Sep
10
Buy Investment Property Without Seeing It
Posted By: Ramon Rivas on September 10, 2010 at 4:39 pmWhy would you buy investment property without seeing it? It’s a numbers game. Whether or not you see the property before you make an offer isn’t nearly as important as making sure the numbers make sense.
A man in California used to just send out offers on a hundred MLS listings at a time, offering 25% less than the asking price on each one. Occasionally a few sellers would accept his offers. He never had to look at the homes beforehand. Including an “inspection and approval” clause in the offer meant he could always back out of the deal later when he saw the house. Meanwhile, he efficiently found the truly motivated sellers.
This true story demonstrates that with a good clause or two in the contract, you don’t have to worry about making an offer before you see a property. It’s true when you buy investment property or your next home. When it isn’t everything the seller says it is, you can reject the deal with little or no loss. So why wouldn’t you want to look at the property?
Buy Investment Property By Numbers
The main reason you might skip looking at a property before making an offer is time. This is certainly true if the property is far away. If you don’t get a price that makes sense, why spend your time traveling to look at real estate investments? A price and terms that make sense – this is what is important. Of course you’ll probably want to look at the actual property eventually, but looking at the numbers is how you invest.
Investors value income property according to current cash flow (or should if they want safe and viable investments), so start by verifying income. Get the actual income figures for the past 12 months. Always consider the potential income if rents are raised, vending machines are added, etc., but base your offer on the current income.
Verify all expenses with investment properties. If any expenses listed by the seller seem unusually low, they most likely are. Just substitute your own best guess in place of any suspicious numbers.
After you determine the net operating income, apply the appropriate capitalization rate to arrive at the value. If you’re not sure how to do this, get help. However, you really should understand the principle of how to figure a cap rate. This is a numbers game you’re playing.
Calculate loan payments (talk to your banker), and see how much cash flow you’ll have. Then you can figure your cash-on-cash return based on how much of your own money you put into the deal. Just divide the cash flow by your investment.
When the numbers work, you can safely make an offer. Inspections will tell you if there are problems that will affect the cash flow. You can always renegotiate if there are such problems (assuming you made your approval of all inspections a contingency of the offer). Of course, you can even go take a look now that you are truly ready to buy that investment property.
Aug
24Danger – Negative Cash Flow Real Estate
Posted By: Ramon Rivas on August 24, 2010 at 12:52 pmThe high Foreclosure rates changed all that. Now more people are seeking good homes to rent, so the supply of available rentals becomes slim. Demand for rental homes has also been stimulated by a reduction in the number of available apartments.
But it’s not all good news for landlords.
Some eager investors bought investment homes near the top of the real estate price cycle. They paid high prices for the homes they are now offering for rent. Many are learning that the cost of mortgage payments, taxes, insurance and other normal costs are leaving them with negative cash flow. That means it is costing them more each month to own the property than they can collect in rent.
The investor’s negative cash flow can amount to as much as $500 or more. Each month the owner must take those hundreds of dollars out of his/her pocket to make up the short fall between rents collected and money paid out in loan payments and so forth. That’s called an alligator property, because it can eat you alive.
Negative cash flow can be avoided by making a larger down payment on the property. You then have a smaller mortgage loan with smaller monthly payments. If you have planned correctly your rental income should then cover all your costs and expenses of owning. The down side is that you have a large amount of cash locked into one property.
The wise investor always buys at a price that will allow him to prosper no matter what happens to real estate values.
Aug
15Costa Rica Home – A Better Lifestyle for You and Your Loved Ones
Posted By: Ramon Rivas on August 15, 2010 at 11:37 pmCosta Rica is a slice of paradise that’s affordable – and buying a home in Costa Rica is easy. Let’s look at the lifestyle you could enjoy.
There are three groups of people who should consider buying a home in Costa Rica, they are:
. People who wish to retire
. People seeking a second home
. People wanting to work abroad
1. Retiring: You have worked hard all your life, and now you want a quality lifestyle – where your money goes further.
Property is up to 70% less expensive than in the southern states of the USA – and you’re just a few hours flight from the Southern states of the US.
