Real Estate Valuation
Real estate valuation for single family homes is typically done by using comparable sales. With income properties this just doesn't work well. Imagine if you are looking at a 24-unit building. It would be difficult to find similar ones nearby that have recently sold.
It's also not ideal to use replacement costs for income property appraisal. How do you figure replacement cost if there is no land for sale nearby with proper zoning? This is used as a secondary method, though, and can tell you if maybe you should be building instead of buying.
Real Estate Valuation By Cap Rate
Income properties are bought for the income. Income, then, is what is used to determine value. The rate of return investors in a given area expect gives you the capitalization rate, or "cap rate" for the area. This is what you use to accurately appraise an income property. Below is a somewhat simplified explanation.
The process begins with the gross income of a property. You then subtract all expenses, but not loan payments. For example, if a building's gross income is $82,000 per year, and the expenses $30,000, you have a net (before debt-service) of $52,000. You then apply the capitalization rate to this figure.
Suppose the acceptable cap rate in the area is .10, for example (ask a real estate agent), meaning investors expect a return of 10% on the value of the property. You simply divide the income of $52,000 by .10. $520,000, then, is the indicated value of the building. Suppose the usual rate is .08, meaning investors in the area expect an 8% return. Then the value would be $650,000.
Easy Real Estate Valuation?
Take net income before debt-service, and divide by the "cap rate:" It's a simple formula. However, the tough part is getting accurate income figures. Did the seller show you ALL the normal expenses? Did he and exagerate the income? Suppose he stopped repairs for a year, and also showed you the "projected" rents. In that case, the income figure could be $15,000 too high. The building would be worth $187,000 less (.08 cap rate) than your appraisal shows.
One thing smart investors do when buying, is to separate out income from vending machines and laundry machines. If these provided $6,000 of the income, that income would add $75,000 to the appraised value (.08 cap rate). Instead, do the appraisal without this income included, then add back the replacement cost of the machines (probably much less than $75,000) to arrive at a valuation.
Of course, you should be careful with any real estate appraisal method. There is no perfect appraisal method, and all are only as good as the figures you plug into them. If used wisely, though, appraisal by capitalization rates is one of the most accurate methods of real estate valuation.
Saving Money Through Investing In Real Estate
The much-hyped concept these days, which is making its rounds in global economic platforms, is how to save money through investing in real estate. Investors all across the globe are trying to come up with innovative ways and means on how to make money fast. Many authors have also penned several books on how to grow money through investing in real estate charting out innovative approaches. Unlike other investment tools, real estate investment gives you the freedom to make or save money easily.
Recent media reports revealed that most senior citizens are now heavily relying on long-term investment plans in order to ensure a safe and hassle free retired life. If you want to create wealth then buying and holding is the best option for you. Saving money through investment requires a proper assessment of market scenario and subsequent risk management. But, with clever moves and right investment tactics you can really augment your income at a much faster rate than by simply saving money. Media reports focusing on business tactics worldwide are unanimous on this issue. Most first-time investors fail to understand how to use credit as a money-augmenting tool in an investment. So the investing tips outlined below may come handy in case you are contemplating with the idea of saving money by making investments.
-Lowering your tax bills - Investments on real estate allow various tax-breaks and thus lower your tax bills. It has become a popular mode of saving money these days.
-Smart asset management - Managing your asset properly also goes a long way in saving money and creating wealth. It means that if you take care of your property in time, it will save you from spending extra amount when the condition of your house gets totally out of control. It is more like a stitch in time saves nine. Another factor that adds to your bank balance is the market value of your property being sustained at a profitable rate by managing it well in advance.
-Increasing cash flow through augmenting monthly rental - Another easy and popular way of creating wealth is to increase your monthly rental for your rented out properties, which could result in producing hundreds of dollars every year.
To avoid making bad investment plans you should always read the term of an existing deed. You should also try and learn from other peoples' mistakes. You can go through the directory of real estate investing club and association listings to make proper decisions. Investing in real estate in order to make and save money is no more a fantasy for you. Media reports focusing on financial institutions offering investment advisory services in global markets hit the headlines recently and they are also being embraced worldwide.
