Sunday, November 30, 2008
The UK Government is set to tighten up the rules for real estate investment trusts (REITs), to keep out property-rich businesses - such as pubs - which do not generate at least 75 per cent of their gross income from renting property out to third party tenants...
New legislation will appear in the Finance Bill 2009. This is apparently a response to structuring which might allow businesses who should not qualify for the exemption available to Reits to become one.
The Government has made it clear that it will consult with the industry on the changes to ensure that they do not create any unintended consequences for existing firms.
Peter Cosmetatos, British Property Federation (BPF) Director for Finance and Investment, said, "While we will of course have to consult our members about this announcement, it seems consistent with the original aims behind the introduction of Reits.
"Clearly, it will be critical that the way in which the Government legislates to tighten up the rules has no adverse impact on the existing Reits. Getting this wrong could damage the longer term prospects of the UK's Reit sector, which is coping with very challenging economic conditions as it is.
"Acquiring investment property is based purely on how it’s defined--the investment and the income," Michael Fasano, regional manager for Marcus & Millichap in Elmwood Park, NJ, tells Globest.com. "In large part, how you buy those assets is leveraging a mortgage or financing, and as interest rates have climbed and underwriting requirements spread, bank requirements have changed and it’s put a lot of pressure on pricing.
"That said, as the constraints and the lending environment have evolved over the past 13 to 14 months, pricing has come down," Fasano says. "Apartment properties continue to trade, albeit at a slower pace and at slightly lower prices than a few quarters ago. Apartment fundamentals in New Jersey will soften in the months ahead, but remain strong relative to other areas of the country."
"If AIG were to put them all on the market on an individual basis, there would be great activity," Hammer says. "At the moment, there are very few buildings on the market where the sellers’ prices are realistic. New Jersey apartments have a wide range of asking prices. North Jersey could be more than $200,000 per unit for really nice buildings, but much less in Camden, Salem, Burlington and other counties."
Hammer adds, "The sale would have a very positive impact on New Jersey, but only if AIG were to sell at prices that made sense."
"We're witnessing a number of new investors coming into the market at present, some of whom are moving out of equities. With fixed-deposit rates moving down, we're also starting to see investors moving money out of the banks back into investment property."
Bayley says transactions are still being concluded in the middle segment of the market between $1 million and $10 million, but activity has slowed.
"As a consequence of the reduced amounts of finance available, we are seeing a re-emergence of the trade market where properties or other assets are exchanged to help make transactions happen. A number of our senior agents are revisiting their experiences with trades in the late 80s and early 90s to keep this sector of the market ticking over."
In a recent example of a trade deal, a property in Allens Rd, East Tamaki, has been exchanged as part of the sale of a larger industrial property in Settlement Rd in Papakura that is currently occupied by Croxley Stationary, but will be vacant on settlement.
Alvarez, a mother of two, bought her house on Little Lake Street as an investment property with a 20 percent down payment. Six months after buying the house, Alvarez refinanced and took out a $95,000 line-of-credit, according to county records.
“We put $100,000 down. We didn't want to lose that,” said Alvarez, who defaulted on another house in May. “A lot of people are losing their down payments. Now they don't have anything. My husband and I put it into our business. We survived with that money.”
Like Alvarez, several people who pulled equity out of their Little Lake properties say they spent it on business expenses or mortgage payments. Only when prodded, and in one case reminded, did they acknowledge using the money to buy a timeshare, new cars and jewelry.
The most common response to the question of how the money was spent was: “To pay bills.” Many could not remember what those bills were for.
Bankruptcy specialists say part of what led to the housing market collapse was systemic. Lenders set themselves up for problems by not requiring buyers to prove they could afford the loans, or to provide traditional down payments.
That stripped buyers of a tangible incentive to stay in their homes. The stigma of foreclosure and damaged credit are real, but temporary.
“Twenty years ago, individuals were doing everything in their power to save their houses,” said Radmila Fulton, a bankruptcy attorney. “Now they're more willing to walk away. Why pay now when they can rent for less than their mortgage payment?”
"North Port was hurt because there was so much speculative building," said Arthur W. Broslat, land and investment property specialist with ReMax Alliance Group. "These guys had these schemes where you put down $3,000 and they built you a house. Gulfstream Construction built 500 houses like that in North Port and nobody had any intention of living in them. A mess of houses built in North Port were purely speculative."
Englewood existing home sales held value the best in Sarasota and Charlotte counties with an average selling price of $174,000 -- down only 7 percent from a year ago.
No data was available on DeSoto because its population is too small for Zillow to track.
All is not lost in North Port and other overbuilt areas. Sales of intact, foreclosed properties are red-hot and as they disappear from the market, property values are expected to stabilize, Broslat said.
"The new houses in North Port will disappear," Broslat said. "The recent foreclosures that haven't been trashed, the turn-keys you can move into in North Port, are going off the market a week or two after they've been listed. They are going off the market very quickly."
Reflecting the foreclosure trend, one-third of all Florida homes sold in the past 12 months sold for a loss, and 14.3 percent of all homeowners have negative equity, according to Zillow.com.
Distressed sales -- foreclosures and short sales where the bank takes less than the amount owed to satisfy a mortgage -- accounted for as much as 40 percent of all real estate transactions in the third quarter, which pulled down the median sales price.
The news is not all bad. Existing home sales are trending up.
For the first quarter since year-end 2005, the Florida Association of Realtors reported existing single-family home sales were up 5 percent in the third quarter. A total of 32,203 existing Florida homes sold in the third quarter compared with 31,558 during the same period a year ago.
Investors will find it tougher to get a bigger loan these days. Banks used to offer more than 85 per cent financing for investment properties but all of them, except DBS Bank, no longer do so, said Ms Yang.
This means buyers have to be prepared to cough up more cash for investment property buys.
Those looking at refinancing may be in for a surprise if they bought their properties in last year's booming market.
The Spring Grove unit in question was bought by a South Korean expatriate for $2.58 million or $1,442 per sq ft on a floating rate package.
