Buy a Real Estate

At public events I cajole the audience into coming up with valid reasons to sell a property. Few of the reasons proffered are truly valid. The most common reason given is to take the profit out of an existing investment, and then to use this profit to invest in another property. There are two arguments against this.

First, when you sell, as we have seen, you will pay capital gains tax and depreciation recapture tax. Second, while you may release the equity in a property by selling, you could release that same equity by refinancing the property and still retaining it.

For example, imagine you bought a property for $500,000 with a mortgage for $500,000 (you bought it vacant, but with a tenant in place it went up in value and the bank was willing to fund the entire purchase price). Assume it is now worth $2 million. You do not need to sell it to release the $1.5 million of equity. You could achieve the same result by simply refinancing with your existing bank or a new bank. You simply get a new appraisal and submit a new proposal for finance. Now admittedly, if the bank will only go up to a 70 percent loan to value (LTV), then they will only lend you $1.4 million, which is only $900,000 more than your present loan.

However, if you sold the property, you would lose perhaps 6 percent in selling commission ($120,000) and at least 15 percent of the capital gain to tax ($225,000), more to depreciation recapture tax, and even more to selling costs, leaving you with perhaps barely a million in net, after-tax profit. Which would you rather have, a million dollars in cash, or equity of $1.5 million (from which you could easily borrow another $900,000), secured against an asset worth $2 million, and rental income for life? The property only has to go up by 5 percent for you to make yet another $100,000 (which would be tax-free so long as you continue not to sell).

Since the Great Depression, history has been supporting the Fed in making the economy stable during a monetary crises such as the 1987 stock market crash, the 1997 Asian currency crisis, or the 9/11 terrorist attacks. In December 1930 the Fed was given a hard lesson as it failed to bail out the official-sounding Bank of the United States. Its failure to act properly precipitated the Great Depression. Ever since that time, the Fed has stepped in quickly and acted as the true last resort lender.
Working out the current real estate credit crunch may take longer, but I’m a quite confident that the Fed will be able to stabilize the economy and the financial markets once more. Nevertheless, it is still possible that history might repeat itself. Considering the fact that the Fed is a source of significant instability (easy money – tight money cycle), it is beneficial to hedge one’s bets.

One of the major reasons for payday loan appeal is the fact that such loans are frequently the only possibility that people with bad or insubstantial credit are able to resort to. In cases when a credit is shot, one will most likely don’t have the possibility of using a credit card for a quick cash fix. That’s where a payday loan can becomes a useful feature.
The majority of payday loan firms claim that they are able to help you regardless of your credit status. Even if you are a person with the worst credit in the world, you will most probably find help. Rarely a payday loan company performs a credit check on people applying for such loans. Instead, they rely on your employment data as a means of justifying the loan. Some of these companies demand that you a person has been employed in the same position for six months or more, so you should be prepared to provide information concerning your current job status. Also, get ready to provide phone numbers and check stubs from your workplace. As long as you have a steady job and a checking account, you can easily get around not having any credit.

Investing in real estate during a time of crisis surely can be a risky thing. However, it you follow some basic rules and do careful research, crisis may turn out to be a great period for investing your money and a financial success will actually be more likely to achieve in times of economic turmoil. If you consider investing in real estate now, bear in mind the following points:
1.    Remember about the basics: carry out your research considering supply vs demand, invest rather than speculate, let the numbers guide you, and be certain that you have a foundation of cashflow to support your investments (now more than ever).
2.    The question of when it is a best time to invest will depend, at least partially, on your strategy. For example, now is a good time for buy and hold investing rather than flipping.
3.    Foreclosures indicate a higher rental demand. To put it simply, people that have lost their homes recently are going to need to rent from somebody.
4.    An economic crash of this size occurs very rarely which indicates it is a unique opportunity. There is a lot of speculation in the discussions about this matter. To gain more knowledge you should tune into what a few respected experts are saying.
5.    Prices may not recover at once, but if you invest so that cashflow will enable you to hold an under-valued property it may be a great form of a long term investment. Finding wholesale priced property is obviously easier today than during a seller’s market.
6.    It takes a very smart investor to time the bottom of the market perfectly – do not let that hold you down; allow yourself to act on both sides of the bottom. You should invest basing on strategy, numbers and fundamentals rather than perfect timing.
7.    Do not treat all markets as one huge market with exactly the same dynamics. There are still some good places to invest your money and, of course, other places which are now bad for investors.
8.    Do not think that all houses are undervalued. Do your research carefully.
9.    Do not lose your head – FUNDAMENTALS!

What is a Real Estate Auction?

A real estate auction is a modern and efficient method of selling your real estate. It is an intensive, and fast real estate marketing process that deals with the public sale of any kind of property  (obviously involving those that are nondistressed) by means of an open cry, competitive bidding.

How can I benefit from an auction?

The real estate auctions are a win-win propositions for everybody involved.

BENEFITS TO THE SELLER:

• Buyers come willing and prepared to purchase
• Fast disposal decreases long-term carrying costs, such as taxes and maintenance
• You are certain that property will be sold at its real market value
• Your property is exposed to a wide range of pre-qualified prospects
• The sale is accelerated
• Competition among buyers is created – auction price can exceed the price of a negotiated sale
• Potential buyers are required to pre-qualify for financing
• You know exactly when the property will sell
• Numerous and unscheduled showings are eliminated
• Takes the seller out of the negotiation process
• An aggressive marketing program that increases interest and visibility is ensured