When you live in Costa Rica, you benefit from the following:
. Property is cheaper, and so too are your living expenses – up to 70% cheaper – meaning your social security cheques go further.
. If you buy a Costa Rican home, you still get the entire infrastructure you’ve become used to in the USA – great communications, shopping, and entertainment.
. You get beautiful scenery – from rolling hills, to stunning beaches – even volcanoes!
. Buying is easy – and you get the same rights as Costa Rican residents.
. You get a more relaxed pace of life – and serious crime is rare.
. You get the comfort of world-class healthcare – at a fraction of the cost you’d have to pay in the US.
. Finally, you get some of the best weather in the world – live without the need for heating in the winter, or air conditioning in the summer.
2. A Costa Rica second home, or an investment property: A Costa Rica home gives you all the advantages of the above and many more – but buying a home in Costa Rica is not just for retired people. With more Americans than ever looking at vacation and investment property, you should consider the following:
Real Estate Values ready to Soar.
Costa Rica homes are cheap – and real estate values are growing at an average rate of 30% per year – and in many locations prices have doubled, or tripled in just a few years.
Therefore, you get an asset you can enjoy as a second home whenever you want – with prices up to 70% cheaper than in the southern US states such as Florida.
Many people are buying Costa Rica homes as an alternative buying property in the USA – it’s cheaper, and you get a fantastic lifestyle.
You get a cheaper property with better growth potential – and the added benefit of a booming vacation rental market. So when you’re not enjoying your second home yourself, you can rent it out and make a good income.
3. A Complete change: We’ve already seen the benefits of a Costa Rica home for retiring to, or as vacation home – but maybe you fancy moving, and setting up a business in Costa Rica? Well the opportunities are endless.
As more Americans and other foreigners relocate to Costa Rica than ever before, there are opportunities to set up businesses and take advantage of the new wealth being created.
Tax Advantages
The major advantage is that the Government will not charge you any tax for years – so you can get your business off to a flying start. Educational standards are high, and labour laws are flexible – so you have everything you need to make your business a success.
Consider Buying a Home in Costa Rica
It’s an affordable slice of paradise, and record numbers of Americans and other foreign nationals are actively buying, or considering buying a home in Costa Rica.
If you’ve not considered a Costa Rica home, then maybe this article will encourage to find out more – you won’t regret it!
Jul
13Property in Costa Rica – Where Second Homes Are a Good Investment
Posted By: Ramon Rivas on July 13, 2010 at 11:22 pmIf you’re thinking of buying a second home, then you should consider buying property in Costa Rica – as prices are currently still inexpensive, but are rising rapidly.
By buying property in Costa Rica, you’ll be able to take advantage of a real estate boom that’s set to continue for many years to come.
Let’s look at why buying a property in Costa Rica is such a good investment:
Property Prices in Costa Rica are rising
Investors that purchased a $30,000 property 15 years ago, now find that their property is worth as much as $750,000.
Another example of the Costa Rica property boom is the Marriot Corporation, which built the Los Suenos Resort, pre selling fifty condominiums of 2000 square feet for $250,000.
The following year, Marriot sold another fifty at $350,000. This year’s upper end units are being sold for as much as $450,000 to $850,000!
The biggest change in property in Costa Rica during the past decade is that prices have dramatically increased as Costa Rica has attracted more foreign buyers – and prices have doubled, or tripled, from 10 years ago.
Property in Costa Rica is Inexpensive
Despite these huge property price rises, Costa Rican real estate is still cheap compared to countries such as the US. A lovely three bedroom property can be purchased for as little as $60,000, and prices for beachfront properties cost up to 75% less than in US states such as Florida and Arizona.
Property prices in Costa Rica will continue to increase in value over the coming years, but there’s another way to ensure that your properties value exceeds what is already an excellent average growth rate – and here we need to look at location:
The Importance of Location
When buying property in Costa Rica, you need to look at the infrastructure – which can improve an area’s value.
Here are examples of three infrastructure changes that will increase property prices in adjacent areas:
A New Freeway: Scheduled to be completed shortly, which will link the largest metropolitan cities to the Pacific Coast, thereby generating an increased flow of traffic and fueling buying interest in adjacent areas.