He now pays 3.5 per cent interest on his 80 per cent loan and was looking to halve his interest payments by switching to a package pegged to the three- month Singapore Interbank Offered Rate, said Ms Yang.
But a check with two banks found that the valuation for his property was $2 million or $2.22 million. If he wants to refinance at these valuations, he would need to pay up to $180,000 to top up his loan, currently at $1.78 million.
Consumers seeking a loan for their property purchase should get prior approval or have more cash on hand. 'They should approach a mortgage specialist for a joint assessment if they are unsure whether they can afford the home purchase,' said OCBC's Mr Chan.
'Things are quite fluid these days so buyers should re-check their loan eligibility after one month,' said Mr Ng.
The 1031 Exchange is a valuable tax deferral tool for the owners of investment real estate. A 1031 Exchange allows a taxpayer to sell an investment property and rather than paying capital gains taxes on the sale, use that money to purchase another investment property. If the IRS rules are followed and the transaction is structured properly, a 1031 Exchange can be a useful wealth building strategy.
Certain rules must be followed in the sale and transfer of the property to insure that it qualifies as a tax deferred exchange:
1. An investor can sell his investment real estate property but must use the proceeds from the sale of the ‘Relinquished Property’ to purchase a ‘like – kind’ property. Both properties must have been held for use in a trade or business.
2. The Seller must enter into a written agreement with a Qualified Intermediary (QI). The QI acts as the principal in the sale of the Relinquished Property and the purchase of the Replacement Property.
3. The Qualified Intermediary receives the proceeds from the sale of the Relinquished Property, usually placing them in a segregated account. The Seller does not touch these funds.
4. The day the sale of the Relinquished Property closes, the 45 Day Identification Period begins. There are generally no extensions to this Identification Period.
5. Replacement Property or properties must be identified in writing to the Qualified Intermediary with complete legal descriptions or addresses. For the 3 Property Rule, three properties may be identified without regard to their fair market value, although it is wise to select a property of equal or greater value than the Relinquished Property. This process must be completed within the 45 Day Identification Period.
6. The 200% Rule means that more than three properties may be selected as long as the aggregate fair market value of these Replacement Properties does not exceed 200% of the aggregate fair market value of all the exchanged properties, as of the transfer date of the Relinquished Property.
7. The 95% Rule allows any number of Replacement Properties to be selected if the fair market value of the properties actually received by the end of the exchange period is at least 95% of the aggregate fair market value of all of the identified potential Replacement Properties.
8. The Replacement Property must be identified and the exchange must be completed within 180 days from the date that the Relinquished Property closed.
9. Title to the Replacement Property must be taken in the same manner that it was held in the Relinquished Property. For example, if Joe and Mary Smith sell their investment property and implement a 1031 exchange then Joe and Mary Smith must take title to the replacement property in the same manner.
Investors, in particular, have "no pressing reason" to get into the market, Davies says.
"It still gets down to the fact that rental yields nationally are still very low: they're still on average about 3 per cent across the country.
"While mortgage interest rates have come down recently with the RBA cutting rates, rental yields are still much lower than the cost of funding an investment property would be.
"That can't help but hurt demand from investors," he says.
Rentals have slowly improved over the last three years, rising in all capital cities, says Cameron Kusher, an analyst at property researcher RP Data.
"Over the three years to July 2008, strong rental increases have directly resulted in gross rental yield improvements," he says.
Someone who bought the median-priced house in July 2005 had an average gross yield of 4 per cent, he says. If they still own that house and are achieving current median rents, that yield has increased to 5.3 per cent.
For units, the median-priced property yielded 4.7 per cent in 2005 and is now yielding 6 per cent.
"Even in the worst-performing market, projected rental yield is achieving 5 per cent (gross) for houses (Sydney) and 5.9 per cent for units (Sydney and Melbourne).
IT is at times like these, when shares are so attractive that every expert, including the galah at the local pet shop, is screaming that we're looking at the buying opportunity of a lifetime, that I know why I love investing in property. The fact that I am a property fan does not mean I don't like shares, it's just that property is a better asset for normal people.
When people ask me for advice for nothing -- normal people won't easily pay for advice, and that is a big issue in itself -- I profile the inquisitor.
If they receive the "normal" tag -- risk-averse and a very casual, nearly disinterested party when it comes to shares and the underlying companies -- my advice is simple.
Buy a house and pay it off quickly. Your principal property can be a great investment -- it's capital gains tax-free and you can live in it, saving you rent.
I recall a retired, relatively young priest, who left the church without any super and needed a wealth-building plan.
With a lateral-thinking adviser's help, his plan was to buy a cheap home, live in it, renovate it, sell it and trade up.
Q: I have a loan on property in Oregon and the interest rate is 7.75 percent. It is on a manufactured home on 110 acres. I have looked into refinancing, and nobody will give a better rate on the place. It is a second home that we rent out so the lenders are telling me it is an investment property.
We have very good credit and enough money to pay off the loan, which is around $60,000. We are only getting 3.5 percent interest on the money in a certificate of deposit (CD). The value of property is about $250,000.
Should we pay off this loan?
A: Great question. At this point in time, cash is king. So if you have plenty of cash (or at least enough to pay off this mortgage plus an emergency reserve), then consider paying off the loan.
But if you're earning income from the property, then having a loan helps offset the income you're receiving. The tax advantage could be worth more than the 3 percent to 4 percent you're "losing" by having the cash in a CD.
Let me explain. At this point in time, federal income taxes top out at 35 percent. Income generated from a rental property is paid at the highest marginal tax bracket. So if you can lower your income by offsetting it with expenses, you're saving quite a bit on your tax bill. If you treat the property as an investment property and take depreciation on your tax return for the property, the tax depreciation also will lower the federal income taxes you pay on the rental income from the property.
I think you'll have to take out a pencil and pad of paper and do the calculations to see whether having the loan would help your bottom line more than not having the loan, particularly when you take into account your other expenses associated with the ownership of this investment property.
