Property Investing Reality Check: Tips to Ensure Your First Flip Is Not Your Final Flop

HGTV and the myriad of home-improvement shows on PBS and other stations have led us to believe that flipping a house is a simple process. The process is broken down into three steps including buy a property, fix it up, and sell it at a tremendous profit. Unfortunately, flipping a house isn’t quite that simple. It takes hard work and dedication to transform a rundown property into a gem that other people will want to pay a premium for. 

Budget More Money

The biggest mistake that people make when trying to flip a property is underestimating expenses. Acquisition costs, material costs, and labour costs are only part of what you’ll have to put into a home to convert it from a diamond in the rough to an outright diamond. Take into account things like mortgage interest, property holding costs, taxes, and utilities to start, but that isn’t all you need to budget for.

Many people also fail to consider the fact that they will likely have to pay a realtor to sell their home. If both the purchaser and the seller employ realtors, the seller may be on the hook for fees that amount to roughly 5% of the total sale price. That amounts to $5000 for every one hundred thousand dollars of home value. This is why many people who flip properties also maintain real estate licenses.

In order to make a profit, the sale price of the home you repair must be greater the combined costs of acquisition, holding the property, and renovations. Don’t forget about the final insult, which is capital gains taxes.

Budget More Time

The second thing that most people underestimate when flipping their first house the amount of time that will be invested into the renovations. If you’ve never flip the home before, it’s a good idea to get estimates from contractors regarding not just the price of the renovations, but the time it will take to complete them. In general, you should expect delays and headaches to arrive at different stages of the renovation. The reason that this is so critical is that you will most likely be making mortgage and tax payments on the property during the renovation process. You can easily lose thousands of dollars if you’re renovation timeframe is extended by a month or two.

Understand Sweat Equity

If you think you’re going to simply hire contractors to flip your property, think again. The real value in flipping a home comes from the sweat equity that you invest. By doing the work yourself, you save thousands of dollars that would otherwise go to plumbers, electricians, carpenters, and other tradespeople. If you don’t have the skills to flip a house doing most of the work yourself, chances are good that you won’t be successful. While you can hire out certain complex tasks, like major cleaning done by Purple Rhino Exterior Building Cleaning Services, if you can’t swing a hammer, hang drywall, or install kitchen sink, then you probably won’t make a profit on your flip.

Understand Value-Adds

A “value-add” is anything that you do to a home that will return more money than you invest. Anytime you flip a home, the key to making a profit is to invest money in renovations which will improve the value of the home and make it more attractive to potential buyers. While certain improvements are universally appealing, a great number of things are dependent upon location. In a neighbourhood where the average home sells for $100,000, investing in renovations that push a home well above that, even if they are beautiful additions, may mean that your home won’t sell or won’t well for the price you need it to you in order to turn a profit. In general, the market is far too efficient for you to expect above average returns. Before you even think about purchasing a house to flip, you need to understand which renovations will make the house more valuable, which renovations you are capable of handling, and any applicable laws that will determine exactly what you can and cannot do to your home.

The Ultimate Asset

Out of all of the things listed above, the greatest asset that you can have when flipping a home is patience. Patience in the real estate market means several things. First, you have to be willing to wait for the right opportunity to arise. Not every fixer-upper is prime for being flipped. After getting the property, you have to be patient with the renovations, the inspection process, the sales process, and much more. In short, you have to be patient.

The bottom line is this. Do your research and understand that flipping a house is no different than any other business venture. It will require investments of time and money and will require you to have a basic set of skills and the patience to apply them.

 

Article source: http://www.nuwireinvestor.com/articles/property-investing-reality-check-tips-to-ensure-your-first-flip-63642.aspx

The nature of Loss: What can Buy-to-let Investors expect in 2016?

UK Prime Minister David Cameron can scarcely recall a worse week in politics, with thousands calling for his resignation of mishandling of his involvement in the Panama tax scandal. While Cameron appears to have done nothing wrong from a legal perspective, his involvement with the scandal has come at the worst possible time for him and his party as a whole.

