Even in uncertain economic times like these, history shows that real estate is one of the soundest investments a family can make. Also remember that the stock market is not the only place where people can make their fortunes. And also, you’ll hardly ever hear of real-estate investors who’ve gone bankrupt, unlike stock market investors.

Even in uncertain economic times like these, history shows that real estate is one of the soundest investments a family can make. During the Great Depression of the 1930s when the stock market plummeted as much as 89 percent, housing prices dropped only 39 percent. So, according to most of the research on housing trends, prices continually stay at the same level as, and most often appreciate faster than the rate of inflation. In fact, the prices of houses actually increased by 10 percent during the economic recessions of the mid-19702 and the early 1980s.

The last downturn of the global stock market resulted in millions of investors who got their fingers burned. Overnight, life savings were eaten away, retirement funds went into decline and the economic forecast for all of us who had any money invested in stocks and shares was gloomy, to say the very least. And as a direct result, investors sought alternative asset classes to invest their hard earned money in. This has led to a global boom in real estate markets and property prices, and has spawned a generation of budding real estate investors.

However, the opportunities to make big, quick profits in residential real estate tend to come and go. If the local market is hot, families might get to buy and sell a house at a profit. but, if the market is not so hot, there are chances that you’ll have to hold on to the house for a longer period of time before selling it or at least till the market turns.

Tips for First-Time Real Estate Buyers

If you play well, you can be the big winners in this current environment of boom. However, it’s important to draw up a good budget to help you decide what you can afford. And, once you’ve determined a price and picked your desired community, you can shop around to find the best house within your budget.

However, for those of you who’re still uncertain about how to go about it, there are five things that might just help you close a great deal. While deciding on the house to invest in, never make the mistake of assuming anything. Instead get help from an expert if you’ve any doubts. Also, it’s important to set a realistic budget and stick to it. You also need to consider every single area of cost and payment to make sure that there are no nasty surprises on the way.

More than Just an Investment

Residential real estate is more than just an investment. For example, if you purchase a vacation home, it will not only be a great deal when housing prices move upwards, but it can also be a place for some great vacations for your family and you.

Also, there is another advantage. The federal government believes that home ownership is so important to the future of our country that it has allowed mortgage interests to remain a substantial tax shelter for families. So, homeowners are allowed deductions on their property taxes. And, the profit on the sale of your home remains tax-free as long as you buy a house for a greater or equal price.

So, before you decide that residential real estate investment is not exactly your cup of tea, re-examine the financial benefits of owning your own home. Also remember that the stock market is not the only place where people can make their fortunes. And also, you’ll hardly ever hear of real-estate investors who’ve gone bankrupt, unlike stock market investors.

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1. Buy what you want to buy. The most important decision when buying a property is deciding exactly what you want the property to do for you. Is it purely for short term capital gain to provide a one-off profit over a particular period of time? Or is it to provide long term regular income? Or is it mainly for your own use as a holiday home?

2. Ignore the hard sell. Many people go to dedicated overseas property exhibitions or go on overseas trips or “inspection flights” to view properties. It is important to stay focused on what you originally had in mind. Do not be swayed by the hard sell of estate agents.

3. Be careful buying off-plan. Off-plan involves buying a property before it is built. You cannot see exactly what you are buying and it can be a long time before the property and surrounding development is completed. Problems can arise if the building is not constructed according to the original schedule.

4. Allow 10% extra for expenses. The cost of buying a property abroad (taxes, conveyancing, lawyers fees, agents fees, VAT, etc) can be much higher than in your own country. The total can add up to 10% to the cost of buying a property.

5. Buying in an up-and-coming area. This will increase your capital appreciation. Buying in the fashionable areas of Spain or France means that property prices are already expensive and may not increase much further, or increase at a slower pace than in the past. Buying in a less-fashionable area of Spain or France, or in the up-and-coming property markets of Bulgaria, Turkey, and Croatia where prices are still low will increase the chance of a rapid price increase. It is important to note that the less-fashionable and up-and-coming areas still need to have all the virtues of the more established destinations. What you are really looking for is an undiscovered property hotspot. Often such places are neighbouring the more fashionable and expensive areas.

