At present the real estate market in the United States does not look much promising. Despite the 75 basis point rate cut the situation seems to look a bit mawkish. If you want to protect your self from the falling real estate prices, there are ways that you can adopt. Let us now look at the reasons for the fall in the US real estate prices. According to Boston fed president Rosengren, the recent fall in the real estate prices in the United States of America is the most severe downfall that the United States has experienced in the past 50 years. The evidence of the downturn can be seen by the increasing numbers of foreclosures. This year the nation wide foreclosure was around 5,00,000 in the third quarter, which was approximately double of what it was in the previous year at the same time. According to him around two million foreclosures could tale place in the year 2007-2008.
In these uncertain times there are certain methods that you can adopt to protect your property. You can lock in your property at the current market price, so that you can at least secure that value. You can make a contract with certain companies who are ready to enter in to a contract, whereby you can sell your property to them after 2 years at a pre decided value. This predefined value is known as the lock in value and the owner of the property has the right to sell the property to sell at that price after a period of two years and within a period of 10 years.
The advantage that the property holder enjoys is that no matter what is the price in the market, he can still get the locked in value. In case the market value falls considerably he can still sell the property to the dealer at the fixed price. In this case you can exercise the deal if real estate market prices fall. In case the real estate market recovers there is no obligation on the part of the owner to sell it to the contractor. Thus this is a win- win situation for you.
This scheme gives the owners of the property peace of mind. As because, for a nominal fees they can be assured that they will be able to fetch the guaranteed amount for their property no matter how the real estate market fares.
Tuesday, 15 July 2008
Sunday, 6 July 2008
Dubai, the new choice for big players in real estate investments.
With the enterprising vision of Sheikh Mohammed Bin Rashid Al Maktoum, the prime minister and ruler of Dubai, this United Arab Emirates is bound to scale new heights. The United Arab Emirates formed in 1971 is a collection of 7 states, but unlike its neighbors, Dubai is not blessed with great oil reserves. Instead Dubai is all set in making itself the newest and the hottest destination of the major global investors. It is the aim of the prime minister of Dubai, to make it the most preferred tourist and business magnet by the end of 2015. The plan aims that Dubai undertakes an all-round development that includes economic development, social equality, justice, security and government excellence.
The real estate market of Dubai is in its nascent stages, it is merely two years old, but investing in a developing market has its own advantages, few of them are as follows.
1. Prices are quite low, as compared to the property prices in other developed market and is thus a great buy.
2. Property is a good hedge to counter the inflation that is emerging in the world economy. In case the interest rate of debt increases, the extra cost can be passed on as additional rent and at the same time the value of property also appreciates.
3. Unlike the stock market that is highly volatile, the rent on property is quite stable, it may fall at times but it can never be nill.
4. In the same way, property value can never be zero, but you can’t say this in the case of shares.
5. Property has the advantage of both stock and bond, just like a bond it provides a regular rental income and like a stock it provides capital appreciation.
6. The Dubai property is available for global investors to invest, but this is not true in the case of local stock exchange.
7. This is the best time to invest in Dubai, as Dubai is in an economic boom. There have been developments of massive projects such as Dubai land, Palm Island, and also the Dubai international financial centre is about to be completed. In such a scenario there is bound to be an increase in the real estate value.
8. You can also take loan against a real estate property. Today real estate is rated as the best collateral security that is demanded by banks and other financial institutions.
9. Investing in real estate is also a very effective way of diversification of risk and having a balanced investment portfolio.
10. As real estate investments are tangible, investors have more control over them, like the timing of sale purchase etc.
Prices are quite low, as compared to the property prices in other developed market and is thus a great buy.
The real estate market of Dubai is in its nascent stages, it is merely two years old, but investing in a developing market has its own advantages, few of them are as follows.
1. Prices are quite low, as compared to the property prices in other developed market and is thus a great buy.
2. Property is a good hedge to counter the inflation that is emerging in the world economy. In case the interest rate of debt increases, the extra cost can be passed on as additional rent and at the same time the value of property also appreciates.
3. Unlike the stock market that is highly volatile, the rent on property is quite stable, it may fall at times but it can never be nill.
4. In the same way, property value can never be zero, but you can’t say this in the case of shares.
5. Property has the advantage of both stock and bond, just like a bond it provides a regular rental income and like a stock it provides capital appreciation.