The Issue of Buy-to-let Investment: What can Investors expect?

After all, Cameron and Chancellor George Osborne have already come under-fire after a number of controversial decisions, most notably the tax changes to the prosperous buy-to-let market. While this has been a key economic engine in the UK during the last three years, it has also contributed to a chronic housing shortage and spiralling price points that are increasing at a disproportionate rate to earnings. This is an issue that the government has been to negate, especially as it remains committed to empowering citizens and first-time buyers.

The initial response to this has been to implement more stringent buy-to-let regulations, including tax and stamp duty reforms that will impact on the impact on the ROI of a typical real estate investment. From this month, private sector landlords will be required to pay a noticeably higher stamp duty (3%) when purchasing buy-to-let homes, while next April will see the introduction of a reduced tax allowance which will wreak havoc among entry level real estate investments.

The Short and long-term Fallout

Almost immediately we have seen a rise in the number of private sector evictions as landlords look to leave the market and offload their depreciating asset. There has even been a rise in the number of buy-to-let properties sold to specialist, quick house buying firms such as propertyrescue.co.uk, with landlords happy to sacrifice approximately 20% of the value in their homes to secure a quick transaction.

This trend is set to continue for the foreseeable future, creating havoc in the market and triggering huge instability.

In the longer term, we can at least expect the market to settle as investors develop a greater understanding of how the new legislation will impact on their returns. This may help to assuage the current level of anger among investors, who feel as though they have been betrayed by a government that has manipulated a private sector marketplace to the detriment of thousands. Above all else, the new reforms will undermine the rental market and reduce the options of aspiring buyers who are unable to get their feet on the ladder.

Article source: http://www.nuwireinvestor.com/articles/the-nature-of-loss-what-can-buy-to-let-investors-expect-in-63632.aspx

3 Ways that Big Data is Transforming the Real Estate Industry

Big data. The term is thrown around constantly in business conversations, though many people barely understanding what the term really means. In today’s world, there is likely not a single industry that is not being significantly impacted by big data. Real estate is one of the biggest. And it’s not a bad thing either. Real estate  investing in the past required a good amount of risk and often relied on a bit of luck to be profitable. Today, while nothing is guaranteed, real estate investors have found ways to utilize data to significantly decrease risk from the unknown. Here are a few ways that big data is doing this.

Trends and Models

Isn’t it every investor’s dream to know what their property will be worth in 5 of 10 years? That is exactly what some of the real estate investor software programs of today come close to doing. These predictions, while not always accurate, are a result of billions of pieces of data and can give an investor a good idea of where growth is most likely to occur and locations that should likely be avoided. They say there is always a bull market somewhere, and with real estate that is typically true.

Improving the Selling Experience

Selling real estate has never been easy. Property is a huge investment and people tend to do a lot more research and be a lot more picky when it comes to real estate purchases. Big data is making real estate professionals jobs much easier now, however.

One way it is doing this is to see online search data from Google, Bing, or other sources. Real estate agents can look and see locations where people are searching from, giving them a good idea of where they need to be targeting. This can also help to identify markets where demand is increasing. Additionally this gives agents the ability to truly see what buyers want and are looking for in their real estate purchases. For example, an agent may notice that in their area people are searching for homes with big windows, or homes with big backyards, or any number of other items. Using this data they can gear their sales pitch or their website to target those people. If they are involved in building in the area they can use that data to decide certain feature of the home. Not only does this allow the agent/builder to sell more, but the customer and buyer ends up having a better experience as well.

Accurate Pricing

Anyone who has purchased real estate has dealt with appraisals. This is where a qualified individual goes to a piece of real estate and decides what it is really worth. Banks try to use this to make sure that they don’t give a loan for a house that turns out to be worth less than the value of the loan.

Appraisals have always been tricky business, however, with the value of most properties being completely fluid and changing based on dozens of factors.

