February 5th, 2010
The financial industry greats will be the first to tell you that real estate investing has the potential to bring in serious profits. They will also gleefully inform you that the risks in some cases far outweigh the potential, especially if they are among the more cautious investors in the industry. Those who have made their fortunes in real estate however will tell you that investing in real estate is worth every ounce of risk when you manage to work through the rough patches and find your way to real estate investing fortunes. Commercial real estate is somewhat unique among real estate investment types. This is the type of real estate that requires a high investment to get into the game, much higher than most residential property and poses equally great risks depending on what you plan to do with your commercial real estate investment. Of course you will also find more than a few options for your commercial real estate investment that many investors find appealing. Most investors find leasing office or building space to be the safest route to take when it comes to real estate investing is the path of leasing office space or warehouse space to businesses. They feel that this is a relatively steady source of income because most businesses prefer to keep their locations as long as possible. Smart business owners are well aware that customers, clients, and vendors need to be able to find them in order to do business with them and for this reason, prefer to keep their business in the same location whenever possible rather than reestablishing themselves in different locations year after year. Commercial real estate investing is a bit of a different animal than traditional residential real estate that many of us are more familiar or comfortable with. You will need to do a lot of research before jumping in with both feet with this particular sort of real estate investment. Commercial real estate investments can take on many forms. From strip malls and outright shopping malls to business and industrial complexes to sky scrapers and high rise condos you will find all manner of commercial real estate interests. Whether your interests lie in business or personal types of commercial real estate there are significant profits that stand to be made.
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Tags: Commercial
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February 5th, 2010
Although most of the real estate news seems to focus on the First Time Home Buyer Tax Credit, there has also been a new tax credit that will be signed in that is geared to help existing home owners. The goal behind this bill is to encourage potential buyers who already own a home and have maintained (or paid in full) their mortgage bills steadily for at least five years. These buyers would usually be moving up, or buying a larger or more expensive home.
-Buyers must have owned and lived in their previous home (in other words, as a primary residence) for five years in a row out of the last eight years.
-The amount is 10 percent of the home’s purchase price, with a maximum credit of $6,500.
-The purchase price of the home must be $800,000 or less.
-The credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010. However, if a binding sales contract is signed by April 30, 2010, the home purchase qualifies (as long as the closing is completed by June 30, 2010).
-The income for a single taxpayer cannot exceed $125,000. Married couples filing jointly must not have a combined income of more than $225,000.
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Tags: Credit, Home, Tax
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February 5th, 2010
Investing in commercial real estate is quite lucrative if you are an intelligent investor, who has a property purchase plan from the beginning. Before you ever make a move to begin the purchase process, it is wise to take a look at the property to project the potential value of your investment. Not all valuation methods are created equal Before discussing the actual valuation of commercial property, it is prudent to know the different methods of real estate valuation. The first is the market valuation, or sales comparison method. Residential homes are usually valued using the sales comparison method since the value of a home is directly related to the price a buyer is willing to pay compared to the sales price of similar homes. Another method is the Cost Valuation Method, which is simply land value plus an estimate of what a building or other improvements would cost to reproduce in today’s dollars. And the last method, which is used most widely in commercial and investment real estate valuation, is the income capitalization method, or cap rate method. Using this method, commercial property is valued by determining the rate of return on an investment, or capitalization rate, divided by the average net operating income (NOI) for the property. NOI is the gross income for the property less expenses, but not including debt service or mortgage payments. For instance, you as an investor find a nice retail strip center for sale. The current owner provides details of the previous 12 months net operating income, and you find that the average yearly NOI is $75,000. The capitalization rate for the area you are looking is about 10%. Therefore, by dividing $75,000 by 10%, you can figure that $750,000 is a good estimation of the value of the property.
