Three Tips For A Safer Property Investment Opportunity

Real estate is a gamble. Yes, there’s plenty of money to be made in it, even with the current downward financial trends, but a property investment opportunity isn’t an automatic way to get a good return on your money.

are plenty of websites that will show you “how easy it is” and offer you a number of “get rich quick” opportunities into which to sink your capital, but think about it, if it were that easy, wouldn’t there be more people doing it? Wouldn’t there be less middle people trying to hook up investors with deals? Of course there would, and that’s why I’m here to get you to stop making an irrational decision to jump on the first property investment opportunity that comes your way!

Before you even start thinking about putting your capital into a real estate project, you must have a well thought out strategy about what you hope to get out of the deal. For example do you want to buy to flip, resell as fast as you can for a higher price? Or are you more inclined to put your money into property you can let for an additional income? Speak to experienced property investors and learn from what their experience. Read everything you can about the current property market, and keep your knowledge base up-to-date.

Hire professionals who know what you don’t. Even learning all there is to know about the current state of the property market around the world, you will find that paying for a professional property legal expert will ensure that you don’t lose out in terms of property tax issues. They will also ensure that you have all the relevant paperwork completed for both buying and selling when you are involved with a property investment opportunity.

Your regular solicitor may well know something on property law, but I advise you to get someone who specializes in property law to handle your investment transactions as they will be much more familiar with the industry and any scams that are making the rounds. Try to find someone who is recommended by at least two other real estate investors, or ask for letters of recommendation from anyone you think might be suitable.

Watch out for property auctions. These are a great way of getting a good bargain, and can give you a good return on your money, but only if you know what you’re doing. The problem with auctions is more likely to be you, than the property! The property ought to be as listed, but you first of all need to do your homework and assess how much the property is worth and how high a ROI you can expect from it.

However, in the electrified atmosphere of an auction room, it’s easy to increase any carefully calculated bid maximum that you’ve set yourself. If you’re going to find a property investment opportunity via the auction route, remove the possibility of lowering your return by getting someone else to attend the auction and bid on your behalf!

There are many other things you can to maximize your profit margins on any property investment opportunity, but following these 3 simple tips above will get you started on the road to what should be a good return on your capital.

Flipping Real Estate, Not Quite "nothing Down"

The present scenario of blistering real estate prices has made “flipping” the hottest rage. It basically involves buying an under priced property, refurbishing it and then selling it at market value to make a tidy profit. In places where property prices plummeted, flipping has been a major flop. However, it can still be a worthwhile option, provided you learn to identify the pitfalls. Otherwise, as someone famously proclaimed “It might not be as lucrative as you thought”. Flipping can be seen as the latest fad in the “nothing-down” movement. Nothing down movement basically means to get into a deal without any sort of initial investment. Of late, it has sort of developed into a tool to overcome objection. When real estate gurus are trying to sell information, they encounter the frequent “but I don’t have any money” response which they need to conquer if they are to make a sale. The bitter truth is that real estate investors generally do not use any “nothing down” techniques.

Not quite “nothing down”: The reality of flip business is quite the contrary to what you may have believed, flipping is all about cash. One cannot expect to get a mortgage as the business costs would be extremely high, considering the fact that you will own the property for a couple of days. Also, it's not possible that you make use of the buyer’s cash because you really don’t have a buyer until and unless you have closed the deal. The amount will usually be far greater than a wannabe could obtain and could mount to hundreds of dollars. Real flippers tend to lose money or earn little profit on certain deals, but its okay since they make it up, by gaining exceptional profits on other deals. However, a wannabe is actually trying to make a profit on every deal he/she makes because they only have that one deal at that time. Unfortunately, the flipping business does not allow itself to be prone to outcomes that are predictable.

Risks involved: A lot of real estate investment techniques tend to suspiciously sound like “brokerage”, sadly flipping is one of them. To do a brokerage deal, you are required to possess a broker’s license or be a salesman with a license, who is affiliated to a licensed broker. Normal regular people, think that they can get around the system by not calling themselves brokers. The law has however enlisted a doctrine called “substance over form” which means it’s not what you call yourself that matters, but what you do. If you do look like broker, you’ll be asked to produce the license and hold you to the standards of behavior of brokers, which is notably a fiduciary duty.

Flipping looks dangerously similar to getting a seller and buyer together just for the sake of commission. This activity in simple words can be termed as brokerage. The practice of flipping has reached hysterical propositions with popular real estate markets like South Florida, witnessing flipping contracts on condos even before they are built. Certain states like New Jersey prohibit “net listing”. It’s a practice in which the seller says “just get me certain amount of dollars and the rest you can keep whatever the amount higher than that”. Net listings came to be ethically questionable as brokers tend to recommend less than the market price to increase his take, again flipping notoriously resembles net listing.

The Many Different Home Improvement Retailers

It seems that every day, there are more home improvement retailers popping up around the corner. Okay, maybe not everyday but it does surely feel that way as more in likely, where ever it is that you are, within at least a thirty or forty minute drive, you will find yourself at one of the many home improvement retailers that are advertising themselves all over the television and Internet. And for many people, this has never been a thought that crossed their mind, as it seems natural now to find these large chains everywhere.

Many people actually do see a lot of benefit in having some of the world’s largest home improvement retailers right in their back yard, or so to speak. For the many homeowners that are trying their hand at self home improvement, having these large home improvement retailers right around the corner is a blessing.