6. Buy a property in a place that is popular with locals as well as tourists. You should always think of the exit route from your investment. The day will come when you want to sell your property and you will want to have the largest possible potential market. Ideally your investment property should be an attractive property for investors of different nationalities as well as a possible home for local residents.

7. Adequate shops, restaurants, and facilities. Most people who want to use a property as a holiday home will want to be near shops, restaurants, and other facilities. This is particularly important if you want a rental income from your investment.

8. Is there an airport nearby? Is there adequate public transport? People who rent property will want somewhere that is easy to get to and will often gravitate to those places with a nearby airport.

9. Consider the property off-season. The property and area might look lovely in summer when all the restaurants and bars are open. But what about winter? Do all the facilities close? Does the area become a “ghost town”?

10. A room with a view. A view is a major bonus from both the rental and the resale perspective. A sea view is top of most peoples list but rural or mountain views can be just as stunning. Nothing beats sitting on a balcony or roof terrace wathcing the setting sun. Beware though that views can change and your beautiful view could be replaced by a view of a new concrete apartment block. Check local planning regulations carefully!

11. Check the inheritance laws of the country where you are buying. You may need a separate will made in that country as well as a will made in your home country. In France for example your children automatically inherit your house; your estate does not pass to your spouse.

12. Get your own independent advice. Do not rely on a lawyer recommended by the property agent or developer.

13. Learn the language of the country you are buying in. You don’t have to become fluent but you should learn as much as you can.

14. Above all, buy a property YOU like in a place YOU like. The chances are that if you love it and would enjoy staying there then others will too!

How much do you really know about investment property? Accurate research and professional expertise applied to the purchase of an investment property builds a solid foundation for financial success. You may want to work with a estate agent who can help to identify the great opportunities in investment properties in the area of your choice. Or, you may choose to do the work on your own. A estate Agent can provide the inside line on properties with potential in the geographic area where you are looking for property. If you do choose to work with a Estate Agent, you will save time, and you may have more choices and opportunities.

Research the Property’s Past and Present

Some essential information must be obtained about the property’s past. For example, do you know the history of the property, or even how old it is? What sort of upgrades have been made to the home? Is the roof waterproof, and is the plumbing and electrical in working order?

What’s the Neighborhood Like?

Once the overall condition of the property has been assessed, tax assessment records must be examined to determine property value trends. A good Estate Agent will be familiar with the neighborhood where the property is located and if he or she is not, the REALTOR should check the neighborhood at different times of the day and night and speak to some neighbors. If there is a homeowners association, check the guidelines, assess fees, and be certain they allow rental of properties.

Assess the Bottom Line

For what purposes are you, the investor, going to use the property? To rent? To house your business? Or, to rehabilitate the property and sell it at a profit? Once this is determined, you can assess the bottom line.

Are you paying cash for your investment property? If not a mortgage will have to be paid. Have your estate Agent determine if rent and applicable fees will cover the mortgage, property management and maintenance. Consider property management if you do invest in property. Research fees and services provided by different property management companies, or ask your estate Agentestate Agent if they provide this service, because many do. If you do not want to collect rents and contract repairs, find a property manager with the skills to negotiate, be your intermediary, and facilitate business in your absence. For investors who rehabilitate and sell buildings at a profit, a decent turnaround is 60-90 days from the time of purchase to the time the property is put back on the market. Three to four contractors should be researched and they should provide written bids with time estimates on their projects.

Document Fund Availability with Your Offer

Once you find that dream investment property, don’t forget that offers need to be accompanied by your financial institution’s statement of fund availability or a lender’s approval letter. This will help make certain your offer will be accepted over other offers that may not come with appropriate paperwork.

There are still plenty of great deals on investment properties in this real estate market, and there are some less than desirable properties as well. Do your research. Or, hire a professional who will do it correctly for you. With proper planning and decision making, your real estate investment should be a profitable and worthwhile endeavor.

