Dec 29

Of course, you’ve already considered location, so the first step you need to contemplate in purchasing a house for flipping is curb appeal. What does it look like from the street? If people aren’t anxious to buy after driving buy, what chance do you have of making a sale? Curb appeal is everything.

Actually, it’s curb appeal times two. You need to consider what it looks like to you for buying and you need to envision what it’s going to look like to a prospective home-buyer when you sell.

If the outside of the home doesn’t captivate you, then no matter what you do to the inside, you face an uphill battle. I’ve had great houses with great prices . . . and potential buyers barely slowed down as they drove by. You need to believe that with a little work and a little money, you can transform a home from a liability to alluring.

Curb appeal consideration for you:

  • Roof lines even? - You don’t want to see a sagging roof, even if it’s structurally sound. That look could cost you thousands in resale value.

  • Additions un-cobbled? - Many times people add on dormers or little additions. If there are additions: do they fit the basic “look” of the house? Does the roofing material match? You don’t want to be changing those. You want the home to look picture perfect.

  • Garage converted to a family room or bedroom? - Many times ramblers have original built-in garages converted to extra bedrooms and/or family rooms. The driveway comes up to the house and you can easily see where new siding was added to “hide” the conversion. This rarely works. The best I’ve seen used French Doors into a family or garden room.

  • House settling? - If you can see from the street that the house has settled, there is little you can do outside of major foundation work.

  • Concrete work settled? Cracked? - Front steps off kilter? Actually, you can build new steps around them. Often you construct a small deck that both hides the old concrete and enhances the new look. This hides unsightly cracks as well (make sure they are repaired first, however (don’t just cover them up).

  • Crappy neighbors with crappy homes, crappy landscape and crappy attitudes? - If you can buy their homes for a good price, consider it. If not, pass it by otherwise you’ll be trying to show your home while the police stop by next door for an on-location shooting of “Cops.”

    If you purchase the house, you will start working on the curb appeal as well as general remodeling. You need to capture the hearts of your potential buyers.

    Curb appeal for your new buyers:

  • Put up large street address numbers so people can easily locate your home for sale.

  • Nicely painted - Fresh paint adds value and says the home is well-cared for.

  • Landscaping - Big bushes and trees add instant value. Tie the landscaping together with edging and you have a complete look. If you don’t know what time of year you will be selling, choose mostly evergreens and then add flowering plants just before you put up your sign.

  • Charming - Nothing sells like charm. Don’t settle for bland. Add color that highlights the home. Got room for an arbor? Is there a small private area that can still be seen from the street? Room for a bench? Does the house have shutters. They don’t even have to work. They can even have to work. Shutters or “faux” shutters can be used to accent the windows and make them appear larger.

  • Dramatic lighting - Make sure your address is well lighted. Use dramatic spot lights to show off the landscaping and the private areas. If your house is vacant, choose a nice table by a beautiful window to add an attractive lamp. You want a shade that sends light up and down. You’re want people to have the feeling that they’ve come home after being away, and someone left the light on for them.

    People view houses when it is convenient to them, this often means after work, at night. Be sure to check out your curb appeal for different times of day and night.

    Imagine the house you’re selling as the perfect home. How would it look, if it were painted as a romantic scene by Thomas Kincade? You would see drama. You would see color. The lighting would pull you into the painting. Create that picture for your curb appeal.

    What you want is an image that stays in the mind of potential buyers. They drive by. They call. They look it over. They make their offer. They can’t wait to move in. They pursue financing. You get your asking price . . . or better. Their dream never waivers. This is their home. All of this is done with curb appeal.

    Don Doman is a published author, video producer, and corporate trainer. He owns the business training site Ideas and Training (http://www.ideasandtraining.com), which he says is the home of the no-hassle “free preview” for business training videos. Don and his wife Peg at one time owned 33 single family homes, which they purchased, remodeled, and used as income properties before selling them for profit. You can gain from their experiences at Simple Home Repair (http://www.simplehomerepair.com).

    [tags]flipping houses, selling a home, real estate, real estate investment, selling houses, buying houses[/tags]

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  • Dec 23

    Dillon is a small town located in Summit County, Colorado in the heart of one of the world’s most famous ski resorts. It is located on the side of Lake Dillon in the heart of Summit County. The town’s location is beautiful and offers visitors an abundance of winter and summer activities. The town’s population is small, under 1,000, but this figure increases to around 4,000 during the peak winter months.

    In the winter Summit County is a winter wonderland. Dillon offers easy and quick access to all of Summit County’s main ski resorts including Breckenridge, Keystone, Copper Mountain and Arapahoe Basin. There are all types of winter activities available here including skiing and snowboarding, cross country, snowshoeing, snowmobiling, sleigh rides, and ice skating. As a backdrop to these activities you have the breathtaking beauty of the snow-covered Summit County peaks.