In simple words, saving is all about managing your wealth rather than wondering where it went. So, next time when you think of saving money ponder over the options of investing money in different ways outlined above and grow richer.
Real Estate Terms From Appraisals To Comps
When you're selling your home or other real property on your own, you don't have to know everything about the process. It does help to have a practical knowledge of the terms that come up during the process.
Keep in mind, these aren't intended as "be all, end all, penultimate" definitions. They're working definitions for pragmatic folks. Let's go...
1) Acceptance - A legal term referring to the acceptance of a buyer's offer by the seller. Acceptance is often preceded by a number of counter offers between the parties.
2) Appraisal - a professional opinion of the value of real property. Most jurisdictions have careful rules defining who may call themselves an appraiser, and most lenders have a "stable" of approved appraisers whom they use regularly. Typically, the lender making the new mortgage loan will require that the property appraise for at least as much as the purchase price. Occasionally, a buyer will require the same thing in an all cash transaction.
3) Bridge Loan - Short term loans used to "bridge" any time gap between the sale of a home and purchase of the next one. These loans can be valuable when escrow is delayed on the sale of a home and the seller has committed to the purchase of another home. Bridge loans are also known as "panic loans", but can be a life saver.
4) Coinciding Settlements - when a buyer needs the funds from the sale of his prior home (which is under contract to be sold) in order to purchase his next home, he may well make settlement under his sale a contingency for settling on the home he is purchasing. In reality, the sales don't usually coincide. They usually take place back to back. Funds from the first are often wire transferred to the second.
5) Closing - Depending upon the state you live in, Closing can have different meanings. Generally, the closing of a real estate transaction refers to the exchange of necessary documents, execution of the same and transfer of money.
6) Comps - This term refers to the sales prices of similar properties in the area of a house in question. Comps are used to help determine the fair market value of a property.
7) Conditions - any conditions which must be met before the sale can be consummated. Some typical conditions include things like the property's appraising for the purchase price or more, the property's being in good condition when a home inspection is done, the buyer's loan being approved.
As you can image, there are many real estate terms for which you have a general understanding. In our next article, we continue with the terms starting with "Condominium."
Lancaster Cebu Takes Advantage Of Philippine Real Estate Boom
Cebu is located 365 miles south of Manila and can be reached in an hour through air travel, it is in the east of Negros Oriental, southwest of Leyte and northwest of Bohol. Strategically located at the heart of the Visayas, it serves as the jump-off points to satellite destinations in the Visayas-Leyte, Samar, Dumaguete and Siquijor and Mindanao islands - Cagayan de Oro, Camiguin and Surigao del Norte. It is positioned as a resort and convention destination.
Beth Collingz, International Marketing Director of PLC Global, the lead marketing partners for Pacific Concord Properties Inc's Lancaster Brand of Condotels in the Philippines said Cebu has a proven capability and economic track record. It is the second largest city and undoubtedly the fastest growing economy in the country. It leads in exports of item such as furniture, fashion accessories, carrageenan, electronic products, etc.
Because of its deep-water harbor, Cebu is the base of the country's domestic shipping. 80% of the country's major shipping companies are based in Cebu. Likewise, with the Mactan Cebu International Airport, Cebu is an accessible gateway to southern Philippines. It allows easy movement of domestic and international travelers and trading connections. Presently, direct flights are available for destinations such as Singapore, Narita, Seoul, Hong Kong, Kota Kinabalu and Qatar. Chartered flights are also available for Incheon, Kansai, Kaoshiung, Taipei and Nagoya.
Taking advantage of the Real Estate Boom, Collingz said Pacific Concord Properties Inc is expanding its Operations for the Lancaster Brand of Condotels in the Philippines and has acquired by purchase an additional 27 units in its Lancaster Cebu Resort Residences adding another 75M pesos to its project inventory and expansion program. This brings the number of properties held in the development to 75 suites with another 120 units to be added before year end for Condo Hotel rental operations.
