain your approved status, it’s required. If you’re unsure whether you need an internal audit, ask one of Richey May’s experts today or learn more here.

Pricing Products and Programs

“Lender Price introduces Composable Pricing UI, an innovative user interface that empowers lenders to effortlessly customize their pricing engine using No Code or Low Code options. With a variety of skinning options and increased flexibility, Lender Price users can now easily create a personalized pricing experience with an abundance of options to choose from. Surpassing the limitations of single UI platforms seen with competitors, the era of rigid, one-size-fits-all PPE’s is over. With a flexible pricing engine like Lender Price, users now have the ability to tailor their interface based on their individual needs and preferences. Composable UI represents a paradigm shift in digital lending technology UX, liberating both individuals and organizations from the constraints of single UI platforms,” said Dawar Alimi, Lender Price CEO. “With an abundance of options and unparalleled flexibility, users can personalize and take charge of their pricing experience.” Email us or request a demo today.”

In this market, hustle is everything. You can’t afford to waste a single deal or a single minute. That’s why ReadyPrice has launched its innovative new Shop, Lock & Deliver loan exchange platform, designed to help independent mortgage brokers like you save time and money. Now you can shop competitive loan offerings from multiple lenders, get rate lock guarantees in real time, receive underwriting findings, and deliver the borrower’s complete loan file to lenders and all on a single platform, at no cost to brokers. It’s the industry’s most powerful universal delivery portal, and it’s already helping brokers around the country thrive and compete in even the toughest market environments. Multiple lenders. One platform. Zero b.s. Check ReadyPrice out today.

STRATMOR Comp Information and Survey

Yesterday I published, “What do underwriters and processors and LOs make? STRATMOR has the information, spelled out in a recent Perspectives piece.” Several wrote to say that there is a wide disparity in pay based on experience, at every level, and that averages may not be telling the whole story. Point well taken, although the drop in volume/units has not been matched by the drop in personnel. Stay tuned…

Information is critical in making payroll decisions. STRATMOR Group’s Compensation Connection® Study provides valuable insight into compensation components, incentive plan structures, role specifics and more, aggregated by company type, annual volume, and region. Prior three-year trending is also included on most metrics. Get the compensation data you need: sign up for the Fall 2023 Compensation Connection® Study today!

Lenders can Relive the 2nd Quarter of 2023

Spoiler alert: Losses continue but at a slower pace. The MBA has crunched the numbers of those surveyed and calculated that independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks reported a pre-tax net loss of $534 on each loan they originated in the second quarter of 2023, an improvement from the reported loss of $1,972 per loan in the first quarter of 2023.

Marina Walsh, CMB, MBA’s Vice President of Industry Analysis and overall good person, summed up the Quarterly Mortgage Bankers Performance Report. “After 11 consecutive quarters of increases, origination costs declined by over $2,000 per loan. Volume picked up during the spring homebuying season and additional personnel were shed. However, the substantial cost savings per loan was not enough to put the average net production income in the black… Production losses were less severe than the previous two quarters and net servicing financial income was strong. Additionally, most mortgage companies in our survey managed to squeeze out an overall profit during one of the toughest times for the mortgage industry.”

Once again, servicing income helped big time. Think about that as companies sell it off. When the MBA looked at both production and servicing, 58 percent of companies were profitable last quarter, an improvement from 32 percent in the first quarter of 2023 and 25 percent in the fourth quarter of 2022. Still, the average pre-tax production loss was 18 basis points (bps) in the second quarter of 2023, compared to an average net production loss of 68 bps in the first quarter of 2023, and down from a loss of 5 basis points one year ago. The average quarterly pre-tax production profit, from the third quarter of 2008 to the most recent quarter, is 47 basis points.

“Total production revenue (fee income, net secondary marketing income and warehouse spread) decreased to 328 bps in the second quarter, down from 358 bps in the first quarter. On a per-loan basis, production revenues decreased to $10,510 per loan in the second quarter, down from $11,199 per loan in the first quarter.

“The purchase share of total originations, by dollar volume, increased to a study high of 89 percent in the second quarter. For the mortgage industry as a whole, MBA estimates the purchase share was at 80 percent in the second quarter, with the average loan balance for first mortgages increasing to $343,386 in the second quarter, up from $329,159 in the first quarter.