    In the summer months Dillon offers visitors many activities including hiking, biking, rafting, golf, camping, canoeing, horse riding and all types of water sports including sailing, boating, cruises, and fishing. The sailing activity is centered around the Dillon marina. The marina is home to the popular Tiki Bar which is a popular hangout during the summer months.

    There is also the option of more tranquil pastimes such as shopping, visiting galleries, relaxing in the sun, or dining at the many nice restaurants in the area. Dillon has a rich history dating back to the 1800s when it was formed as a trading post. The Summit Historical Society Museum is located in the old Dillon school house and will help you understand the beginning of the town. Many visitors are attracted by the lower priced accommodations during the summer months which makes a visit to the area during the summer a real bargain.

    Dillon offers an abundance of resorts, hotels, condominiums and bed and breakfast accommodation situated on the shores of the lake. Whether you are looking for a vacation on your own or with your family there are all types of options. You may also be in the market for purchasing a vacation home. If so there are lot of possibilities in the area.

    Dillon in Summit County, Colorado offers all the attractions of a world famous winter destination. It also has something to offer all year round. The winter visitor is guaranteed the finest of winter sport facilities while the summer visitor can enjoy a range of summer activities enjoying accommodation and facilities at a bargain price. Regardless of when you visit Dillon, in Summit County Colorado you are assured the utmost in fun and value.

    Copyright 2006 Peter Hayes

    The Kelli Sells Team is the top real estate firm in Breckenridge and Summit County. For more information visit http://www.kellisells.com.

    [tags]Dillon real estate, Dillon Colorado real estate, Dillon CO real estate, real estate Dillon Colorado[/tags]

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    Dec 12

    Latent defects are those hidden or concealed defects that would not be discovered in the course of a reasonable inspection. Latent defects are the opposite of patent defects, which by definition are defects plainly visible or that can be discovered in the course of a reasonable inspection. In real estate, although misrepresentation normally requires a statement to be made to the Buyer silence can also result in some liability on the part of the Seller.

    Prior to entering into a Contract to sell real estate the Seller is required to disclose to the Buyer any latent defects the Seller is aware of. Failure to disclose will not affect the consent of the parties, but will have similar consequences as misrepresentation.

    Technically speaking, latent defects are facts that :

    1) are unknown to the Buyer and are so crucial to the enjoyment and value of the property that the Buyer might not have entered into the Contract had he known they existed and
    2) cannot be discovered upon reasonable inspection of the property.

    An example of a latent defect in one case was the presence of an underground water culvert which was not apparent from a normal inspection of the land and which the Seller was aware of and failed to disclose. If the Seller does not disclose the existence of a latent defect, the Buyer can rescind the Contract and/or recover damages. Other more typical examples of latent defects are the existence of urea formaldehyde foam insulation or asbestos insulation in a property offered for sale. However, the Seller will not be held liable for failing to disclose a latent defect he was unaware of unless a reasonable person would have been aware of it.

    Some latent defects are out of the ordinary but must still be disclosed if known to the Seller. For instance, properties rumored to be haunted are one such example, as is a property previously used as a site for a marijuana grow operation. In one recent court case, a luxury condominium where someone had committed suicide was held as a property with a latent defect that the Seller had a duty to disclose to the Buyer. These are known as ’stigmatized properties’ because they are associated with a ’stigma’ , an unusual, distressing event or circumstance such as murder, suicide or criminal activity. These properties may be worth less or could be hard to resell because prospective Buyers might not consider them. As such, the market for stigmatized properties is drastically reduced - and so is their value.

    Luigi Frascati

    Luigi Frascati is a Real Estate Agent based in Vancouver, British Columbia. He holds a Bachelor Degree in Economics and maintains a weblog entitled the Real Estate Chronicle at http://wwwrealestatechronicle.blogspot.com where you can find the full collection of his articles. Luigi is associated with the Sutton Group, the largest real estate organization in Canada, and is based with Sutton-Centre Realty in Burnaby, BC.

    [tags]real estate chronicle, real estate,economics, latent defects,finance[/tags]

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    Dec 08

    So why should you invest in foreclosures? In the long-term, it’s for lifestyle and financial freedom.

    I do not define success in terms of winning or losing, but rather by whether I am challenging myself to be the best that I can be. One of the reasons I left my 9-5 corporate job, besides getting laid off, was because I wanted MY OWN lifestyle. I wanted to create my own lifestyle for me, my family, and my friends. I wanted to become a champion, the best at what I did. I believe that anything I set my mind to, I would be successful at that endeavor.

    However, my biggest problem in working for a company where I was not the boss, the president, or the owner, was that I could not set my own schedule. I would not be able to go skiing when I wanted, play golf, or travel when I wanted. I was a terrible employee because I wanted to do things when I wanted to do them. And today I don’t want to be accountable to anybody, except myself and my family, and the people that are counting on me to create real estate transactions.

    Don’t get me wrong. I was pleasant at my jobs, and I showed up, and I produced revenue. But the reason that I think I was a terrible employee was that I only wanted to work just 2 to 3 weeks a year. To me, a JOB means Just Over Broke and my time was not my own time, it was my boss’ time.

