Posts Tagged ‘investment property’

There is good news ahead for rental incomes, as we know through the government stimulation package, which included tripling the first home buyer’s grant this resulted in reducing the number of renters. However this is about to reverse.

The commentators tell us In 2010 we will see some excellent rental income growth. This is good news with increasing interest rates. There is one positive in having to pay higher interest rates and that is it means that the regulators believe the economy is gaining in strength and therefore property values will increase.

Why is residential property such a good investment right now?

There are three key components that continue to make residential property the ideal investment vehicle.

1. Interest rates are still at historic lows

2. Supply and demand factors favor investors

3. Residential is the most favored security by the banks

Choosing the best investment property is a process that involves knowing what you want to get out of the investment.Finding real estate that will allow you to reach those goals in the most efficient and effective manner is the objective.

Since Residential investment properties come in several different types and are found in a variety of forms and locations, knowing what you want is key to success.

In considering that the timing is correct based on the three points above we then set our objectives for our investment strategy.

If for example we concluded that we wanted a long term set and hold investment strategy for say ten years then more options open up. For example a new subdivision which had some compelling future prospect or attraction may be considered.

Where as if your objective was to make money and sell within a year or two then this would possibly not be your investment vehicle of choice. Decisions around risk, leverage, personal time involvement and time to realise ones return are the factors one needs to consider in selecting the right property investment strategy.

So the message in this article is to suggest that whilst the timing is right your returns can be significantly improved, simply by selecting the right vehicle for your personal investment objectives.

Property investment consultants are available just like a stockbroker lives and breathes shares; property investment consultants live and breathe property.

The key is to select a consultant who specilises in a location that you want to invest in and also the sector of the market you wish to participate. A good quality property investment consultant will not only ensure their fees are covered in their negotiations on the property but also you will be assured of getting the right property that fits your personal objective. Employing a property investment consultant also removes any potential emotion from the equation which can creep in particularly with residential property investments.

Seeking quailty council makes good sense learning from others saves time and you gain quailty knowledge for your next investment

Enjoy the process.

This Article was written by Phillip Mollard
Director of Mollard Property investment Consultants P/L
http://www.mollard.com.au

Author: Phillip Mollard
Article Source: EzineArticles.com
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Once you reach the point that you seriously want to start investing in real estate, it’s time for you start searching for the real estate investment that best fit your investment goals.

In this article, I want to discuss why it could benefit you to develop a working relationship with an investment Realtor to help locate investment property, the qualities you should look for, and how you can find that person.

Why Use a Professional?

Let’s start at the top. Why would you want to use a real estate professional when you can find your own rental properties?

Foremost, because the right Realtor can guide you from your initial goal setting phase through the selection, acquisition, and subsequent management of your investment. They can direct you into investments you may not have discovered on your own and then negotiate the purchase for you (generally more easily than when a buyer and seller meet face-to-face).  Moreover, they are equipped with the tools like real estate investment software and the expertise to help you crunch and interpret the numbers.

Who is a Right Realtor?

Most importantly, you are not looking for a licensed agent who sells houses for a living without ever having become active or knowledgeable about investment real estate. You do not want a house salesperson with no or minimal clue about rental property.

You want an agent who works full time in the business and not only understands and practices real estate investing, but also knows the market.

The Realtor you want understands investing and is familiar with such things as taxation, depreciation, financing and tax-deferred exchanges. You want a specialist who can create rental property cash flow, rates of return, and profitability analysis presentations and then help you to interpret that data against your investment goals. A real estate investment might be the largest sum of money you will ever spend, and you want a broker who not only cares how you spend your money but also handles it amply as if it was their own.

How to Find the Right Realtor

You can locate agents in your area qualified to work with investment property in any number of ways.

Contact the brokerages and ask if they have an investment specialist in their office with background education in real estate investing; contact the CCIM Institute; contact the MLS and see who regularly lists rental property, the local Board of Realtors, and maybe a local appraiser, property management firm, or perhaps a friend or colleague who has been investing. You should have little trouble building a short-list of potentially qualified candidates that specialize in commercial and investment real estate full-time that you can meet with and interview. How you make your selection afterward will probably boil down to chemistry; whom do you prefer to work with.

As an investor, especially if you are a first time investor, you will discover that having a good investment specialist on your side will truly benefit your investment goals and well worth your effort to locate one and utilize their services.