It ain’t cheap to do a loan. “Total loan production expenses (commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations) decreased to $11,044 per loan in the second quarter, down from a study-high $13,171 per loan in the first quarter of 2023. From the third quarter of 2008 to last quarter, loan production expenses have averaged $7,236 per loan.

“Servicing net financial income for the second quarter (without annualizing) was $94 per loan, up from $54 per loan in the first quarter. Servicing operating income, which excludes MSR amortization, gains/loss in the valuation of servicing rights net of hedging gains/losses, and gains/losses on the bulk sale of MSRs, was $105 per loan in the second quarter, up from $102 per loan in the first quarter.”

For all the stats, there are five Mortgage Bankers Performance Report publications per year: four quarterly reports and one annual report. Contact Falen Taylor (202-557-2771). The reports can also be purchased on the MBA’s website.

Capital Markets

At this point it can be argued that the Fed doesn’t want to see higher long-term rates. But bond yields continue to rise across the board, impacting mortgage rates of course, continuing an upswing that began nearly three months ago at the beginning of the summer. In fact, the yield on the benchmark 10-year Treasury (US10Y) closed at 4.25% on Wednesday, the highest level since 2008. The upward march this week follows the release of the latest Federal Open Market Committee minutes, which stressed that additional interest rate hikes might be needed.

“With inflation still well above the Committee’s longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy… Participants generally noted a high degree of uncertainty regarding the cumulative effects on the economy of past monetary policy tightening... and emphasized the importance of communicating as clearly as possible about the Committee’s data-dependent approach to policy and its firm commitment to bring inflation down to its 2% objective.”

Stronger-than-expected economic data continues to pour in, helping stock market prices, especially if you think the Fed to end its hiking cycle soon. Others say 10-year yields above 4 percent still present a good buying opportunity, in contrast to the potential rewards from pricey stocks and multiples that might not be as appealing. But it seems that bond investors have shifted to a “higher-for-longer” narrative coming out of the Fed, causing nominal rates and real rates to keep moving higher. Not good for housing affordability.

Strong economic data continued yesterday with initial jobless claims -11k and Philly Fed beating expectations by 22 points. That helped to lift benchmark 10-year U.S. Treasury yields above 4.30 percent as MBS once again sold off across the coupon stack. The recent surge in U.S. mortgage rates to anywhere between 10-month and two-decade highs, depending on who you ask, has pushed housing affordability to the lowest level in nearly four decades. Yesterday also brought another troubling sign for the Chinese economy as Beijing authorities are said to have told state-owned banks to step up intervention in the currency market in a push to prevent a surge in yuan volatility.

With no major data releases or Fedspeak today, the market will be left to its own devices. We begin the day with Agency MBS prices better from Thursday afternoon by .250, the 10-year yielding 4.22 after closing yesterday at 4.31 percent, and the 2-year at 4.91: yield curve inversion is alive and well without a recession.

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

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A “for sale” sign in front of a home under construction in Miami in July. nbcnews.com

Homeownership aspirations in the US are facing a considerable hurdle as mortgage interest rates have surged to their highest point since 2002.

The average interest rate for a 30-year fixed-rate home loan has now reached 7.09%, marking a stark contrast from just a couple of years ago. The abrupt increase in rates is a direct result of the Federal Reserve’s aggressive moves to curb inflation by raising interest rates. 

In a span of two years, mortgage interest rates have more than doubled, significantly amplifying the financial burden for prospective homebuyers. For instance, the monthly payment on a $350,000 home, assuming a 20% down payment, has escalated to $1,880, compared to the considerably lower $1,159 in 2021 when interest rates remained below 3%.

Robert Dietz, the Chief Economist of the National Association of Home Builders, voiced concern, saying, “A lot of buyers have been priced out. If you don’t have access to substantial parental financial support for a down payment, the road to homeownership becomes exceedingly challenging.”

Notably, the ramifications of the escalating interest rates extend beyond potential first-time buyers. Existing homeowners are also hesitating to sell and upgrade their homes due to the prospect of higher mortgage interest rates. Dietz further explained, “Homeowners with existing 2% or 3% mortgages are in no rush to list their homes, given the potential for higher mortgage costs. This has led to a staggering 50% reduction in resale inventory compared to anticipated levels.”

The National Association of Realtors’ Chief Economist, Lawrence Yun, echoes these concerns, stating that the limited number of homes available for sale has led to a considerable drop in home sales. In June alone, sales of existing homes plummeted by 18.9% compared to the previous year.

