Today: Let's have a Reality Check ...
Imagine that you are a loan officer at a bank. A customer comes in and says, "My hours got cut back, and my weekly paycheck just went from $395.40 a week to $190.20 per week. My boss also said, that he expects that his earnings to be less this quarter ... so there may be more trouble ahead. Anyways, what I wanted to ask is ... will you give me a loan for $10,000?"
As the loan officer, which do you say?
1. Sure Joe, are you sure that's enough ... can I give you more?
2. Sorry Joe, I can't give you the loan because the bank would be worried that you couldn't pay it back.
That takes us to the Pulte Homes story ...
This is Wednesday's news for Pulte Homes:
Pulte Homes Profit Falls as Demand for Homes Drops.
Pulte Homes Inc., the largest U.S. homebuilder by market value, said third-quarter earnings fell 52 % as a flood of unsold homes showed no signs of abating. Their net income declined to $190.2 million, or 74 cents a share, from $395.4 million, or $1.50 per share. In addition, Pulte forecasted that they expected their fourth-quarter earnings will come in below analysts' expectations.
So, what does the banker in you do with this news? Do you sell the stock, or think that "this is a stock I should buy right now?"
Here is what happened:
On Tuesday, Pulte Homes (Symbol: PHM) closed at $31.76.
The bad news came out on Wednesday. Investors bought and the stock went to $32.20.
Yesterday (Thursday) ... investors must have liked the fact that Pulte said, "the flood of unsold homes shows no sign of abating", because they bought more and drove the price to $32.66.
From Tuesday to Thursday, they registered a stock price gain of $2.83%. Pretty good for announcing that your net income fell 52%. With this kind of investor reaction, one wonders if there must be some kind of brain virus in our drinking water.
Saturday, October 28, 2006
Tuesday, August 15, 2006
Home sales slow, 28 states see declines
WASHINGTON - The slowdown in the once-sizzling housing market is spreading, with 28 states and the District of Columbia reporting spring sales declines, led by big drops in former boom areas of Arizona, Florida and California
Nationally, sales were down 7 percent in the April-June quarter this year compared with the same period in 2005, the National Association of Realtors said Tuesday in its latest state-by-state look at housing conditions around the country.
The Realtors survey showed that the biggest declines occurred in states that had been enjoying red-hot sales during the five-year housing boom.
The five biggest declines this spring compared to the April-June period of 2005 were Arizona, down 26.9 percent; Florida, down 26.7 percent; California, down 25.3 percent; Virginia, down 23.9 percent, and Nevada, down 23.5 percent.
The Realtors report depicted a tale of two housing markets, with former boom areas experiencing declines and other areas of moderate sales gains during the boom years experiencing strong growth.
In all, 20 states had sales gains in the spring, led by Alaska, which enjoyed a 48.6 percent jump in sales; followed by Arkansas, up 17.9 percent; Texas, up 11.3 percent; North Carolina, up 11 percent, and Vermont, up 9.1 percent compared to the spring of 2005.
"States with moderately priced areas that have experienced healthy job creation are seeing sales gains," said David Lereah, chief economist for the Realtors. "The economic backdrop remains favorable for the housing market, which is helping home sales level out."
In a separate survey of price changes in 151 metropolitan areas, the Realtors reported that 26 metro areas experienced outright price declines while 37 areas were still enjoying double-digit price increases.
The biggest price drops in percentage terms were in Danville, Ill., where home prices fell by 11.2 percent in the spring compared with the spring of 2005, and the Detroit area, where home prices were down 8 percent.
Nationally, sales were down 7 percent in the April-June quarter this year compared with the same period in 2005, the National Association of Realtors said Tuesday in its latest state-by-state look at housing conditions around the country.
The Realtors survey showed that the biggest declines occurred in states that had been enjoying red-hot sales during the five-year housing boom.
The five biggest declines this spring compared to the April-June period of 2005 were Arizona, down 26.9 percent; Florida, down 26.7 percent; California, down 25.3 percent; Virginia, down 23.9 percent, and Nevada, down 23.5 percent.
The Realtors report depicted a tale of two housing markets, with former boom areas experiencing declines and other areas of moderate sales gains during the boom years experiencing strong growth.
In all, 20 states had sales gains in the spring, led by Alaska, which enjoyed a 48.6 percent jump in sales; followed by Arkansas, up 17.9 percent; Texas, up 11.3 percent; North Carolina, up 11 percent, and Vermont, up 9.1 percent compared to the spring of 2005.
"States with moderately priced areas that have experienced healthy job creation are seeing sales gains," said David Lereah, chief economist for the Realtors. "The economic backdrop remains favorable for the housing market, which is helping home sales level out."
In a separate survey of price changes in 151 metropolitan areas, the Realtors reported that 26 metro areas experienced outright price declines while 37 areas were still enjoying double-digit price increases.
The biggest price drops in percentage terms were in Danville, Ill., where home prices fell by 11.2 percent in the spring compared with the spring of 2005, and the Detroit area, where home prices were down 8 percent.
Home sales slow, 28 states see declines
WASHINGTON - The slowdown in the once-sizzling housing market is spreading, with 28 states and the District of Columbia reporting spring sales declines, led by big drops in former boom areas of Arizona, Florida and California
Nationally, sales were down 7 percent in the April-June quarter this year compared with the same period in 2005, the National Association of Realtors said Tuesday in its latest state-by-state look at housing conditions around the country.
The Realtors survey showed that the biggest declines occurred in states that had been enjoying red-hot sales during the five-year housing boom.
The five biggest declines this spring compared to the April-June period of 2005 were Arizona, down 26.9 percent; Florida, down 26.7 percent; California, down 25.3 percent; Virginia, down 23.9 percent, and Nevada, down 23.5 percent.
The Realtors report depicted a tale of two housing markets, with former boom areas experiencing declines and other areas of moderate sales gains during the boom years experiencing strong growth.