Big data has made valuing the home as an appraiser, or even just a buyer, much easier. Many sites offer insights into the neighborhood, even offering data on how much similar houses in the same neighborhood are selling for. If the couple down the street recently bought a home that was similar in size and age, but they paid $50k less for it, there is a good chance that your home is overvalued.

There are many more significant changes that are being made to the real estate industry as data becomes more available and software improves. Anyone involved in the real estate industry would be well advised to keep on top of an industry that is changing and improving incredible quickly. 

Article source: http://www.nuwireinvestor.com/articles/3-ways-that-big-data-is-transforming-the-real-estate-63608.aspx

Crowdfunding and Commercial Real Estate – Just a Fad?

Crowdfunding, where a project or venture is financed from a large number of modest individual donations, was once used mostly to help artists, designers, musicians and inventors make their dreams a reality.

However, in recent years it has become something of a buzzword in the real estate sector too, bringing a revolutionary new funding source to the commercial property landscape.

In the aftermath of the 2007-2009 financial crisis the public’s perception of traditional institutions dive-bombed. The scarcity of conventional credit inspired budget business models like pop-up stores and innovative new funding sources like crowdfunding.

Since their launch back in 2009 the world’s most popular crowdfunding site, Kickstarter, has had 10 million people back a project, amassed $2.2bn in pledges and brought 1,000,142 projects to fruition.

And what was once used to support video games, comics and gadgets has come a long way since.

The JOBS Act and equity crowdfunding

In 1933 the U.S. government passed the Securities Act, which banned general solicitation – the advertising of investment opportunities in private companies to the general public.

The aim of this act was to help reduce fraud, but it proved harmful to entrepreneurs, restricting them from accessing potential investors during the worst recession of the 20th century.

This all changed on April 4, 2012 when President Obama passed the JOBS Act, which included two sections relating to crowdfunding, Title II and Title III, to eliminate the restrictions on general solicitation.

After Mary Jo White was sworn in as Chairwoman of the Securities and Exchange Commission she pushed the regulations for Title II through, legalizing equity crowdfunding for accredited investors –and for the first time in more than 80 years start-ups and small businesses were able to raise capital direct from the general public.

However, this was still a difficult process for small businesses as the new regulations required accredited investors to have a net worth – excluding the value of their home – of at least $1 million, and an income of at least $200,000 for the past two years.

After three and half years the Securities and Exchange Commission (SEC) approved Title III in 2015, finalizing the proposed rules and allowing equity crowdfunding for non-accredited investors – in other words allowing everyday citizens the opportunity to invest.

Fresh capital flooded in and crowdfunding for real estate took off in a big way, with hundreds of millions of dollars raised in 2015 alone.

Dan Miller, co-founder and president of real-estate crowdfunding platform Fundrise, says: “The whole industry is changing by allowing non-accredited investors to participate for as little as $100. The excitement for us is giving everyone access to investing in commercial real estate.”

And that brings us to where we are today, where small businesses and real-estate developers can leverage the internet to reach millions of potential investors.

A turn to real estate

Since the early 1990s real estate has proven to be a lucrative investment option, with growth in private equity investment in excess of $100 billion.

And while tech start-ups and community projects are still at the heart of crowdfunding, it’s starting to encompass more traditional, hard-headed investments like real estate.

However, the idea of crowdfunding for property isn’t a completely new concept. Real Estate Investment Trusts (REITs) have long allowed investors to combine their resources to gain access to a larger portfolio of properties.

But the rise of sophisticated online platforms has fast-tracked the process and enabled investors to better evaluate which offer has the best terms and incentives.

According to a study from Massolution, crowdfunding investors were responsible for injecting $1 billion into the U.S. real estate market in 2014.

Richard Swart, Massolution’s research adviser, says the market is “growing beyond expectations. When the JOBS Act passed we didn’t think real estate would be a part of it, but it turns out to be a more efficient way for investors to find good deals across the spectrum.”

Jilliene Helman, founder and CEO at RealtyMogul.com, told CNBC: “I always wanted to provide access to more investors and crowdfunding is a perfect way to do that. You can give access to tens of thousands of investors online.”

