Monthly Archives: August 2016

How to Invest in Real Estate

Don’t let the housing bubble burst deter you. The fact that there are so many properties to choose from right now and that too at relatively throw-away prices, buying a property might just be the perfect investment decision. As it is, one tends to hold a property for a longer period, so you can consider it from a retirement planning perspective as well. It may also be a good idea to invest in a newly-developing area, since the land can be purchased quite cheaply and the rent in these places will always go higher in the future.

The Good Old-Fashioned Way

Real estate investment can be done in two ways. If you have funds lying idle in your bank account, it may be a wise decision to buy a property using them. This way, you make a one-time expenditure and earn a rent over the period for which you hold the land. You can also sell it off later, if you think the price is right and you are earning a good-enough profit. The other, more riskier way is to get external real estate financing from banks. You can then rent it out to someone at a slightly higher price than what you pay as mortgage. On the flip side, if you are unable to find a tenant for your land, you run the risk of a dead investment and a mortgage.

Real Estate Investment Groups

Being a landlord has its share of problems. A tenant might default on payments or cause some damage to the property. In such a case, you can deduct it from their initial deposit, but fixing it is still your headache, right? Not, if you go for a real estate investment group.

A real estate investment group can be considered as the mutual fund amongst real estate investments. This group builds apartments or condos and then sells them to investors as rental properties. So, instead of taking a loan from a bank, you pay the mortgages to the group which takes care of all the maintenance issues. Of course, for this service, they may charge you a percentage of the rent you receive.

Real Estate Trading/Flipping

This type of investment is suitable for the adventurous among us. Trading or flipping is where an investor buys property in a low-priced area, but when the demand looks like it’s going to pick up. The intention is to resell it in the short term when the price goes up. He might not choose to wait for the best price, and might sell it when he feels that he has got a good return. This is a very risky proposition, due to market price fluctuations in the short term, and it is only advised if you have surplus funds in your account.

Remember, if made wisely, investment in real estate might just be the smartest thing you do in your lifetime.

Land Buying Tips

If you are thinking of making a land investment, for building a home or for business; it is very important that you study as much about it, as possible, before you buy it. Its value has a reputation of appreciating over the years. So, buying land is almost always profitable. However, the rate at which the value appreciates, is totally dependent on the rate of development around the area. So, make sure that you choose it smartly.

Tips on Buying Land

Land remains the most sought after asset in the world. All things can be manufactured, but land can’t. It is the most sound investment to make. It is a more secure investment than stocks or bonds. However, investing in terra firma can be quite a tricky business. There are many issues to deal with and many things to watch out for. It can be a complicated business and one needs to carry out the whole business very carefully. Here are some tips, for those who came in late, in search of their promised land.

Location, Location, Location
When it comes to buying land, there are three important things to think about, which are location, location, and location. Yes, location matters. First of all, if you are clear about what purpose you are buying it for, your search is simpler. It helps when you know exactly what you want. See that you have electrical connections around your land so that you can get one easily, when you go into the construction phase. Water supply is another thing to look out for.

If water ain’t there, not much is going to grow there and life will be difficult. Ensure that your land is easily accessible by road. This is very important, as otherwise, transporting building material during construction becomes difficult. Also, it’s good to choose land, that is close to your place of residence. Otherwise, commuting will consume a major part of your time. Be ready for a lot of travel, to choose your promised land. Start with real estate advertisements in papers or approach real estate agents.

Check Topography and Surface Features
Check the topography of the land carefully. Avoid marshes and lowlands, as they are difficult to build upon. Hill slopes are also tough terrains to build upon. If you intend to buy it for agricultural purposes or otherwise, it is a good practice to get the soil type and quality checked.

Check if the land has an underground base of bedrock, that can hold water. If the bedrock’s there, possibilities of finding water underground are greater and may solve your water needs, in times of scarcity. If you are buying it for residential purposes, you must think from a landscaping point of view and evaluate it accordingly.

Ensure Title Clearance
Ensure that the land title is clear and there are no legal problems associated with it. Get the legal papers checked for authenticity. Many adventurers who were careless, have been conned by false papers and duped out of their life’s earnings. Take legal advice and professional help in making your purchase agreement.

Market Research
Research market prices in the area before going into a deal and agreeing on a price. Get a real estate appraisal. This way, you can ensure that you are paying a reasonable price. It is better to pay for the land in cash directly, instead of going for real estate loans. Loans can be very costly and can put a lot of financial burden. Saving money and buying your land within that budget, is a better option.

Land dealings are never simple. Rounds of negotiations and bargaining go on for days, before a price is agreed upon. The process can be even more complicated, when estate agents are involved in the process. Be patient and persistent. Ensure that everything about the deal is carried out through proper legal channels and consult a real estate attorney.

Real Estate Investing Tips

investing-in-real-estateWhen you have extra money, you think of ways to invest it so as to earn more money. If it is a huge sum, an idea of buying second home may always pop up in your mind. Buying real estate can help you earn large amount of profit on the basic investment. Real estate investment is a fabulous business and you can do it along with your existing job or business. But, this doesn’t mean that it is a very simple business which just involves buying a property and selling or renting it. It’s a wise investment and definitely, you need to invest your time and brain in this business to make it successful. So, what are you waiting for, go through these real estate investing tips mentioned below before you start off.