They are constantly having to run and buy new supplies or building materials for their home. For homes that seem to always have something going wrong, it is very convenient to have a few home improvement retailers right in town as it saves them a lot of time and energy then having to drive to several smaller stores which have limited supplies compared to the large chains.

Who They Hurt

But as with anything that is new, bigger, and better, there seems to always be someone or some business left behind in the dusk. It has been said by many that the large home improvement retailers have put so many small town mom and pop type shops out of business.

These businesses that have sometimes been around for generations are suddenly being wiped out and that company and family have lost their income. But other argue that while the bigger home improvement retailers are putting little stores out of business, the jobs that are gained from that store opening is worth it for the community.

Still, even with the increase in jobs for the area that the home improvement retailers provide, there is a sense of customer focus that is lost. The idea is that the smaller stores are more personal and can give better attention to each individual customer. But, in a world where everyone is on the go and has no time to waste, we may be looking at a new way of shopping where the customer doesn’t want that one on one attention and would rather trade that comfort for the convenience of the home improvement retailers.

How to Profit on a Softening Real Estate Market

Interest rates are rising, home values are declining, and the areas hit hardest by the softening real estate market are the same as those that profited the most from the previous years’ housing boom. The Florida real estate market epitomizes this shift in trends, showcasing a change far more dramatic than in other areas of the nation. Just recently a prime spot to sell property for profit, South Florida is becoming a buyer’s market as supply has outnumbered demand.Property flippers will be hurt the most as their short-term investment properties will decline in value during their previously intended holding time. But experts predict that other real estate buyers will not face such dire consequences.

Although the market has softened, real estate experts still see the potential for successful investment. Sellers can still make significant money when selling property, but now the standards are higher. Since there is an abundance of available property, competition is lower, and buyers can take their time when making a decision on where to invest. They will inspect homes more thoroughly and take more time to carefully weigh their options to ensure that they spend their money wisely in a market where they cannot just get rid of an unsatisfactory property.

Experts also see a bright side to the cooling real estate market. Since investing in the decelerating market is a more risky process than investing in a rapidly appreciating market, fewer amateurs will feel confident enough to invest in real estate, filtering out the market to be predominantly filled by professionals. With fewer investors, housing prices will increase at a lower rate, making housing affordable once again. Leaving the market dominated by real estate investment professionals creates an upward trend that can benefit buyers and sellers alike and encourage more amateurs to become educated about real estate investing—not just capitalizing on an economic fad—and make smarter investments that can benefit the entire market.

Also, even though the investment market is down, there is no indication that interest in South Florida in general is decreasing. Lower investment returns do not dissuade people from relocating to Florida. Neither the climate—ever so popular with northern-dwelling retirees—or the beaches will be affected by a softening real estate market. And multi-billion dollar attractions like Disney World and Universal Studios will lose their tourist appeal because of a lull in home sales. As Florida’s climate and atmosphere has been prescribed as a cure for medical maladies, there is definitely room for the real estate market to recover.

Commercial Real Estate

How to Ask Your Discovery Questions

In order to make a successful commercial real estate investment you need to know the right questions to ask and the right way to ask them. Since purchasing commercial real estate is a negotiation between the buyer and the seller (and probably their prospective brokers), it is important that you, as the buyer, are prepared. Asking the right questions could help you avoid owning an underperforming asset.

Remember, both parties are trying their best to get what they want, but their goals are diametrically opposed. The seller is trying his or her best to get the highest possible price, while the buyer is trying just as hard to get the property for the least possible amount of money. There’s an old saying in the business: “All sellers are liars, all buyers are thieves.” While I don’t believe in either scenario as a way to do business, those commercial real estate investors who are able to create a win-win transaction will enjoy huge advantages over their more combative competition. And the key to doing that is in your questioning technique.

Finding and creating these win-win deals isn’t easy, but making them happen is the basis of successful real estate investment. In many ways, finding the best deals boils down to knowing which questions to ask and is one of the most important of all real estate “secrets.”

The key is to ask plenty of open ended questions of either the seller or his agent and to not accept a simple “yes” or “no” answer. If you ask an open ended question and get a yes/no answer, your immediate reaction should be to follow up with additional open ended questions! Obviously, if you keep getting yes/no’s to your questions, it may be time to find a more cooperative and serious seller.

Some of the leading questions smart real estate investors use include:

• What can you tell me about this piece of property?
• What makes this particular property a good investment?
• What is it like dealing with the city?
• Tell me about your tenants … neighbors … city, etc.
• What can you do to help me get into this property?
• What financing are you willing to carry?
• What are your neighbors like? Or “how easy are the adjacent property owners to
• eal with?
• How quickly do you need to close? Why?
• Why are you selling the property … now?
• What is the existing financing? How can it be assumed?
• What are the down payment requirements?

While the straightforward approach and strategy generally works the best, many successful real estate investors have also found success at using the “Columbo Technique.” For those of you too young to remember, Columbo was a dumpy-looking fictional detective who always seemed a couple of cents short of a dollar. However, he had this process where he’d get up to leave after seeming to conclude his suspect interviews and would say something like: “Oh, Mr. Jones, one more thing …” And that question would usually catch the perpetrator off guard. I suggest trying it during your discovery process. It can be very enlightening!

You’ll need to develop your own list of questions as you do more transactions and I suggest even rehearsing them or incorporating them into some form of due diligence checklist. The bottom line is that the better you question, the better your deals will be.