In all, 20 states had sales gains in the spring, led by Alaska, which enjoyed a 48.6 percent jump in sales; followed by Arkansas, up 17.9 percent; Texas, up 11.3 percent; North Carolina, up 11 percent, and Vermont, up 9.1 percent compared to the spring of 2005.
"States with moderately priced areas that have experienced healthy job creation are seeing sales gains," said David Lereah, chief economist for the Realtors. "The economic backdrop remains favorable for the housing market, which is helping home sales level out."
In a separate survey of price changes in 151 metropolitan areas, the Realtors reported that 26 metro areas experienced outright price declines while 37 areas were still enjoying double-digit price increases.
The biggest price drops in percentage terms were in Danville, Ill., where home prices fell by 11.2 percent in the spring compared with the spring of 2005, and the Detroit area, where home prices were down 8 percent.
Nationally, sales were down 7 percent in the April-June quarter this year compared with the same period in 2005, the National Association of Realtors said Tuesday in its latest state-by-state look at housing conditions around the country.
The Realtors survey showed that the biggest declines occurred in states that had been enjoying red-hot sales during the five-year housing boom.
The five biggest declines this spring compared to the April-June period of 2005 were Arizona, down 26.9 percent; Florida, down 26.7 percent; California, down 25.3 percent; Virginia, down 23.9 percent, and Nevada, down 23.5 percent.
The Realtors report depicted a tale of two housing markets, with former boom areas experiencing declines and other areas of moderate sales gains during the boom years experiencing strong growth.
In all, 20 states had sales gains in the spring, led by Alaska, which enjoyed a 48.6 percent jump in sales; followed by Arkansas, up 17.9 percent; Texas, up 11.3 percent; North Carolina, up 11 percent, and Vermont, up 9.1 percent compared to the spring of 2005.
"States with moderately priced areas that have experienced healthy job creation are seeing sales gains," said David Lereah, chief economist for the Realtors. "The economic backdrop remains favorable for the housing market, which is helping home sales level out."
In a separate survey of price changes in 151 metropolitan areas, the Realtors reported that 26 metro areas experienced outright price declines while 37 areas were still enjoying double-digit price increases.
The biggest price drops in percentage terms were in Danville, Ill., where home prices fell by 11.2 percent in the spring compared with the spring of 2005, and the Detroit area, where home prices were down 8 percent.
Thursday, August 10, 2006
BUY Land, They've Stopped Making It!"
Land Investment
LAND has, just like most other precious commodities, an eternal value. It's a good investment option. Just like Gold, Platinum and Diamonds.
Investing in plots, lands, houses or buildings however is a absolutely necessary for people who want to live or work there.1031 Exchanges, Developments, or just Investment can make you 100% return on your money. But you must not forget that the value of the investment is in the expected return, and the risks involved, and not in its physical features. Return from real estate investments is obtained from rental/lease/possible capital appreciation. It can be enhanced by the benefits of taking a loan against the real estate asset.
Key Factors in Land Investment
1). The first and most important rule is to act according to your strengths. Take into account all the aspects relating to your income and budget. You should also to decide on where to and in whose name to invest.
2). The property can be jointly purchased in the name of two or more family members.
3). For joint purchase, investment by the co-owners should be in proportion with their owner ship in the property. For instance, if the property is proposed to be purchased in the name of husband and wife the ratio of 50 : 50, then the investment should also be in the ratio of 50 : 50.
4). Avoid making investment in properties in the name of minor children.
5). In the initial stages your land investment, you look for prime areas where there is less demand and where the premiums are low.
6). For purchasing the landed property, the location should be easily accessible for all basic facilities including hospital and transportation facilities.
7). One should keep in mind about the potential of the area and the property for future yields.
8). Do not invest in already mushrooming localities or in areas where the price of real estate in pretty high. Invest only in the areas that are developing.
9). Decide on your budget and evaluate your current liabilities and savings.
10). Buying plots, vast lands for commercial purposes would do much better profits as the value increases day by day.
11). Investing in Real Estate Investments Trusts (REITS), popular in USA would also bring good profits.
Risks Factors in Land Investments
The real estate market could be a risky proposition for investors not intending to hold the property for long. If you are intend to purchase the landed property, do not rush into calling sellers, real estate brokers or consultants without making upfront preparation. If you hire the services of a real estate brokers make clear your specifications and expatiations. Tell him about your budget too.
The following are risks factors in land investments.
i) Lack of Liquidity: Direct investments requires large commitments of funds and that makes diversification of an investors portfolio difficult. Investments in land or real estate is also difficult to convert to cost quickly. Ownership history, possession and occupation of the property etc., can lead to complexity in transactions.
ii) Maintenance burden: Property maintenance involves significant amount, time, effort and costs. Further, add to this the risk of unauthorised entries/trespassers and change in Governmental regulations. This includes controls over ownership land use and other planning controls and landlold and tenancy litigations.
iii) Government Charges: Government uses the real estate as a taxation over the transactions between the parties. The vendor has to bear stamp duties and registration charges, land taxes and general levies at various level of authorities. Transaction costs in land investments are higher than most other investment avenues.
iv) High risk: Real estate can be regarded as a dangerous investment in the medium and short run, but is often considered safe in the long run.
v). Monopolistic market: Real Estate is one of the most information inefficient market. Information necessary to make informed decisions is difficult to obtain, often imprecise, and some times misleading or contradictory.
vi). Segmentation: Prices often more depending on what kind of property you have: it depends on whether it is commercial, retail or residential/ housing in nature. And this depends on the buyer perception, irrespective of what you might feel.
If one has to consider so many things risk of economic growth, risk of patience, risk of liquidity, risk of geographical concentration - would it not be better to invest in Real Estate Investment Trusts. That can trade in these risks and makes money out of them.
Real estate investment is also a leading indicator of economic growth in all market economies. So keep trade in land investment.
LAND has, just like most other precious commodities, an eternal value. It's a good investment option. Just like Gold, Platinum and Diamonds.
