Many people are speculating that now is the worst time to invest in real estate. There are heightened fears of a recession, the global credit crunch means that people are tightening their belts and the cost of living has increased substantially.
However, despite these concerns, real estate continues to be a solid investment. People will always need a place to live for a variety of reasons including the increasing demands of immigration, divorce rates, people seeking greater independence at a younger age, students needing somewhere to live close to their place of study and the high cost of getting on the property ladder. This is a great opportunity therefore to supply real estate to meet the needs of the rental market.
Real estate investing during a recession is just as easy as investing during a period of economic growth. Property prices are much lower and there tend to be a number of cheap foreclosure properties on the market. This means that there is a real opportunity to make money in real estate but the strategy during a recession should be seen as a long-term investment rather than relying on short-term "flipping" investments.
"Flipping" which means buying a property, carrying out renovations and selling it on quickly for a profit (usually within a 3 - 18 month period) was a very easy and profitable way of making money a couple of years' ago but is a strategy which is full of holes in today's market. Less people are buying property today and those that are buying are paying much less than the asking price and you could find that you actually lose money rather than make any profit. Real estate investing requires a long-term view (about 2 - 5 years), because any properties that you invest in now whilst prices are cheaper, will see a steady increase in their value over time in the coming months and years.
So, what are the factors you should look out for when investing in property over the long-term?
Decide your strategy
If you want to appeal to young professionals, one or two-bedroom apartments are ideal in an area close to bars and nightclubs, and to transport links to get them quickly to work. If your strategy is to provide homes to families, a 3-bedroom house with garage space, close to schools, parks and supermarkets may be ideal. Deciding your strategy beforehand will make the process of investing much easier.
Decide where to invest
Is the investment in an up-and-coming, highly desirable area? There must be accessible amenities nearby such as shops, bars, schools and supermarkets. Notice whether there is an oversupply of newly built apartments or houses in the area which are empty or taking a long time to sell or rent out.
Do your research
Learn how to value property. What are other properties selling and renting for in the area your interested in? Speak to estate agents (but don't rely on them) to get the best possible understanding of the real estate market in the area. Do the investments you are considering add up? Research, research and research again and carry out your own due diligence in order to make sure you are investing in the right property, in the right area at the right time.
Rental Property & Equity
This is the key to real estate investing over the long-term. Rental properties can generate passive income almost immediately, although this will probably only be a small amount of profit each month. Although you can't expect to get rich on the profits of one property, five or more investment properties all bringing in a small amount of profit each month will soon add up to a comfortable income. This profit comes in handy when it comes to maintenance repairs for each property or to cover periods when a property may be empty. The real riches comes from building equity over the long-term which you can release over time to enable you to buy additional investment properties.
Remember, this is a business
You should treat your real estate investing as a business, which means you should not get attached to the property, which is quite common, especially amongst first-time real estate investors! It's a mistake to become too personally involved in your property. You should not consider your own personal requirements, but those of the future inhabitants.
The real estate market is full of people who are driven by greed and fear. There were people who were jumping in with both feet during the real estate boom times because they wanted to get rich quick, but they lost a great deal of money and their investments during the leaner times because they hadn't carried out the necessary research and due diligence needed to be successful whatever the climate. Taking the long-term view in real estate investment will ensure that you are successful in periods of recession as well as during periods of growth.
Sunday, 24 August 2008
Saturday, 23 August 2008
Tips For Today's Property Auctions
Good news for novice property investors: auction sales. Nowadays, buying a first home or an investment property at an auction has undergone a paradigm shift. It is no longer reserved for seasoned portfolio investors or those people with mountains of cash. Property auctions have become a great way to purchase a property for a profit - especially since so many properties can be bought at a price well below market value.
In today's uncertain economic situation, buying at an auction is a viable option for those looking for a quick yet cost-effective purchase. Property auctions are fast becoming a popular alternative to the traditional route of having to go through estate agents. A wide range of homes are now being put up for auction. With the rise in the number of properties being repossessed due to restrictive interest rates, properties up for auction have also increased.