The surge in mortgage interest rates closely correlates with the upward trajectory of the 10-year Treasury yield, which has also witnessed a recent ascent. This rise is attributed to growing expectations that the Federal Reserve will persist in maintaining higher interest rates in its bid to rein in inflation. The 10-year yield hit 4.3%, just a day after the release of the minutes from the latest Federal Reserve meeting.

As homebuyers grapple with the new reality of elevated mortgage rates, the housing market’s future remains uncertain, raising questions about its resilience in the face of mounting financial challenges.

Source: geo.tv

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When I became an accredited investor, I found myself among an elite group with the financial means and regulatory clearance to access investments that many couldn’t. This opened doors to exclusive realms like hedge funds, venture capital firms, specific investment funds, private equity funds, and more.

Even though I had this “exclusive access” it took me awhile to start investing in alternative asset classes.

The Securities and Exchange Commission states that as an accredited investor, I possess a level of sophistication that equips me to craft a riskier investment portfolio than a non-accredited investor. While this might not be universally true for everyone, in my case, I had demonstrated the financial resilience to bear more risk (see barbell investing), especially if my investments took an unforeseen downturn.

One of the intriguing aspects I discovered was that investment opportunities for accredited investors aren’t mandated to register with financial authorities. This means they often come with fewer disclosures and might not be as transparent as the registered securities available to the general public.

The underlying belief is that my status as a sophisticated investor implies a deeper understanding of financial risks, a need for less disclosure on unregistered securities, and a conviction that these exclusive investment opportunities are apt for my funds.

On a personal note, as a practicing CFP®, I hadn’t always worked with accredited investors. Early in my career, I didn’t quite grasp the allure. But as time went on, I began to see the broader spectrum of investment options available to accredited investors.

As I learned more the clearer it became why this realm was so sought after. The variety and potential of these exclusive opportunities were truly eye-opening, reshaping my perspective on the world of investing.

Introduction to Accredited Investors

An accredited investor is an individual or a business entity that is allowed to trade securities that may not be registered with financial authorities. They are entitled to this privileged access because they satisfy one or more requirements regarding income, net worth, asset size, governance status, or professional experience.

The concept of an accredited investor originated from the idea that individuals or entities with a higher financial acumen or more resources are better equipped to understand and bear the risks of certain investment opportunities.

Historically, the distinction between accredited and non-accredited investors was established to protect less experienced investors from potentially risky or less transparent investment opportunities.

Regulatory bodies, such as the U.S. Securities and Exchange Commission (SEC), have set criteria to determine who qualifies as an accredited investor, ensuring that they have the financial stability and sophistication to engage in more complex investment ventures.

Criteria for Becoming an Accredited Investor

To be classified as an accredited investor, one must meet specific criteria set by regulatory bodies:

Criteria Description
Income Requirements An individual must have had an annual income exceeding $200,000 (or $300,000 for joint income with a spouse) for the last two years, with the expectation of earning the same or a higher income in the current year.
Net Worth Requirements An individual or a couple’s combined net worth must exceed $1 million, excluding the value of their primary residence.
Professional Credentials Recent updates have expanded the definition to include individuals with certain professional certifications, designations, or other credentials recognized by the SEC. Examples include Series 7, Series 65, and Series 82 licenses.
Business Entities Entities, such as trusts or organizations, with assets exceeding $5 million can qualify. Additionally, entities in which all equity owners are accredited investors may also be considered accredited.

Best Investment Opportunities for Accredited Investors

Here’s a rundown of some of the top investment for accredited investors…

1. Fundrise

  • Minimum Investment: $500
  • Best for: Newbie Investors

Fundrise has revolutionized the real estate investment landscape. By democratizing access to real estate portfolios, it allows individuals to invest without the complexities of property management or the need for vast capital. The platform’s innovative approach provides exposure to a traditionally lucrative, yet often inaccessible, sector of the market

Through Fundrise, investors can access a diversified range of properties, from commercial ventures to residential units. The platform’s expert team curates these portfolios, ensuring a balance of risk and reward. With its user-friendly interface and transparent reporting, Fundrise has become a top choice for many venturing into real estate investments.

How it Works:
Investors start by choosing a suitable investment plan on Fundrise. Once invested, the platform pools the funds with other investors and allocates them across various real estate projects. As these properties generate rental income or appreciate in value, investors receive returns in the form of dividends or appreciation.

Pros:

  • Diversified real estate portfolios.
  • User-friendly platform with transparent reporting.