    When I first started in the real estate investing business I had to ask my wife to give me a chance to make this work. I had a severance package, so I had three months to move forward. When we cashed the first check of $8,000, I took $4,000 and took my wife to Paris, a place she always dreamed of going. That helped tremendously in my pursuit of this business.

    Now that I have established my business I take off one week for every six weeks of work. This gives me five to eight weeks of vacation per year depending on how my deals are going. I use this time to connect with my family, vacation, work on other projects, and just go out and enjoy life because isn’t that what it’s all about? If you’re working so hard that you’re not enjoying life then you need, in my opinion, to rethink your priorities.

    My 15-yr-old son Nick and I go to hockey games, football games and other things that a 15-year-old and his dad can do together. My 6 year old daughter Chloe and I go skiing in the Rocky Mountains of Colorado where we live and we do it 10-15 times a year. We go camping, take motor home trips, fly to Maui to go to the beach and much more. This is truly a life that I am designing.

    My belief is we should constantly have to better ourselves, to acquire new skills, to refuse to be bogged down with the feeling of failure, inadequacy, or that L word–loser. In my opinion, the losers of the world are those that never try. I would rather work with somebody who has tried 10 different businesses and failed than somebody who has worked 30 years successfully for one company and achieved moderate success.

    When are you finally a financial success? Only you can answer that question for yourself and your family but to me the answer is when you can totally financially support yourself without having to show up for work. When you can do whatever you want, whenever you want, with whomever you want, anywhere you want, anytime you want to do it, as much as you want to do it, then you have reached financial success. That is the time that passive income is really working for you and your dreams are becoming a reality.

    _________________________________________________

    Paul Wells has been investing in foreclosures full-time for more than 5 years. For more foreclosure investing secrets like the one in this article, subscribe to Paul’s Free Foreclosure Investing course here: http://www.FreeForeclosureInvesting.com

    [tags]foreclosure investing, real estate, real estate investing, bank foreclosures, forclosure, forecloser[/tags]

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    Nov 25

    My husband and I were eating breakfast at the Good Egg the other morning and couldn’t help but over hear a fellow talking to his elderly parents about their home. It was fairly obvious that his father had a hard time hearing and the louder he talked the more I was tuning in to what he was saying.

    “Dad, the real estate market in Arizona is going crazy right now!” He said.

    “Huh?” His father grunted

    “THE HOMES ARE SELLING IN A MATTER OF HOURS.” He said louder.

    “HOURS?” His father yelled almost in half a question, half disbelief.

    “Yes,” He continued, “What you need to do is look for the signs in your neighborhood with the same real estate agent’s name on them. These agents are the neighborhood specialists. They sell all the homes in the neighborhood and they know what is going on in that particular neighborhood. That is what you should do. That is how you find the best agents.”

    I nearly choked on my toast! I sort of heavy sighed and my ears were getting hot by this time. It was all I could do to compose myself. I continued listening, all the time in disagreement with much of what the well intentioned son said to his parents.

    My husband leaned over and said, “Yeah right. Just because someone gets a bunch of listings in a neighborhood makes them a specialist. That poor guy is giving his parents the worst advice I have ever heard!”

    “I know but it is probably what a lot of people think.” I said.

    “I think it is a hit and miss method of finding the best agent. Those attorneys that are ambulance chasers have their signs all over the TV and on bus benches, just because they have a sign out doesn’t mean they are a specialist! Those guys are snakesjust like some real estate agents! You know, you have seen it. One crummy agent gets a listing and the next thing you know bamthey are listing homes all over the neighborhood. Doesn’t mean they are gooda lot of them hang a sign and walk away. Anyone can call themselves a neighborhood specialist. What he is telling his father is ridiculous!” He sneered at me.

    I couldn’t believe this had hit a nerve with my quiet and well mannered husband. He was mad!

    “Why are you so upset by this?” I asked.

    “Its not a good way to select a professional. People should spend more time finding out what the agent does after the sale. I see you making deals happen. A lot of them would never close if you weren’t on the phone naggin lenders, title companies and other agents!” He nearly shouted at me.

    “Nag? I don’t nag!” I said as I smiled at him.

    “Well, you know what I mean.” He said in a calmer voice.

    He continued. “With the market the way it is, you know there are more agents going through real estate school now than ever before. Think about it. What if the agent can’t negotiate strongly or they don’t get the paperwork in and follow timelines? Not everyone is as obsessive / compulsive as you are! A lot of them are discount agents because they have nothing else to offer a client. The homeowner wants to save money and they think all agents are the same so they go with the discount agents. You know some of those agents are either not the sharpest tool in the shed or they are simply greedy and list a bunch of homes and have no marketing skills at all. Some of them lie and are crummy at life, how could they specialize in anything?” He snorted in disgust.

    “You are right, you don’t have to convince me.” I agreed. “But you know there are a lot of professionals out there too. I work with them every day. Our office is filled with them.” I repeated. “Filled with them.”