Property auctions have also seen more novice buyers coming in. Most people have become familiar with bidding, perhaps due to online sites like eBay and some TV shows. Joining auctions is no longer an intimidating experience. Professional investors, bargain hunters and first-time home buyers are now turning to auctions to find the perfect property at an affordable price.
A property auction is exciting for the seasoned bidder, but a daunting experience for the first-timer. An auction is a heady yet bewildering experience, definitely not for the faint of heart. The number of properties up for auction has increased by over 60% in the past ten years. However, with more people participating, auctions have become a lot easier for the beginner. Before embarking on your first property auction, keep these tips in mind:
- Research beforehand on the property for sale. A good way to start would be to see if there is some information on the property available online. Also, contact the auction for additional details.
- View the property or lot prior to the scheduled auction day. Consider the neighborhood and the vicinity. Ask local estate agents for the going market prices of the nearby properties to determine if the price asked for at the auction is fair and within the current market rate.
- Arrange to have a survey done by an independent surveyor. Most properties up for auction are required to have a Home Information Pack but not a Home Condition Report. Though a survey can be costly (more or less £500), it is crucial in determining the maximum price you are willing to bid and the amount of repairs the property needs. Also, be prepared to consider the survey expenses as forfeited even if you do not win the bid.
- Carry out all other necessary checks on the property before the hammer falls. Seek the advice of a professional for structural and legal matters.
- Organize your finances. Remember that you have to immediately put down a 10% down payment once your bid has been successfully received, with the balance often needing to be paid 28 days after.
Parmdeep Vadesha is a property investment expert and founder of the largest community of property entrepreneurs on the web who buy below market value properties from distressed homeowners facing repossession, divorce and bankruptcy. He writes a monthly newsletter for over 70,000 property investors worldwide -
Property Tips to Find the Best Investment
Investing in real estate is a profitable business that can be easy for those willing to invest time and effort. The market for real estate is at an all time high and there are tools available to help you evaluate various properties. Since there is a significant amount of money involved there is always a risk involved and there is a chance that you can lose your investment. Here are some tips to real estate evaluation and to help you find a property that will make you money.
Use the Internet
The property hunting process has been made much easier with the internet. Property listings will include photos as well as important information such as square footage, amenities and price. This allows you to search for properties outside of your area. Unless you find a property that is for sale by owner (or "FSBO") you'll need to plan on paying realtor fees.
Research the Market
Become familiar with the market by looking at listings and visiting realtors or estate agencies. For a price you may be able to get a MLS (multiple listing service) if no license is required to obtain one. With a MLS you get the same information that agents get regarding the listing and sale price of houses in a certain area.
Visit the Property
Even with all of the available tools such as the internet and MLS, you still can't make decisions sight unseen. You can only tell if a property is right for you if you actually visit the property and neighborhood. A neighborhood with surrounding homes that are in disrepair and unkempt can bring down the value of the property. Talk to the neighbors about any problems they've noticed. Ask them if they've seen a lot of repairmen in and out of the home. Plan on making multiple visits to the property at different times of day and in different weather conditions. This will tell you if there are holes in the roof or if the heating and air conditioning works properly. It will also give you the opportunity to see the property with different lighting. This is true if you're looking for property for sale in Benidorm or anywhere in the world.
Inspection
After you've determined that the property is right for your needs, you can make a contingent deal that is dependent on a professional inspection. Find an inspector that is honest and reliable even if they cost more. Review the report and ensure that every major and minor problem is recorded. Not everything will require repair but it should still be recorded. Things to look for are water damage, termites and other items that have significant costs to fix.
Negotiate Repairs
Once you have the information you need, you can negotiate who pays for the repairs. This is generally as reductions on the final sale price. In any case, be realistic and keep in mind that even the newest homes will not be 100 percent perfect. Just make sure that the repair costs required are not eating up your projected profit.
Robert Carlton's informative papers can be found on many web pages associated with Benidorm, Spain real estate and apartments to buy in Benidorm. His observations on property for sale in Benidorm can be encountered on http://www.alicante-spain.com
Use the Internet
The property hunting process has been made much easier with the internet. Property listings will include photos as well as important information such as square footage, amenities and price. This allows you to search for properties outside of your area. Unless you find a property that is for sale by owner (or "FSBO") you'll need to plan on paying realtor fees.