Cons:

  • Limited liquidity compared to public markets.
  • Returns are dependent on real estate market performance.

2. Equitybee

  • Minimum Investment: $10,000
  • Best for: Experienced Investors

Equitybee offers a unique platform that bridges the gap between private companies on the cusp of going public and potential investors. This innovative approach provides a golden opportunity for investors to tap into the potential of startups and other private firms before they make their public debut.

The platform’s primary focus is on employee stock options. By allowing investors to invest in these options, they can potentially benefit from their appreciation as the company grows. With a vast array of companies, from emerging startups to established giants, Equitybee presents a diverse range of investment opportunities.

How it Works:
Investors browse available stock options from various companies on Equitybee. Once they choose an option, they invest their funds, which are then used to purchase the stock options from the employees. If the company goes public or gets acquired, the investor stands to gain from the increased value of these stocks.

Pros:

  • Access to pre-IPO companies.
  • Diverse range of startups and established firms.

Cons:

  • Platform fee of 5%.
  • Potential risks associated with private market investments.

3. Percent

  • Minimum Investment: $500
  • Best for: Novice Investors

Percent stands as a beacon in the vast sea of the private credit market, illuminating a sector often overshadowed by traditional investments. This burgeoning market, valued at over $7 trillion, consists of companies borrowing from non-bank lenders. Percent offers a unique vantage point into this market, allowing investors to diversify their portfolios beyond typical stocks and bonds.

The allure of Percent lies in its ability to offer shorter terms and higher yields, combined with investments that are largely uncorrelated with public markets. This makes it an attractive proposition for those looking to step away from the volatility of traditional markets.

How it Works:
Upon joining Percent, investors are presented with a plethora of private credit opportunities. After selecting an investment, funds are pooled with other investors and lent out to companies seeking credit. As these companies repay their loans, investors earn interest, providing a steady income stream.

Pros:

  • Access to the burgeoning private credit market.
  • Potential for higher yields.

Cons:

  • Requires understanding of private credit dynamics.
  • Less liquidity compared to public markets.

4. Masterworks

  • Minimum Investment: $10,000
  • Best for: Novice Investors

Masterworks paints a vivid picture of art investment, blending the worlds of finance and fine art. Traditionally, investing in art was a luxury reserved for the elite. However, Masterworks has democratized this, allowing individuals to buy shares in artworks from world-renowned artists.

The platform’s strength lies in its expertise. From authentication to storage, every facet of art investment is handled meticulously. This ensures that investors can appreciate both the beauty of their investments and the potential financial returns.

How it Works:
After registering on Masterworks, investors can browse a curated selection of artworks. They can then purchase shares, representing a fraction of the artwork’s value. Masterworks takes care of storage, insurance, and eventual sale. When the artwork is sold, investors share the profits based on their ownership.

Pros:

  • Opportunity to diversify with fine art.
  • Managed by art experts.

Cons:

  • Art market can be unpredictable.
  • Long-term investment horizon.

5. Yieldstreet

  • Minimum Investment: $15,000
  • Best for: Advanced Investors

Yieldstreet stands at the intersection of innovation and alternative investments. It offers a smorgasbord of unique investment opportunities, ranging from art to marine finance. For those looking to venture beyond the beaten path of traditional stocks and bonds, Yieldstreet presents a tantalizing array of options.

The platform’s allure lies in its curated selection of alternative investments, each vetted by experts. This ensures that while investors are treading unconventional grounds, they’re not stepping into the unknown blindly.

How it Works:
Investors begin by browsing through the diverse investment opportunities on Yieldstreet. After selecting their preferred asset class, their funds are pooled with other investors and allocated to the chosen venture. Returns are generated based on the performance of these assets, be it through interest, dividends, or asset appreciation.

Pros:

  • Wide range of alternative investments.
  • Potential for high returns.

Cons:

  • Some niches may be too specialized.
  • Requires a deep understanding of chosen investments.

6. AcreTrader

  • Minimum Investment: $10,000
  • Best for: Newbie Investors

AcreTrader, as its name suggests, brings the vast expanses of farmland to the investment table. It offers a unique opportunity to invest in agricultural land, combining the stability of real estate with the evergreen nature of agriculture. With the global population on the rise, the value of fertile land is only set to increase.

The platform meticulously vets each piece of land, ensuring only the most promising plots are available for investment. This rigorous process ensures that investors are planting their funds in fertile ground, poised for growth.