    “Yeah, yeah, but your office gives extensive training and you fully train the agents you bring in under your wing. I don’t see a lot of brokerages doing that. Most of them show you the phone and say good luck. That is why so many people fail in the first 6 months.” He said. “You know most companies aren’t like that at all. Most of the agents I have seen don’t have a clue.”

    “I know, I know. You are right. There ARE a lot of unprofessional agents that really don’t care how they treat their clients, they are just in it to collect a check. More people should shop around and find the right agent to sell their home. I agree with you so lighten up.” I said to him.

    Of course I slipped over discreetly and passed this fellow and his parents my business card and introduced myself.

    His mother quickly asked, “What neighborhoods do you work?”

    I just smiled and said, “A lot of different neighborhoods, all in the East Valley.”

    “Oh.” She responded coolly.

    After what her son had just told her, suspected they wouldn’t call. The unfortunate thing is they have about a 50/50 chance of getting someone skillful. And in my opinion, skill is only a small piece of the pie.
    I think it really takes five key ingredients to find a truly successful person in any industry, especially real estate because it is most people’s largest asset and they are paying you a lot of money to use great care and skill in selling their home.

    Skill is only the first key ingredient.

    Skill is completing all the necessary documents in a timely manner and providing the sellers with an education on the process of selling their home. Also, skill is very important in pricing a home correctly and marketing is huge. Getting maximum exposure is honestly what most of it is about. Are you wondering what the other four are?

    Number two is character. Character is a person’s internal compass that guides their decisions. It is a guide to treating people honestly, respectfully and fairly.

    Number three is philosophy. Philosophy is how deeply they ponder character, situations and people. Philosophy is sort of the purpose behind the character. How they see life in general I guess. My favorite philosophy is a simple one that most of us learned as a child. It is called the ant philosophy and defines the character qualities of work ethic, purpose and diligence.

    Number four would be attitude. Attitude is how they respond to people and situations. When something goes wrong, are they negative or do they have an attitude of getting things done without anger, procrastination, and pettiness. Do they know how to motivate others to work with them or do they tick people off wherever they go?

    Lastly, number five is goals. Goals are important because you have to have a plan in selling your home. How quickly do you need to sell? How much will you make on the sell of your home, what fees are you looking at? Without a goal or target, how do you know where to aim? Goals stem from both needs and wants. Strong goals push you toward results.

    To make the picture a little clearer in your mind, let me ask you, have you ever worked with someone that had a high level of skill, character, goals, and philosophy about their job, yet displayed a crummy, negative attitude? Or perhaps their attitude was good, yet they just didn’t have any direction or goals in life and you suspected they would never get very far in their career, let alone their life. Or worse still is maybe they had a great attitude, strong skills, strong philosophies, and they achieved their goals but they stole, lied and cheated to get what they wanted.

    When selecting an agent to help you with buying or selling a home, it is in your best interest to find someone that works on all five key ingredients that will make them a success, isn’t it? Of course it is! When they are truly a success in every sense of the definition, you will enjoy success too, right?

    Michelle Shelton lives in Gilbert, Arizona on horse property with her husband Paul and their five children. Michelle is an author, educator, recruiter and licensed Arizona REALTOR

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    Nov 08

    We all are thinking about it and some of us are actually taking action and getting their hands on real estate investment properties. The longer the NY Stock Exchanges doesn’t produce desirable returns the more people are starting with real estate investments.

    For most of us the obvious choice of properties are single family homes. Although you can invest in real estate without owning a home, most people follow the experience they made while purchasing their own home. This is familiar ground and the learning curve for doing a real estate deal of this type is pretty slim.

    Of course there’s a drawback with this approach. The competition is fierce and there are markets where investors are artificially driving up the cost of the properties while completely discouraging first time home buyers. If this is the case, the burst of the real estate bubble is just a matter of time.

    How do you avoid these situations and still successfully invest in real estate? How do you get ahead of the competition and be prepared for bad times in real estate investments as well? The only answer I have is commercial real estate.

    Why commercial real estate you might ask? Commercial real estate is a solid investment in good and bad times of the local real estate market. The commercial real estate I’m referring to are multi unit apartment buildings.

    Yes you will become a landlord and No you don’t have to do the work by yourself. You are the owner and not the manager of the apartment building. The cost of owning and managing the building is part of your expenses and will be covered by the rent income.

    Apartment buildings are considered commercial real estate if there are 5 or more units. To make the numbers work you should consider to either own multiple small apartment buildings or you should opt for bigger buildings. This will keep the expense to income ratio at a positive cash flow. Owning rental properties is all about positive cash flow.

    With investing in single family homes it is easy to achieve positive cash flow. Even if your rent income doesn’t cover your expenses 100%, the appreciation of the house will contribute to the positive cash flow. With commercial real estate the rules are different.