Investing in plots, lands, houses or buildings however is a absolutely necessary for people who want to live or work there.1031 Exchanges, Developments, or just Investment can make you 100% return on your money. But you must not forget that the value of the investment is in the expected return, and the risks involved, and not in its physical features. Return from real estate investments is obtained from rental/lease/possible capital appreciation. It can be enhanced by the benefits of taking a loan against the real estate asset.
Key Factors in Land Investment
1). The first and most important rule is to act according to your strengths. Take into account all the aspects relating to your income and budget. You should also to decide on where to and in whose name to invest.
2). The property can be jointly purchased in the name of two or more family members.
3). For joint purchase, investment by the co-owners should be in proportion with their owner ship in the property. For instance, if the property is proposed to be purchased in the name of husband and wife the ratio of 50 : 50, then the investment should also be in the ratio of 50 : 50.
4). Avoid making investment in properties in the name of minor children.
5). In the initial stages your land investment, you look for prime areas where there is less demand and where the premiums are low.
6). For purchasing the landed property, the location should be easily accessible for all basic facilities including hospital and transportation facilities.
7). One should keep in mind about the potential of the area and the property for future yields.
8). Do not invest in already mushrooming localities or in areas where the price of real estate in pretty high. Invest only in the areas that are developing.
9). Decide on your budget and evaluate your current liabilities and savings.
10). Buying plots, vast lands for commercial purposes would do much better profits as the value increases day by day.
11). Investing in Real Estate Investments Trusts (REITS), popular in USA would also bring good profits.
Risks Factors in Land Investments
The real estate market could be a risky proposition for investors not intending to hold the property for long. If you are intend to purchase the landed property, do not rush into calling sellers, real estate brokers or consultants without making upfront preparation. If you hire the services of a real estate brokers make clear your specifications and expatiations. Tell him about your budget too.
The following are risks factors in land investments.
i) Lack of Liquidity: Direct investments requires large commitments of funds and that makes diversification of an investors portfolio difficult. Investments in land or real estate is also difficult to convert to cost quickly. Ownership history, possession and occupation of the property etc., can lead to complexity in transactions.
ii) Maintenance burden: Property maintenance involves significant amount, time, effort and costs. Further, add to this the risk of unauthorised entries/trespassers and change in Governmental regulations. This includes controls over ownership land use and other planning controls and landlold and tenancy litigations.
iii) Government Charges: Government uses the real estate as a taxation over the transactions between the parties. The vendor has to bear stamp duties and registration charges, land taxes and general levies at various level of authorities. Transaction costs in land investments are higher than most other investment avenues.
iv) High risk: Real estate can be regarded as a dangerous investment in the medium and short run, but is often considered safe in the long run.
v). Monopolistic market: Real Estate is one of the most information inefficient market. Information necessary to make informed decisions is difficult to obtain, often imprecise, and some times misleading or contradictory.
vi). Segmentation: Prices often more depending on what kind of property you have: it depends on whether it is commercial, retail or residential/ housing in nature. And this depends on the buyer perception, irrespective of what you might feel.
If one has to consider so many things risk of economic growth, risk of patience, risk of liquidity, risk of geographical concentration - would it not be better to invest in Real Estate Investment Trusts. That can trade in these risks and makes money out of them.
Real estate investment is also a leading indicator of economic growth in all market economies. So keep trade in land investment.
Tuesday, August 01, 2006
Florida Residents Here's the Secret to Earning 1% Interest a Month for Four Months on Your Money
What's the highest interest rate you can earn now in a safe, government-sponsored program?
Did you say 4% per year? Wrong!
In Florida, for the next 4 months, every real property and tangible personal property taxpayer can earn an effective interest rate of 1% PER MONTH by paying taxes during the discount period!
Here's how simple it is: just pay your property taxes before March 1. Here's the way it works.
Taxes paid--i.e., received by the Tax Collector--during
November are subject to a 4% discount;
December are subject to a 3% discount;
January are subject to a 2% discount;
February are subject to a 1% discount.
Taxes paid after March 31 are delinquent and are subject to penalties and 1 1/2% delinquent interest per month.
In the same way that paying down your credit cards is the equivalent of earning interest at the same rate of interest that the credit card company is charging the customer on the outstanding balance, taking advantage of the 1% per month early payment discount on Florida property taxes is the same as earning interest at the rate of 12% per year on the amount of taxes you pay.
Don't say we didn't tell you!
About the author:
For a free consultation regarding your property, contact us at:
http://www.tannebaumweiss.com/property_tax.php
Did you say 4% per year? Wrong!
In Florida, for the next 4 months, every real property and tangible personal property taxpayer can earn an effective interest rate of 1% PER MONTH by paying taxes during the discount period!
Here's how simple it is: just pay your property taxes before March 1. Here's the way it works.
Taxes paid--i.e., received by the Tax Collector--during
November are subject to a 4% discount;
December are subject to a 3% discount;
January are subject to a 2% discount;
February are subject to a 1% discount.
Taxes paid after March 31 are delinquent and are subject to penalties and 1 1/2% delinquent interest per month.
In the same way that paying down your credit cards is the equivalent of earning interest at the same rate of interest that the credit card company is charging the customer on the outstanding balance, taking advantage of the 1% per month early payment discount on Florida property taxes is the same as earning interest at the rate of 12% per year on the amount of taxes you pay.
Don't say we didn't tell you!
About the author:
For a free consultation regarding your property, contact us at:
http://www.tannebaumweiss.com/property_tax.php
Wednesday, July 26, 2006
Where Are The Really Good Real Estate Investment Deals?
In writing my last article about the neighborhoods where I find the most profitable rehab real estate investment deals, something occurred to me.
In that article I described investing from what I've found is typical in doing this business. I wrote about where I TYPICALLY find the deals. Well, what IS typical in this business?
No two deals are the same, that's for sure! Every rehab itself is different with different problems to solve. So, in describing a typical deal, I'm referring to the spread involved. The spread is the different between what I can buy the house for, and what it's value will be when it's brought back up to standards.
The next big question is, "What will the rehab going to cost."
