| |
 |
|
|
Finance & Stock Groups Forum Index » Stock Investments » Real Estate Investment Success Series Tip #4 -how To Spot A
Page 1 of 1
|
| Author |
Message |
| www.stockmarketwatch.info |
 Posted: Fri Nov 28, 2008 4:05 am |
|
|
|
Guest
|
This article is part of the Real Estate Investment Success Series and
continues from
http://www.realestateinvestment101.info/commercial_property_investment.html
As mentioned in our previous article, like in value investing in
stocks as made popular by Benjamin Graham, money is made in the
purchase of real estate investment property. You want therefore to
purchase property with good rental yield and that is at a discount
relative to the surrounding area. This article identifies three ways
to find a below market real estate deal so that you can either resell
it later at a higher price or enjoy lower mortgage instalment payments
and from that a greater cash flow.
Method #1- Distress sales and foreclosure
The general rule of thumb in real estate investment is that the target
property might sell for a price lower than the areas average if the
owner is in distress. There are two possible situations that you might
want to look out for so that you can negotiate with the owner to
reduce their asking price.
Firstly, look out for mortgage foreclosures on property and monitor
the property auction sites. Banks may under-finance property meaning
that they might not want to risk financing the property and then have
to sell the property at a loss during a recession (negative equity
situation). So what happens is when the mortgagor (the owner) is in
default of his mortgage, the bank would foreclose the property and
auction off the property and sell it off. Note that under the common
law, while the bank is supposed to get the best value for the owner,
this sometimes does not happen and the best way the bank can discharge
its liability is to auction off the property.
As we can tell from the above analysis, the bank usually just wants to
get the selling price enough to cover the outstanding mortgage and so
the reserve price for such auctions may be below valuation prices.
Spend some time attending such real estate auctions and it could pay
off in helping you get a property at below market value.
Method #2- Migration
When people want to migrate out of a country fast, there is a high
chance that they will not be picky about what price the property can
fetch. These people generally want to sell off their property fast and
the first prospective buyer that appears on the horizon for their real
estate would usually benefit from this. On your part, you would want
to get an independent valuation of the real estate and then make an
offer.
Ann wanted a property near the city’s amenities and was looking for
such a property. There was a family that was moving over to France and
sold it to her at a bargain. It turned out that what that family
wanted was hard cash fast so that they could move out. Ann gave it to
them and all parties were very satisfied. Thus bargains can be found
if you know more about your seller’s reason for selling.
Method #3- Look for landlords with attitude problems
This strategy is rooted in human nature and you may chuckle when you
hear it. In some areas, some properties are always yielding lower
rentals than other places and this might be because of the landlord
rather than any other fundamental reason. If the landlord has a bad
temper for instance and then finds it hard to get tenants who can
stay, might try to entice present tenants to stay with lower rentals.
This would therefore translate into a lower valuation for the
property. At the point where you appear on the scene, some of these
sellers are willing to accept a lower price to get a problem off their
hands.
Things to note with this real estate investment method include
spending some time with neighbours staying around the property in
question to find out any hidden defects, bad tenants or crime related
problems that the owner may not be telling you about the area. It may
not be all the landlord’s fault.
In conclusion, we have spotted three ways that you can take into
account when analyzing a real estate investment. Real estate
investment can be said to be like any other form of shopping as you
want the best quality for the lowest price. But do not be let
paralysis by analysis stop you from taking action. Here’s wishing you
all the best in your real estate investment endeavours!
About The Author: Joel Teo is the owner of several websites and takes
a keen interest in real estate investment as part of a larger
investment portfolio and considers real estate investment as a viable
business model. For more tips in the real estate investment success
series go to
http://www.RealEstateInvestment101.info/Success_Series.html
extract from www.myinvestmentadvice.info
Hi guys more articles in
http://www.stockmarketwatch.info
"4 Small Cap Stocks About To Make Big Breaks "
Note: The above article would be deleted from stockmarketwatch after a
month to make room for new extracts
regards
ezycash |
|
|
| Back to top |
|
| |
|
Page 1 of 1
All times are GMT
The time now is Wed Jan 07, 2009 8:35 pm
|
|
|