How it Works:
Investors peruse available farmland listings on AcreTrader. After selecting a plot, they can invest, effectively owning a portion of that land. AcreTrader manages all aspects, from liaising with farmers to ensuring optimal land use. Investors earn from the appreciation of land value and potential rental income.

Pros:

  • Stable, tangible asset.
  • Potential for steady returns.

Cons:

  • Returns may be slower compared to other platforms.
  • Limited to U.S. farmland.

7. EquityMultiple

  • Minimum Investment: $5,000
  • Best for: Experienced Investors

Summary:
EquityMultiple is a testament to the power of collective investment in the real estate sector. By leveraging the principles of crowdfunding, it offers a platform where multiple investors can pool their resources to finance high-quality real estate projects. This collaborative approach allows for diversification and access to projects that might be out of reach for individual investors.

The platform’s strength lies in its curated selection of real estate opportunities, ranging from commercial spaces to residential properties. With a team of seasoned real estate professionals at the helm, EquityMultiple ensures that each project is vetted for maximum potential and minimal risk.

How it Works:
Upon joining, investors can explore a variety of real estate projects. After committing to a project, their funds are pooled with other investors to finance the venture. Returns are generated through rental incomes, property appreciation, or the successful completion of development projects.

Pros:

  • Diverse real estate opportunities.
  • Managed by real estate professionals.

Cons:

  • Market risks associated with real estate.
  • Longer investment horizons.

8. CrowdStreet

  • Minimum Investment: $25,000
  • Best for: Advanced Investors

CrowdStreet stands as a pillar in the commercial real estate investment domain. With its vast experience and industry connections, it offers a platform where investors can tap into prime real estate projects across the nation. From bustling urban centers to tranquil suburban locales, CrowdStreet provides a diverse range of investment opportunities.

The platform’s expertise ensures that each project is meticulously vetted, offering a blend of potential returns and stability. For investors looking to delve into commercial real estate without the hassles of property management, CrowdStreet is an ideal choice.

How it Works:
After registration, investors can browse a myriad of commercial real estate offerings. Upon investing in a project, CrowdStreet manages the investment, providing regular updates and ensuring optimal project execution. Investors earn returns based on the project’s performance, be it through rentals, sales, or project completions.

Pros:

  • Access to prime commercial properties.
  • Established platform with a proven track record.

Cons:

  • High minimum investment.
  • Market dependency for returns.

9. Mainvest

  • Minimum Investment: $100
  • Best for: Newbie Investors

Mainvest offers a refreshing twist in the investment landscape, focusing on the heart and soul of the American economy: local businesses. From quaint cafes to innovative startups, Mainvest provides a platform where investors can support and benefit from the growth of small businesses in their communities.

The platform’s community-centric approach ensures that investments are not just about returns but also about fostering local economies. For those looking to make a difference while earning, Mainvest presents a unique opportunity.

How it Works:
Investors can explore various local businesses seeking capital on Mainvest. By investing, they essentially buy a revenue-sharing note, earning a percentage of the business’s gross revenue until a predetermined return is achieved.

Pros:

  • Support and invest in local businesses.
  • Low minimum investment.

Cons:

  • Risks associated with small business investments.
  • Returns might be slower compared to other platforms.

10. Vinovest

  • Minimum Investment: $1,000
  • Best for: Novice Investors

Vinovest uncorks the world of wine investment, offering a blend of luxury, history, and financial growth. Fine wines have been a symbol of opulence for centuries, and Vinovest provides a platform where this luxury becomes an accessible investment.

With a team of wine experts guiding the way, the platform ensures that each wine is not just a drink but an investment poised for appreciation. From sourcing to storage, Vinovest handles every facet, ensuring the wine’s value grows over time.

How it Works:
After signing up, investors set their preferences and investment amount. Vinovest then curates a wine portfolio based on these preferences, handling sourcing, authentication, and storage. As the wine appreciates, so does the investor’s portfolio.

Pros:

  • Unique investment opportunity in fine wines.
  • Managed by wine connoisseurs.

Cons:

  • Long-term holding for optimal returns.
  • Market influenced by external factors like climate.

11. Arrived Homes

  • Minimum Investment: $100
  • Best for: Novice Investors

Arrived Homes offers a fresh perspective on real estate investment, focusing on the charm of single-family homes. While skyscrapers and commercial complexes often dominate real estate discussions, single-family homes offer stability, consistent returns, and a touch of nostalgia.