Transparency and accessibility

Crowdfunding has changed the real estate investment landscape dramatically and the effects have largely been positive.

Previously, it wasn’t unusual for investors to get involved in a deal they knew little about and hope for the best.

However, crowdfunding offers investors detailed information about an investment opportunity, which is often vetted beforehand, and investors can keep track of their holdings online.

It also brought a new level of accessibility to what was once a very closed market, opening up a new asset class to a larger pool of investors and eliminating the premium price tag associated with ‘minimum’ investment.

In 2016, the crowdfunding industry is set to reach the $3.5 billion mark. So long as the economic climate remains benign, it seems that crowdfunding for real estate will only continue to grow, becoming more competitive and fuelling demand as non-accredited investors flood the market.

Article source: http://www.nuwireinvestor.com/articles/crowdfunding-and-commercial-real-estate--just-a-fad-63607.aspx

Why Mobile Home Parks Do Well During Periods Of Inflation

There have been numerous recent articles predicting a rise in the U.S. inflation rate, as a result of lower unemployment and growing wages. Since interest rates and inflation run in cycles, it is about time that inflation re-enters the U.S. mindset, as it’s been gone for around a decade. While the very mention of inflation can be a very alarming for many investment niches, it is not a great concern to mobile home park investors. This is because mobile home parks fare very well in times of inflation.

All real estate does well with inflation

Of course, most real estate does well in times of inflation. Prices paid for properties are set in stone – as are their mortgages – but values escalate with inflation, building in a profit by nothing more than the gradual rise in prices. This has always been the case since the days of John Jacob Astor, America’s first real estate millionaire, who bought up a whole lot of farmland in the 1800s that later became known as Manhattan. In fact, some of the greatest fortunes in real estate were created by the massive run-up in rates of inflation – as high as 13% — in the 1970s and 1980s. Inflation has always been real estate’s best friend.

But mobile home parks do even better

Although all real estate does well in times of inflation, mobile home parks do the best of any sector. There are several reasons for this:

  • Mobile home park tenants are typically on month-to-month leases, so the rent can be increased frequently and perpetually. Shopping centers, by comparison, have leases that can be decades long and not subject to having rents raised at all.
  • Mobile home park rents have massive room for increases yet still remain affordable. The average mobile home lot rent in the U.S. is around $250 per month, while the average apartment rent is $1,150 per month. You could triple the lot rent in most mobile home parks and still be the cheapest form of housing in that market.
  • Mobile home parks meet that most basic human need for shelter. It is in no way a luxury product. One side effect of inflation is often national recession. As a result, the riskiest real estate niches are those that are strictly luxuries that can cease to be needed when Americans tighten their belts, such as marinas and vacation properties. But mobile home parks are absolutely essential and housing can’t be cut back on.

While inflation may be a positive for real estate as a whole, mobile home parks are huge beneficiaries on a micro level.

Conclusion

If the current headlines are true, and the U.S. is heading into an era of rising inflation, than you need to allocate your assets to address that risk. Many Americans will put their investment dollars in real estate, as it is the best hedge to inflation. But the really smart ones will put their money into mobile home parks.

 

Article source: http://www.nuwireinvestor.com/articles/why-mobile-home-parks-do-well-during-periods-of-inflation-63606.aspx

Investors Shouldn’t Be Afraid of Alternative Architecture

With the housing market coming back to life, cities around the world are seeing a resurgence of construction: New buildings, new developments, and new suburban communities are growing as fast as consumers’ needs. Yet, much of this new construction looks different than it did before, which is making some investors uncomfortable.

Housing, commercial properties, and industrial spaces are changing. People want individuality, progress, and flair, and architects and contractors are eager to oblige. Rather than throwing down miles upon miles of cookie-cutter track housing, builders are inserting individuality into homes. Commercial buildings within cities are no longer simply steel and glass; they are made from a number of new and renewable materials. Architecture these days is innovative and exciting ? and it should be for investors as well.