A New Marina: The largest marina in Costa Rica,is due to be completed soon in the Town of Quepos.
A New Airport: A new international airport is planned for the town of Orotina in the near future.
When buying property in Costa Rica, being in ahead of the crowd – before an important part of the infrastructure is completed, will enable perceptive buyers to take advantage of price rises after the infrastructure is completed.
If you’re buying property in Costa Rica, (or anywhere else for that matter) then you need to consider location before buying.
Buying Property is Easy
Where else in the world can foreigners come to a country which has a stable democracy, no military, a government that encourages investors with no restrictions, and where foreigners are entitled to the same ownership rights as Costa Rican citizens?
Throw in low costs and no capital gains tax, and its no wonder foreign buyers are looking at Costa Rica. Buying property is Costa Rica is easy – and that’s one of the major attractions.
A Demand Driven Market
Buying property in Costa Rica will continue to be a sound investment, as foreign buyers look for an affordable place to live with a great lifestyle.
Costa Rica is beautiful, and has a great climate with no weather extremes, a low cost of living, no serious crime and an infrastructure that is on par with many industrialized nations.
Buying property in Costa Rica offers a slice of paradise at a cost anyone can afford – and as more buyers invest, prices will rise.
Big Rewards for Savvy Investors!
We’re still at the start of a boom in property prices in Costa Rica, and now’s an ideal time to get in on the action. Buying property in Costa Rica is a solid investment, which looks set to reward savvy investors with great capital gains in the near future.
Buying property in Costa Rica can change your financial future, and if you’re thinking of investing in property, there is no better market to get involved in.
If you are flipping a property, you need to find buyers fast in order to make money. You can find buyers quickly by meeting investors and other potential customers at local business events and auctions and by building online mailing lists that you can send to potential buyers.
House flipping is attractive because it allows you to start making money right away. You don’t have to rent out the property, take care of taxes and management costs for months or years, and you don’t have to wait around waiting for buyers. The idea behind flipping is that you buy distressed property, turn it around, and sell it quickly to someone as soon as the renovations are done. The trick, of course, is to find buyers who are willing to buy quickly. If you’re planning on flipping a house but cannot find a buyer quickly, the delay in selling will mean lost profits.
To sell your investment home quickly:
1) Visit auctions to meet other investors. Local foreclosure auctions are not only a great way to find your next investment property for refurbishing and reselling, but they’re also a great place to pass out your business cards to other investors. Collect the business cards of other investors at the auction in order to build an investor list that you can contact whenever you have a property to sell. This is especially important if you plan on house flipping fairly regularly.
2) Build an e-mail list. Once you have a number of business cards and e-mails of other investors, develop a mailing list and an e-mail list. This way, you can contact investors quickly whenever you are about to sell property. However, keep in mind that you cannot simply send unsolicited information to other people. Have investors sign up for your mail newsletter or your e-mail newsletter, and this way you can send information about your latest home in the latest issue of your newsletter. Use a double opt-in list for e-mail newsletters and e-mail discussion groups, especially, because anti-spam laws can be fairly strict. Also, be careful not to abuse your e-mail list or mailing list. If you send investors a lot of information that they are not interested in, they’ll not only opt out of the mailing lists and e-mail lists, but they will become annoyed and less likely to look carefully over your property opportunities. You may wish to divide your mailing lists into a few groups. For example, send your higher-end properties to those investors interested in higher-end homes, and send rental units to those investors interested in commercial properties. This way, each investor will get the information that they’re actually interested in using.
3) Join business groups in your area. Any meetings, events, or luncheons held by business groups in your area are a great networking opportunity that lets you meet potential investors and investors in your area. Plus, you will be meeting people who are not investors but are still interested in business. These people may still be interested in contacting you when they have a property that they need to sell quickly or hear of a property that is going up for sale. Just about anyone can refer business to you and can refer customers to you, so make friends with lots of business owners in your area.
4) Go online. The Internet has lots of discussion groups, message boards, and forums where you can meet other investors who might be interested in buying your properties. These are great resources if you are house flipping, since you can receive and send information fast.