    While single family homes are appraised by the value of recent sales of similar homes in your neighborhood, commercial real estate doesn’t care about the value appreciation of other buildings. The value of the property is solely based on the rent income. To increase the value of a commercial real estate you need to find a way to increase the rent income. The formula on how this is calculated would be too much for this short article. I listed a few very helpful books where you can find all the details.

    What’s another advantage to invest in commercial real estate? Commercial real estate financing is completely different than financing a single family home. While financing a single family home you are at the mercy of lenders who want to make sure that you are in the position to pay for the house with your personal income. Commercial real estate financing is based in the properties ability to produce positive cash flow and to cover the financing cost.

    After reading all these information about commercial real estate you want to go out there and dive into the deals. Not so fast. First, you need to learn as much about real estate as possible. In commercial real estate you’re dealing with professionals. If you come across too much as a newbie you will waste these guys’s time and your commercial real estate career ended before it actually started. Second, no commercial real estate lender will lend you any money if you can’t show at least a little bit of real estate investment experience.

    What’s the solution to this? Go out there and do one or two single family home deals yourself. It doesn’t matter if you make huge profits to start off with. Most newbie investors are loosing money on their first deal anyway. If you can manage to show positive cash flow with your single family home deals you are ahead of the pack.

    My advice, buy a small single family home in a decent neighborhood and rent it immediately. This will keep your out of the pocket expenses at a minimum and you will have rent income to cover for your monthly expenses. Bonus, you gain experience as an investor and as a landlord.

    Here’s another observation I made during my real estate investment career. Most people like to analyze, learn, discuss and analyze some more. They never actually got to do a real estate deal. They love to talk about real estate investments, but never did it themselves.

    My approach to real estate investment was simple.

    - I bought some books about real estate investment.

    - I read every single one of them.

    - I put together a simple plan on how I want to get started.

    - I started looking for properties.

    - I bought my first investment property 30 days after I started reading my first book.

    - I made positive cash flow with all of my properties so far.

    What is my point? You have to go out there and practice what you’ve learned. The only valid credential in the real estate business is practical experience. Having a couple of deals under your belt, you can go out there and start looking at commercial real estate and even impress seasoned investors with your knowledge. Because you made this experience by yourself and you know what you’re talking about.

    Book reference for commercial real estate investments:

    Gary W. Eldred, PhD: “Make Money with Small Income Properties”

    Jack Cummings: “Real Estate Financing and Investment Manual”

    You will find these books and many more on my real estate investment website at http://www.suncoastrenttoown.com/author_directory.htm

    Sincerely,
    Peter Dobler

    Peter Dobler is a 20+ year veteran in the IT business. He is an active Real Estate Investor and a successful Internet business owner.
    Learn more about real estate investments at http://www.doblerproperties.com or send a blank email to mailto:suncoastrenttoown@getresponse.com

    [tags]real estate investment, commercial real estate, rental income, real estate[/tags]

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    Oct 24

    Money is the source of all evils - so goes the popular saying. Money is also what makes real estate spin around. So the critical question of the year becomes: where are real estate prices headed? Short of using a crystal ball, there are indeed a few considerations that can be made to have a general idea as to whether prices will continue to surge - at the average rate of 15 percent a year for the past four years - or, alternatively, if we are poised for a shift in the market.

    Record-low mortgages, pent-up demand and improving consumer confidence have made this the fourth consecutive best year for home and condo sales in the Greater Vancouver area. The sales-to-active listings ratio, defined as the number of sales at any given time relative and directly in function of the number of inventory listings available at the same time, is over 30 percent compared to about 20 percent in a balanced market. If we want to be even more technical, price increases have been rising at about 7 to 8 times the national inflation rate, a sure sign that demand has consistently exceeded supply which, in turn, has made real estate a Seller’s market for the most part of the past four years.

    And the consequence of this all, albeit you may not have directly noticed, is that Canadians are getting richer because of built-up equity. You bought a condo, for instance, in 2003 for CAD $150,000 using a $100,000 mortgage at 4.5 percent interest calculated semi-annually, not in advance. Your condo is worth, today, $195,000 in 2005 Dollars. Your loan has now diminished to an outstanding balance of approximately $97,770 so that, therefore, you have acquired a built-in equity of CAD $97,230. Since you initially invested CAD $50,000 of your own money, your return has been $47,230 in two years or a hefty 47.23 percent per year. Not too shabby. That sure beats the stock market.

    Will you be making another 47.23 percent at the end of 2006 ?
    You probably will, unless certain economic forces will conjure up against you. These forces - or variables as they are known in economics - are: energy cost, interest rates and affordability. Now, here there are a few clouds looming on the horizon that may make the future look somewhat different from the past.

    Energy costs are on the rise. And Hurricane Katrina and Hurricane Rita and the hurricanes that will come afterwards do not help. To be sure, energy prices were on the rise even before the hurricanes that have devastated the Gulf region came around. In fact, most economists still predict no overall long-lasting impact from Katrina. Yet, the same economists also predict that energy costs will not come down to pre-2004 levels. The rises are here to stay, and that applies to all motor vehicle fuels, natural gas, electricity. Everything that affects our capitalistic economies, and not solely in North America.