6. The Dubai property is available for global investors to invest, but this is not true in the case of local stock exchange.
7. This is the best time to invest in Dubai, as Dubai is in an economic boom. There have been developments of massive projects such as Dubai land, Palm Island, and also the Dubai international financial centre is about to be completed. In such a scenario there is bound to be an increase in the real estate value.
8. You can also take loan against a real estate property. Today real estate is rated as the best collateral security that is demanded by banks and other financial institutions.
9. Investing in real estate is also a very effective way of diversification of risk and having a balanced investment portfolio.
10. As real estate investments are tangible, investors have more control over them, like the timing of sale purchase etc.
Prices are quite low, as compared to the property prices in other developed market and is thus a great buy.
Tuesday, 1 July 2008
How to make a profitable real estate investment.
To get the maximum gain from investing in real estate, you have to do a lot of research. Before you fix up your mind to buy a certain property it is important that you find out its market. Make sure to get all the information that you can get. For instance find out if the area is seeing a lot of sales or the properties in that area are slow moving ones. Getting all the information can greatly help in making a better choice.
To make a great investment, you should first know the features that sell.
After getting overall information of the market, it is now your turn to find out what are the properties that aided the sale. Most of the times, small cosmetic changes, lure the investors. Sellers avoid making any structural changes as it tends to cut down on their profit. Generally plumbing, repair of electric wiring, sub flooring and painting is all that is required to make the property a great sell. When you are buying a property it is also important to check out if you can make changes to suit your needs, e.g. check if you can split the garage in to two etc.
An ugly house can easily be your cash cow. As an investor you should make sure to embrace overgrown gardens, nasty smells and stained carpets. It is because these things can be easily fixes and once fixed the property can give you a decent profit.
If you are new at real estate investment, then it is advisable that you take the opinion of inspectors, plumbers and other experienced people before finalizing anything. Chances are that a shrewd seller may convince you and sell a rotten property that is no good for you.
For most of us real estate investment is limited to buying homes as very few of us have the adequate resource to buy a commercial property. But in case of buying a residential property you do not generate any cash flow for yourself. You, in fact create a liability for yourself in the form of maintenance and upkeep. But there is a financial incentive to invest in a home. This way you can save the cost of rents and you can also enjoy capital gains when you decide to sell your home.
Most of the advisors are of the belief that the best strategy of investment is to pay off the loan as soon a possible and to reduce the debt. And if you want to invest in another property after that you can choose from either the commercial property or residential property.
To make a great investment, you should first know the features that sell.
After getting overall information of the market, it is now your turn to find out what are the properties that aided the sale. Most of the times, small cosmetic changes, lure the investors. Sellers avoid making any structural changes as it tends to cut down on their profit. Generally plumbing, repair of electric wiring, sub flooring and painting is all that is required to make the property a great sell. When you are buying a property it is also important to check out if you can make changes to suit your needs, e.g. check if you can split the garage in to two etc.
An ugly house can easily be your cash cow. As an investor you should make sure to embrace overgrown gardens, nasty smells and stained carpets. It is because these things can be easily fixes and once fixed the property can give you a decent profit.
If you are new at real estate investment, then it is advisable that you take the opinion of inspectors, plumbers and other experienced people before finalizing anything. Chances are that a shrewd seller may convince you and sell a rotten property that is no good for you.
For most of us real estate investment is limited to buying homes as very few of us have the adequate resource to buy a commercial property. But in case of buying a residential property you do not generate any cash flow for yourself. You, in fact create a liability for yourself in the form of maintenance and upkeep. But there is a financial incentive to invest in a home. This way you can save the cost of rents and you can also enjoy capital gains when you decide to sell your home.
Most of the advisors are of the belief that the best strategy of investment is to pay off the loan as soon a possible and to reduce the debt. And if you want to invest in another property after that you can choose from either the commercial property or residential property.
Sunday, 22 June 2008
Which is better, fixed rate mortgage or an adjustable rate mortgage?