For instance, if a property in my market has a $25,000 spread between what I can buy it for and what I can sell it for (the as-repaired appraised value), it's a "maybe" in my book depending on how much rehab it needs. If it needs much, I would probably pass unless some external factor makes it a good buy, like the neighborhood. In other words, if it needs much rehab, I'd have to be convinced enough to put some of my own money into it.
I typically look for houses with a $30,000 spread or better. You have to decide for yourself, based on values in your area and what is the minimum you want to make, what spread you'll be happy with.
So, what is a rehab real estate investor's "homerun? "
Homeruns occur at the outer edge of what is typical. My homerun deals have occurred one of several ways.
- The spread is stellar. Let's say the spread is $45,000 and the rehab is a manageable $5-10,000.
- The spread is good, but the rehab is very light. Wham-bam, I'm looking for tenants within days of closing.
- The cost is exceptionally low for a given area. Sometimes the spread on paper will not be anything to get excited about, but the property has a huge lot, extra bedrooms, or is located an area that is in serious demand.
- There is NO rehab, and the spread is sufficient that I can buy it with none of my own money.
True story - I've only had one NO rehab deal. Wow. This house had been recently rehabbed, clean and didn't need a thing! This was a homerun just due to the ease at which I added this property to my inventory! The spread wasn't great, in fact, I had a local hard money lender make up a story about being out of money because he thought the spread was too narrow and didn't want to lend on it. He wrongly assumed there was a significant rehab. (Being straight up with me was too hard, I guess.) I consider this a homerun because I bought this property, changed the locks, put out a sign and had it rented within two weeks. Mind you this is a beautiful well-built brick/block home in a great neighborhood. Cost to me…nothing. This house has one of my best cash flows month-to-month.
The point here is to give you an idea of what kinds of homeruns rehab real estate investors look for. But, here is a key point…
It's truly NOT worth my time, or yours, to wait around for the homeruns. I firmly believe that these kinds of homerun deals come about by being an active investor. Rehabbers that keep 1-2 projects going at all times, get calls from wholesaler with great deals. Personally, I make the best buying decisions decisions with what I have among the properties brought to me when I am in my "buy mode." Some of these turn out to be homeruns, some don't.
If I waited around for only the homeruns:
- I would waste precious learning time. Since there is no substitute for experience, I want all I can get!
- I would lose money over the long run as a buy-and-hold investor. If I'm buying and rehabbing with little or none of my own money anyway, it doesn't make sense to wait around for homeruns if I can add properties to my inventory that fits my investment criteria. If you're in the buy and hold business, the important thing is how much property can be controlled with as little money as possible.
Question: Is it better to have $1,000,000 worth of property appreciating or $200,000?
Hitting a homerun in rehab real estate, and anything else, requires these two ingredients:
- You've GOT to be "in the game." By this I mean you have to have prepared in advance for your turn at bat. In the rehab business, this means you have enough knowledge to get started, you have a decided investment criteria, you have your money source lined up, and you are looking for property.
- You are "swinging." In the rehab business, this mean you are buying property, rehabbing, learning and turning. It's not enough to merely stay on the sidelines.
Let me say that again…
IT'S NOT ENOUGH TO MERELY STAY ON THE SIDELINES.
About the author:
-------------------------------------
Bruce W. Ford is the editor of Rehab-Real-Estate.com Get his important Special Report entitled "12 Things Real Estate Investment Gurus Won't Tell You" at http://www.Rehab-Real-Estate.com
In that article I described investing from what I've found is typical in doing this business. I wrote about where I TYPICALLY find the deals. Well, what IS typical in this business?
No two deals are the same, that's for sure! Every rehab itself is different with different problems to solve. So, in describing a typical deal, I'm referring to the spread involved. The spread is the different between what I can buy the house for, and what it's value will be when it's brought back up to standards.
The next big question is, "What will the rehab going to cost."
For instance, if a property in my market has a $25,000 spread between what I can buy it for and what I can sell it for (the as-repaired appraised value), it's a "maybe" in my book depending on how much rehab it needs. If it needs much, I would probably pass unless some external factor makes it a good buy, like the neighborhood. In other words, if it needs much rehab, I'd have to be convinced enough to put some of my own money into it.
I typically look for houses with a $30,000 spread or better. You have to decide for yourself, based on values in your area and what is the minimum you want to make, what spread you'll be happy with.
So, what is a rehab real estate investor's "homerun? "
Homeruns occur at the outer edge of what is typical. My homerun deals have occurred one of several ways.
- The spread is stellar. Let's say the spread is $45,000 and the rehab is a manageable $5-10,000.
- The spread is good, but the rehab is very light. Wham-bam, I'm looking for tenants within days of closing.
- The cost is exceptionally low for a given area. Sometimes the spread on paper will not be anything to get excited about, but the property has a huge lot, extra bedrooms, or is located an area that is in serious demand.
- There is NO rehab, and the spread is sufficient that I can buy it with none of my own money.
True story - I've only had one NO rehab deal. Wow. This house had been recently rehabbed, clean and didn't need a thing! This was a homerun just due to the ease at which I added this property to my inventory! The spread wasn't great, in fact, I had a local hard money lender make up a story about being out of money because he thought the spread was too narrow and didn't want to lend on it. He wrongly assumed there was a significant rehab. (Being straight up with me was too hard, I guess.) I consider this a homerun because I bought this property, changed the locks, put out a sign and had it rented within two weeks. Mind you this is a beautiful well-built brick/block home in a great neighborhood. Cost to me…nothing. This house has one of my best cash flows month-to-month.
The point here is to give you an idea of what kinds of homeruns rehab real estate investors look for. But, here is a key point…
It's truly NOT worth my time, or yours, to wait around for the homeruns. I firmly believe that these kinds of homerun deals come about by being an active investor. Rehabbers that keep 1-2 projects going at all times, get calls from wholesaler with great deals. Personally, I make the best buying decisions decisions with what I have among the properties brought to me when I am in my "buy mode." Some of these turn out to be homeruns, some don't.
If I waited around for only the homeruns:
- I would waste precious learning time. Since there is no substitute for experience, I want all I can get!