    Prices of consumer goods, henceforth, are on the rise as well because it is costing more to produce and to ship them all around. Each and every house component is bound to cost more as well. And the people that are in the process today of building your future dream home or your next real estate investment … they too will have to pay more to go to the work site. And, taken globally, a rise in manufacturing and shipping costs typically translates in an overall currency devaluation, a noble way to avoid mentioning the infamous i-word: inflation.

    Fed Chairman Alan Greenspan - Mr. Monetarist as some affectionately call him - has been saying this all along this past year. Except that nobody wanted to listen. Reality was much rosier than the somewhat gloomy outlook offered by the venerable Chairman. And the Fed has been keeping the steady course of raising interest rates, albeit not hurriedly or in a draconian fashion. And they continue to hold this course.

    Which, then, brings us to the third variable: affordability. Let’s take a look back at the initial example of you buying a condo in 2003 for $150,000 with $50,000 of your own money. Ask yourself this question: could you, today, buy the same condo for $195,000 with the same $50,000 downpayment ? If you are like the majority of real estate consumers, the answer is probably no. You would need a $145,000 mortgage today as opposed to the $100,000 mortgage you took in 2003. Which means you would have to show your lender that your gross income has increased of $15,000 per year - which probably has not. Bankers say they cannot lower their qualifications standards as they are working on the bare minimum (I still have to meet a banker dying of starvation, but …). Which, therefore, leads to the conclusion that you would not qualify today for the mortgage. Such being the case, you would no longer be what we in real estate call a ‘market participant’ . And if a lot of people are or will find themselves into the same situation, the end result will be a lower demand.

    So, therefore, what’s the verdict? Are prices going to continue to surge or are we heading for Apocalypse Now? Probably neither. But if the foregoing models hold true, it is reasonable to expect a slowdown in appreciation of property values - which in turn implies a correction in prices. Those of us who are involved into real estate on a professional level are beginning to see this already: asking prices are somewhat shifting down, although asking prices are not really reflective of market trends due to their very subjective nature. And it must also be noted that a shift downwards in asking prices is a far cry from the dreaded real estate bubble some people have been prognosticating all along. But it looks more and more that the market is due for an adjustment.

    Luigi Frascati is a Real Estate Agent based in Vancouver, British Columbia. He holds a Bachelor Degree in Economics and maintains a weblog entitled the Real Estate Chronicle at http://wwwrealestatechronicle.blogspot.com where you can find the full collection of his articles. Luigi is associated with the Sutton Group, the largest real estate organization in Canada, and is based with Sutton-Centre Realty in Burnaby, BC.

    [tags]real estate,real estate prices,economics,real estate bubble,investment,finance,[/tags]

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    Oct 22

    If you are presently a Tenant anywhere in North America, before you plan to remain a Tenant you should read this Article. There are several good reasons for ownership to prevail over tenancy and the real estate profession is littered with extremely clever pointers as to why Tenants should buy - and buy now. But quite aside from all the hype characteristic of real estate sales, there are five solid economic reasons for Tenants to purchase instead of renting. Here they are:

    CAPITAL APPRECIATION

    Real estate appreciates over time. This is due to a variety of factors, the most important of which is that bare land does not depreciate. The economic rationale behind this is that bare land cannot depreciate because free, available land diminishes as population increases. You may not notice this immediately if you live right in the middle of the Sahara desert, but in urban environments everywhere there is no question that land is scarce and, in turn, pricey. What depreciates in real estate is the structure, such as the walls, plumbing and electrical circuitry. This is normal functional depreciation due to the constant use - and subsequent wear and tear of the place. But functional depreciation almost never offsets land appreciation, with the end result that even if you mistreat your property you still end up building up equity.

    Capital appreciation applies just as well to single-family detached houses as to condominium units. The ‘land’ of a condominium unit is the strata lot, so that if you so happen to live - say - on the twenty-fourth floor of a highrise tower in downtown like I do, your condo unit still sits on a strata lot. And on the twenty-fourth floor your strata lot does appreciate while the structure of your condo is subject to functional depreciation.

    RENT MATCHES INFLATION

    Inflation, as it is widely known, is defined as the loss of purchasing power of money. Inflation is due to a variety of economic factors and political choices but no matter what our governments do - or fail to do - at any given time, it all boils down to increased borrowing and increased monetary supply and availability which, in turn, decreases the purchasing power of money. In layman’s terminology what this means is that it will cost tomorrow, for the sake of an example, ten cents more to buy a certain good in the economic basket than it does today. You still end up buying the same good, but you pay more for it.

    These days inflation is not a problem in North America - at least not the way it used to be. But every year our currencies still lose value, albeit minimally: two percent in the United States and almost three percent in Canada on the respective currencies as of last year’s count. Rent typically increase at the rate of inflation, so that a tenant in Vancouver that was paying - say - CAD $1,000 per month in 2005 can expect to pay CAD $1,030 approximately in 2006. Rent paid is, in essence, the cost of just another service this time offered by a Landlord , and once the rent money is into the Landlord’s pockets it can never be recovered.

