Article: Real Estate Unicorns

 

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The term “unicorn” has become ubiquitous of late. It’s used to describe an unattainable ideal in everything from dates to dot-com stocks.

And yet we chase these unicorns. Because, hey, why not?

Which got us thinking: What would a “unicorn” look like in the real estate world? Well, first off it would be a high-upside property that is selling for cheap. It would be low-maintenance, but enough work to keep the price down and lots of other buyers out of the bidding process. It might even be a pocket listing or something that hasn’t even made it to market that our network brings to our lap.

Rare? Sure. Unattainable? Not even.

The best post we found on this phenomenon was from a young, first-time investor who does a great job chronicling his thought process on the blog at www.biggerpockets.com.They key here is that he was willing to not only purchase a property, but move in to it and manage it for a period of time, a commitment that is probably more risky for some (read those with families) than others. There are financial as well as practical reasons to think about doing this, the author explains:

From the article:
Luckily, as an owner-occupier looking to buy multifamily property, I had a couple of serious advantages over the competition. First, I was looking at properties that most other would-be homeowners weren’t interested in; first-time buyers usually aren’t looking to purchase a duplex, triplex, or fourplex. Second, I had the opportunity to bid on properties before investors that did not intend to inhabit the property because of a special government program – the First Look program from Fannie Mae.
If you’re thinking about an investment property, particularly an urban, multifamily unit, this article really is a must-read. This guy figure out how to have his unicorn and live in it, too. (Assuming, you know, it all works out financially. We suspect it will, particularly in Denver.)

Then there are REITS, which are something like a mutual fund for real estate investors. According to The Motley Fool, most of these programs are required to pay out 90 percent of income to shareholders, and they’re typically organized by category to manage risk – apartment complexes, data centers, commercial properties can all be had.

Why have just one unicorn when you can have a collection of them?