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Tags: Commercial, Property
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February 5th, 2010
Are you in the marketplace for a location change? Do you know what properties you are curious about? Are you someone who enjoys city life and is searching for homes in an event region? Would you rather the peacefulness of the nation or the beauty that waterfront properties boost of? If you are ready for a change, there are many available options regarding places. The land market is an extremely active business. People are incessantly moving and relocating searching for a better environment. Many people are compelled to relocate owing to employment issues. Whatever the reason is for moving, these individuals have preferences as to the sort of homes they are seeking. Some families opt for properties in close to amenities like medical facilities, recreational programs, shopping and schooling. If seeking attributes such as this, they’d likely see them in or near a town or city. During a child’s growing years, they would like to be engaged in pursuits which are ordinarily found in a town or city. It’s more handy to have places near these pursuits. There’re many individuals who such as the convenience proposed by a town or city but aren’t in the least curious about living there. These people are seeking properties within driving distance but not close adequate to be involved in the hustle and bustle each and every day. They’re loads of who fall into this category. In spite of everything, everyone needs to be near to a medical facility and a supermarket is a must. These creature comforts can simply be accessed by families who’ve homes in the field surrounding the town or city. Some individuals just do not want any area of the noise a fuss a city offers. They would like to be far from the crowds and hectic traffic. These individuals aren’t curious about inhaling the filthy air which is common in the city. If moving, these people are seeking places well outside the city boundaries. These individuals are seeking properties in the country or on the waterfront. These places are free of dirt-filled air and honking horns. Instead people are in a position to hear the sweet chirping sounds of the birds or the seem of the water splashing on the shore. These attributes provide clean, fresh air all year round. Waterfront and country properties are enjoyed by people who love nature and love to participate in outdoor pursuits like boating, fishing, skiing, snowmobiling, biking, etc.
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Tags: Property
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February 5th, 2010
The tightening mortgage guidelines have left many potential homebuyer’s unable to get a home loan. As a result, lease to own homes are becoming more and more popular. Lease to own home (or rent to own homes as it is often called) have numerous benefits to the tenant buyer. Let’s look at a few!
-No Credit Qualifying
One of the biggest reasons that people choose to get a lease to own home, is because they have credit issues that prevent them from securing conventional financing. Most lease to own approvals are based strictly on your ability to pay. This makes them very attractive to people who have bad credit but stable income.
-Potential to Profit from Appreciation
Because the purchase price is set up front in a lease to own contract, you know going in what you will be expected to pay for the home. If the home does appreciate during your rental period, you will still only be required to pay the pre-agreed on price. This means that the appreciation goes to you, not the current home owner.
-Decreased Down Payment
The changes in the mortgage industry have increased the about of cash that you have to come up with to secure a loan. In fact, FHA just announced that it will be requiring 10% down from any person with a 580 credit score or less. With a lease to own home, you can get in for much less. The option fee you will be expected to pay will likely be somewhere between 2% and 5% of the purchase price of the home.
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February 4th, 2010
“Why should I invest in Commercial Real Estate?,” someone recently asked me. With the well-publicized drop in residential prices in some areas of the country, it might seem prudent to be avoiding real estate right now. But commercial real estate is a different animal altogether: First, commercial real estate is strictly property for businesses, i.e., retail centers, office buildings, warehouses, manufacturing sites, apartments, and land. Second, there is less of it than homes. Third, commercial real estate is either for the use of a business or for producing an investment return, as opposed to a house you and your family may live in. So, why invest in this area? Some of the great fortunes in the U.S. have been based on real estate. Investing in the stock market, where you can see the hour-by-hour and day-by-day gyrations of your portfolio can be stomach wrenching. Real estate trades hands infrequently, so the valuations are less subject to daily events and more governed by yearly trends of supply and demand. Putting a 5% to 15% portion of your investment portfolio in property is a very prudent thing to do. This will help stabilize your overall returns and real estate may often move in the opposite direction of the stock market. For instance, commercial real estate, as measured by the index of equity real estate investment trusts over the past 10 years, returned a total of 12.4% versus the SP-500 returns of just under 10%. Income: Commercial investment properties will be leased to tenants, like businesses, and retail stores. These leases produce rental income for the owner which should create positive cash flow after the mortgage and expenses are paid. This may produce an income of 5% to 10% per year of the amount you invested. Depreciation: Also called cost recovery, this tax write-off shelters some or all of your income from the expense of taxes. You write off the cost of the building and some of the building components, but not the land it sits on. Equity build up: Because you can use your rental income produced by your tenants to pay your mortgage, then the part of your mortgage that is principal – but not interest expense – reduces the amount of your loan and thus builds up your equity in the property.
Appreciation: The property becomes worth more money 1) as the rent income goes up, 2) as the market puts a higher value on the rents and 3) as the land value goes up. Additionally, the value usually goes up somewhat in proportion to inflation so that property is a good hedge against inflation.