Alternative Architects

Perhaps one of the biggest changes to the field of architecture, and one that has many investors scratching their heads, is the dwindling number of architects and the increasing number of “creative consultants,” “special agents,” and simply “designers.” The fact is, architects, old and young, are accumulating more and more responsibilities in the construction field, and to reflect this, many are stepping away from the stodgy term in favor of the flexibility and responsibility afforded by newer, more obscure titles.

For more than a century, the study of architecture has been relatively straightforward: Aspiring building designers attend accredited five-year architecture programs, obtain state licensing, and find work at successful architecture firms. However, experts expect that age-old career path to disappear as higher education changes. The costs of college are only continuing to increase around the world, but lack of access to degree programs is not stopping many entrepreneurial young people from achieving their dreams.

Instead, many young architects are achieving their licenses and experience through so-called guerilla education. Guided by industry experts through a proto-apprenticeship, younger generations of builders are learning practical knowledge of the field confidently and creatively outside the traditional structure. It should be no surprise, then, that so many choose to identify as alternatives to architects, providing services above and beyond the regular firm and expanding upon the previous constraints of architecture with innovative materials and designs.

Alternative Building Materials

Steel, concrete, brick, glass, wood – though these are the most visible building materials, they are certainly not architects’ only options as plenty of new structures demonstrate. Structures are going up using all sorts of unlikely substances, such as bamboo, cork, and wool. Engineers are working with architects to create brand-new materials that are stronger, more durable, and more attractive than anything previously seen. Perhaps most exciting for investors, many alternative materials come with much lower price tags than traditional resources.

Sustainable building materials are some of the newest and most thrilling options, as they provide more value for building inhabitants and the global community through energy conservation and waste reduction. Small-scale builders are experimenting with reclaimed items, like aluminum cans, glass bottles, rubber tires, and wooden pallets, and even large-scale industrial-focused architecture can take advantage of recycled materials, like the recycled plastic and steel used to construct custom fabric buildings. An architect’s decision to use alternative, green building materials usually indicates an overall focus on sustainability, which could slash maintenance and energy costs for the structure given the right design.

Alternative Designs

With new architects using new building materials, it makes sense that new structures boast new designs. Unreal curves, fantastic angles, and mesmerizing lines classify the most noteworthy structures of recent years. Buildings like the Ribbon Chapel in Hiroshima, Japan, Riverside 66 in Tianjinn, China, and the Fulton Center in New York are creative and captivating, and though they challenge traditional expectations for architecture, few can deny their magnetism.

It should be no surprise that the desire to build sustainably has stimulated a major shift in building design. Architects and engineers have uncovered a number of building features that lead to better resource management, including south-facing windows and a broad canopy roof. Typically, green building characteristics look and function differently from traditional building features, but in most cases, the differences are only adding to the structure’s value.

Architecture is an art form, and like any art form, it is perpetually changing. Like any art form, its artists are always pushing boundaries to discover new and exciting possibilities. Like any art form, it needs people to trust in the advantages of those possibilities and invest in ideas that at first seem strange. Supporting alternative architecture encourages global progress, in art, sustainability, and economy.

Article source: http://www.nuwireinvestor.com/articles/investors-shouldnt-be-afraid-of-alternative-architecture-63599.aspx

Will Investment do for Manchester What it Did for Dubai?

Manchester has been growing increasingly popular as a property investment destination in recent years, as investors both within the UK and overseas have sought the advantages of the British property market without the high prices and mediocre yields of old favorite London. Now, major government initiatives and private investment deals are about to see huge amounts of money poured into the city over the next few years, feeding massive development in both property and infrastructure.

Needless to say, this is creating a lot of optimism about the city’s future, and further fueling property investment in the city which in turn brings even more money into Manchester’s economy. It is widely agreed that the outlook is bright, but in order to get some rough indication of specifics in terms of where Manchester is headed the best approach is to look at a city that has previously undergone a similarly large-scale investment process. One of the closest matches, and certainly one of the most high-profile, is Dubai.

