Posts Tagged ‘Real Estate Investment’
Real Estate Investment Groups are once again appearing to outstrip every other investment vehicles.
Attending a number of investment expos and seminars have brought to attention this one group that appears to even surpass the Private Banking Investments (those new Private Banking Players).
These groups are not necessarily REITs (Trusts) but certainly, they are marketing and promoting extremely hard. Mostly developed with Private Investment Funds they in a sense operate like country banks.
The UK has become a very popular target for these companies after property prices have taken a severe tumble there. Of course investment in the USA is also a common one now, but foreign investors may have to beware of some very punitive real estate withholding or imputed property taxes there.
This time, I won’t be mentioning these groups’ names but they do have a common M.O. or modus operandi.
Typical M.O. of these Real Estate Investment Groups
1) a grouped fund is operated as a financier to guarantee the purchase of the entire property or project at very low prices (some not so low).
2) They retail pieces of “real estate investments” to private investors, only using their good credit, not cash…
* yeah right – once you hold title to the property your rear end on the line for it and remember there is an opportunity cost…
3) Management and rental is not your problem, and you are obligated to resell the property back to the bank rolling company after X number of months or years.
Caution to any Investors
1) My immediate assesment of such an M.O. is that your credit is being used for a possible profit, “guaranteed” or not.
2) You are at open risk to the property, not the funding company.
3) However, the upside potential is being curbed when you are obligated to resell the holding back to the funding comapy.
4) The funding company and other invovled party is essentially using your credit to fund their project/s and gaining the lion’s share of the proceeds as a result at largely your personal credit.
5) Remember, even though it is their “cash” you are using for “no money down” it your risk – everything you use as credit is at risk.
6) My assessment is that this is a high risk enterprise if you go into it for your wealth building enterprise.
7) Should you wish to proceed – do the math; do your due diligence; ask many hard questions and ask this question “Can I trust them?”
Technorati Tags: Real Estate Investment
Tags: Real Estate Investment
Posted in Informal Banks, Real Estate Investment | No Comments »
This is a time when the top real estate experts tell you to go buy that bargain real estate. But do they ever tell you to spot that real estate disaster? It’s after all a very deep recession, there will be many properties that are in a state of disrepair or are simply financial traps. Here’s a list of my 7 favourite ways to spot a disaster before you dive headlong into a trap.
1) A large tree growing just outside the house and the basement is wet.
Very likely the basement has been damaged by the trees roots. The sewer is probably backed up and the basement floor may be cracked too. Even the basement wall may be damaged along with the water proofing. Remember, the size of the roots around the house will match or exceed the size of the tree above the ground (Willows are even worse as the roots may extend twice the size of the tree). Simply avoid this house – the repairs can be extensive and definitely expensive.
2) Check for liens on the house.
This is usually of a financial nature where there are unpaid depts. For repairs or loans or unpaid taxes on the property, etc. These will add to the costs of the house after you buy it. But your closing lawyer will have found this for you. Besides, special liability insurance may cover such oversights. However, if the liens are way too complicated and large, pass on the house. It’s the complications that will cost you endless headaches and money. Always buy property that’s 100% clear on finalized purchase.
3) A flooded house in a flood prone area.
This is bad. A flooded house will already be in bad shape. The add to it the prospect of getting flooded again…
4) A badly debilitated heritage house.
These are never bargains. The planning permissions are endless. And everything you do seem to cost 3 or 4 times as much. Enough said.
5) Buy more than you can reasonably afford.
You have a hard time making payments. There are people caught up paying 2 mortgages for whatever reason – buying a second house or getting caught buying a new house while not being able to sell the one they’re living in. You could lose a lot of equity or everything.
6) Roof sagging down with water stains in the house.
A huge repair bill. The house will likely be gutted before rebuilding.
7) Unheated for years.
It may look great – but there will be mould damage, rot, and what not. Invest in a really good real estate inspector if you must try for it.
8) Buying with your heart.
Bad mistake. You’re leaving out your head too. People often use only emotion to buy anything. So you fall in love with the property, but do a thorough price comparison, financing options, and a good inspection before you follow your heart.
So okay, I gave you a bonus #8. But I had to…
Technorati Tags: Real Estate Disaster, Real Estate Investment
Tags: Real Estate Disaster, Real Estate Investment
Posted in Financial Freedom, Making Money, Real Estate Disaster | 1 Comment »
Suddenly real estate investment got onto the radar of investors wanting to put money somewhere; anywhere but the stock market. Tons of e-mails got everyone busy and most investments were about the state of real estate.
Number of Homes For Sale Have Fallen Far More Than The Prices.
Watching the GTA (the Greater Toronto Area) real estate right now, I do not see the great investor panic prevalent just recently in the US. Instead, home owners have simply put off selling their homes and not upgrade to larger houses.
Similarly, investors have decided to hold off disposing of their properties if they need not. So reports about falling home prices did not keep pace with the falling numbers of homes sold in recent months. Even the latest real estate prices for the month of October did not reflect panic selling but indicated a lower selling average price across the GTA.
That said, the Provincial and Federal Governments in Canada have been making the right noises about easing lending rates and liquidity. There is no general panic; but there is belt tightening, evidenced by the stricter lending practices. Although an end to this recession is still not evident, governments all over the world are very definitely preventing a total melt down of the global financial services. That augers well. And I am for one, hanging in there and not panicking.
In fact, I see opportunity.
Then, there is the plethora of real estate Gurus and pundits offering up their services to invest in commercial real estate. Well, let me qualify that. They are promoting their know how into investing in real estate with rentals and rental potential.
It does make a calculated financial sense to have stable businesses or renters paying your mortgage and maintaining that real estate investment. But due diligence is the order of the day, no less. Also, be very careful of your borrowing terms. Invest in the services of a really highly respected real estate lawyer specializing in such commercial and rental properties. They’ll save you a bundle by avoiding the money pits and traps.
Then there are the sitting on the fence buyers and sellers.
I can only advise doing the math to match your needs; financial, physical or emotional. Do what makes the most sense. Right now, it is the higher prices and larger properties that are experiencing the greatest price derease and slower market.
What surprised me were the number of real estate agents that were e-mailing requesting my take on the situation – and I thought they were the experts there! But verily, this recession has everyone spooked. My reply to them has been to actually seek opportunity right now. Look for new ways to make money or promote your services. holding back right now is one of the worst things you can do during a slow down.
The winners will be those that take the plunge and go right ahead and promote their real estate business; take calculated risks. Those holding back will be akin to commiting business suicide.
This is the time when fortunes are won or lost.
Technorati Tags: Commercial Real Estate, Greater Toronto Area Real Estate, Promote Their Real Estate Business, Real Estate Investment, State Of Real Estate
Tags: Commercial Real Estate, Greater Toronto Area Real Estate, Promote Their Real Estate Business, Real Estate Investment, State Of Real Estate
Posted in Financial Freedom, Real Estate Investment | No Comments »