If you do your own taxes, you can run any number of scenarios through your tax software. Otherwise, you may want to have a quick conversation with your tax preparer or accountant.
The most expensive streets in Britain have been revealed by a Halifax survey which shed light on the poshest investment properties in London.
The Vale in Kensington and Chelsea is the priciest residential street in England and Wales, with an average price of £4,677,500.
Next on the list of the UK’s most expensive areas is Ingram Avenue in the London borough of Barnet, with an average tag of £4,465,000.
The South was revealed to be by far and away the most expensive area of the country, with the costliest street outside of this region being Congleton Road in Alderley Edge in Cheshire, where a home typically fetches £1,684,166.
Halifax chief economist Martin Ellis said:
“Chelsea and Kensington have some of the most expensive streets in England and Wales. The Royal Borough has been a highly fashionable area to live in since the swinging sixties.
“In recent years, its prime location in central London has attracted affluent celebrities and ultra wealthy foreign businessmen helping to drive up house prices.”
Halifax used data from the land registry to compile the report, which examined transactions between 2004 and 2008.
RISMEDIA, Nov. 10, 2008-You remember the news stories: People buying condos in Florida, Nevada, California, and other hot markets and “flipping” them for a fat profit before even a single spade of earth had been turned. Then everything went crazy, and hundreds of thousands of investors were stuck with new bricks-and-mortar properties that no one would buy.
Fortunately, for many, there’s a very palatable alternative: offering those properties as vacation rentals or “VRs.”
As hard as it is to believe, there may be a silver lining to the current turmoil. First, people will always take vacations. But now they’re more likely to stay on U.S. soil. Second, with their full kitchens, washer/dryer laundry rooms, swimming pools, and other amenities, vacation rentals not only offer much more space than a hotel, they are much more economical. There’s no need to ever take the family out for an expensive restaurant meal, for example.
And there’s more good news. General awareness of the vacation-rental lodging option is growing. The leading Internet VR advertising sites were set up around 1995. Ten years later, in 2005, venture capitalists raised over $200 million to buy them all up. They established a company called HomeAway, and began a major campaign to promote public awareness of the vacation-rental option.
So, how can you catch this wave and ride it to pay your mortgage and expenses while you wait for the real estate market to come back, as it always does?
Here are five tips to get you started:
Study the competition. Two of the best places to do this are HomeAway (www.homeaway.com) and VRBO (www.vrbo.com). Look at listings for VRs in your area to get an idea of what they offer and how much they charge.
Take lots of great photos of your property. Note: No people in the pix, please! Make it easy for your prospective renters to visualize themselves in the scene. And be sure to “dress the set” the way professional photographers do, with an arrangement of colorful flowers on the coffee table, or a dining table set up for a family dinner.
List your property on the leading VR advertising sites. For starters, we recommend HomeAway and VRBO, because they’re the most popular and get the most Web traffic. Total cost: less than $600 a year.
Run your VR like a business. Build a team of reliable cleaning and service people, collect and pay local and state sales tax, get set up to accept credit cards, maintain an online availability calendar, and always respond quickly to inquiries from prospective renters.
Remember: You’re in the hospitality business. Think of yourself as a host and your prospective renters as guests. With this mindset, you’re sure to be successful as a vacation-rental owner.
(PRWEB) November 5, 2008 -- Despite the downturn in property values in the UK, there are still investment hotspots in the world property market. According to the experts at Australian Investment Property, Australian property has not suffered in the same way as investment properties in Europe and America. They say that property values in many desirable Australian locations are still rising.
The analysts at Australian Investment Property (www.australianinvestmentproperty.co.uk) point to Noosa on the Queensland coast as an example of a typical must-have location that defies global trends. Investors who have recently bought into the Noosa property market continue to see capital growth in their investment - and excellent returns in the form of rental income.
Noosa is not the only town in Australia that continues to attract investors. There are many other desirable locations that property owners just can't keep away from. And for investors who opt for off-plan investments in Melbourne and the state of Victoria, there are generous tax breaks on stamp duty to build into the equation.
Visitors to the Australian Property Investment website will find a huge range of investment opportunities ranging from city-centre apartments in Melbourne (AU$ 500,000) to top-of-the-range designer developments on Queensland's gloriouos Sunshine Coast (AU$ 5,000,000). Many of the properties on the company's books began life on the drawing boards of cutting-edge architects such as Arkhefield, Gabriel Poole, and Owen and Vokes. These are the houses and apartments that investors with an eye to long-term growth snap up first.
For UK buyers, the Australian Property Investment website is a treasure trove of investment opportunities. Buyers who want a head start in the search for income and growth should bookmark the site. Every property on the website is available in the UK exclusively through Australian Investment Property.
Investors who are new to the Australian property market or who are unsure about the rules and regulations relating to Australian property ownership will find plenty of help and support at Australian Property Investment. The company offers a personalised service that matches buyers with properties that meet their criteria in terms of location and investment value.
To find out more, visit www.australianinvestmentproperty.co.uk.
Planning officials in an Indian city are launching a criminal case against a woman who allegedly tried to swipe a site from under the nose of the property owner by using falsified documents.
The Bangalore Development Authority (BDA) is warning real estate market firms and property investment professionals to be on the lookout for similar scams.
The group says Chanamma Shivalingegowda was allocated a 30 by 40 feet site in Koramangala in May 1984 and was given the possession certificate for the site the same year.
The plot was then left empty for a long period, which the BDA claims Esther Sarojini Alex, a woman employee of communications firm BSNL, tried to take advantage of.
The BDA says Alex, with help from Sri M Shankar Bin Muniyappa, approached the authority posing as Channamma saying the original documents had been lost and applied for an absolute sale deed.
A waiting list has been opened for a US condominium building featuring 100 investment property opportunities.
Developers said the Altessa building in Union City, Hudson County, New Jersey, would boast skyline views of New York city.
Full sales do not start until early next year but investors can add their names to a VIP list, Union City said.