Property is all about LOCATION said Collingz. Mactan, Cebu, provides one with both the laid back pace of provincial living, as well as prerequisites of the urban dweller. Schools, hospitals, restaurants, shopping malls, and leisure are all found on the island itself.
Lancaster Cebu Resort Residences, located a mere 3 minutes from Mactan-Cebu International Airport, provides you with easy access to all the essentials of urban living. This ideal location will complement the Condotel operation since Lancaster Cebu will function as a condominium hotel a preferred accommodation choice of businessmen and holiday travelers alike.
Clients can either purchase Condotel Suites for investment purposes or lease the units on weekly, monthly or yearly basis. We have Fully Furnished Executive Studio Suite and Two-Bedroom Suites available for sale at Lancaster Cebu Resort Residences at Pre-Increase Prices that will be ready for occupancy from December 2007 at the current price. Fully furnished Studio Suites are priced at -Pph-2,753,924.06 whilst, fully furnished 2 BR Loft Type Suites are priced at -Pph-5,467,004.14 and may also be purchased with an initial Reservation Fee of only -Pph-100,000.00 with the Balance Payable without interest over 24 consecutive equal monthly payments. Fully Furnished Suites many also be purchased on Five Year Payment Terms through our no qualification In-House Finance Available with 15% Down Payment added Collingz
Lancaster Cebu Resort Residences is also offering Studio and 2-Bedroom Fully Furnished Ready for Occupancy Suites on daily, weekly, monthly or yearly lease rental terms. Whilst some renovation works are still ongoing within the complex, unit rentals are now available to guests at 'Special Promo Rates'
Rental Property Investment Finding The Properties
Rental property investment starts with finding the best deals. To do this, you can increase your odds by finding more deals. Who's more likely to get a cheap apartment building, an investor that looks through the MLS listings and calls it a day, or the one that uses ten resources? Here are those ten:
1. Look in old papers to find "For Rent" ads. Call if they are a few weeks old. The landlord may be ready to sell, especially if he hasn't yet rented the units out.
2. Look up old FSBO ads. Call on two-month-old "For sale By Owner" ads, and if they haven't sold, they may be ready to deal. Owners often give up the effort, but still would love to sell. Help them out!
3. Drive around looking for "For Sale By Owner" signs. Owners often don't want to pay to keep the ad in the paper every week, so you won't see all properties there.
4. Find abandoned properties. That's a pretty clear sign that the owner doesn't want to deal with the property. He might sell cheap.
5. Talk. Let people know you are looking and sometimes the properties will come to you. There are a lot of owners out there who want to sell, but haven't yet listed their property.
6. Talk to bankers. You might get a foreclosed rental property cheaper if you buy it before they list it with a real estate agent.
7. Offer someone a finder's fee. There are people that always seem to hear about the good deals. Have such people coming to you.
8. Eviction notices. If your local papers publish eviction notices, or if you can get the information at the courthouse, it can be useful. A landlord who just went through the procees of evicting tenants is a likely seller.
9. Use the internet. Go to a search engine and enter the type of real estate you are looking for, along with the city you want to invest in. You never know what you might find.
10. Put an ad in the paper. "Looking for rental properties to buy," might be sufficient to generate a few calls.
There is a lot more to learn to do it right, but finding good properties is a good place to start for rental property investment.
Retiring In Costa Rica Why You Should Consider It
Many people are now seeking to retire in Costa Rica - often called the "Jewel of Central America", and its popularity is growing.
So, why are more people than ever looking to retire in Costa Rica? The major reasons for retiring to Costa Rica are:
. Close proximity to the US
. Natural beauty
. High standard of living for a very low cost
Quite simply, social security checks go a lot further in Costa Rica than they do in the US.
For many people retiring to Costa Rica, one of the major advantages is its geographical proximity to the US.