    MORTGAGE CAPITAL AND INTEREST PAYMENTS

    Naturally when you go buy a house and contract out a mortgage with a lender, you will have to pay interest because you are using someone else’s money. But every time you make your monthly mortgage payment you also pay back some of this money. This builds up your equity which then grows over time. Equity growth is typically more evident in the United States where mortgages are amortized in a straight line over the term of the loan. In Canada lenders are more complicated and apply a process known in the business as compound interest, i.e. interest on the interest. Still at about halfway through over a typical 25-year amortization span, in Canada too principal repayment takes over interest payment, so that equity growth builds up faster.

    CAPITAL GAINS

    Capital gains are not to be confused with capital appreciation, although they are a consequence of it. Simply put, there is a realized capital gain when the amount of money you sell your property for minus the price you paid for it is positive. The real estate market may fluctuate, but it is a matter of fact that house prices increase over time. Economic capital gains are adjusted for inflation and expressed in Dollar/Year. For instance, here in Vancouver a single-family detached home that sold in 1975 for CAD $57,000 in 1975 Dollars may very well sell today for CAD $525,000 in 2005 Dollars.

    On a cursory count, CAD $57,000 in 1975 are equivalent to approximately CAD $80,000 in 2005, so that your economic capital gains from the time you bought the house in 1975 to the time you sell it in 2005 are the difference between CAD $525,000 and CAD $80,000 expressed in 2005 Dollars, or a whopping $445,000. You can easily determine from this example how much real estate has appreciated over time in my hometown, with the appreciation already adjusted for inflation.

    PRIVACY AND CONTROL

    In a Tenancy Agreement you are entitled to privacy typically for the period you pay rent for, subject to the Landlord’s rights. These rights include the Landlord’s right to inspect the tenanted premises on reasonable notice, the Landlord’s right to sell the tenanted premises, the Landlord’s right to repair and ameliorate and so forth. In essence, just because you pay rent that does not make you the owner. The rent simply guarantees your exclusive use of the premises for a certain period of time, again subject to the Landlord’s rights.

    Likewise, in most cases you as the Tenant have no control over items such as remodeling, repainting and redecorating. It is true that in most jurisdictions Landlords have a duty to rent premises reasonably fit for human habitation, but then it is also true that many Landlords do not go one inch over and above the minimum threshold required by law. But from an economist point of view, if you spend money you should be entitled to reap the rewards - something you entirely miss out in a tenancy situation.

    Too many tenants and renters think that owning a property is a farfetched goal. Yet, now more than ever it is the best time for them to take the plunge and buy real estate. Mortgage rates are still historically low and the buying process is easier than ever.

    Are you missing out, if you rent? You bet.

    Luigi Frascati is a Real Estate Agent based in Vancouver, British Columbia. He holds a Bachelor Degree in Economics and maintains a weblog entitled the Real Estate Chronicle at http://wwwrealestatechronicle.blogspot.com where you can find the full collection of his articles. Luigi is associated with the Sutton Group, the largest real estate organization in Canada, and is based with Sutton-Centre Realty in Burnaby, BC.

    Luigi is very proud to be an EzineArticles Platinum Expert Author. Your rating at the footer of this Article is very much appreciated. Thank you.

    [tags]real estate chronicle,real estate,economics,finance,tenancy[/tags]

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    Oct 05

    With the United States real estate market growing faster then ever before in history everyone seems to be asking “Where are the preconstruction real estate hot spots?”. Now I could just tell you the best places to invest in real estate are Orlando, Las Vegas, and Miami but that doesn’t make an exciting article. The truth is it depends what kind of investor are you. Ask yourself:

    * Are you the kind of investor that is willing to take a bigger risk for a chance of bigger profits?

    * Are you the kind of investor that focuses on rental income over flipping houses?

    * Are you the kind of investor that prefers to visit the property on vacation or are you never going to see the property?

    If you’re the kind of investor that is looking for preconstruction investment real estate that you will be sure to sell at a whim’s notice AND bring you high rental income then perhaps you should look in Miami. Miami has long been a upper class vacation hot spot with it’s gorgeous beaches, exciting nightlife, 5 star restaurants and hotels, and interesting mix of cultures. Although out of Las Vegas, Orlando, and Miami - Miami has been growing the longest which means prices have risen greatly over the last few years, but as long as you have preconstruction in mind this is still a great investment. Those of you that know Miami know that it’s a seller’s market to say the least. Desirable properties usually only stay on the market for a few days and the price just keeps going higher and higher. For many Miami residents, the chances of owning a upscale property in Miami is slim to none simply because of the high price tag. This is the very reason why preconstruction investment properties are doing so well there.