The 15-storey scheme will include amenities such as a landscaped rooftop deck including a swimming pool.
Marcone Rocha, owner of developers Rocha Construction and Development, said:
“Scores of interested buyers have already contacted us to add their name to our growing VIP list.
“Many are single professionals or young couples drawn to the convenient location, magnificent views, luxurious floor plans and exceptional value when compared with communities found in neighbouring Hoboken and Jersey City.”
Construction is nearly complete at the site, Rocha said, with one, two and three-bedroom units ranging in size from 812 sq ft of living space to more than 1,400.
THE dearth of investment sales of assets of more than $100 million has left values languishing as vendors and buyers fail to reach agreement on prices.
But that may be the least of their worries. There are predictions that values could drop by up to 30 per cent in the coming 12 months.
Investment Property Databank says in a report that Australian commercial property returns were unchanged from the preceding quarter, earning investors 1.1 per cent in the September quarter. This is the lowest total return since March 1995.
Capital values at the All Property level slid -0.5 per cent. The mixed use and other properties category was the worst, values on a quarterly basis falling -1.1 per cent, while office capital values slid -0.6 per cent.
John Garimort, managing director in Australia of Investment Property Databank, said All Property total returns were unchanged largely because there had been a dearth of transactions.
"However, there is in excess of $20 billion of commercial real estate for sale, and once the expectations of buyers and sellers converge, we expect values to fall substantially.
Without a doubt - without any question in my mind - the best investment you will make in your lifetime is the home you buy and live in. As long as you are alive, you have to live somewhere. And if the recent downturn in the stock market proves anything, it's that housing is your best investment. Why? First of all, you can't live in a stock, mutual fund, bond, treasury, money market account, etc.
"When you buy a home, you get to live in it! Your home is your castle. It's where you love and live with your family - it's where your memories are made. Homes are much more than investments, they are your shelter and your safety. But if you return to why homes make great investments, the simple answer is that they are forced savings (when you pay your mortgage you pay down your home), they ultimately are leverage and they go up in value long-term. I promise you a decade from now, most housing markets will be higher than where they are today."
I cannot agree with Bach more! One of the fundamental basics behind investing in anything is "buy low, sell high."
Here we are: a time when prices have stayed relatively stable and interest rates are historically low. As I write this today, owner-occupied interest rates for a 30-year loan are hovering around 5.5 percent. This is a wonderful opportunity to buy a new home, whether you are ready to move up, downsize or buy an investment property.
Unlike a stock or bond, a home is a tangible asset. Years from now, everyone will look back and say, "I wish I would have bought back in 2008 or 2009." You can make that wish a reality.
VICTORIA'S property market has taken a turn for the worse with almost half the homes auctioned on the weekend being passed in.
With 420 of the 865 houses on offer over the weekend not selling, it was the worst auction week for four years.
On the up side, some buyers snapped up bargains and dictated the settlement terms.
REIV chief executive Enzo Raimondo said the economic downturn was expected to hurt house sales into the new year.
"We can't see any huge increase in clearance rate between now and the end of this selling season," Mr Raimondo said.
"If there is one positive out of this market it is that buyers with the capacity to buy or borrow can secure a home or investment property at a price they wouldn't have got last year.
"If we get some more interest rate cuts, perhaps in the first quarter of next year we might see some improvement," Mr Raimondo added.
British banks have underlined the need for a swift solution to the UK’s mortgage problems by reporting a low rate of home loan approvals.
The British Bankers’ Association released statistics showing October’s mortgage rates were lower than the average for the last six months.
The availability of investment property loans has suffered as a lack of liquidity prevents the UK’s main lenders from approving new deals.
However, officials pointed out that ‘high street’ banks were still providing two-thirds of all mortgages and said new measures could help availability.
BBA statistics director David Dooks said banks had increased lending to non financial firms and had bolstered financial intermediaries.
Mr Dooks said:
“That support, together with lower interest rates, will feed through to lending and the pre-budget report measures will help consumer demand.
“Comparison of current lending levels with last year is obscured by the very different economic conditions that exist now.”
He said there was currently a “reduced appetite” for borrowing and consumer credit was still “subdued”.
Dubai investment property developers must delay requests for payments from buyers in order to stabilise the region’s real estate market, a consultancy firm has claimed.
RichVille released a fourth quarter report on the emirate’s property market and included a suggested rescue plan to prevent a potential collapse.
Some developers also criticised the government of Dubai for not doing enough to help out the sector.
Officials must work with builders to work out how to stimulate demand, the RichVille report claims.
Tariq Ramadan, chairman of Tharaa Holding, of which RichVille is a member, said;
“It is very interesting to see that while the authorities around the world are taking all possible measures to revive their real estate markets, authorities in Dubai seem to be doing nothing to support the real estate sector.”
DIRECT property returns continue to tumble across Europe, and rental contraction in the office and industrial sectors in Britain is adding to property market woes, the Investment Property Databank survey has found.
In its British monthly results to last month IPD's index showed all property total returns fell to minus 3.8 per cent.
Last month's results were more negative than those for last December, making it the weakest month on record. Commercial property capital values in Britain have plummeted by the largest monthly figure in IPD's 22-year history, minus 4.3 per cent.
This is more bad news for the Australian real estate investment trusts with exposure to British and European property markets.
Jonathan Kriska, an analyst at the financial services company Patersons, said the latest International Monetary Fund report forecast global growth to slow from 5 per cent last year to 2 per cent next year.
He said several Australian REITs had large exposures to European property.
Several readers complained that policy changes by Fannie Mae and Freddie Mac are limiting investors' ability to buy more of the surplus housing inventory.
Richard Moroscak Jr., a vice president with OlympiaWest mortgage in Lansdowne, wrote: "I get a call once a day from borrowers who are interested in purchasing an investment property. They have 780 credit scores, full documentation, cash for a 30 percent down payment or more, great assets besides real estate, etc. In other words, they're the perfect borrower in most lenders' eyes. But if they own more than four properties they do not qualify to purchase another investment property. Investors tend to own multiple properties.