Research the Market
Become familiar with the market by looking at listings and visiting realtors or estate agencies. For a price you may be able to get a MLS (multiple listing service) if no license is required to obtain one. With a MLS you get the same information that agents get regarding the listing and sale price of houses in a certain area.
Visit the Property
Even with all of the available tools such as the internet and MLS, you still can't make decisions sight unseen. You can only tell if a property is right for you if you actually visit the property and neighborhood. A neighborhood with surrounding homes that are in disrepair and unkempt can bring down the value of the property. Talk to the neighbors about any problems they've noticed. Ask them if they've seen a lot of repairmen in and out of the home. Plan on making multiple visits to the property at different times of day and in different weather conditions. This will tell you if there are holes in the roof or if the heating and air conditioning works properly. It will also give you the opportunity to see the property with different lighting. This is true if you're looking for property for sale in Benidorm or anywhere in the world.
Inspection
After you've determined that the property is right for your needs, you can make a contingent deal that is dependent on a professional inspection. Find an inspector that is honest and reliable even if they cost more. Review the report and ensure that every major and minor problem is recorded. Not everything will require repair but it should still be recorded. Things to look for are water damage, termites and other items that have significant costs to fix.
Negotiate Repairs
Once you have the information you need, you can negotiate who pays for the repairs. This is generally as reductions on the final sale price. In any case, be realistic and keep in mind that even the newest homes will not be 100 percent perfect. Just make sure that the repair costs required are not eating up your projected profit.
Robert Carlton's informative papers can be found on many web pages associated with Benidorm, Spain real estate and apartments to buy in Benidorm. His observations on property for sale in Benidorm can be encountered on http://www.alicante-spain.com
The Top Five Reasons to Invest in Real Estate
Number 1
Other People's Money - There is plenty of money out there for you to use to buy real estate. You just need to go out and find other peoples money to buy discounted property. This is a great reason to invest you are not using your own money.
Number 2
Tax Breaks - Owning property gives you serious write offs and depreciation on your property. At tax time this will definitely help in lowering taxes paid.
Number 3
Equity - Buying property at huge discounts can give you a ton of equity in property. The best part is once you pay off the property you can keep it for cash flow or sell to withdraw your equity.
Number 4
Its Not That Hard - Everyone says they do not want to fix toilets at midnight when a tenant calls. You should have contractors that can take care of this for you so you do not have to do it. Landlording or investing is only as hard as you make it. In all honesty it is probably just as hard as the job you are currently working.
Number 5
Cash Flow - This should be your top reason to invest. In real estate you can build up enough property to create a residual income for you and your family. Lets look at some numbers:
Other People's Money - There is plenty of money out there for you to use to buy real estate. You just need to go out and find other peoples money to buy discounted property. This is a great reason to invest you are not using your own money.
Number 2
Tax Breaks - Owning property gives you serious write offs and depreciation on your property. At tax time this will definitely help in lowering taxes paid.
Number 3
Equity - Buying property at huge discounts can give you a ton of equity in property. The best part is once you pay off the property you can keep it for cash flow or sell to withdraw your equity.
Number 4
Its Not That Hard - Everyone says they do not want to fix toilets at midnight when a tenant calls. You should have contractors that can take care of this for you so you do not have to do it. Landlording or investing is only as hard as you make it. In all honesty it is probably just as hard as the job you are currently working.
Number 5
Cash Flow - This should be your top reason to invest. In real estate you can build up enough property to create a residual income for you and your family. Lets look at some numbers:
- You own 10 rentals free and clear at a value of $100,000 each. The rent on each property is $1,000 a month. We will calculate vacancy, taxes, insurance and repairs at 40% just to be safe. That would give you $6,000 a month cash flow not including the taxes you have to pay on that income. This is not bad with just owning 10 properties free and clear, what if you got the number up to 20 properties owned.
- Owning 10 to 20 properties requires work but would not be a full time job at most it would take 2 or 5 hours a week to manage the properties.