- I would lose money over the long run as a buy-and-hold investor. If I'm buying and rehabbing with little or none of my own money anyway, it doesn't make sense to wait around for homeruns if I can add properties to my inventory that fits my investment criteria. If you're in the buy and hold business, the important thing is how much property can be controlled with as little money as possible.
Question: Is it better to have $1,000,000 worth of property appreciating or $200,000?
Hitting a homerun in rehab real estate, and anything else, requires these two ingredients:
- You've GOT to be "in the game." By this I mean you have to have prepared in advance for your turn at bat. In the rehab business, this means you have enough knowledge to get started, you have a decided investment criteria, you have your money source lined up, and you are looking for property.
- You are "swinging." In the rehab business, this mean you are buying property, rehabbing, learning and turning. It's not enough to merely stay on the sidelines.
Let me say that again…
IT'S NOT ENOUGH TO MERELY STAY ON THE SIDELINES.
About the author:
-------------------------------------
Bruce W. Ford is the editor of Rehab-Real-Estate.com Get his important Special Report entitled "12 Things Real Estate Investment Gurus Won't Tell You" at http://www.Rehab-Real-Estate.com
Thursday, July 20, 2006
10 Tips for Successful Real Estate Property Investment
Just because real estate prices seem to have hit a temporary ceiling in many countries around the world, that doesn’t mean that profits from property investments are hard to come by.
Even during a real estate market slowdown, stagnation or depression profits can be made locally and overseas. This article shows you the top ten tips that real estate investors apply to their property portfolio building strategy to ensure success from their investments.
1) Research the curve - the concept of a property market cycle existing is not myth it’s a fact and is generally accepted to be based on a price-income relationship. Check the recent historical price data for properties in the area of the country you’re considering purchasing in and try to determine the overall feel in the market for prices currently. Are prices rising, are prices falling or have they reached a peak. You need to know where the curve of the property market cycle is at in your preferred investment area.
2) Get ahead of the curve – as a basic rule of thumb, professional real estate property investors seek to buy ahead of the curve. If a market is rising they will try and target up and coming areas, areas that are close to locations that have peaked, areas close to locations experiencing redevelopment or investment. These areas will most likely become ‘the next big thing’ and those who by in before the trend will stand to make the most gains. As a market is stagnating or falling many successful investors target areas that enjoyed the best levels of growth, yields and profits very early on in the previous cycle because these areas will most likely be the first areas to become profitable as the cycle begins turning towards positive once more.
3) Know your market – who are you buying property for? Are you buying to let to young executives, purchasing for renovation to resell to a family market or purchasing jet to let real estate for short term rental to holiday makers? Think about your market before you make a purchase. Know what they look for in a property and ensure that is what you are going to be offering them
4) Think further afield – there are emerging real estate property markets around the world where countries’ economies are going from strength to strength, where a growing tourism sector is pushing up demand or where constitutional legislation has been or is about to be changed to allow for foreign freehold ownership of property for example. Look further afield than your own back yard for your next property investment and diversify that real estate portfolio for maximum success.
5) Purchase price – set yourself a budget that will realistically allow you to purchase what you’re looking for and profit from that purchase either through capital gains or rental yield.
6) Entry costs – research fees, charges and all expenses you will incur when you buy your property – they differ from country to country and sometimes even from state to state. In Turkey for example you should add on an additional 5% of the purchase price for all fees, in Spain you will need to factor in an average of 10% and in Germany fees and charges can be in excess of 20%. Know how much you will have to incur and factor this amount into your budget to avoid any nasty surprises and to ensure your investment can become profitable.
7) Capital growth potential – what factors point to the potential profitability of your real estate property investment? If you’re looking overseas at an emerging market, which economic or social indicators exist to suggest that property prices will increase? If you’re buying to let out are there any indications to suggest that demand for rental accommodation will remain strong, increase or even decline? Think about what you want to achieve from your investment and then research and find out whether your expectations are realistic.
8) Exit costs – if you will incur substantial capital gains taxation liability if you sell your property investment for profit, will that render the investment profitless? In Spain a foreign buyer can incur up to 35% capital gains tax, in Turkey on the other hand property sales are capital gains tax free if the underlying real estate has been owned for four or more years.
9) Profit margins – what levels of capital growth can you realistically gain on your property investment or how much rental income can you generate? Work out these facts and then work backwards towards your initial budget to work out your potential profit margins. At all times you have to keep the bigger picture in mind to ensure that your real estate investment has good potential for profit.
10) Think long term – unless you’re buying property off plan and intending to flip it for resale and profit before completion you should view real estate investment as a long term investment. Real estate is a slow to liquidate asset, cash tied up in property is not simple to free up. Take a long term approach to your property portfolio and give your assets time to increase in value before cashing them in for profit.
About the author:
Rhiannon Williamson is a freelance writer whose articles about property investing and emerging real estate markets have appeared in publications around the world. She is currently working on a brand new property investment resource http://www.amberlamb.com/
Even during a real estate market slowdown, stagnation or depression profits can be made locally and overseas. This article shows you the top ten tips that real estate investors apply to their property portfolio building strategy to ensure success from their investments.
1) Research the curve - the concept of a property market cycle existing is not myth it’s a fact and is generally accepted to be based on a price-income relationship. Check the recent historical price data for properties in the area of the country you’re considering purchasing in and try to determine the overall feel in the market for prices currently. Are prices rising, are prices falling or have they reached a peak. You need to know where the curve of the property market cycle is at in your preferred investment area.
2) Get ahead of the curve – as a basic rule of thumb, professional real estate property investors seek to buy ahead of the curve. If a market is rising they will try and target up and coming areas, areas that are close to locations that have peaked, areas close to locations experiencing redevelopment or investment. These areas will most likely become ‘the next big thing’ and those who by in before the trend will stand to make the most gains. As a market is stagnating or falling many successful investors target areas that enjoyed the best levels of growth, yields and profits very early on in the previous cycle because these areas will most likely be the first areas to become profitable as the cycle begins turning towards positive once more.