"If they take a short-term hard-money loan, which is insane, they generally cannot refinance out of them. The result is foreclosure unless they find another hard-money loan. Investors are on the prowl, but in my humble opinion, the market would stabilize much quicker if they actually had access to cash."
A column about the risks to consumers' deposits if someone they're doing business with files for bankruptcy drew hard-earned advice from one reader.
"This happened to me, and I should know better because I used to be a lawyer who did a lot of debtor-creditor and bankruptcy work," said Ellen Paul of Chevy Chase.
"I wrote to my state legislators to suggest legislation that would require companies that take advance payment or deposits to be bonded for an amount reflecting the amount of deposits or pre-payments they held over the previous year. That way, we unsecured creditors would actually get our money back."
Friday, September 19, 2008
According to the quarterly survey by Investment Property Forum (IPF), property experts have slashed their expectations for the UK market in the last three months and now project an average 15.7 percent drop in capital values in 2008 and a 5.5 percent capital loss in 2009.
Compared with the previous quarter's report, forecast total returns -- which combine rental income and capital growth -- fell by more than half to minus 10.6 percent for 2008 and sank to broadly flat from 4.7 percent for 2009.
Less pessimistic was the expert prognosis for 2010, where total return forecasts slipped only marginally to 8 percent.
"This is clearly where hope of recovery lies, both in the commercial property markets and the wider economy," IPF said in a note.
Capital growth forecasts for both 2008 and 2009 were deep in the red for all property sectors -- office, industrial, and retail.
The barrage of negative reports about the economic outlook in the UK may have caused many consumers to feel nervous about the market. But surprisingly a recent survey from Nationwide revealed that the gloom doesn´t stop them from becoming more hopeful about purchasing a property. In fact professional property investors are actively snapping up investment properties at distressed sale prices.
The continued interest in buying bricks and mortar stems from the fact that property is one investment that holds many benefits. For a start, property has always been one of the best-performing investments in the UK. But apart from that, here are the other major reasons why property remains on the public´s radar:
Security is one of the major reasons why people purchase properties. Provided that they are up to date with their mortgage obligations, they can stay in their property for as long as they like. The fact that banks readily lend money to people to invest in property implies that the institutions perceive the investment to be one of the most secure and stable asset there is. Despite what doomsayers are trumpeting, banks are aware that the underlying pressures experienced by the market in terms of supply and demand signify that property prices will go on increasing, providing investors with long term security.
Investing in property offers stability compared to other forms of investment. While share prices can cave in in a matter of few hours, property prices are unlikely to move more than 2% each month. Add to that the fact that the housing market is strengthened by the fact that property is a necessity and people will always need somewhere to live. If prices spiral downwards, there will be fewer people who will opt to sell. Therefore supply immediately decreases and demand causes prices to become stable. You must make sure that you are buying in areas with good rental demand and stable prices.
Property allows you to add value. Property allows you to come up with all kinds of improvements that will help to enhance your asset´s value. Plus, when the property you bought goes up in value and you will want to have more home improvements in the future or if you want to make a major purchase such as a car, you can have your mortgage extended instead of having to apply for other more expensive types of loans.
Property allows for the release of capital without you having to give up your asset. If you choose to collect your profits you do not have to sell your property. You can instead remortgage it and have the capital released. The strategy allows you to keep your property earning income and growth.
With all the advantages that buying investment property provides, it becomes all too obvious that property is indeed a genuinely appealing proposition. But there is still a need for you to perform necessary research and due diligence to determine the right investment property for you at the right price and in the right location.
How do I start being a landlord? Whether you have a small apartment in your basement or own a large high-rise, as a landlord you are subject to rules and regulations that define your responsibilities and what you can and cannot do.
Since each province and territory has its own landlord and tenant legislation, make sure you know the rules and regulations that apply to your province (there are some surprising differences). The collection of Provincial and Territorial Fact Sheets is great reference material to get you started. You can also look for books, booklets, and guides published for new landlords (since legislation can change, make sure that the publication is up to date).
When it comes to buying real estate in Victoria BC we can help you with just about all the information you need. Having said this, it is advisable to get some expert legal advice. This is a specialized area of law, so make sure you consult a specialist. Further you should also talk to your accountant to see how it effects your unique financial situation.
Thursday, May 22, 2008
Based on the relatively transparent British market, commercial property has generated an inflation-adjusted return of more than 5 percent a year since 1970, according to data from Investment Property Databank (IPD).
But much like gold -- another classic inflation hedge -- real estate's relationship with inflation can fluctuate, not least if economic activity slows and corporate tenants and rental growth come under pressure.
"Because property returns are not linked to inflation in the short-term there is no rush to move back into property just because we have inflation," said Rupert Clarke, chief executive of Hermes Real Estate, which helps to manage the retirement savings of
"Stagflation" is a term coined in the
The ramifications for property are complex.
"When we've had inflation-only in the economy, real estate has provided an inflation hedge," she said.
The question is, which kind of inflation?
Commercial property investments are better placed to generate consistent above-inflation returns when price pressures are a symptom of a healthy economy and result from higher spending and income.
In the long-term, the rent commercial property would be expected to attract on the open market at any given time -- the Estimated Rental Value -- is highly correlated with inflation.
"All the analyses show that over the long-term property is a good inflation hedge," Hermes's Clarke said.
Sunday, February 10, 2008
Business Management Software
Call Center Software
Saturday, February 2, 2008
Here's my guide to the best videos on Youtube in the following categories:Academy Awards
Heather Mac Donald
Las Vegas Condominiums
New York Giants
Sacha Baron Cohen
San Jose Condos
South Beach Diet
Texas Hold 'Em
Sunday, January 13, 2008
When entering into a real estate investment, investors should have multiple exit strategies for a variety of circumstances. But sometimes investors run into unanticipated circumstances, or fail to plan altogether. Here are some tips for leaving a real estate investment or avoiding foreclosure with minimal damage when planned exit strategies have fallen through.