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Tags: Commercial, Real Estate
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February 4th, 2010
Investing in commercial real estate can be a daunting, and if done incorrectly, very expensive process. The good news is you don’t need years of training to be successful at it. First-time buyers who take the time to do their homework find real estate investing to be financially and personally rewarding. This article gives newbies the practical advice they need before jumping in. First, here are a few differences between residential and commercial real estate (CRE) investments that you should know before buying anything. Commercial properties
-are valued differently. CRE income is directly related to its usable square footage, which isn’t always the case with residential properties.
-often see greater cash flow. On an initial investment basis, the yield is often higher per square foot than in residential. A leased or rented multi-unit commercial property generates more income than a single-family dwelling.
-have longer leases. A longer lease length helps stabilize cash flow.
-help diversify risk. What this means is if, for example, you own an apartment building and you lose one of your ten tenants, only one-tenth of the income for that property is lost. In a single-family house a lost tenant means the entire rent is lost.
-are valued differently by the bank; find one that works with commercial real estate, and know that it will want a higher down payment than with residential investments, usually 30 percent or more.
One important similarity to keep in mind between these two types of property investment is that commercial real estate does go into foreclosure. Banks apply the same methods here as in residential properties. Now that you’re a little more familiar with the ins and outs of commercial real estate, the next step is to do some research. The worst possible thing to do is to jump right into before getting all the facts. It is important to educate yourself as much as possible to keep from making a financial blunder. Read as many books on the subject as you can. Learn the market for your geographic area.
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February 4th, 2010
Few things in life are easy, especially when you try and sell a property quickly in today’s economic crisis. The financial market place has had a major effect on the property market and first-time buyers are virtually non-existent due to not being able to get a mortgage, not to mention the fact that the market has also taken most of the property investors out of the market place.
-Getting the price correct with the estate agent
-Choosing the right estate agent
-Finding a buyer/property investor
Now unfortunately majority of these options are completely out the window, simply because it now takes quite a substantial amount of time to not only find a buyer, but also for your buyer to arrange a mortgage. Mortgage companies are now looking for greater deposits which means first-time buyers are struggling to get on the property ladder and investors are finding it hard, not only to come up with the deposit but also find a property where the rents work, not only them but the mortgage companies also. Please don’t despair there is a solution because there are still a number of, cash property buyers in the market place to purchase property, even in today’s market. You need to ensure that you select the right company, please don’t be fooled in thinking that you will achieve a high price for your property, these companies are simply in the marketplace to purchase property below market value and make money. Most of these companies will generally be offering you 70% to 80% of a realistic market value.
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Tags: Property
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February 4th, 2010
There are many ways of selling a home quickly, but you will have to do some compromises. Before you make any decision or fall for one of the “Sell My House fast” schemes, you will have to gather more information about the common ways of selling a house quickly. The very first option of selling a home is through an auctioneer. In case you are home owner and don’t need to sell the home at a specific price for paying off mortgage, this is the best option. An auctioneer service provider will do advertising for your house, take care of auction and sales detail as well as arrange an auction for you. The process is hassle free but the downside is that you don’t get to know actual worth of the property. The price is decided by how much bidders are willing to spend during the auction. Many online services also offer cash for houses. You just have to submit the name and address details, as well as information of the house you want to sell. Before getting involved into any “Need To Sell My House Fast” website, you should check for the credibility of the website. Read the client testimonials and check out for the reputation through other sources. Another option is to find out the appraised value of the home and determine the minimum selling value. This traditional home selling method will help you in smartly negotiating with the potential buyers. When you know the minimum amount, it will be easier for you to calculate the profit made after paying off the existing mortgage of the house.
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Tags: Property
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February 4th, 2010
Buying a home is everyone’s dream, but what happens if you want to purchase a home, but you have declared bankruptcy in the past. If this sounds like your scenario, there are some things that you can do, in order to increase your chances of landing a home. First off, I want to ask yourself when you declared bankruptcy, because this is going to effect your purchasing power. If it was within the last 5-7 years, you’re going to have a hard time getting one, because this is going to show a huge ding on your credit report. Now, I’m not saying that you’re going to get denied by everyone, it’s going to be awfully hard to get it. If you want to increase your odds of landing one, here’s what you can do… Just wait: There’s no rush to get a home. In the meantime, rent out a home/apartment, and clean up your credit. Even if you have to live in the home for the next 5 years, it’s no big deal. Put 20% down: Banks love a big down payment, and if you can supply a relatively large down payment, you should be able to increase your chances of landing it. Save up your money, and work on this.
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