Posts in Category: Investing

Is It The Right Time To Invest In Property?

This appears to be the query on many minds and with rates of interest at historic lows, we can not blame traders for asking! As with most issues, nevertheless, there’s a quick and an extended reply.

The quick reply – sure, the present powerful financial surroundings and low-interest charges make for a patrons’ market with nice funding alternatives however earlier than you soar in, you might want to ask your self just a few questions.

This text just isn’t meant to provide the solutions. As an alternative, we wish to level you to among the issues you ought to be contemplating earlier than making the funding resolution and as all the time, we advocate that you just focus on this in additional element along with your certified monetary advisor.

Under are some things to consider:

What are the extra prices, over and above the acquisition worth of the property?
Do I have to finance these prices as properly, incurring extra curiosity, or do I’ve money reserves put aside?
What ongoing prices do I anticipate after the preliminary buy?
Ought to I purchase residential property or go for industrial?
Am I able to vetting potential tenants and effectively accumulating rental revenue; or
Who will handle the rental property on my behalf; and
At what value?
How will my funding have an effect on my revenue tax, and do I would like to think about every other taxes like CGT, property obligation, and so forth.?
Will I have the ability to proceed paying the bond premiums, charges and taxes, and upkeep prices, even when the property has no tenant in it for a interval of say six months?


In the event you can breeze by way of this checklist with out feeling a tinge of uncertainty, direct funding into property may be for you. Nonetheless, if these questions make your abdomen flutter, you must in all probability contemplate accessing your property publicity in a distinct method.

There are two broad forms of property traders; those that just like the concrete facet of a brick and mortar funding and those that could recognise the function {that a} property funding will play of their total portfolio, however they don’t seem to be passionate “property individuals”.  Fortunately, there are alternatives each domestically and offshore, for each forms of traders.

The textbooks inform us that traders ought to diversify their portfolios throughout quite a lot of asset lessons, the massive 4 being money, bonds, equities, and actual property. The primary three are normally properly represented within the common balanced unit belief, however property is commonly neglected by fund managers on account of its specialist nature. Fortunately, it’s now simpler than ever to entry the property funding of your alternative.

In the event you like the thought of getting an deal with for your property, however some features of the checklist above concern you, or maybe simply the considered the admin of all of it exhausts you, there are some incredible brick and mortar funding alternatives accessible to you with out having to personal the entire constructing/dwelling your self. Traditionally, traders have sadly been uncovered to fairly just a few property scams, giving the syndication mannequin a nasty status in South Africa, however the business has come a really good distance in direction of defending traders.

Currently, you will discover alternatives to put money into each native and offshore properties by way of properly regulated, formal channels. Just a few of the advantages of this funding technique are:

Entry to bigger industrial properties that you could be not have been in a position to purchase instantly because of the dimension of the transaction;
Skilled funding managers taking good care of all of the administration, authorized necessities, ongoing taxes, and so forth; and
The power to unfold your danger by investing smaller quantities into numerous initiatives, relatively than proudly owning one constructing uncovered to a single tenant.

Don’t actually really feel like worrying about whether or not your tenant’s pitbull is digging holes all through the backyard or whether or not the corporate you might be renting to is laundering cash from the again room? Maybe you must relatively contemplate the much less hands-on funding route of listed property.

There’s a multitude of listed funding choices accessible. These investments – typically referred to as actual property funding trusts or Reits– commerce on a recognised inventory alternate, with all of the accompanying laws that listed funding managers have to adjust to.

Investing in listed property is an effective way of getting publicity to a variety of properties throughout the globe. You possibly can select from native choices that put money into SA solely, international Reits which have publicity to a worldwide diversified portfolio, or something in between. Some traders choose regional specialists to make up a basket with international publicity. This may increasingly sound like numerous work, however you possibly can entry a neighborhood listed property fund with as little as R200 per 30 days. Relying in your funding supplier, offshore investments can have minimums of round $500 or one other foreign money equal.

Aside from gaining access to a world portfolio, your listed property funding may even provide you with publicity to a spread of several types of buildings, which implies you will have a decrease danger. Give it some thought: within the midst of the present pandemic the proprietor of a cinema constructing might be having severe discussions together with his tenant about staying updated with the hire, however the proprietor of a constructing let to a low-cost grocery store has a safe revenue stream. Listed property funding provides you with entry to a big, combined basket of forms of buildings eradicating this single-tenant danger.

Whether or not you favor do-it-yourself direct funding, property syndications or listed actual property, it’s properly price your time to debate the professionals and cons along with your monetary advisor!

6 Must Ask Questions When You Are Talking To Owners Of Distressed Properties

One strategy that can be very rewarding when buying foreclosures is negotiating directly with the owner of the distressed property. These homeowners are often misinformed and unrealistic, and it’s your job as a real estate investor to extract the proper information from them in order for you to make an informed decision on the property.

Here are 6 must ask questions you should be asking in your communication with the owner of a distressed property:

1. How far behind are you? Every state has different laws regarding the foreclosure timeline, so it’s imperative that you understand this process. Using this knowledge when asking the homeowner how far behind on their mortgage they are, you can formulate a pretty good idea as to how much time they have before the lender repossesses their home. You’ll be surprised at how many people do not realize how little time they have left.

This is the lead in question that I use when I first approach the homeowner. It’s a great way to break the ice, and allows them to get comfortable with you before moving on to the more “personal” questions.  Most of the time, you will not get a specific answer, but more of a general time interval, such as “about a year” or “I stopped paying my mortgage when I got laid off in so and so”. When you start talking about events and time, it helps get the homeowner’s guard down, and they start sharing with you in a more open manner.  This information is also a critical element in determining whether this investment makes sense for your business.