This is hardly a damning comparison, of course. Dubai has been utterly transformed by its own investment process, from a city important within the Gulf region but relatively obscure outside it to one of the world’s biggest economic centers and a major property investment hub. Even a catastrophic crash when the financial crisis hit was not enough to put investors off of returning en masse to the much more stable recovered Dubai that emerged a few years later.

Dubai’s transformation began with a situation which was in many ways similar to that which Manchester finds itself in today. In both cases, the process started with the government having a specific vision for the development of the city and its growth as a major regional center, and then providing the investment to back it up whilst also pushing for major deals with international investors. For Dubai, the vision was to create a major tourist and commercial hub. For Manchester, the UK government’s Northern Powerhouse initiative aims to increase the city’s economic and financial profile in order to reduce the UK’s overreliance on London. Creating an investment destination is a specific goal in both cases.

Manchester is also much like pre-transformation Dubai in that it is a city well-placed, geographically and economically, to become the regional center that the government hopes for. In both cases, the transformation began with infrastructure improvements to facilitate travel to and within the city, along with major development projects across all property sectors to facilitate an influx of people and businesses.

Of course, this by no means should be taken to mean that Manchester will follow Dubai’s template exactly. All the same, the similarity in their situations is more than sufficient to mean that a look at the massive growth of Dubai – physically, economically, and in terms of influence – and take this as a definite positive sign for the potential of Manchester in the years to come.

Article source: http://www.nuwireinvestor.com/articles/will-investment-do-for-manchester-what-it-did-for-dubai-63575.aspx

Rethinking Higher Mortgage Rates

When the Fed increased bank rates at the end of 2015 the natural assumption was that mortgage costs would also rise but so far such predictions have been a bust. According to Freddie Mac, rates for 30-year, fixed, prime mortgages went from 3.95 percent for the week of December 17th when the Fed announced its increase to 3.73 percent for the week of March 17th.

“These declines are not what the market anticipated when the Fed raised the Federal funds rate in December,” said Sean Becketti, Freddie Mac’s chief economist, in early February. “For now, though, sub-4-percent mortgage rates are providing a longer-than-expected opportunity for mortgage borrowers to refinance.”

What “the market anticipated” is often based on the false idea that mortgage rates and Fed interest policies move in tandem. As The New York Times points out, “many people think mortgage rates are tied to the Fed’s action, but there is no direct link. The Fed controls a key short-term rate, while 30-year fixed-rate mortgages are generally priced off the 10-year Treasury bond, which is influenced by a variety of factors, not just short-term rates but also the outlook for inflation and long-term economic growth here and abroad.”

Not only are fixed rates in decline but the same is also true with adjustable rates. This is especially odd because many ARMs are tied to indexes which should move up and down with Fed policies, but so far at least that hasn’t happened. Freddie Mac reports that 5/1 ARMs were priced at 3.03 percent for the week of December 17th but fell to 2.93 percent by the week of March 17th.

“If anyone needed proof that mortgage rates don’t move in lock-step with Fed funds rates, what we’re seeing now is ‘Exhibit A,’” said Rick Sharga, executive vice president at Ten-X, an online real estate marketplace. “A variety of economic trends and world events have combined to keep rates historically low, presenting an excellent opportunity for people to finance and refinance investment properties.”

One could suggest that easing credit is responsible for lower rates but that seems unlikely. Access has been falling for several months and the Mortgage Bankers Association says that for January “credit availability decreased over the month, driven by a decline in some FHA and conventional offerings as compared to the previous month,” according to Lynn Fisher, MBA’s Vice President of Research and Economics.

Mortgage Credit Availability

With higher bank rates and less credit availability it might seem as though mortgage costs should be rising but that simply hasn’t been the case. So why have mortgage rates been heading south? Several reasons stand out.

First, US banks now have excess reserves worth $2.3 trillion. These are reserves above required set-asides. It’s hard to see how rates can rise with so much idle capital.