    Imagine you’re looking at two identical properties, one is three years old and one is just starting to be built. The one that has been around for three years has an overwhelming amount of amenities (gourmet restaurants, spas, high end retail shops, etc) while the new development doesn’t have any amenities yet. Because of this the price on the new condo (The preconstruction development) is significantly lower and thus more affordable for the investor. Now after this condo development is completed amenities will stop popping up around it and it will then be worth as much as the original condo that has been around for three years.

    Some people say that the real estate bubble in Miami is going to pop soon but the fact is it just makes preconstruction real estate even more valuable. When real estate hits such a high mark like Miami has it makes every investor desperate for preconstruction. Why? Because they know the real estate will sell because it’s in such high demand AND they know because they’re buying it in the preconstruction phase that they will be getting it at well below market value.

    Bottom line is finding preconstruction investment developments in Miami is tough right now but they are out there. These projects are not advertised but if you do your due diligence you should be able to find them. If you have trouble finding them contact your local brokerage and be sure to ask for “Preconstruction” or “Investment” real estate.

    For further information visit www.investrealestate101.com
    Goldberg Executive Realty Group>
    Mark Goldberg>
    Phone: 1-866-247-2259>
    E-mail: GoldbergRealtyGroup@cfl.rr.com>

    http://www.investrealestate101.com

    [tags]investment, real estate, miami, florida, investing, preconstruction, buying[/tags]

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    Sep 18

    Contractors are a reason that a lot of people are afraid to get into real estate investing. They hear horror stories from other investors or homeowners who got screwed by contractors and are shell shocked into believing that the only thing that is safe to do is to Wholesale or Lease Option.

    To those who are afraid of the big bad contractor, beware of the investor who cries “wolf” because no matter what form of real estate investing you do, sooner or later you will need to hire a contractor.

    Whether your doing full blown rehabs, subject to, agreement for deeds, buying apartment buildings, lease option or even wholesaling, you are going to need to use a contractor and you want to know a secret? They’re not that hard to work with.

    Actually if you follow some very simple rules you will substantially decree the risk of getting screwed by any contractor.

    Those you have been mistreated and had a contractor walk off the job with thier money and not return or had a contractor who would rarely show up, never trained themselves properly to work with these tradesmen.

    Now don’t get me wrong. I say tradesmen because those are the only type of contractors that I have work for me. There are many people out there who claim to be tradesmen but are nothing more than thieves in the night.

    The first rule or working with contractors is to ask for and check his/her references. Too many people skip this step because they are in hurry to get someone, anyone on the job so that they can get finished. This is their number one priority.

    They soon find out that this is not the contractors number one priority, especially since they already got a good chunk of money up front.

    Even if you check thier references and your “gut” tells you that this may not be the person for your job, listen to your gut. Your going to have to be married to this person until the job is finished. Make sure it’s a marriage made in heaven.

    You must then have the contractor sign a Contractor Agreement. You must have a binding contract that spells out the rules that both you and the contractor will follow as the job progesses towards completion.

    If you do not have a Contractors Agreement signed, you have just set yourself up for failure.

    Here are the key clauses and addendums that you need in your contract:

    1) Scope Of Work - make sure all of your contractors bid on the same job. A lot of contractors omit items from thier bid so that they can charge you “overages” later.
    Be as specific as possible when describing the scope of work. For example, if it is a roof that is being replaced, make sure the contract specifies the type of shingle, the style, the manufacturer of the shingle you want to use, how it will be fastened down… the more specific you get, the more protection you will have.

    2) Draw Schedule - Never give a contractor 50% up front! You drastically increase your chances of never seeing him again. I give enough to cover the supplies and to pay his guys for one week, then I split the rest up into thirds.

    3) Change Order - Be clear with your contractor that if any additional work is done on the property, if he doesn’t fill out your Change Order and have you both sign it, (I will only sign it after I have inspected the proposed additional work) you will not pay for the work.

    This is a common tactic with less scrupulous contractors.

    4) Penalty Clause - I have a penalty clause in my contracts that charges a contractor a certain amount per day for each day he is over the date that he said he would be done. The amount is usually $100 but it depends on the job size. This clause is a must!

    5) Damage Clause - This states that the contractor will pay for any damage that he or his workers do to any other part of the property when they are on site. Contractors are always damaging other contractors work. Why should you have to pay? You save money with this clause over and over again.

    6) Contractors Home Address And Phone Number - If he knows that you know where he lives, the chances of him disappearing go down drastically.

    7) Clean Up Clause - You want your job site broom swept clean at the end of every day. You never know when a potential buyer will be coming through and if you don’t keep the place clean it will quickly look like a dump. Nothing attract trash like trash!

    If you treat your business like the business it is, you will be treated like a businessman from your contractors.

    Contractors are not hard to deal with if dealt with properly. Consider yourself informed.

    There is a lot, A LOT of money to be made in real estate investing. Go out and get your share!

    David Lindahl has renovated over 475 houses in 6 1/2 years and is the author of “How To Estimate And Renovate Houses For Huge Profits“.

    [tags]david lindahl,real estate investing,fixers,rehabbing,contractors[/tags]

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