3) Know your market – who are you buying property for? Are you buying to let to young executives, purchasing for renovation to resell to a family market or purchasing jet to let real estate for short term rental to holiday makers? Think about your market before you make a purchase. Know what they look for in a property and ensure that is what you are going to be offering them
4) Think further afield – there are emerging real estate property markets around the world where countries’ economies are going from strength to strength, where a growing tourism sector is pushing up demand or where constitutional legislation has been or is about to be changed to allow for foreign freehold ownership of property for example. Look further afield than your own back yard for your next property investment and diversify that real estate portfolio for maximum success.
5) Purchase price – set yourself a budget that will realistically allow you to purchase what you’re looking for and profit from that purchase either through capital gains or rental yield.
6) Entry costs – research fees, charges and all expenses you will incur when you buy your property – they differ from country to country and sometimes even from state to state. In Turkey for example you should add on an additional 5% of the purchase price for all fees, in Spain you will need to factor in an average of 10% and in Germany fees and charges can be in excess of 20%. Know how much you will have to incur and factor this amount into your budget to avoid any nasty surprises and to ensure your investment can become profitable.
7) Capital growth potential – what factors point to the potential profitability of your real estate property investment? If you’re looking overseas at an emerging market, which economic or social indicators exist to suggest that property prices will increase? If you’re buying to let out are there any indications to suggest that demand for rental accommodation will remain strong, increase or even decline? Think about what you want to achieve from your investment and then research and find out whether your expectations are realistic.
8) Exit costs – if you will incur substantial capital gains taxation liability if you sell your property investment for profit, will that render the investment profitless? In Spain a foreign buyer can incur up to 35% capital gains tax, in Turkey on the other hand property sales are capital gains tax free if the underlying real estate has been owned for four or more years.
9) Profit margins – what levels of capital growth can you realistically gain on your property investment or how much rental income can you generate? Work out these facts and then work backwards towards your initial budget to work out your potential profit margins. At all times you have to keep the bigger picture in mind to ensure that your real estate investment has good potential for profit.
10) Think long term – unless you’re buying property off plan and intending to flip it for resale and profit before completion you should view real estate investment as a long term investment. Real estate is a slow to liquidate asset, cash tied up in property is not simple to free up. Take a long term approach to your property portfolio and give your assets time to increase in value before cashing them in for profit.
About the author:
Rhiannon Williamson is a freelance writer whose articles about property investing and emerging real estate markets have appeared in publications around the world. She is currently working on a brand new property investment resource http://www.amberlamb.com/
Saturday, July 15, 2006
Real Estate Agents - Deliver Maximize Internet Exposure for Sellers by Giving EVERY Listing its Own Website
Buyers Love the Convenience of On-line House Hunting
The real estate industry has moved on-line with good reason - that's where the buyers have gone. Real estate sales methods are being redefined, as people increasingly rely on search engines to locate precisely the house they want. More than 53% of house hunters use the Internet in their home search, according to the National Association of Realtors (NAR).
Their surveys also show, seventy-five percent of buyers locate their agent online. And seventy percent of real estate firms have a website - many of them searchable. Searchable websites allow a person to enter their specific preferences (3-bedroom, price range, etc.) and see that firm's available listings matching those criteria.
Expect Internet reliance for real estate to increase further, because computer- and Internet-savvy buyers find answers that way (no matter what they're buying). Studies show web searchers tend to have higher education and incomes, and are more likely to buy. To gain credibility with Internet-oriented buyers, agents must demonstrate they understand what's wanted - not just homes, but HOW they prefer to buy them.
Web searchers prefer to take an active role in their home search, rather than waiting to see what their agent suggests. Now, the pressing challenge among real-estate firms is to find even better ways to serve buyers and sellers online. Simply sticking a listing on-line doesn't make it easy to find. It's too easy to get lost in the pack.
Impress with Technology - Without Needing High-tech Skills
Firms employing online methods effectively out-perform the rest, by delivering answers in the way buyers prefer-ample pictures, simple and direct facts, and easily found online.
Visualize this - a website entirely devoted to one particular property. The domain name? It's location, of course http://www.1122MainStreet.com
Take a peek. No question about where it's located. The home stands out in a high-impact way. And its front yard signs send passers-by to the unique website for all the particulars.
Any property offered from its very own website rates extra attention - and gets it. Realtors are pleased to learn they don't need to know any technical stuff at all, to produce a well-designed, one-of-a-kind website. Following the easy steps lets them create a unique site within minutes. Each property appears its own domain name (the address) until the sale is made.
Single Property Sites, http://www.singlepropertysites.com has pioneered property-specific websites. Their package provides everything from templates, to hosting, to tech support. No technical know-how is needed. Yet a customized website costs only a few dollars a month per listing. It's so cheap an agency can provide websites for every one its listings - without it costing sellers anything.
Deliver Convenience in a Way that Appeals to both Sellers and Buyers
To the oft-quoted real estate phrase, "location, location, location," add "convenience, convenience, convenience." Nowadays, that's what everyone looks for. As improbably as it would seem, individualized sites are convenient and simple.
The unique marketing strategy gives any property a competitive advantage. But it also provides the agent a valuable advantage during the listing interview. One no other sales agent can match.
1. Convenience for Sellers
Sellers want their property to sell quickly and easily. They expect their agent to make their property stand out from similar homes. Providing maximum Internet exposure guides buyers directly to their property. And it's so fast it's not dependent on customary printing or newspaper schedules.
2. Convenience for Buyers
The address takes them to the website, with numerous pictures and all the property specs. No need to click through numerous listings that don't interest them. It's much easier to find the home that "rings their bell," without needing to visit the property initially.
3. Convenience for the Listing Real Estate Agent
Individual websites expedite the whole sales cycle. Since properties sell faster, it's easier to focus their energies on getting them closed. When courting sellers, it's a powerful distinction. Also, it maximizes open-house activity.