The most basic distinction between different mortgages depends on how the interest rate is charged. There are two types of mortgages, the first one is the fixed rate mortgage and the second is an adjustable rate mortgage. In case of a fixed rate mortgage, the rate of interest charged by the lender remains the same through out the period. The interest rate charged in case of fixed rate mortgage is unaffected by the general interest rate in the market. On the other hand, in case of rate adjustable mortgage, the interest rate is adjusted to account for the changes in the general interest rate. These adjustments are made periodically. In case the general interest rate rises there is a an upward correction in the rate of interest that is charged for the mortgage and in case there is a fall in the general interest rate, there is a downward correction made. Both these interest rate loans have their advantages and disadvantages, and it is impossible to say which one is better. This answer varies from person to person depending upon his personal choice and risk appetite.
In case of fixed interest rate, you enjoy the advantage of stability. Here you know for sure that come what may, your monthly interest payment will not vary; this scheme is best for risk adverse people who like to plan things in advance. On the other hand in case of fixed rate mortgage, the lender will generally charge you higher than adjustable rate mortgage as the lender loses his chance to increase the rate in accordance with the market.
Adjustable rate mortgage is for the adventurous type of investors; here the interest rate changes depending on the change of rate of the chosen index. It is best to go in for an adjustable rate mortgage if you are sure that the interest rates will fall in the years to come. But making such a prediction is quite not humanly possible and this loan scheme is thus quite risky.
Generally, the lenders offer a very low starting rate which is also called a teaser. These rates lure the investors in to accepting the loan scheme and they end up paying higher interest rate as and when the rate of the underlying index increases.
There is also a third type of mortgage scheme that is now available in the market. It is called the hybrid mortgage loan scheme. It incorporates the features of both the fixed rate ad the adjustable rate mortgage. Here, you can pay a fixed rate of interest for a certain number of years and then the rate is adjustable as per the prior decided plan.
In case of fixed interest rate, you enjoy the advantage of stability. Here you know for sure that come what may, your monthly interest payment will not vary; this scheme is best for risk adverse people who like to plan things in advance. On the other hand in case of fixed rate mortgage, the lender will generally charge you higher than adjustable rate mortgage as the lender loses his chance to increase the rate in accordance with the market.
Adjustable rate mortgage is for the adventurous type of investors; here the interest rate changes depending on the change of rate of the chosen index. It is best to go in for an adjustable rate mortgage if you are sure that the interest rates will fall in the years to come. But making such a prediction is quite not humanly possible and this loan scheme is thus quite risky.
Generally, the lenders offer a very low starting rate which is also called a teaser. These rates lure the investors in to accepting the loan scheme and they end up paying higher interest rate as and when the rate of the underlying index increases.
There is also a third type of mortgage scheme that is now available in the market. It is called the hybrid mortgage loan scheme. It incorporates the features of both the fixed rate ad the adjustable rate mortgage. Here, you can pay a fixed rate of interest for a certain number of years and then the rate is adjustable as per the prior decided plan.
Tuesday, 17 June 2008
How to sell your property real quick.
If you want to move to a new location or just want to sell your house because of a financial difficulty, whatever is the case, there are a number of places that can help you.
It is a good idea to hire an agent who can help to sell your home fast. An agent will help to handle the schedules and the meetings, as he knows the tricks of the business, he will be able to complete all the paper work and other technical formalities for you. You should preferably hire an agent who specializes in this type of quick sale.
In order to sell your house fast, it is important that you know what is involved in the process. First of all you have to ask the lender to forgive the remaining part of the loan, most of the lenders may not give in to your request and as such it becomes important that you present your point well before the lender. The most reliable person to handle this situation is a professional agent. These agents are a boon as they make the process of selling the property very easy and absolutely effortless.
The best part about a quick sale is that this way you can save credit. In case you are thinking of foreclosure, this can be a great way out. In case you want to move out, then again a quick sale is the most viable option. This way you can get quick money that can help you to move and you do not have to wait a year or so to accumulate the money.
You should get hold of an agent as soon as it is possible for you. It is important to note that in the case of quick sell there are greater amount of paper work as compared to most other deals. So it is important that you do not delay the process and start it as soon as it is possible for you. This way you will be able to sell your home fast and will not have to waste money on rent and other costs of the existing house.
It is important that you do not try and go about a quick sale on your own. It is a very tedious task. You will have to go to a number of people and there is a lot of paper work that is involved in this process. Just remember that in quick sell you do not have time to waste, as soon as you know that you have to sell a property get started and the first thing that you will have to do is to hire an agent. If you follow these simple tips you will be able to sell your house in no time at all.