I have been investing for 11 years and want to help people learn how to create extra income and residual income using real estate. We also show people how to buy homes at huge discounts to learn more visit us at
http://www.CollegeOfREI.comReal Estate Investing in 2008 - Are You Crazy - Well Maybe Not!
The latest data from the real estate industry shows a marketplace in steady decline and no bottom in sight. Residential home sales are in free fall mode with an expected 25% decline in the total number of home sales in 2007 versus 2006. Additionally, homes sales are currently off by more than 35% from the record year of 2005 when over 7.0 million homes sold.
Industry analysts estimate that we're on track to sell only 5 million houses nationwide for the entire 2007 year, which is the slowest pace since 1999. Equally sobering is the fact that at any given time there are about 4.4 million unsold homes for sale. Based on the number of available houses, it would take about 10.5 months to sell all the houses on the market right now.
It's not just the number of homes sold that is falling; it's also the sales price. The median, or average, home sales price is expected to dip below $211,000 for the year, which represents the first time since records have been kept that the year-over-year price of a home fell.
While home sales are plummeting and sales prices are falling, the only thing that seems to be rising is the number of foreclosures. During the first ten months of 2007, the foreclosure rate nationally surged by about 94%, which puts about 573,000 homeowners at risk of losing their homes.
As bad as things are right now, we might just be at the tip of the iceberg, because more than 2.2 million home loans are going to reset in the next year and a half as introductory and teaser rates end. Homeowners are faced with payments that are considerably higher than they had banked on - or budgeted for. Bush's new homeowner bailout plan will save some, but will exclude most of the homes that are close or already in the foreclosure process.
Aright, enough of the doom and gloom. With all financial bubbles there are many losers but a few big winners. Despite all of the above, now is the time to consider real estate investing. With prices down and motivated sellers everywhere real bargains are popping up and the long term returns on real estate should be outstanding in the coming years. Much of the risk has been taken out of real estate investing.
The housing market has undoubtedly changed, but I still think real estate is one of the best long-term investments you can make. I also think if you know what you're doing, there's a whole lot of money to be made right now by investing in real estate.
The key to this opportunity is the ability to raise cash or credit quickly to make low all cash offers. The ability to have a combination of cash, credit lines and access to private lending will allow you to make low and compelling offers. In many cases, the buyer will be forced to accept any reasonable offer.
If you do this, you'll discover that this is possibly one of the best times in more than a generation in which to make tens of thousands of dollars -- or more -- by playing your cards right and timing your real estate purchases in a way guaranteed to help you build a fat real estate portfolio.
Do you want to learn more about Private Lending and get our brand new FREE 20-page ebook titled "Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders!" then have a look below to find out how to access your instant download Private Lending Presentation Kit
Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE Real Estate Wealth Newsletter go to
http://realestatewealthtoday.com/Private-Lending-Presentation-Kit.html
Industry analysts estimate that we're on track to sell only 5 million houses nationwide for the entire 2007 year, which is the slowest pace since 1999. Equally sobering is the fact that at any given time there are about 4.4 million unsold homes for sale. Based on the number of available houses, it would take about 10.5 months to sell all the houses on the market right now.
It's not just the number of homes sold that is falling; it's also the sales price. The median, or average, home sales price is expected to dip below $211,000 for the year, which represents the first time since records have been kept that the year-over-year price of a home fell.
While home sales are plummeting and sales prices are falling, the only thing that seems to be rising is the number of foreclosures. During the first ten months of 2007, the foreclosure rate nationally surged by about 94%, which puts about 573,000 homeowners at risk of losing their homes.
As bad as things are right now, we might just be at the tip of the iceberg, because more than 2.2 million home loans are going to reset in the next year and a half as introductory and teaser rates end. Homeowners are faced with payments that are considerably higher than they had banked on - or budgeted for. Bush's new homeowner bailout plan will save some, but will exclude most of the homes that are close or already in the foreclosure process.
Aright, enough of the doom and gloom. With all financial bubbles there are many losers but a few big winners. Despite all of the above, now is the time to consider real estate investing. With prices down and motivated sellers everywhere real bargains are popping up and the long term returns on real estate should be outstanding in the coming years. Much of the risk has been taken out of real estate investing.