Sellers Claim Ownership of their Property's Website
Cindie Day, an agent with Piele Realtors, http://www.pielerealtors.com of Denver, claims it's much easier to sell a property with its own website. "Sellers share the site information with friends and co-workers. It looks so deluxe and impressive, people assume it's expensive. But it's much cheaper than newspaper ads. I'm putting all my listings on their own site since they sell faster that way."
When it comes time for a seller to choose which agent brings "something extra," offering sellers their own buyer-oriented website (for no cost to them) counts as a noteworthy listing tool.
©2005, Paul Eastwood
The real estate industry has moved on-line with good reason - that's where the buyers have gone. Real estate sales methods are being redefined, as people increasingly rely on search engines to locate precisely the house they want. More than 53% of house hunters use the Internet in their home search, according to the National Association of Realtors (NAR).
Their surveys also show, seventy-five percent of buyers locate their agent online. And seventy percent of real estate firms have a website - many of them searchable. Searchable websites allow a person to enter their specific preferences (3-bedroom, price range, etc.) and see that firm's available listings matching those criteria.
Expect Internet reliance for real estate to increase further, because computer- and Internet-savvy buyers find answers that way (no matter what they're buying). Studies show web searchers tend to have higher education and incomes, and are more likely to buy. To gain credibility with Internet-oriented buyers, agents must demonstrate they understand what's wanted - not just homes, but HOW they prefer to buy them.
Web searchers prefer to take an active role in their home search, rather than waiting to see what their agent suggests. Now, the pressing challenge among real-estate firms is to find even better ways to serve buyers and sellers online. Simply sticking a listing on-line doesn't make it easy to find. It's too easy to get lost in the pack.
Impress with Technology - Without Needing High-tech Skills
Firms employing online methods effectively out-perform the rest, by delivering answers in the way buyers prefer-ample pictures, simple and direct facts, and easily found online.
Visualize this - a website entirely devoted to one particular property. The domain name? It's location, of course http://www.1122MainStreet.com
Take a peek. No question about where it's located. The home stands out in a high-impact way. And its front yard signs send passers-by to the unique website for all the particulars.
Any property offered from its very own website rates extra attention - and gets it. Realtors are pleased to learn they don't need to know any technical stuff at all, to produce a well-designed, one-of-a-kind website. Following the easy steps lets them create a unique site within minutes. Each property appears its own domain name (the address) until the sale is made.
Single Property Sites, http://www.singlepropertysites.com has pioneered property-specific websites. Their package provides everything from templates, to hosting, to tech support. No technical know-how is needed. Yet a customized website costs only a few dollars a month per listing. It's so cheap an agency can provide websites for every one its listings - without it costing sellers anything.
Deliver Convenience in a Way that Appeals to both Sellers and Buyers
To the oft-quoted real estate phrase, "location, location, location," add "convenience, convenience, convenience." Nowadays, that's what everyone looks for. As improbably as it would seem, individualized sites are convenient and simple.
The unique marketing strategy gives any property a competitive advantage. But it also provides the agent a valuable advantage during the listing interview. One no other sales agent can match.
1. Convenience for Sellers
Sellers want their property to sell quickly and easily. They expect their agent to make their property stand out from similar homes. Providing maximum Internet exposure guides buyers directly to their property. And it's so fast it's not dependent on customary printing or newspaper schedules.
2. Convenience for Buyers
The address takes them to the website, with numerous pictures and all the property specs. No need to click through numerous listings that don't interest them. It's much easier to find the home that "rings their bell," without needing to visit the property initially.
3. Convenience for the Listing Real Estate Agent
Individual websites expedite the whole sales cycle. Since properties sell faster, it's easier to focus their energies on getting them closed. When courting sellers, it's a powerful distinction. Also, it maximizes open-house activity.
Sellers Claim Ownership of their Property's Website
Cindie Day, an agent with Piele Realtors, http://www.pielerealtors.com of Denver, claims it's much easier to sell a property with its own website. "Sellers share the site information with friends and co-workers. It looks so deluxe and impressive, people assume it's expensive. But it's much cheaper than newspaper ads. I'm putting all my listings on their own site since they sell faster that way."
When it comes time for a seller to choose which agent brings "something extra," offering sellers their own buyer-oriented website (for no cost to them) counts as a noteworthy listing tool.
©2005, Paul Eastwood
Real Estate Investor Question: Rehab and Sell, or Rehab and Keep?
Here's another awesome question I received from my discussion board. The question; Why bother keeping property after it's rehabbed? Why not sell it after the rehab and GET PAID!
Of course, the first questions that you must answer is how emergent is your need for quick cash? You can likely generate the most SHORT TERM cash by selling a freshly rehabbed house. But, you will give much of it away in taxes come next April.
If you keep it, you stand to make more! You will also enjoy some great benefits while you own it such as cash flow, a tax break, and MORE cash with the future appreciation. You can still pull some nice cash a few months after buying it when you refinance (post rehab) the property from your hard money (at 70% loan to value) to long term financing (at 85% or 90% loan to value).
The short answer is an investor is going to make considerably more money by hanging onto a property after it's rehabbed. There is a downside to it. You have to be a landlord, and you have to decide if you want to do that. I don't think it's too bad as long the landlording is done correctly.
Let me illustrate the difference in overall money between rehab and sell, and rehab and rent investing with this example;
Let's say appreciation rates are 5% in your town and the average price of a freshly rehabbed property in the neighborhoods investors buy in is $100,000. Let's also say there is Bill and Fred.
Bill sells his properties after rehabbing and makes $15-18,000 per house. Good boy Bill!
Fred keeps his rehab projects and cash-out refinances, pulling out around $10,000 per house within 3-6 months of ownership. (Fred trades his 70% loan-to-value (LTV) ratio hard money for long term, 30-year mortgages at a lower interest rate with an 85-90% loan to value ratio. He pockets the difference between what it costs to pay off the hard money and the new mortgage less closing costs. This works out to about $10,000 per property.)
Bill (rehab and sell) makes a great living. Ten houses per year is $150,000-$180,000 per year...nice jingle! The downside is that Bill has to keep rehabbing to keep making that living year-after-year and pays taxes on all that money as regular income (ouch!). So his $150,000 per year is in reality somewhat less.