It is a good idea to hire an agent who can help to sell your home fast. An agent will help to handle the schedules and the meetings, as he knows the tricks of the business, he will be able to complete all the paper work and other technical formalities for you. You should preferably hire an agent who specializes in this type of quick sale.
In order to sell your house fast, it is important that you know what is involved in the process. First of all you have to ask the lender to forgive the remaining part of the loan, most of the lenders may not give in to your request and as such it becomes important that you present your point well before the lender. The most reliable person to handle this situation is a professional agent. These agents are a boon as they make the process of selling the property very easy and absolutely effortless.
The best part about a quick sale is that this way you can save credit. In case you are thinking of foreclosure, this can be a great way out. In case you want to move out, then again a quick sale is the most viable option. This way you can get quick money that can help you to move and you do not have to wait a year or so to accumulate the money.
You should get hold of an agent as soon as it is possible for you. It is important to note that in the case of quick sell there are greater amount of paper work as compared to most other deals. So it is important that you do not delay the process and start it as soon as it is possible for you. This way you will be able to sell your home fast and will not have to waste money on rent and other costs of the existing house.
It is important that you do not try and go about a quick sale on your own. It is a very tedious task. You will have to go to a number of people and there is a lot of paper work that is involved in this process. Just remember that in quick sell you do not have time to waste, as soon as you know that you have to sell a property get started and the first thing that you will have to do is to hire an agent. If you follow these simple tips you will be able to sell your house in no time at all.
Monday, 9 June 2008
Commercial property or residential property, which one is a better bet?
While investing in real estate it is important that your investment fetches you a monthly cash flow. Even if you are hoping to get a decent profit due to capital appreciation, it is very important that your investment provides a monthly return. If it is not so, then chances are that you will find that all you profit will be nullified by the monthly drain on your income. This will be all the more true in case there is a decline in the growth of real assets for a few years.
All those who ever had tenants would swear that it is much better to have commercial tenants than residential tenants. With residential tenant you have a tough time with them, do not be surprised if you are woken up at the dead of the night because your tenant has some complain to make.
The reason why most people invest in residential real estate is because they have never invested in commercial real estate and they fear landing themselves in unfamiliar territory. But the fact is that commercial property must indeed be one that works well, after all it did work for Donald Trump and it can work for you also.
Given below is a list of reasons as to why we think you should invest in commercial real estate rather than residential real estate.
The return on investing in commercial real estate is far higher than that of residential real estate.
You must be thinking as to why should you invest in the real estate market at all? Well, the facts state that unlike the unpredictable stock market, the real estate market has shown a steady growth over the years with only a few minor hiccups. The best part is that you do not need any prior training or qualification to enter in to the field of commercial real estate. It involves very little risk and you can end up making a lot of money out of it.
Investing in the commercial real estate, although beneficial is altogether different from investing in the residential real estate. First of all you need to know about the basics of mortgage. The focus of the commercial real estate creditors is the property itself. They are interested in its condition and its earning capacity. Here the credit scores do not matter as much as that they matter in residential property deals.
You can earn much more in the case of commercial real estate business as in addition to the fixed rent, you also charge a percentage of profit from the tenants.
If you have the property in central location, you can charge a higher amount of rent, as location is of vital importance in these cases. Commercial real estates also appreciate much faster than the residential ones.
All those who ever had tenants would swear that it is much better to have commercial tenants than residential tenants. With residential tenant you have a tough time with them, do not be surprised if you are woken up at the dead of the night because your tenant has some complain to make.
The reason why most people invest in residential real estate is because they have never invested in commercial real estate and they fear landing themselves in unfamiliar territory. But the fact is that commercial property must indeed be one that works well, after all it did work for Donald Trump and it can work for you also.
Given below is a list of reasons as to why we think you should invest in commercial real estate rather than residential real estate.
The return on investing in commercial real estate is far higher than that of residential real estate.
You must be thinking as to why should you invest in the real estate market at all? Well, the facts state that unlike the unpredictable stock market, the real estate market has shown a steady growth over the years with only a few minor hiccups. The best part is that you do not need any prior training or qualification to enter in to the field of commercial real estate. It involves very little risk and you can end up making a lot of money out of it.