Second, the world is flooded with an estimated $5.5 trillion now invested worldwide with negative interest rates, according to a JPMorgan Chase chart posted originally by the Financial Times.

Third,, labor productivity was down 2.2 percent in the fourth quarter. This figure suggests that businesses are not making capital investments to improve productivity and therefore that previous gross domestic product predictions may turn out to be optimistic. With less productivity the case for higher rates becomes more difficult.

Fourth, many had thought the Fed would have additional rate increases in 2016, perhaps four or so .25 percent hikes every few months. Now – just as in 2015 – the timing of such predictions is being pushed back and there are even suggestions that there might not be any additional increases. For instance, BloombergBusiness reported in January that bond traders “are pricing in a sub-2 percent U.S. inflation rate for the next 30 years.”

If those bond traders are right then we’re in for low interest rates for a very long time.
 

Article source: http://www.nuwireinvestor.com/articles/rethinking-higher-mortgage-rates-63568.aspx

6 Reasons to Invest In Global Real Estate in 2016

Each year, millions of Americans get into the real estate business for the first time. Whether they are simply purchasing their first home or looking to begin investing, this leap is always filled with uncertainty. The real estate market is constantly changing, but has shown rewards and comeback in recent years.

Many investors are claiming that 2016 is the “year of real estate,” and with 11% in returns on global property investment in 2014, it is easy to see why going global may be your best bet. Gone are the days of moving abroad simply to backpack around Europe, the time has come to begin traveling with a lifetime portfolio in mind. Included here are a few reasons it might be time to grow your investment portfolio diversity with a few pieces of property abroad.

European Growth

While international investors have begun to find places to buy in the U.S., with hotspot cities being Los Angeles, New York and San Francisco, Americans may be looking to broaden their investments in Europe. 43% of investors are finding property in London, 19% in Paris and 14% in Frankfurt. The top three investment centers in the U.K. are shopping centers, offices, and luxury retail spaces.

Asia, Japan and Australia Promise

Roughly a third of investors say they will be allocating funds for Asian cities in the coming year. Some of the hottest investment areas include Japan, Asia and Australia. Hong Kong, China and Singapore show promise of growth in the coming year. The hottest cities for investment are Tokyo, Melbourne and Sydney.

In Asian markets, Beijing and Shanghai are making progressive upward movement. In this area, the most promising investment properties include logistics, residential and office space.

South American Potential

If you lack the millions of dollars necessary to purchase high end properties around the globe, consider investing in smaller markets that are greater in risk but may also have the highest pay outs. Some condos in north-east Brazil have been capable of selling for 60% more than their buying price in less than two years! That is incredibly fast turn-around on equity for a potential property.

Protect Your Capital

For individuals who have stored up cash, investing in property may be the best way to put your money to work. Real estate is in finite supply, and there will always be a demand for properties to live on. Utilizing your American money to buy in countries that benefit the exchange rate, could land you with more money in your pockets over time. You will also have security in this financial investment, as land will only grow to be in higher demand.

Buy Up Beachfront

The beauty of beachfront property is that it is always in demand. With vacation home owners, resort builders and other developers, you will have a hard time not selling properties. Buying beachfront internationally can be a great way to create an incredibly valued and diverse portfolio.

In the case of undeveloped beachfront, you can look at even more profit in the long term. For example, a small beachfront lot in South America may be bought for less than 50% of its potential value. Your equity will be built into the sale price and you will have valuable income for years to come.

Alternate Currency Cash Flow

Another benefit of international real estate investment is that you are generating income in an alternate currency. This means, should your home country experience an economic crash, think devaluation of the dollar, you will still have alternate funds that hold value. Granted, the flip side is also possible — if the dollar gains in value against the other currency, you could stand to lose significant value. Additionally, you can become an expat and move to another country while retaining your business and income potential.