1. Search on the world wide web for distressed or foreclosed properties as a starting point. Use a professional REALTOR to identify great foreclosure deals for you. You may be successful at searching the web on your own, but keep in mind some of the information is outdated, some may be incorrect, and some of the available properties are not even listed. A Estate Agent subscribes to updated MLS listings and can offer you the most current information available.

2. If you search yourself for distressed properties and purchase from the selling agent, you are paying a commission to someone with a vested interest. Obtain objectivity in the sale by working with your own Estate Agent You won’t pay any more. Technically, everyone works for the seller, since they pay the commission.

3. With distressed or repossessed properties, time is of the essence. Purchasers must close on the date specified by the agency, and cannot close after this without penalties of £25-200 per day.

4. It takes 1-3 weeks to qualify a loan. If you are approved for a loan, make sure you are qualified by your lender as soon as possible. If you are paying by cash, make certain funds are available. If finances are in order, the Estate Agent will then submit an offer. When the offer is accepted by both seller and buyer, the Estate Agent will submit the ratified contract to the lender and closing agent. These steps will begin the process of a successful real estate transaction.

5. When purchasing a distressed property, always obtain 3-4 bids from different contractors to estimate costs of repairs, if you do not plan on doing the work yourself.

6. If you are going to sell the property after rehabilitating it, ask your Estate Agent to research similar properties in the neighborhood to ascertain market price.

7. Keep copious records for tax deductions. Any expenses related to the purchase, repair, or maintenance of the property may qualify. Meticulous records are key to a profitable property venture.

8. The title you receive after purchasing a distressed or repossessed property is a special warranty deed rather than a general warranty deed. Some buyers are alarmed by this, but there is no need to worry. The purchase of title insurance protects the buyer. Each lender purchases insurance to protect the loan as well. Titling insurance should be obtained by the property purchaser. It is always offered by the closing agent. Consider using an attorney instead of a titling company as your closing agent. An attorney is only £50-75 more than a titling company. A property solicitor can remedy any situation that may arise. Therefore, they are more efficient representatives on time sensitive repossessed properties.

9. Repsossed properties require special addendums and special contracts by the individual bank and HUD office (where applicable).

10. Foreclosure properties are potentially the most profitable, but require the most attention to detail. A REALTOR experienced in foreclosure deals is highly desirable because the paperwork must be in order to submit a proper bid, and timeliness is critical.

Why real estate, or why property, some people ask when looking for an investment. Property investment is, and always has been, the most powerful type of investment for building wealth. It has been said that over 90% of the world’s millionaires got there by owning property. The reason property is such a powerful way to build wealth is due to one key concept: leverage.

Once I realised this, I didn’t look back. Now if you are an experienced investor this may be obvious, but for the benefit of those who haven’t seen the light, let me explain … Leverage is your ability to magnify your returns by using other peoples’ money (in this case, it’s usually the bank’s money).

To give a clear example, say you have £20,000 to invest. This can be a lump sum or by releasing equity in your main residency.

So what is the best way of investing this money?

Option 1

Stick it in your local bank - by some considered the safest option, “at least you can’t lose it, and you get some guaranteed increase in value” usually goes the argument.

Money in the Bank - assumed return: 4%
Now £20,000
1 Year £20,800
5 Years £24,333
10 Years £29,605

As you can see, after 10 years, you’ve made virtually no progress at all, especially when you consider the effects of tax and inflation.

Option 2 Stocks and Shares

Now over the last 10 years, although admittedly not in last 4 years, the stock market has been very popular. However I cannot accept it is a better bet. When I read that the stock market is a better bet over the next 2 years as will go up by 15% a year, as opposed to the property market that may go up by 5% a year this does not take leverage into account and so paints a very distorted picture!!

And I will show you why. It’s hard to say what sort of return you might get on the stockmarket, but let’s say you get 12% a year for the next 10 years - very unlikely, but let’s just go with this. So if you could beat the odds and get a 12% return every year ……

Money in the Stockmarket - assumed return: 12%
Now £20,000
1 Year £22,400
5 Years £35,247
10 Years £62,117

Now that’s a big increase on sticking the money in the bank, but clearly is not guaranteed. But can you do better?