The first and most obvious exit strategy investors should consider is selling the property outright. Investors should calculate the price at which they have to sell the property for in order to break even, including paying off all outstanding liens, commissions and other closing costs.
Once that necessary price is set, investors should look at the selling prices of comparable properties on the market. If the market supports the investor’s price, this exit strategy may work. Ideally investors should aim for being the lowest priced comparable property in the area. Investors may also want to consider home staging, as staged homes tend to sell quicker and for higher prices than un-staged homes.
If a full 5 to 6 percent real estate commission is not in an investor's budget, they should consider looking into companies such as MLS4Owners that list homes on the MLS for a small fee. While the investor will likely lose out on marketing and consulting services performed by the listing agent, getting the property listed on the MLS is the highest priority.
The current real estate market has created an increase in the number of people that are purchasing residential real estate properties for investment purposes. If they are purchased and managed properly, these properties can provide a source of income or a chance to build equity over time.
The difference between commercial properties and residential properties is that someone will be living in the residential home. That will mean that you are the landlord and as such need to keep the property in a good and livable condition. As maintenance issues come up you will need to address them promptly.
That alone can deter some from taking on the landlord responsibility, but there are options for those that just don’t want to manage the property. Property management companies will rent out and ensure maintenance on your investment when a vacancy or problem presents itself.
Maintaining an additional property can sometimes seem like a hassle or big financial responsibility. Take a moment to think about the benefits of keeping a rental home in good repair. If your home is run down in disrepair no one will want to live there. That means no rental income to cover that mortgage payment. Another reason for keeping the maintenance on the home up to date is that when you go to sell the property a well maintained home will return a better profit from appreciation.With a rental home you need to be prepared for the commitment and be dedicated to your responsibilities as owner and landlord. It will take an investment of your time and in some cases personal capital to have a property that generates revenue. In the best case scenario the rental income will return a profit, but should minimally cover the homes maintenance.
When it comes to rental properties there are a couple types of income. Those are appreciation and yield. They appreciation you realize when you sell the home for more than you paid for it. The yield is your annual rental income. These concepts usually work inversely. That means that a property that has higher yield will generally have a smaller appreciation and vice-versa. The best situation would be a balanced approach to achieving moderation with each.
When you are considering a residential investment property the first step in the process is getting comfortable with the landlord responsibilities and the next step is obtaining financing. Ideally you will have assets available for a down payment, but if not there are programs available for that scenario also.
Financing a residential purchase has differences from a commercial real estate loan. With a residential property you are not usually expecting a profit on the scale of a commercial real estate deal. The residential mortgage terms are typically longer term which will allow you more payment, term and interest options. Many investors that already own a home will secure a home equity loan that helps them with the down payment on the investment property.
Residential property investors can turn a good profit on properties. It really depends on the time, capital and effort that you put into it. The residential investor that manages these aspects of the investment well will see the chances for success increase. Find additional real estate resources at the Authority Real Estate Directory.
While the investment game is never a sure thing, one of the most solid investments a person can make is real estate. As the old saying goes, "God's not making any more land, so the price is only going to go up."
But if the real estate game were that easy, everyone would be a millionaire. Because of the expensive nature of real estate and the uneasiness many people feel when they decide to invest in it, consider the following tips before taking the plunge.
It's always important to remember that buying an investment property isn't the same as buying a home you're going to live in. But some of the same rules apply. One such rule is location. While those looking for their own home will likely look at privacy, the local school system and other things, when buying an investment property it's best to look in a high traffic area that's close to public transportation. The high traffic means more prospective renters will see your "For Rent" signs, while accessibility to public transportation will increase your pool of potential tenants.
In addition, it goes without saying that a desirable locale can often rent a place on its own. Rental properties in trendy neighborhoods often rent the fastest and landlords can often charge more for less.
Homeowners found three attractive tax breaks among their holiday presents, thanks to the federal Mortgage Forgiveness Debt Relief Act of 2007, which was enacted in December.
The first tax break concerns forgiveness of debt, which occurs when a lender forgoes repayment of principal and/or interest the borrower owes.
Typically, discharged debt is considered ordinary income to the borrower for income tax purposes.
The new law allows taxpayers to exclude this amount and thus escape the tax liability.
"When you're worried about making your payments, higher taxes are the last thing you need to worry about. "So this bill will create a three-year window for homeowners to refinance their mortgage and pay no taxes on any debt forgiveness that they receive," President Bush said in his remarks upon signing the law. Three new tax breaks: 1. Homeowners who experience a foreclosure, short sale, deed in lieu of foreclosure or loan modification may be able to exclude lender-forgiven mortgage debt from taxable ordinary income. 2. Homeowners may be able to deduct the cost of mortgage insurance. 3. A homeowner whose spouse has died may be allowed up to two years to exclude $500,000 of profit from the sale of a principal residence from capital gains tax.
"When you're worried about making your payments, higher taxes are the last thing you need to worry about.
"So this bill will create a three-year window for homeowners to refinance their mortgage and pay no taxes on any debt forgiveness that they receive," President Bush said in his remarks upon signing the law.
Three new tax breaks:
1. Homeowners who experience a foreclosure, short sale, deed in lieu of foreclosure or loan modification may be able to exclude lender-forgiven mortgage debt from taxable ordinary income.
2. Homeowners may be able to deduct the cost of mortgage insurance.
3. A homeowner whose spouse has died may be allowed up to two years to exclude $500,000 of profit from the sale of a principal residence from capital gains tax.
In 2005, developers built shopping centers and the tenants came knocking.
But now, Southwest Florida’s robust commercial real estate market is slowing. Retail and office vacancies are increasing and rents are decreasing.
Commercial properties are valued largely on how much income they produce, so property values are affected, according to about a dozen Collier and Lee Realtors, developers and property appraisers interviewed for this story.
Commercial real estate shadowed residential real estate on the way up, and developers built shopping centers to catch up to the area’s population boom.