Investing in the commercial real estate, although beneficial is altogether different from investing in the residential real estate. First of all you need to know about the basics of mortgage. The focus of the commercial real estate creditors is the property itself. They are interested in its condition and its earning capacity. Here the credit scores do not matter as much as that they matter in residential property deals.
You can earn much more in the case of commercial real estate business as in addition to the fixed rent, you also charge a percentage of profit from the tenants.
If you have the property in central location, you can charge a higher amount of rent, as location is of vital importance in these cases. Commercial real estates also appreciate much faster than the residential ones.
Monday, 2 June 2008
Ways to Make Money from Commercial Property Investments
There are basically five different ways in which you can make money by investing in commercial real estate.
Strategy 1: Building equity
The key way to make money in commercial real estate business is by building up equity in the property. You can do this in four ways that are mentioned below.
The first way is to buy the property below its market value. To do this you will have to do your due research, you will have to find out the needs of the buyer and you also have to be good at negotiation.
The next way in which equity builds up is through the appreciation of property. You can easily ensure that your property appreciates by marinating it properly and undertaking the necessary repair work. It is also important to buy a property in a location that promises to grow.
The third way to build equity is by paying down debt. The key to this strategy is to try and get the lowest interest rate possible on your debt instrument.
The fourth way in which you can create equity is the time when you sell the property. You must try and sell you property at above market value and to do this you have to put in effort to find the right buyer and again you have to have good negotiation skills.
Strategy 2: depreciation of property
You can save a considerable amount of tax as depreciation on building is tax deductible expenditure. When you arrive at the profit before tax, you are allowed to account the expenditure on depreciation of assets as an operational expenditure. This way you have to calculate the percentage of tax on a lower amount. It is however important to note that depreciation can be charged only on the building but not on land.
Strategy 3: Charging suitable rent
It is important that the property generates enough rent so that you can easily cover the expenditure if its maintenance and can also cover the interest payment of the mortgage. But you should not stop there, it should be your goal to try and get additional rent so that you can pay off the debts and thus create equity.
Strategy 4: Attractive financing schemes for the buyer
When you are selling your property, you can fetch a better price if you offer convenient payment schemes to the potential buyer. For example, if you allow the buyer to pay in easy installments and do not want a heavy down payment, then the buyer may be willing to pay you a higher over all price.
Strategy 5: Add value to your property
You can add value to you property in various ways. Try and make strategic improvements in your property that will help you to increase its worth. You can also put your property to higher and better use to increase its worth.
Strategy 1: Building equity
The key way to make money in commercial real estate business is by building up equity in the property. You can do this in four ways that are mentioned below.
The first way is to buy the property below its market value. To do this you will have to do your due research, you will have to find out the needs of the buyer and you also have to be good at negotiation.
The next way in which equity builds up is through the appreciation of property. You can easily ensure that your property appreciates by marinating it properly and undertaking the necessary repair work. It is also important to buy a property in a location that promises to grow.
The third way to build equity is by paying down debt. The key to this strategy is to try and get the lowest interest rate possible on your debt instrument.
The fourth way in which you can create equity is the time when you sell the property. You must try and sell you property at above market value and to do this you have to put in effort to find the right buyer and again you have to have good negotiation skills.
Strategy 2: depreciation of property
You can save a considerable amount of tax as depreciation on building is tax deductible expenditure. When you arrive at the profit before tax, you are allowed to account the expenditure on depreciation of assets as an operational expenditure. This way you have to calculate the percentage of tax on a lower amount. It is however important to note that depreciation can be charged only on the building but not on land.
Strategy 3: Charging suitable rent
It is important that the property generates enough rent so that you can easily cover the expenditure if its maintenance and can also cover the interest payment of the mortgage. But you should not stop there, it should be your goal to try and get additional rent so that you can pay off the debts and thus create equity.
Strategy 4: Attractive financing schemes for the buyer
When you are selling your property, you can fetch a better price if you offer convenient payment schemes to the potential buyer. For example, if you allow the buyer to pay in easy installments and do not want a heavy down payment, then the buyer may be willing to pay you a higher over all price.
Strategy 5: Add value to your property
You can add value to you property in various ways. Try and make strategic improvements in your property that will help you to increase its worth. You can also put your property to higher and better use to increase its worth.
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