2. What is your mortgage payment? Usually this number is on the tip of the homeowner’s tongue, because they’ve either tried to get the payment lowered, or have complained enough about how high it is to anyone that will listen. Make sure you are one of those listeners. Finding this information out coupled with how many months they are behind will allow you to structure how deep the homeowner is in arrears and add an important factor to your investment equation.

3. How much do you owe? Besides back payments, knowing the total payoff amount for the mortgage is essential when buying foreclosures.  Usually, the homeowner will know how much the initial mortgage was, and how long they paid before they went bad.  If not, simply asking to see their last correspondence with the lending institution should provide all the information you need to get a starting point when doing the negotiation for the property.

4. Do you have more than one lien on the property? Always make sure that you have the entire picture as far as who may be attached to the property in question.  While some homeowners think they are only obligated to pay off a mortgage in first position, second (and even third) mortgages as well as any liens must be factored in when making an investment decision. While you can run an abstract or titles search and find out the whole story, it would help to have an idea before running the report and wasting your time and your money.  The last thing you want to be is blindsided by a large tax lien or a judgment held against the property. Keep in mind that depending on how deep in the muck the homeowner is, there may be issues that they are just not aware of.

5. Are you the only decision maker?  When you are presenting a deal for a distressed property, it’s important that all decision makers are present to hear the offer.  You are spinning your wheels going into your presentation, no matter how polished and convincing it is, without all decision making parties present and accounted for.  If not, no matter how well your deal is received, it will likely get cracked, if not entirely broken.  This means you will have to work twice as hard and take time away from other things you could be doing (like making more deals!). Don’t think for a second that presenting to multiple people will make you feel outnumbered. Your odds are actually better because you will easily see who is in control and who you have to focus on in order to make the deal happen.

6. How much do you need? When it comes down to finalizing any deal with the owner of a distressed property, there’s only one thing that matters- what’s it in for them.  They don’t care about how much they owe, they just want to know how much they could get to move on and into a new life. I never ask them how much they want, because inevitably that answer will only set me back in the negotiations as they will have unrealistic expectations.  It’s important to know the bottom line number that will assist them in getting their feet planted and starting anew. You may not be able to give them everything they want, but you may be able to give them what they need.  Be sure to ask them not once, not twice, but three times with the last time stressing what they really need to make this happen.  You’ll be surprised how the number changes and they have negotiated for you already.

Asking the above 6 questions is your first step in determining the proper tactics needed in order to make a deal happen.  Buying foreclosures requires following a set process, and these questions provide the information needed to choose the best process to follow.

Finding Your First Investment Property

Finding the right investment property takes time and research, but it is essential to succeeding in the property market, unfortunately finding your first investment property is often harder than most investors think. Eagar to buy a property, to start reaping the rewards, inexperienced investors often jump head on into the first property they find and for many of them this error can cost them dearly. This article will outline some of the things you need to know to find the right property that will generate income and not waste it.

You have the choice of searching for a property by yourself or with the aid of a broker.  My advice to first time investors is to invest a little money and get a broker to guide you through the first purchase, if your plan is to buy multiple properties than I recommend you use a broker to help with all your properties until you feel confident about going it alone. If you’re looking to buy into a market that you don’t know well than a broker from that area can help you find suitable properties including new properties that have just been put up for sale, giving you the first bite. A broker with local knowledge, who understands the area that you are looking to invest in, is invaluable for both the beginner and the experienced buyer.

Understanding the local market is paramount to your success. Look for any discernible trends in that local property market. If housing prices are falling then there is a good change that the local rental rates will soon follow. Along the same lines, if the local prices have gone up in the past 6 months than the area must be in demand, meaning you will be able to increase the rent without fearing long term vacancies. If your target market is not too far away you should also visit city hall or at least visit their website to see if there are any development or plans for that area which could adversely affect property prices. It is also a good idea to contact the local police department to check the how safe the area is so you can find out if you should provide extra security to the property.

real_estate contract

Once you have found your perfect property you need to make sure you have your finances in order. Before you start looking for financing you should check your credit report so you can find any inaccuracies that would prevent banks from loaning you money. Checking this yourself will give you time to rectify your record before letting the banks have a look. It’s best to check with all the credit reporting bureaus to get the full picture of your credit situation. Even if your report doesn’t seem that bad remember that the better you can make your credit report the better the interest rate you will be able to get.

While a renovator’s delight can be an exciting purchase I don’t recommend it for the first time investor. Although it means buying the property at a cost well below anything else you will find in the area the cost of fixing the property to a stage where you can successfully rent it out can very quickly break the bank, and of course the period that the property is being worked on is time that you can’t collect rent. Your first property should be one that is ready to be occupied, one that can start making money as quickly as possible.

You should of course inspect the property yourself and make sure it is too your liking but more importantly than that is to get a professional to inspect the property to make sure it is safe. While you can check the doors, the power points, the taps and the gas yourself, it definitely pays to get someone to look below the surface, beyond what you can see. Have a professional check the actual wiring throughout the house, see if there are any remnants of lead paint on the property and make sure that the building is structurally sound, you don’t want your first property to fall down around you.

I know that when you make the decision to invest in property you are so anxious to buy that you don’t want to go waste time and effort worrying about the property, you want to buy a property and start making money. But when it come to finding your first investment property it really does pay to take your time and double check everything before proceeding with the purchase, not only will it  save you money and make it a more enjoyable