But some of that population growth indicated by new home construction turned out to be speculative, and the residents – and business customers – never came.
Commercial projects that opened in 2007, and those slated for 2008, were planned two to three years ago when the residential market was booming and it was hard to find a commercial space empty.
Now that the residential market has slowed, commercial property owners face a more challenging rental market because tenants have many more options.
DESPITE discussions about the national and local economy being affected by the "credit crunch", Gavin Dawson says demand for investment property in the North-East, from both national and local investors, continues to be robust.
Our firm has recently been involved in a number of transactions where - despite most of them being agreed before the summer - they have all subsequently completed without reductions in prices.
We believe this is a sure sign that demand is still strong, whether it be from investment funds, private property companies or private individuals.
The position is supported by investors who are willing to pay net initial yields of sub 7% for 1970s and 1980s refurbished industrial stock, and further sustained by vacant possession values from owner occupiers and investors.
These groups still regard the North-East as a safe bet where comparatively low base rents offer good prospects for rental and capital growth in the future, boosted by a lack of supply of new buildings and scarce land supplies.
To reinforce the point, we have recently disposed of four multi- let units at Harvey Close, Washington, where the majority of leases were secured for three years, certain to local covenants, achieving a net initial yield of 7.4% and a capital value of pounds 50 per sq ft.
LONDON -- With commercial real-estate values falling, investors in many open-ended United Kingdom property funds are clamoring to cash out.
Many are finding that it isn't that easy. Fund managers can't meet redemption requests and are enforcing waiting periods because sales have slowed to a crawl. Because the funds hold property, not cash, they can't honor redemption requests until they sell some assets.
For example, U.K. asset manager Morley Fund Management, which is owned by Aviva PLC, UBS AG's Triton property fund and Deutsche Bank AG's RREEF U.K. open-ended core funds, has imposed 12-month waiting periods on investors in recent weeks. Fund managers said the limits aren't new and were always part of the terms of the fund. In the past, managers were willing to relax their deadlines, and now they are rigidly adhering to them.
Meanwhile, returns on U.K. commercial real estate in November hit their lowest level since records have been kept, falling by 3.4%, according to data released Friday by independent research body the Investment Property Databank. This brings the year-to-date return to minus 1.8%. It is the first time the U.K. annual index has recorded a negative return since 1992 and is the worst monthly performance since records started in 1990.
However, the fundamentals of many commercial properties remain healthy. Rents are stable and the vacancy rate isn't rising in most markets.
“The most amazing thing about the investment market in 2007 was that it started out with so much investor confidence and ended in a near panic,” according to a report issued in December by New York-based real estate research firm Real Capital Analytics Inc.
The credit crunch that hit with full force in September was “one of the most abrupt disruptions to ever hit the commercial real estate capital markets,” the report says, “marking the end of an incredible five-year bull market.”
Under such circumstances, it would be easy to offer dire predictions about the coming year. But Real Capital cautions against such knee-jerk reactions, noting that nationwide rents are “solid” for the four largest commercial real estate sectors: apartment, industrial, office and retail.
“Don’t forget to look at the positives in the new year,” the report says.
Getting the most from your investment is a primary goal of real estate investment. If your property investment loan has a high interest rate and fees, your profit is greatly decreased. Comparing your options can get you the best deal.Article Anyone that wants to get into the real estate business is likely going to need some sort of investment property mortgage loan, unless they have a large amount of money that is free for investing. Lots of banks offer special financing for people who want to make a property investment.
These are called investment property mortgage loans, and they have been helping people get started in the real estate industry for years. If you have any property of your own paid off, then you will be able to use it as collateral and get a mortgage loan with good terms and a decent principle that will allow you to follow your real estate dreams.
You should contact all of your local banks to find out what they offer in terms of property investment loans. Keep a notepad with you, and write down the basics of every financing option – the initial interest rate, the maximum available amount, the term, monthly payment plans, the recourse, the fees, and anything else that will have an effect on your borrowed amount. If they have any literature on their financing offerings, be certain to get that as well.
Most of the time, the terms will depend on your credit, and what you have to offer as collateral. Once you've got all of this information gathered, you can make use of various tools to analyze your financial prospects.
Initially, you will have to enter all of the data that you gathered into a chart to help you easily compare your available opportunities. First, you should go through and figure out if any of them will be simply unviable for whatever reasons – for example, if you aren't sure you'll be able to make the payments on time, you should not consider that deal.
Next, you can use your analysis tool to compare all of the loan options, and figure out which one will be the most profitable, and take the least amount of money from your profits.
Once you've determined which property investment offer will be best for you, you should start creating a plan that will outline your investment intentions. This may even be required by the bank, and a loan officer will look over your proposal to ensure that you have a solid business plan. But whether it is compulsory or not, a solidly formed plan will give you personal satisfaction knowing that once you have your investment property mortgage loan, you know exactly what you are going to do with it.
As for tools that will help you compare your financing alternatives, you should investigate all of the options that are available to you. If you use a program that can easily compare your options, then you will save hours of manual work which would have involved performing endless calculations. Using investment software can help you find the best loan and profit as much as possible from your real estate ventures. The technology is available, so make the most of the software.
By: Getting into real estate for yourself takes a great deal of work. One of the first steps is to check out your investment property mortgage loan options. KISCL offers software to help you along. http://www.kiscl.com
Sentiment in the buy-to-let sector remains buoyant despite growing concerns for the wider property market.
That is according to the latest research from the Association of Residential Letting Agents (ARLA), which finds 90 per cent of landlords have no desire to sell property during the next two decades.
Furthermore, up to 40 per cent of landlords are seeking to buy further properties during 2008.
"This is good news for the whole of the private rented sector and for the housing market, particularly as it comes from surveys carried out well after the credit crunch had begun to bite," commented ARLA's head of operations, Ian Potter.
"The rental sector is the lynchpin for all our housing requirements and needs continual investment from private individuals as it still suffers from a lack of investment from the institutions."