Costa Rica is only a few hours flying distance to the southern U.S. mainland. Flights from Costa Rica to the US and Europe are frequent - making traveling easy. In addition, the time difference between Costa Rica and most US cities is just a couple of hours.
Cost of Living
Another reason for retiring in Costa Rica is that the cost of living is so much less than in the US.
For example, dining out will cost you around $12, and a maid will cost you just $150 a month. General household items are about 60% cheaper than in the US, and utility bills are also far cheaper.
In fact, you can quite easy live comfortably on a couple of thousand dollars a month.
When retiring to Costa Rica, one of the major advantages for Americans is its tax haven status - Americans retiring in Costa Rica do not pay income taxes on social security received from the U.S.
Cost of Real Estate
When you retire in Costa Rica, you'll enjoy affordable housing - houses of an equivalent standard to those in the U.S. are available at a far cheaper cost.
While real estate has risen in price over the last few years, you can find small, basic homes from around $80,000 - with a choice of homes to suit your pocket and your lifestyle.
Costa Rican law and its constitution protect private ownership of land - and foreign nationals get the same rights as citizens. Costa Rica has a history of stability and democratic government.
The comfort of a stable political environment - as opposed to other Latin American countries, means retiring in Costa Rica gives you peace of mind, due to your legal rights.
Of course, if you buy a house when retiring in Costa Rica you become part of the real estate boom, that has seen houses bought for $30,000 15 years ago, rise to around $700,000 today.
For many years, Costa Rica has provided healthcare services to visitors from around the world - where they've been able to get world class healthcare at a fraction of the cost of that available in the US and Europe.
When retiring in Costa Rica, most people take out the medical insurance offered by the government's insurance company - this offers cover at just $900 per year for an adult male, aged between 45 and 50 - and this covers 80% of medical costs!
In fact, the United Nations consistently ranks Costa Rica's health services the best in Latin America - and in the top 20 worldwide.
When retiring in Costa Rica, it's nice to know that as you get older, you can enjoy some of the best healthcare around - at a fraction of the cost of the US or Europe.
Costa Rica is a very small country of around 32,000 square miles - and a population of only 4 million.
Many people retire to Costa Rica for the slower pace of life - and because it's one of the safest countries in the world. In addition, the infrastructure is first class.
Costa Rica is also a beautiful country with diverse scenery. With stunning sandy beaches, mountains, rolling hills, beautiful lakes and huge volcanoes - Costa Rica is truly a country of beauty and wonder.
Another attraction for many retiring to Costa Rica is the climate. For example, if you want the heat of the beach you can have it. However, if you like a cooler, less humid climate - then you may prefer the "Eternal Spring" of the Central Valley and San Jos
Foreclosed Home Listing
Everyone wants to save on real estate. The problem is, many people simply don't know how, or where to actually find those elusive savings. When you're buying on the open market, it can be truly difficult to come across unusually good deals. You might be able to win a home with a lower bid through a real estate agent, but if you're really looking for savings that will create lots of initial savings and maximum potential investment value, you have to consider the market for foreclosure listings. These incredible resources are the homebuyer's key to finding deals on great homes that can provide savings of as much as 50% off your initial purchase.
A foreclosed home listing is like a guide to a property that is available for purchase through a lender sale. They come about when a homeowner defaults on their home mortgage loan. After a default, the lender will have to sell the home and use the proceeds to cover the remaining debt owed by the homeowner. But the opportunity for buyers to win these homes for discount prices manifests in the sale or auction itself, where lenders often undersell properties. Since they only need to collect an unpaid portion of the original loan amount provided, they can sell the home for less than its full value and still make back all the money they need. Attending these sales provides you with one of the best chances to find discounts you'd never find anywhere else, on perfectly good properties of all kinds!