Option 3 Property

One of the great things about property is it enables you to leverage the ?20,000 to purchase a ?100,000 investment property (in other words, borrow the remaining ?80,000 from the bank). Now say the property market slows down to an average of only 6% return for the next 10 years. This would probably be a fair estimate in the UK, although there are plenty of markets which are growing more rapidly, lets concentrate on UK for this example.

Money in Property - assumed return: 6%
Now £20,000 (?100,000 property value ?80,000 mortgage)
1 Year £26,000 (?106,000 property value ?80,000 mortgage)
5 Years £53,823 (?133,823 property value ?80,000 mortgage)
10 Years £99,085 (?179,085 property value ?80,000 mortgage)

Make sense? So you make 6% increase on the full value of the property, not just the ?20,000 which you initially had. This is the power of leverage. In effect you have increased your initial investment 5 fold in 10 years! So even if the stock market increases by twice as much per annum as the property market over the next 10 years, you can make far more money from property.

Now for simplification, I have not included lawyers’ fees, agents’ fees or stamp duty. Admittedly buying a property has more additional costs than buying shares, but this would not make a significant difference on your profits - around 4% in the UK, higher overseas.

One thing to point out is that in the short term you have greatly increased your potential loss i.e. if the property went down by 10% in value, you would lose more of your initial investment, because the property value would go down to ?90,000, you still owe the bank £80,000, so you now have £10,000. In comparison if the stock market dropped by 10%, your investment would be worth ?18,000, as only lose 10% of £20,000.

However over a length of time, using leverage to good effect and using all the other skills you need when buying property, property is by far the best investment, for the majority of individuals.

The figures I have used have been very conservative, many individuals are making far more than this on property, whereas anyone making the same returns on the stock market, will generally be benefiting from some sort of insider dealing or be very high up in the company, I would imagine!

Property investment and development has never been a more popular pastime or career changing challenge; if you would like to learn seven secrets for consistently successful real estate investing through development or you would like to know how you can continue to profit from property even if the market takes a downward turn just read on.

1) Do Your Location Homework - did you know that through successful and sustained location research professional property investors actually continue to profit during a market down turn? It’s true - whatever the market conditions you can apply their location research approach to your real estate investments and also make consistent profits from property.

Take the necessary time to learn all about a town or city you’re considering for your next property development purchase and discover where the up and coming areas of that town are likely to be. If there are inner-city redevelopment projects planned examine the real estate market in the immediate vicinity, if there are areas that are booming right now examine the immediate neighbouring areas for their potential for future prices rises for example.

Don’t follow the crowd - have the confidence to buck the trend and get ahead of the curve by positioning yourself in a market that is about to boom rather than in one that has already blossomed.

2) Know What You Can Afford - While it can pay to sometimes speculate never be tempted to jeopardise your own home. Work out your finances and be ruthlessly strict about what you can and cannot afford as a down payment, for mortgage costs and for the renovation and redevelopment of your next real estate investment. Only proceed within the confines of your tightly allocated budget and do not be tempted to over extend yourself particularly if competition in the property market is tough and the market is slow or stagnant.

3) Identify Your Target Market - Having identified your next location for property investment identify the types of people who buy into renovated properties in that location. Know who your target market are going to be and what they are likely to look for in a property in that location. If for example you’re examining inner-city spaces you might identify that your buyers will be young single professionals and that the ideal property type for these people will be luxury low maintenance apartments - seek out suitable properties with the potential for redevelopment into luxury low maintenance apartments and you will fulfil your target market’s brief.seek out large houses with substantial gardens in the area and you will have totally missed the market and potentially created a property that will not sell!

4) Renovation Not Rebuild - Know your budget limits and your personal skill restrictions. Do not consider taking on a property that is in need of a complete structural overhaul when your budget is tight or you do not personally have the time, skills or inclination to do the structural work yourself. Be realistic about what you and your budget can achieve and seek properties that fulfil that brief. Pay to have an independent and complete survey done on any property you are seriously considering buying before making a down payment to ensure that there are no hidden surprises waiting for you beneath the floorboards to eat up your budget in its entirety.