The housing market has undoubtedly changed, but I still think real estate is one of the best long-term investments you can make. I also think if you know what you're doing, there's a whole lot of money to be made right now by investing in real estate.
The key to this opportunity is the ability to raise cash or credit quickly to make low all cash offers. The ability to have a combination of cash, credit lines and access to private lending will allow you to make low and compelling offers. In many cases, the buyer will be forced to accept any reasonable offer.
If you do this, you'll discover that this is possibly one of the best times in more than a generation in which to make tens of thousands of dollars -- or more -- by playing your cards right and timing your real estate purchases in a way guaranteed to help you build a fat real estate portfolio.
Do you want to learn more about Private Lending and get our brand new FREE 20-page ebook titled "Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders!" then have a look below to find out how to access your instant download Private Lending Presentation Kit
Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE Real Estate Wealth Newsletter go to
http://realestatewealthtoday.com/Private-Lending-Presentation-Kit.html
Tips on Buying an Investment Property
If you are considering buying a property for investment purposes there are several things to keep in mind. It can be a lucrative endeavor, however, it does take some work and a buyer needs to be smart about the choices that are made when purchasing a new investment property. Two of the most common types of investments are purchasing properties to rehab and sell for a profit, or purchasing a distressed property to fix up and rent out for monthly income.
If you have an investment property in mind, make sure your purchase price will be worth the return. If you overpay then it will not be profitable. You need to consider all that will go into repairing the property including repairs and maintenance. If you own it for awhile you will eventually need to make some repairs, some of which may be significant. If you plan on immediately selling the investment property for a profit then you need to consider the marketing costs involved such as advertising. Make sure to factor in those costs when determining the value of the investment over time.
In addition to the costs for repairs, an investment property may also cause some headaches if you are fixing it up to rent it out. There are rental agreements that need to be researched and credit checks to be made before deciding on tenants. You will also have to adhere to various standards and ensure your tenants are satisfied per the terms of your lease. What will you do if the tenant fails to pay rent or gets behind? What about if the property remains empty for a period of time? Will you be able to afford the monthly payment even without a tenant? Becoming a landlord to renters is not always an easy task and there is some risk involved in it. However, if successful, you can recoup your money, have extra income and make a profit if you eventually decide to sell it.
When choosing an investment property these are some of the things to consider. It can be a very lucrative endeavor but only if all the factors are weighed and the choice in the property will produce a good return over time. For most people, it is more lucrative over a period of many years as opposed to a short term investment. Make sure you take into consideration all the issues surrounding it before making the decision that this is the right route for you. Buying a fixer upper investment property can be the most valuable but you will have to have the capital and the know how to make it an appealing home for potential renters.
Please visit http://www.discountedproperties.com for more information on flipping houses
If you have an investment property in mind, make sure your purchase price will be worth the return. If you overpay then it will not be profitable. You need to consider all that will go into repairing the property including repairs and maintenance. If you own it for awhile you will eventually need to make some repairs, some of which may be significant. If you plan on immediately selling the investment property for a profit then you need to consider the marketing costs involved such as advertising. Make sure to factor in those costs when determining the value of the investment over time.
In addition to the costs for repairs, an investment property may also cause some headaches if you are fixing it up to rent it out. There are rental agreements that need to be researched and credit checks to be made before deciding on tenants. You will also have to adhere to various standards and ensure your tenants are satisfied per the terms of your lease. What will you do if the tenant fails to pay rent or gets behind? What about if the property remains empty for a period of time? Will you be able to afford the monthly payment even without a tenant? Becoming a landlord to renters is not always an easy task and there is some risk involved in it. However, if successful, you can recoup your money, have extra income and make a profit if you eventually decide to sell it.
When choosing an investment property these are some of the things to consider. It can be a very lucrative endeavor but only if all the factors are weighed and the choice in the property will produce a good return over time. For most people, it is more lucrative over a period of many years as opposed to a short term investment. Make sure you take into consideration all the issues surrounding it before making the decision that this is the right route for you. Buying a fixer upper investment property can be the most valuable but you will have to have the capital and the know how to make it an appealing home for potential renters.
Please visit http://www.discountedproperties.com for more information on flipping houses
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