While you don't find these sorts of listings every day, one of the best ways to get your hands on lots of them is to hire a foreclosure listings service, and when it comes to quality, effectiveness and efficiency, there's no better business around than ForeclosureConnections.com. We provide more than 500,000 properties currently available in our nationwide list of bargain homes, and there are new availabilities added all the time! It's easy to search for the exact property you need, whether that's homes for single families or commercial seized properties to expand your business. We'll teach you how to get the best properties available too, and from all kinds of different lenders. We'll show you how to buy federal homes for sale, government homes, and we can even help you find a local bank foreclosure listing that can be extremely profitable.
So sign up with the experts today and get more than just listings. Get the professional advice and backup you need to make extremely successful real estate investments, with ForeclosureConnections.com!
Real Estate Ads Home Style Terms And Their Meanings
Whether you're buying or selling, reading real estate ads can be confusing. Here are explanations of more style terms used in real estate ads.
"Split Foyer" style
A home entered by a foyer with a half flight of stairs up to the upper level (where the living spaces and one or more bedrooms are usually located) and a half flight of stairs to the lower level (typically housing the family room and additional bedrooms).
A home with three levels. It is typically entered on the middle level and has half flights of stairs to the highest and lowest levels. The living room, dining room, and kitchen are usually on the middle level. The bedrooms are usually on the highest level. The lowest level may be unfinished or have family room, laundry, and perhaps a garage located there.
These vary greatly, but none looks as if it could have been built prior to 1900. Some are almost entirely of glass. Some are almost entirely under ground. Roofs can be gable (slants down on each side of a ridge line creating triangles of space at each end), shed (slants in one direction only from high on one side to low on the other), flat, or sod (grass covered) for that matter. Often several roof styles are incorporated in one home. Energy saving or indoor-outdoor connectedness tend to be designing motives. Simplicity, straight lines, and open spaces are hallmarks. Decks, patios, and terraces are frequently featured and are often constructed of the same materials used indoors.
This style is based on houses built during Queen Victoria's reign and for a while afterwards. They are usually at least two stories tall and maybe more. They are embellished with a variety of things including porches, turrets, towers with conical roofs, pediments with fanciful shapes over doors and windows, windows to the floor with perhaps only one sheet of glass per sash. And do think "gingerbread" or wood fashioned into intricate shapes for gable ends, places where porch posts reach the ceiling, at stair landings, and so on. Modern builders usually pare this style down because of the expense, but even the most recently built examples can be rather fanciful.
When looking at homes, you'll find particular styles appeal to you. Once you identify the styles, you can narrow your search for the perfect home.
Budget For Closing Costs Home Inspection And Title Fees
Purchasing a home is a euphoric event. Once escrow begins, the euphoria can change to frustration, particularly if you are not ready for the closing costs that quickly accumulate.
Budget for Closing Costs - Home Inspection and Title Fees
Closing costs simply refer to the fees associated with various things associated with the escrow process in a real estate transaction. In the excitement of having an offer accepted for your dream home, you can easily lose track of the fact you are going to need to have some serious cash on hand to pay them. Many people make the mistake of only assuming they need the down payment money, and have to rush around town trying to come up with money for the closing fees.
If you are buying a home, you need to get a professional home inspection. Doing so can reveal potential problems with the home that you wouldn't otherwise notice. Problems can include things such as rot, termites, water leaks and a bevy of other issues. The time to do this is during escrow. Of course, that means you are also going to have to pay for the inspection. Depending on the size of the property, home inspections can run a few hundred dollars up to a few thousand. Make sure you have money set aside for the fees.
Title insurance is something you absolutely must purchase when you buy any real property, a home, building, land or whatever. Title insurance protects both you and your lender. Title insurance is just what it sounds like. A title company will research the title of the home and essentially guarantee that the title is good. This means the seller actually owns the title and has the right to sell it to you. The title company will also make sure there aren't any liens on the homes or other things that will cause you problems. Depending on the price of the home, title insurance can run you a couple of hundred dollars or up into the thousands. Again, it is important to find out the cost and budget for it.
Title insurance and a home inspection are two things you should absolutely have when purchasing a home. Just make sure you budget for them.
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