5) Manage Your Budget - With your survey in hand you can approach builders for quotations and seek out prices for fixtures, fittings, finishings and furnishings. Take the prices quoted and sourced and build your budget. Factor in ongoing mortgage and service costs and labour costs as well as your findings and structure and allocate your money accordingly. Watch every single spend and be ruthlessly strict with yourself and your builder. If at all possible have your builder commit to a contract with fixed finish dates and fees and stay on top of every single penny or cent every single day. At the end of each week tally up your outgoings and expenditure and ensure you’re not exceeding your budget. If you’re overspending rein it in or you will have to shave it off other areas of the development. Remember never to scrimp and save on finishing touches and always give yourself a realistic fall back fund in case of emergencies.

6) Appeal To The Widest Market - Forget putting your personal stamp on any property you develop - YOU are not going to be living in the property! You should already have identified your target market which will give you a good idea of the level and quality of finish expected, now meet those expectations without adding your own personal taste into the equation. By appealing to the widest market or the lowest common denominator your property will be attractive to the majority of buyers making it faster and easier to sell on and profit from.

7) Make Friends With A Real Estate Agent - Your greatest ally when developing property will be your real estate agent. Make friends with these guys and you will build a beautiful and successful symbiotic relationship in which you both profit to the maximum! Real estate agents are a fountain of untapped knowledge about the local market, who is looking for what property in which area, which additional features cost little to add but which push up the asking price and what a buyer expects from your particular property type. Get the facts from your real estate agent and then apply their advice. You will create a property they can market for top dollar and to the widest market - you will make more profit and they will make a bigger commission ensuring a beautiful and lasting friendship!

Finally, remember that when you’ve bought, renovated and sold on you’ll be looking for that next property opportunity and any real estate agent who you’ve worked well with will be on the hunt for suitable real estate for your next investment making any subsequent purchases that much easier to source.

Most experienced property investors use property managers. Why? Because they make you money.

Property management isn’t just about collecting rent. It’s about ensuring your property is always rented, ensuring you have the best possible tenants, and ensuring you’re getting the best possible rent. It’s about keeping the property well maintained, tracking expenses and income, and dealing with the legalities of leases and the rights of tenants.

This is what property managers do. It’s their core business. For a landlord, the benefits are significant.

Save Valuable Time

The most obvious benefit is time saving. You don’t have to spend an hour or so each week making phone calls, placing ads, interviewing prospective tenants, speaking to solicitors, speaking to your tenants, collecting rent, organising tradesmen and so on.

How much could you earn in that hour if you were focussing on your work rather than chasing your tail?
Know Your Market

Property investment is a business. To succeed in business, you need to know your market.

Property managers make their living out of knowing the rental marketplace. They know how much your property is worth and who’ll want it. They know the best ways to reach the market and they have the resources to do it.

A property manager with some real marketing nous can earn you thousands every year, just with an intelligent marketing campaign.

Know Your Rights

Rental legislation is constantly changing. It’s important that you know your rights as well as the rights of your tenants. But most people don’t even know where to start looking.

Property managers work with tenancy legislation every day. They know all the ins and outs, as well as the pitfalls and loopholes. They’re experienced in all aspects of lease negotiation - from bond to maintenance agreements to eviction.

Most importantly, they’ll protect your rights as a landlord.

Get Good Tenants

Most good tenants will only rent through property managers. The whole process is much more streamlined and convenient. Payments can be made electronically, their questions can be answered quickly, and everything can be done during business hours.

The opposite is true of bad tenants. They target privately managed rentals, because that’s generally all they can get.

Property managers chase down and validate every reference, and they get to know problem tenants. They do everything possible to provide you with a hassle-free investment because they know the eviction process is every landlord’s worst fear. You can’t just kick someone out without notice. The whole process can take months.

But if you’re unlucky enough to end up with a problematic tenant, a property manager will manage the whole eviction process - including all dealings with tenants, sheriffs, and court officials.

Sure, you can juggle all of these elements yourself, and you’ll save yourself a small management fee. But what’s the cost? Do you want to work for your investment or do you want it working for you?