Fred (the rehabber) also makes a great living. Ten houses per year makes him $100,000 or so in tax free, spendable cash. But, Fred controls a million dollars in real estate and it's going up in value year after year. Also, Fred pays no taxes on that money he gets from the cash-out refinances. It's part of a mortgage, so must be paid back, therefore is not income! I love that part!
Let's look at what Fred's doing more closely.
Let's say Fred bought 10 houses valued at $100,000 each, owes $90,000 on each one (after the 90% cash out refinance), so he controls $1,000,000 in property. If he keeps them 5 years (assuming a low appreciation rate...which is pretty conservative):
Purchase year - 10 houses x $100,000 = $1,000,000
Year 1 - Same 10 houses X $105,000 = $1,050,000
Year 2 - Same 10 houses X $110,250 = $1,102,500
Year 3 - Same 10 houses X $115,762 = $1,157,620
Year 4 - Same 10 houses X $121,550 = $1,215,500
Year 5 - Same 10 houses X $127,627 = $1,276,270
Essentially, Fred makes an extra $50,000 per year for keeping 10 properties. After owning them 5 years, if he sells, he puts $276,000 in his pocket.
Remember
- Some parts of the country will appreciate much faster than 5%. Heck some places properties will double in value in 5 years.
- No tax benefits of keeping the property is included here. That equates to thousands of dollars in real income.
- This is ONE ten-house year. Let's say you want to "top out" at owning 30 houses. Well, in just a couple of years your buying will slow down to a trickle and you'll start selling and cashing out of properties. I mean, how many ten-house years to you need to string together before you are set for life?
- What if you hold these houses 10 years? The numbers get pretty exciting.
If you're like me and you don't want to do this for too many years, then holding properties for a few years makes a lot of sense, especially if you don't have much personal money invested in them.
So what of poor old Bill? Chances are, Bill will satisfy his need for short term cash, then start holding property. What do you think?
About the author:
Bruce W. Ford is the editor of Rehab-Real-Estate.com Get his important Special Report entitled "12 Things Real Estate Investment Gurus Won't Tell You" at http://www.Rehab-Real-Estate.com
Of course, the first questions that you must answer is how emergent is your need for quick cash? You can likely generate the most SHORT TERM cash by selling a freshly rehabbed house. But, you will give much of it away in taxes come next April.
If you keep it, you stand to make more! You will also enjoy some great benefits while you own it such as cash flow, a tax break, and MORE cash with the future appreciation. You can still pull some nice cash a few months after buying it when you refinance (post rehab) the property from your hard money (at 70% loan to value) to long term financing (at 85% or 90% loan to value).
The short answer is an investor is going to make considerably more money by hanging onto a property after it's rehabbed. There is a downside to it. You have to be a landlord, and you have to decide if you want to do that. I don't think it's too bad as long the landlording is done correctly.
Let me illustrate the difference in overall money between rehab and sell, and rehab and rent investing with this example;
Let's say appreciation rates are 5% in your town and the average price of a freshly rehabbed property in the neighborhoods investors buy in is $100,000. Let's also say there is Bill and Fred.
Bill sells his properties after rehabbing and makes $15-18,000 per house. Good boy Bill!
Fred keeps his rehab projects and cash-out refinances, pulling out around $10,000 per house within 3-6 months of ownership. (Fred trades his 70% loan-to-value (LTV) ratio hard money for long term, 30-year mortgages at a lower interest rate with an 85-90% loan to value ratio. He pockets the difference between what it costs to pay off the hard money and the new mortgage less closing costs. This works out to about $10,000 per property.)
Bill (rehab and sell) makes a great living. Ten houses per year is $150,000-$180,000 per year...nice jingle! The downside is that Bill has to keep rehabbing to keep making that living year-after-year and pays taxes on all that money as regular income (ouch!). So his $150,000 per year is in reality somewhat less.
Fred (the rehabber) also makes a great living. Ten houses per year makes him $100,000 or so in tax free, spendable cash. But, Fred controls a million dollars in real estate and it's going up in value year after year. Also, Fred pays no taxes on that money he gets from the cash-out refinances. It's part of a mortgage, so must be paid back, therefore is not income! I love that part!
Let's look at what Fred's doing more closely.
Let's say Fred bought 10 houses valued at $100,000 each, owes $90,000 on each one (after the 90% cash out refinance), so he controls $1,000,000 in property. If he keeps them 5 years (assuming a low appreciation rate...which is pretty conservative):
Purchase year - 10 houses x $100,000 = $1,000,000
Year 1 - Same 10 houses X $105,000 = $1,050,000
Year 2 - Same 10 houses X $110,250 = $1,102,500
Year 3 - Same 10 houses X $115,762 = $1,157,620
Year 4 - Same 10 houses X $121,550 = $1,215,500
Year 5 - Same 10 houses X $127,627 = $1,276,270
Essentially, Fred makes an extra $50,000 per year for keeping 10 properties. After owning them 5 years, if he sells, he puts $276,000 in his pocket.
Remember
- Some parts of the country will appreciate much faster than 5%. Heck some places properties will double in value in 5 years.
- No tax benefits of keeping the property is included here. That equates to thousands of dollars in real income.
- This is ONE ten-house year. Let's say you want to "top out" at owning 30 houses. Well, in just a couple of years your buying will slow down to a trickle and you'll start selling and cashing out of properties. I mean, how many ten-house years to you need to string together before you are set for life?
- What if you hold these houses 10 years? The numbers get pretty exciting.
If you're like me and you don't want to do this for too many years, then holding properties for a few years makes a lot of sense, especially if you don't have much personal money invested in them.
So what of poor old Bill? Chances are, Bill will satisfy his need for short term cash, then start holding property. What do you think?
About the author:
Bruce W. Ford is the editor of Rehab-Real-Estate.com Get his important Special Report entitled "12 Things Real Estate Investment Gurus Won't Tell You" at http://www.Rehab-Real-Estate.com
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