According to ARLA buy-to-let landlords borrowed an average of 70 per cent of the value of a property when setting up a new investment during the final quarter of 2007, down from 74 per cent in the previous quarter.
UK sales of commercial property plunged in Q4 2007 because of credit crunch; Market set for biggest annual losses in more than 25 years
The value of transactions fell from £15bn in the third quarter to £5.5bn in the fourth, according to data provider Property Data. The dismal figures contrasted sharply with £20.1bn value of deals that were transacted in the last three months of 2006.
The last time quarterly sales dipped below £5.5bn was in 2002, during the traditionally low activity first three months.
According to IPD (Investment Property Databank), a leading index provider for commercial property, prices have fallen by nearly 10% since their peak last summer. IPD says that owners may record losses of at least 11% in 2008, according to prices of derivatives contracts pegged to indexes its maintains.
The fall would be the largest since IPD introduced its annual total-return index in 1981, which combines data for rental incomes and changes to appraisal values. The benchmark index covers £200 billion of investments and excludes debt, which can multiply property gains or losses.
Turmoil in the housing market spurred double-digit drops in sales of houses and condos along the Grand Strand last year, though prices inched up, according to year-end figures released this week.
Condo sales plunged 37 percent compared to sales in 2006, while single-family home sales dropped 21 percent.
Those are the biggest percentage drops since the statistics started being recorded in 1993. The statistics, compiled from the Multiple Listing Service, represent about 80 percent of the listings in Horry and Georgetown counties.
High insurance rates, a new property tax law, stricter lending policies and rapid appreciation have made it difficult to buy and sell property, said Tom Maeser, president of the Fortune Academy of Real Estate.
"Those four things are kind of like the perfect storm, and it severely impacted our investors," he said.
Plus, as the national real estate market tumbles, many people who want to move to the Grand Strand can't because they're unable to sell their homes elsewhere, he said.
The decrease comes after a housing boom the area experienced in 2005, when condo sales leaped 48 percent and single-family home sales rose 27 percent.
London - LaSalle Investment Management put Condor House, a seven-storey office building facing London's St Paul's Cathedral, on the market for £130 million (R1.8 billion) six months ago.
Last month the building sold for £117 million, 10 percent below the asking price.
Appraisal values fell at a record 4 percent rate in November, increasing the cumulative 11-month decline to 7.8 percent, according to research firm Investment Property Databank (IPD). In the last property crash, values dropped 27 percent from 1989 to 1993.
"The UK market is falling apart," said Peter Hobbs, the head of research at Deutsche Bank's RREEF Real Estate. "There's a risk that this cyclical downturn turns into something worse."
Britain's £700 billion commercial property market would perform worse this year than the rest of Europe, the US and Asia, Hobbs said.
ONE man's housing affordability crisis is another man's lucrative investment market.
Escalating house prices show little sign of abating and long-term figures confirm Australian residential property is a strong, stable investment — sexy qualities in these shaky times.
The ANZ property market outlook for 2008 was unequivocal in its recent forecast: "A severe and potentially intractable shortage of housing will continue to drive house prices and rents sharply higher in the years ahead."
This was despite Bureau of Statistics data on Tuesday showing total building approvals rose 8.9% — on a seasonally adjusted basis — and were up 14.6% last year.
Those looking for investment property need to concentrate more on buying well than on external economic factors such as the credit crunch, property firm Young Group has advised.
Managing director Neil Young said: "It is buying well that ensures a good investment," adding that this was as true now as it was in 2007.
Mr Young stated that buy-to-let remained a "solid medium to long-term investment class" and advised the key was for buyers to do their research and assess each property on its merits.
As one experienced landlord put it: "You make your profit when you buy a property, not when you sell it." Pay too much, and you'll never recoup as much as you could have had you driven a better bargain.
The rental real estate market is generally tougher on investors who overpay than on homeowners who do the same thing, several landlords said. While a home is often an emotional purchase, which can lead to "I must have it!" offers and bidding wars, most landlords look strictly at the numbers to see if their investments will pay off. If you pay too much for a rental, you can't count on a "greater fool" coming along later to bail you out.
Not overpaying can be tough in a hot market, however. Apartments in New York, for example, currently sell at a 60% premium over their "inherent" value. In other words, they're selling for much more than the income streams the apartments generate, according to Reis, a national real estate research firm. In San Francisco and Los Angeles, the premium is 10%.
Some landlords use formulas, such as not paying more than six to eight times the rents they expect to make the first year. Others try to estimate what the property could be worth after needed repairs and upgrades are made, and they don't pay more than 70% of that price, less the cost of those repairs, CPA Berning said.
The longer you plan to own the property, the more you'll probably need to invest in maintenance, repairs and improvements, Cain said.
"If you're keeping it for 20 years, at some point you're going to be putting a new roof on that property. You're going to be putting in new appliances and doing some major repairs," Cain said. If you're only planning to own a property for five years, by contrast, you'll probably want to avoid making any major improvements unless you're sure you can recoup the cost with a higher sale price.
You also may face more investment risk with a shorter time horizon. Although your rental will almost certainly appreciate over 20 years, it could easily lose value in the next five, particularly if you're buying in an overheated market. You'll need a bigger potential annual return to make up for that risk.
For many small investors, long-term ownership makes the most sense, said Pat Callahan, an attorney, landlord and founder of the American Association of Small Property Owners. You'll have plenty of time to ride out any swings in the market, and rental income can make a nice supplement to your day job. Find enough rental properties, and being a landlord may become your day job.
The idea of owning rental real estate seems to be gaining popularity as investors tire of the swoops and swoons of the stock market. As I pointed out in a separate column, not everyone has what it takes to be a landlord. But those who do may find rentals to be a good way to build wealth.
Once you've made the decision to buy rental property, your real work begins. Finding a profitable rental property usually takes time, connections and plenty of research.
Here's what you need to know to get started:As with any other investment, you should have a good idea how long you plan to own a rental property before you buy it, says Robert Cain, publisher of the Rental Property Reporter newsletter.