Here’s to your real estate investing success.

About the Author

James Kobzeff is the developer of ProAPOD – superior real estate investment software solutions since 2000. Fast, easy, and concise. Discover how to create cash flow, rates of return, and profitability analysis presentations for any-size rental property in minutes! Learn more at => http://www.proapod.com

Author: James Kobzeff
Article Source: EzineArticles.com
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The most important thing to remember when shopping for international investment property is the word in the middle: “investment.”

Many investors get carried away by visions of sunny beaches and swaying palm trees and forget that the true purpose of investing in international property is making money and not taking vacations.

Some properties can double as a holiday homes and rental property, but the best investment opportunities are in less exotic locales where residential properties are undervalued or where the market is anticipated to increase in value.

Knowing whether your priority is to own a home abroad, earn additional income through a rental property, or make a killing on an off-plan investment is the first step toward developing a solid investment strategy for your future purchases.

There are typically three main investment types and they are:

Vacation / Retirement Home – You need to consider specific details such as, location preferences and whether you would rather be near a ski resort or beach? Do you plan to continue to work to supplement your income? Is being near your relatives important? Do you wish to return to the same spot year after year? As this will also be your home, will you be comfortable renting it out to strangers when you are not there?

Rental Income / Capital Appreciation – If your primary focus for investing internationally is for financial gain then you need to decide whether you prefer steady income vs. capital appreciation or perhaps both? Is the rental season long? Is the area popular among tourists?

Off-Plan Investments – This type tends to be more complicated and requires an in-depth analysis. Investors considering this type of investment should become well acquainted with off-plans in great detail before investing internationally.

Again, investors should watch out for locations that are currently improving, such as, countries that are growing or communities that are being restored. Early investments in these areas can pay off largely in the end when these locations become more recognized and valued.

All in all, investing internationally is for investors with long-term goals, with many investments lasting twenty years and longer and is not for investors looking to make a quick profit. Follow the economic and social data of the countries, even the poorer ones, to get a feel as to which ones may be growing.

Be careful of sales people promoting specific locations and offering discounts. Doing your research on countries can help you avoid making poor investment decisions.
Another important factor to consider is whether or not mortgages are available in the area. If not, will they soon be available? This can lead to an increase in property values.

When investing internationally, it is recommended that investors try to invest in countries which are steadily improving. Investing earlier on in the process can yield a higher profit. Of course, braver investors often invest in a country once it has already busted. Keep in mind, that newly restored countries tend to go through the “boom-and bust” cycle which typically lasts an average of seven years (the bust is known as the time when the best international deals are available).

Investors looking to invest internationally should always use a professional agent who is registered with “The Association of International Property Professionals”.

Surrinder Ahitan offers free property investment advice and tips on how to invest in residential and commercial property for maximum returns. Visit http://www.best-investment-property-tips.com where he reveals more valuable insider tips and property secrets.

Author: Surrinder Ahitan
Article Source: EzineArticles.com
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Foreclosure Investing encompasses a few different types of Real Estate investing. Foreclosure Investing can be very profitable and a sure fire way to become financially independent. Foreclosure Investing can also be a very slippery slope and can lead to financial ruin if done improperly.

Buying foreclosed property at an Auction is one type of Foreclosure Investing. At this point in the foreclosure process the property has already been foreclosed on by the lender and is now up for auction to the highest bidder. An investor would find out the day, time, and place of the auction and come prepared to bid on a certain property or properties. The goal would be to buy a property at a substantial discount so that the investor could re-sell for a profit, or use the property as a lease/rental investment property. This can be a great way to buy real estate at a discount but there are many draw backs to purchasing property this way. There are title concerns, insurance concerns, and there is also the concern that an investor can get caught up in a bidding war and end up paying more for the property than what it is worth. The investor would then end up with negative value upon re-sale, or not be able to collect enough in lease/rent to make the property a profitable investment.

Real Estate Owned or R.E.O. investing is another type of Foreclosure Investing. An R.E.O. is a property that has been foreclosed on by the lender but has not as yet been put up for auction. When certain market conditions arise lenders end up with a surplus of R.E.O’s on their books. The lenders need to get these R.E.O’s off their books and are usually willing to deal with investors in this scenario. This is a perfect time for an investor to invest in R.E.O’s. To do so the investor would need to contact the lender directly to negotiate a deal. The investor would be looking to by properties in As-Is condition that are being sold below market value. Often the lender will even offer financing to the investor on these properties. With the proper knowledge and investor can make a killing purchasing R.E.O’s. An investor can also end up losing money if he/she does not get the property at a low enough discount and repairs, closing costs, etc. end up costing more than planed. This type of Foreclosure Investing is a lot less risky then buying at the auction however there are several market conditions that have to be in flux in order to do this type of investing.