Tips for Investing in Real Estate

  • Scrutinize the property before buying. This is one of the most important tips. Check with the nearby localities about your site. Examine your site properly, do not be negligent about doing this. You can also hire a professional inspector for this.
  • In any business, research has prime importance. A comparative study will prove beneficial, before doing any deal. You need to do a research to know about the average property value, around your property. This will help you in deciding the value of your property if you have to sell it.
  • Similarly, check the rent of properties in this area if you are planning to rent your property. This is the best way to measure the market value of your property. The sale price of your property is almost equal to that of the nearby properties and even the rent will be almost equivalent.
  • The rate will only increase or decrease depending upon the amenities and condition of your property. This research is necessary even if you are renting your property because, if you decide a higher amount of rent as compared to other properties with similar features, then it will be difficult to find customers.
  • Also, a person who can afford highest price, will think of buying instead of renting, so reasonable rent price is important.
  • There are various fields in the investment business. Get specialized in any one field, this will help you to gain deeper knowledge and have updates of those investment properties. For example, you can focus on fixer- uppers, foreclosures, low down payment properties, starter homes, small apartment buildings, condominiums, etc.
  • You need to be thoroughly aware about the current tax laws, real estate loan options, loan payments, cash flow statements, etc. Also, you need to study the tax properly and calculate your advantage.
    An essential factor is tax, as it makes a huge difference between negative and positive cash flow. Newcomers can take help from tax advisers. You can also take advice from a real estate attorney for legal matters relating to your property.
  • If you are renting your property then you must have the necessary information about tenants. Know where they work, their hometown, contact numbers, etc. Collect the security deposit as well. Also, respond to all their complaints; solving them on time will help you keep up good relationship with them.
  • Negative cash flow will lead to frustration. If a property is reducing your cash everyday then it may lead to a lot of stress followed by financial problems. So, note out any issues that may affect your cash flow negatively and make you to sell the property even before you earn enough benefits out of it.
  • Remember that you have to first secure your investment and then earn profits out of it. Opt for the best insurance coverage for your investment. For this also, research the available options and the benefits of each over the other.
  • Learn the art of real estate negotiation. You have to be a good negotiator to do this business. Highlighting the plus points of your property, in a way that customers forget the minus points is much important. Your convincing abilities will be helpful while deciding the price.

Starting a real estate investment business is a great option of investing your surplus money. It all depends on your knowledge and confidence to make this business, a success. Study about real estate field thoroughly and be a successful investor.

Real Estate Investing Business Plan

Real estate is one of the booming sectors and everyone wants to make a mark here. There is a lot of competition and only those with vision, passion, and the ability to work hard can achieve this success. In this field, one of the most important things a businessman should be aware of is a business plan. It basically includes creating a written outline that evaluates the economic viability of your business venture based on real estate investment. It helps you define your objectives, i.e., what you want to achieve from this particular venture. It also helps you to focus on your goals, aims, and targets.

A carefully designed plan can also help you attract more lenders, investors, and banks. It makes you look neat, professional, and reliable, which is very important for the investors so that they can trust you and believe in your abilities. It also helps you to find out probable weaknesses and shortcomings in your plan that you can improve. Mentioned below is a template for it that would help you to create one on your own.

Main Elements

Executive Summary
In this section, you are supposed to write the long-term vision and mission of your venture. Here, you should provide the reader with a brief introduction to the entire business plan. As the name suggests, you should pen down the overall plan in a summarized manner. You must also mention your objectives and start-up details, along with some general information about your business.

Company Background
In this section, you should write about the entire history of the company, the people associated with it, and its journey so far. The kind of ownership of the company, something about its owners, achievements of the company, etc., should also be mentioned here. If it is a new company, then why and how it is/was established, who is it inspired by, etc., should be mentioned.

Market Research and Business Strategies
Here, you should write about your target industry, customers, and real estate financing status. You should give the detailed description of the real estate investing industry you wish to work with. Apart from this, you should also mention about your understanding about the industry and how you would like to work with a difference. You should also write about the business model you have already established or planning to design. Also, mention the strategies you have formulated for the same based on your market research analysis.

Marketing Plan
Here, you should mention everything about this aspect, including how you are going to market your new venture. Provide detailed information about promoting and marketing strategies, including which medium you will choose to advertise, how frequently you would engage in this activity, how much budget is allotted for advertising, etc. And to decide these things, you need to study the opponents, identify your USP, and plan accordingly. All these aspects have to be mentioned, so that readers come to know about the viability of your business plan.

Financial Plan
You must write how you are going to start this venture and from where the initial money is coming. You also need to mention the probable profit and loss you are expecting. You must describe the entire begetting plan with adequate details. Also, mention the sales projection and implementation strategies of all the projects. This helps the investors ensure that you are not involved in any illegal activity and that it is safe to be associated with you.

Assumptions
In this section, you would mention the assumptions related to your business venture and the industry. For example, you can make assumptions about the interest rates or growth rates, etc., based on the background research of the industry and your business plan. This helps the investors to understand your confidence level, as well as your risk calculation abilities. It also provides them a chance to know about your thinking process and your perception about the industry.

Management Summary
In this summary, you should appeal and motivate the people to work with you. This is quite similar to the closing statement, where you should mention that goals are realistic and you have the manpower and strategies to reach them. You have to write this last piece in such a way that your faith in this venture should be reflected clearly from your words. You should use promising and regressive language that would make the readers live your dream.

You can personalize the above template as per your needs and choice. Use a catchy and simple language that is easy to understand. A rightly and precisely designed and formulated business plan is sure to fetch great success to you.