The platform’s strength lies in its focus. By concentrating on single-family homes, it offers investors a chance to tap into a stable real estate segment, benefiting from both rental income and property appreciation.

How it Works:
Investors browse available properties on Arrived Homes. After selecting a property, they can invest in shares, representing a portion of the home’s value. As the property is rented out, investors earn a share of the rental income. Additionally, any appreciation in property value benefits the investors.

Pros:

  • Low minimum investment.
  • Quarterly dividends.

Cons:

  • New platform with a shorter track record.
  • Limited to single-family homes.

12. RealtyMogul

  • Minimum Investment: $5,000
  • Best for: Novice to Experienced Investors

RealtyMogul stands tall in the commercial real estate investment landscape. It offers a platform where diversification meets opportunity, presenting a range of commercial properties for investment. From bustling office spaces to serene residential complexes, RealtyMogul provides a plethora of options for investors to expand their portfolios.

The platform’s prowess lies in its dual approach. Investors can either dive into non-traded REITs or make direct investments in specific properties. This flexibility ensures that both novice and experienced investors find opportunities that align with their investment goals.

How it Works:
Upon joining RealtyMogul, investors can choose between REITs or direct property investments. Their funds are then channeled into these real estate ventures. Returns are generated through rental incomes, property sales, or successful project completions.

Pros:

  • Wide range of commercial properties.
  • Both REITs and direct investments available.

Cons:

  • Market risks inherent to real estate.
  • Higher minimums for direct investments.

The Future of Accredited Investing

The world of accredited investing is dynamic and ever-evolving. Emerging trends suggest a shift towards democratizing investment opportunities, with regulatory bodies considering more inclusive criteria for accredited investor status. This shift aims to balance the need for investor protection with the recognition that financial acumen can come from experience and education, not just wealth.

Furthermore, technological advancements are playing a pivotal role. The rise of blockchain and tokenized assets, for instance, is creating new avenues for investment and might reshape the landscape of opportunities available to accredited investors.

xAs the line between traditional and alternative investments blurs, the future promises a more integrated, inclusive, and innovative environment for accredited investors.

The Bottom Line – Top Investments for Accredited Investors

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Understanding the role and opportunities of accredited investors is crucial in the modern financial landscape. While the distinction offers privileged access to unique investment opportunities, it also comes with increased risks and responsibilities.

As the world of investing continues to evolve, potential accredited investors are encouraged to stay informed, conduct thorough research, and seek professional advice. The realm of accredited investing, with its blend of challenges and opportunities, promises exciting prospects for those ready to navigate its complexities.

FAQs – Investment Options for Accredited Investors

Why is there a distinction between accredited and non-accredited investors?

The distinction is primarily for investor protection. Accredited investors are deemed financially savvy or stable enough to handle the risks associated with unregistered securities, which might be riskier and less transparent.

What investment opportunities open up for accredited investors?

Accredited investors gain access to a broader range of investment opportunities, including hedge funds, private equity, venture capital, certain private placements, and more.

Are investments for accredited investors riskier?

While not inherently riskier, these investments often come with less regulatory oversight and transparency, which can increase potential risks. It’s essential to conduct thorough due diligence before investing.

Do accredited investors have any advantages in the public stock market?

While the primary benefits of being an accredited investor pertain to private investment opportunities, the financial acumen and resources associated with accredited investors can also be advantageous in public markets, especially when considering more complex investment strategies.

About the Author

Jeff Rose, CFP® is a Certified Financial Planner™, founder of Good Financial Cents, and author of the personal finance book Soldier of Finance. He was a financial planner for 16+ years having founded, Alliance Wealth Management, a SEC Registered Investment Advisory firm, before selling it to focus on his passion – educating the masses on the importance of financial freedom through this blog, his podcast, and YouTube channel.

Jeff holds a Bachelors in Science in Finance and minor in Accounting from Southern Illinois University – Carbondale. In addition to his CFP® designation, he also earned the marks of AAMS® – Accredited Asset Management Specialist – and CRPC® – Chartered Retirement Planning Counselor.

While a practicing financial advisor, Jeff was named to Investopedia’s distinguished list of Top 100 advisors (as high as #6) multiple times and CNBC’s Digital Advisory Council.

Jeff is an Iraqi combat veteran and served 9 years in the Army National Guard. His work is regularly featured in Forbes, Business Insider, Inc.com and Entrepreneur.

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Source: goodfinancialcents.com