Pre-Foreclosure Investing is a third type of Foreclosure Investing. This type of investing can be done under any type of market conditions and can be a great way for and investor provide a service for the people who are about to lose their home. At this point in the foreclosure process the property owner has received a default notice, warning that the foreclosure process has been started. An investor that has access to these default notices would search through them looking for properties that still have some equity. Then the investor would contact the owners of the properties directly to negotiate a deal to purchase the property at a discount before it is foreclosed on. Once the investor has the property in his/her name, the investor would then resell the property for a profit or hold it as an investment property. The foreclosure process is different from state to state but the opportunity to help the owners out of this horrible situation and make a profit doing so is always there. Purchasing Pre-Foreclosure properties can be a great way to give an investor financial stability. Investors can also find themselves in a whole lot of financial and legal trouble if they don’t follow the state laws, use the proper forms, and treat the property owners poorly.

There is a ton of information on Foreclosure Investing. Unfortunately there are far too many Foreclosure Investment experts or so called “Guru’s” that practice unethical methods of Foreclosure Investing that have no regard for the property owners in trouble. Foreclosure Investing can be done Legally and Ethically if an investor has the proper knowledge and tools. If done properly the investor can be seen as a White Knight to property owners in foreclosure and end up making a substantial income in the process.

Don’t get “SCAMMED” by some Foreclosure Expert “Guru”! Learn how to become a “White Knight” Foreclosure Investor! Read the Foreclosure Investment Report for more information on Ethical Foreclosure Investing. Follow this link:

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Author: John F Langford
Article Source: EzineArticles.com
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Most people are intimidated by the prospect of acquiring investment properties. This fear often stems from the fact that potential investors are so preoccupied with what they perceive as the proper time to buy that they pass up opportunities along the way. Some people on the other hand are unsure as to how to choose the best property to invest in. Buying real estate specifically as an investment property guarantees several benefits that are superior to other investments like stocks.

Investment properties are a source of reliable and steadily increasing income. Rent and lease income can be a reliable and more convenient source of income for a wide variety of owners. Moreover, the value of the property itself appreciates through time. With the population increasing yearly, the demand for real estate properties will remain a constant even in the years to come.

The crucial point is choosing which of innumerable options would constitute a good investment property. The first characteristic of a good investment would be the intrinsic value of the property. Ideally, the investment property is bought at a price that is lower than the real intrinsic value so that upon purchase, a profit has already been made.

A buyer should ask himself how long he plans to keep the property. If the intention is long term, he will need to consider expenses relative to the investment property such as repairs, maintenance and taxes. Investors should choose properties that offer income greater than the expense needed for maintenance.

The next major consideration for any investment property is the risk factor. It would do no good to drain the investor of his assets by investing in a risky property. It is also healthy to consider having an exit strategy. This means studying all the possibilities, even those that can happen when things don’t go according to plan.

Finally, review the characteristics of the potential investment property. The location of the property is the primary characteristic that will determine its feasibility and profitability as an investment property. The focus should be on a steadily increasing income and a positive outcome. A common pitfall for some investors is the temptation to be greedy in having a speedy and unrealistic return. By concentrating on a more realistic expectation, buyers are less likely to be attracted to unreliable investment options.

Especially for long term plans, it would also be beneficial for the buyer to avoid the lure of trendy purchases. Just because the rest of the herd is snapping up a particular investment, it does not make that particular investment more reliable. A buyer should rely on rational study instead of emotional judgment in making such an important selection.

All in all, a good investment property is characterized by its suitability to the financial capability of the buyer as well as his investment time frame. It is also characterized by the present and future income to be generated, as well as its suitability to the future goals of the buyer.

Sunil Sharma writes on various Real Estate topics including Investment Properties. Learn more about Zero Money Down Condo Investments in our Real Estate Investment Alliance site Today. For more details visit http://www.reinalliance.com

Author: Sunil V Sharma
Article Source: EzineArticles.com
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In real life, there is no secret way to attain real estate investing success. I wish it were not so, but successful real estate investing requires hard work, good research, and a systematic analysis of each and every investment property opportunity.