Article source: http://www.nuwireinvestor.com/articles/6-reasons-to-invest-in-global-real-estate-in-2016-63567.aspx

How Soaring Home Prices Hide Real Estate Bargains

Everybody likes good news, and here’s a trend which is likely to please just about everyone: Home values are going up. I mean really going up. According to the National Association of Realtors, January home prices were up for the 47th month in a row. The Federal Reserve says that homeowner equity has increased by nearly $6 trillion since 2011.

These happy numbers have real meaning for investors.

First, the foreclosure rate is back to the levels seen before the mortgage meltdown. This is hugely important because it means there is less risk in the marketplace. Like moths to a flame, less risk draws in mortgage investors and their capital – capital which is pushing down mortgage rates.

Second, property owners – including investors with single-family homes – have more equity.

At the end of 2015 RealtyTrac says that the number of “equity rich” properties increased by 2.1 million units. “Equity rich” homes are defined as those with at least 50 percent equity. On the other side of the coin, 6.4 million properties were “seriously underwater” at year end, a reduction of 481,000 units when compared with a year earlier. The term “seriously underwater” means that property debt exceeded property value by at least 25 percent.

“There’s no doubt that real estate has recovered substantially during the past few years,” said Rick Sharga, executive vice president at Ten-X.com, an online real estate marketplace. “But at the same time, there are numerous opportunities for investors, as lenders push seriously delinquent homes through what’s been a 3-year foreclosure process, and many homes in certain markets are available for sale at prices which in some cases are actually lower than the values we saw in 2014 and 2013.”

Mixed News

No doubt there’s a lot of positive energy in the real estate marketplace, the news is overwhelmingly good, and the headlines are wonderful. However, lurking in the shadows are some realities which need to be acknowledged.

According to NAR, median existing single-family home prices increased in 81 percent of the metropolitan statistical areas (MSAs) it measured at the end of 2015. Values rose in 145 out of 179 MSAs.

The catch is that at the same time existing home values fell in 34 MSAs (19 percent).

If we dig a little deeper we can see that even in areas where home prices are rising they’re not rising for everyone.

In looking at more than 40 million properties, Weiss Analytics found in November, the latest period available, that 28,318,281 homes saw higher values. That’s down from 31,495,679 properties a year earlier.

For the same period Weiss also found that 11,833,930 homes saw equity declines – that’s 24.2 percent of the homes measured. Moreover, the number of homes in the whoops, we have less equity, category rose substantially from 7,282,612 units 12 months earlier.

“This is nothing like the rate of erosion we saw in the percent of houses rising in the 18 months prior to the housing meltdown, however this steady decline in appreciation is concerning,” said company CEO Alan Weiss.

The Investor Opportunity

If there’s a bottom line here it’s that despite rosy headlines the real estate marketplace remains a mixed bag. Prices are rising in general but a large number of homes are languishing. Moreover, there are factors outside real estate which make selected property investments interesting.

First, while it appears home values are broadly rising, they’re not rising uniformly or universally. Bargains remain and seem likely to continue: the latest home purchase sentiment survey by Fannie Mae found that “the net percentage of those who say it is a good time to sell a house fell 2 percentage points to 7 percent.”

Second, you have to love today’s mortgage rates, currently at 4 percent and below. We’re not at the lows seen in 2012 but at the same time we’re not far off. Compared with historic norms, roughly 8.6 percent over a 40-year period according to Standard Poors, financing today is cheap.

Third, according to the National Association of Home Builders, “the share of first-time home buyers has traditionally averaged around 40 percent, but in the aftermath of the housing downturn it now stands at just under 30 percent.”

What’s happening is that a lot of people can’t buy and the reason is a lack of income. NAHB estimates that during the past seven years “the slow recovery and uncertainty in the job and housing markets resulted in 7.4 million lost home sales.”

The bottom line is that we now have a large and widespread stock of homes at good prices, low mortgage rates, and a growing renter population. For many investors that’s a recipe for success.

Article source: http://www.nuwireinvestor.com/articles/how-soaring-home-prices-hide-real-estate-bargains-63550.aspx