A proficient real estate professional can help you find, research, and even analyze the profitability of specific rental properties. This can be helpful (even needful), but you want to be prepared. It is good for you to have some knowledge of the rates of return real estate investors generally use during the analysis process before making that all-important decision to purchase a property, regardless.

Since you are new to real estate investing, it seems like a good idea to discuss three of the most commonly used measures and returns.

By themselves, none of these is a deal maker or breaker. You would not make an investment decision based solely on the results of any of these numbers. But they are popular, you will hear them referred to, and it certainly will better prepare you to achieve your investment goal by becoming familiar with them.

Cash on Cash Return

Cash on cash return (C-o-C) measures the initial profitability of a rental property. That is, it indicates the return you can expect to receive in the first year on the money you invest to purchase the property (i.e., the initial cash required to cover your down payment and closing costs).

There are no hard fast rules regarding what return makes a good investment, but it should be obvious that the higher the cash on cash return is the better.

Formula: Cash on Cash = Before Tax Cash Flow / Cash Equity (Initial Investment)

Test your understanding. Given the opportunity to invest $50,000 for a cash-on-cash return of 6.5% or an investment of $75,000 for a 10.2% return, which appears to be the better investment? Though it would require more cash outlay, the higher return, at least on the surface, seems to be the better investment. Why, because a first-year yield of 10.2% on your cash investment is better than a first-year yield of 6.5%.

Gross Rent Multiplier

Gross rent multiplier (GRM) measures the ratio between annual gross rental income and sale price. It is the least informative measure of an income-property primarily because it does not consider a property’s operating expenses, debt service or cash flow, and by itself is insufficient as a stand-alone number because it says nothing about a property’s profitability.

Nonetheless, gross rent multiplier can be helpful for simple comparisons between rental properties. It is an easy calculation you can make in your head, and can be used when you simply want to get some idea how the price for one rental property compares to similar properties recently sold or currently for sale in the market.

Formula: Gross Rent Multiplier = Purchase Price / Gross Rent

Test your understanding. If you are considering a duplex with a gross rent multiplier of 7.2 and know that two similar duplexes down the street sold recently at gross rent multipliers of 8.5 and 9.0, what does that suggest? That you could be getting a good deal, and might want to take a serious look at the property. Why, because the gross rent multiplier on the duplex you are considering indicates a higher ratio of gross rent to purchase price then the market seems to suggest.

Capitalization Rate

Capitalization rate (or Cap Rate) is essentially an indicator of how much debt an income property can carry; the higher the cap rate, the more debt a property can support, and vice versa.

The idea is straightforward. A property’s cap rate indicates the percentage rate of sale price attributable to net operating income (income less operating expenses). That is, it shows how much cash flow is generated to make the mortgage payment as a percent of sale price.

Real estate investors, of course, want to purchase at the highest rate possible (they desire net operating income to be a larger percentage of sale price), while sellers seek to sell at lower cap rates (meaning they can obtain a sale price that is higher compared to the property’s net operating income).

Formula: Capitalization Rate = Net Operating Income / Purchase Price or Value

Test your understanding. You know from your research that small office buildings in your area have typically been selling for a cap rate around 8.3%. The building you are looking at results in a cap rate of 6.8%, what does that say about the price? That unless there are some benefits to prove otherwise, the property might be over priced. Why, because the building in question indicates less net operating income as a percent of sale price compared to what the market suggests.

Conclusion

There is no magic bullet for real estate investing; pure luck is improbable. To succeed, you will have to work hard, research, and above all, do the math. Investment property is all about the numbers, and the more you prepare yourself to run those numbers, the better your chances (as one new to real estate investing) to make money at it.

About the Author

James R Kobzeff is a real estate broker and developer of ProAPOD Real Estate Investment Software – Rental property cash flow, rate of return, and profitability analysis.

Real Estate Investor Software – So those just starting to invest in real estate can determine whether the property makes money before invest.

Mortgage and Financial Calculator – Compute hundreds of mortgage, time value, and cash flow computations in seconds!

Preview an APOD, proforma income statement, and our other cash flow analysis reports at www.proapod.com/ReportsPage.htm

Author: James Kobzeff
Article Source: EzineArticles.com
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