Monday, October 10, 2005

When is the Right Time to Invest In Real Estate? by Bruce W. Ford

You know what I'm going to say, right? I bet you think I'm going to say that it's always a good time to invest in real estate.

Well, I'm not.

There are rare occasions when you should not be buying property...or selling for that matter. Simply put, you should not buy or sell property if you are in an area, or encomonic times are such that property is loosing value.

Granted, this isn't very often and is usually very localized...the Southern California market crash of a few years back comes to mind.

If that happens in your area, just hold what you've got. Don't buy or sell until things improve. The rebound can often be quite profitable!

Now, the flipside of that is, if property IS going up in value, maintain your steady approach to building your wealth by increasing your real estate inventory.

This applies even if the housing market is tight, slow, a buyers or a sellers market or even if it's considered booming. All that doesn't matter. Just maintain your investment criteria and keep your hooks in the water looking for property.

When the economy slows, typically housing appreciation slows, but doesn't stop or go in reverse. So, real estate remains a great investment vehicle through good times and bad. Here's a very simple example comparing real estate investing to a really good stock/mutual fund/401K investment.

Let's say I have $100,000 invested in a security such as a stock, bonds, 401K.

If I make 10% on that money...a GREAT return these days...then I make $10,000 off that investment per year.

To make that same $10,000 with real estate, it takes much less, or none of my own money. That makes real estate investment a much smarter play.

Let's say I am going to buy a property that, once repaired, will be worth $100,000. I typically buy property at around 55% of the as-repaired value (a rough average). So, in our example, I am buy this property for $55,000. My 70% loan-to-value loan gets me $70,000 which covers my closing and some or all of the rehab...usually all.

Once the rehab is completed and a renter in, I refinance this property at a 90% loan-to-value level and pocket around $8-10,000.

If I go this route (keeping the property and renting it), I retain the tax benefits year after year, and not only have I made $8-10,000K from it already on the refinance, it continues going up in value. Given a 5% appreciation rate, which is conservative for most areas, I stand to make around $5-6000 per year. This means if I sell this property 4 years down the road, I stand to make another $20-30,000 or more.

So, in our example, the house I had very little or none of my own money in, now stands to make me around $30,000 NOT including the tax break I enjoy from it.

This is one property, I have more than one, so apply this rough formula to the values in your area, and do it for the number of properties you want to hold in your inventory. The numbers get pretty good, don't they?

Let's take our example another way. Let's say I have $100,000 to invest like our original example. Instead of putting that into the markets, you decide to control as much property with it as possible.

Let's say I decide I can live with putting $5,000 into the purchase of each property. So, I buy and rehab 20 properties with that $100,000. Let's just assume each property is worth $100,000 when repaired. So, that $100,000 controls you $2,000,000 worth of property. (Note that it may take a couple of years to find, buy and rehab 20 properties that fit your criteria!)

Let's assume you re-fi these from your hard money and can only pull out $5000 per property (remember I put in $5000 of my own money in these for the purposes of the example).

From the re-financing, you'll put $100,000 in your pocket recouping your original investment ($5,000 per property). The rest is gravy, and here it is.

IF you average your 5% appreciation, you are making, you are making $100,000 per year. Not bad!

If you are making just $100 per property as positive cash flow (rent minus mortgage + taxes + insurance), then you are making $2000 additional per month.

I'm not including what you'll save with taxes.

Sure, you have to be a landlord for a few years, or pay someone to be. Sure, there will be headaches along the way.

But, let's say you decide to sell off all 20 properties 4 years later and you average a $25,000 profit from each...

You will have made $96,000 from the positive cash flow

You will have made $500,000 from the 5% appreciation

You will have saved thousands on your taxes annually

I'll take real estate investment any day!

About the Author
Bruce W. Ford is a Editor of and is an ACTIVE rehab real estate investor.

Methods for Renting a Furnished Apartment by Ispas Marin

If you are in need of an apartment for rental for a shorter period of time you should consider to apply for a furnished apartment. This way the whole process will be cheaper and you could save money for other urgent needs. There are many offers for furnished apartments so all you have to do is see them and decide upon the one which best suits you.

Main issues to be considered when renting a furnished apartment

At first you should decide on the precise location of the apartment so that it would be close to your workplace or educational institution. Moreover you should program your standards such as the price for rental, the space provided, the items to be furnished. The place to look for these furnished apartments is the Internet or the local newspapers which can provide also a description.In order to save some money consider using the free services of an apartment agent who will send you a list of the furnished apartments which meet your expectances.Use the telephone number provided by every announcement so as to arrange some appointments for visiting the selected locations and apartments. In addition, you should pay attention to all the details such as: parking, area markets and so on. Don't forget to read the contract very carefully before you sign it so that every term of it to suit you.


Furthermore, the utility costs like: water, sewer, electricity TV cable, trash or gas, may be or not be included in your rent payment. You have to be aware of this aspect of your contract or ask what utilities are included. This aspect has to be included in your contract. What you do not see in it does not exist. The contract is a sort of binding document for you and the landlord. Ask a specialized person to look over it so as to prevent any illegal demands from the landlord. Before signing a contract which does not comprise the details regarding the utilities, ask the landlord for the estimated price for them to see if you can afford. The apartament's location may be a very expensive one and you can face the unpleasant situation of not being able to pay for the electricity bill.

For a long-termed contract it is advisable for you to rent an unfurnished apartment, while the furnished apartments are suitable only for short-term contracts. Make sure to decide upon the length of the contract before looking for a furnished or unfurnished apartment.

About the Author
For Dubai furnished apartments & villas for rent for business or holiday use just visit us at

Best Buy to Let Mortgage Calculators by Jennifer Tweed

It would be easy to start saying just how easy it is to become a landlord and earn income from UK investment property and how you can simply sit back and watch the profit tumble in like a cascading waterfall. The reality is that there are a number of key issues that you will have to be involved in to ensure your investment property portfolio works to its optimum. With tenants to source and vet, an investment property to maintain, buy to let mortgages to arrange, letting agents to manage and accounts to monitor, it does take a certain level of commitment. So if you are still keen to have a slice of the much talked about property game then you will want to read on to find out how to get started?

Firstly, you need to establish if this is the right time for you to become a landlord and how much it is going to cost you. Can you afford to tie up money in a property? If the worst comes to the worst, can you afford to lose that money?

The simplest way to work out the repayments on a buy to let mortgage is to use an on-line buy to let mortgage calculator. These can help you work out the best buy to let mortgage product for the type of UK investment property you are considering and your individual circumstances. You will need to know the likely rent that can be achieved for the property as this will determine the maximum loan amount available against the purchase price or refinancing value of the buy to let property. Lenders normally suggest that the rental income each month represents at least 130 per cent of the monthly mortgage payment. Although there are some buy to let products calculated on ratios of as little as 115%. By working on these calculations, gives the investor a margin to cover the letting agent's fees and other associated costs.

This is a long-term investment and you need to take the same approach to investing money into a house or flat as you would to buying into the stock market. Historically the value of properties have doubled every 10-15 years but that doesn't mean to say that there won't be peaks and troughs in between. These are times that you have to be prepared and most importantly can afford to ride through.

Increasing your returns by using buy to let finance to your advantage

For example, lets say you have £100,000 cash to invest into Investment Property. Is it best to buy a property outright or use this money as deposits on multiple buy to let properties?

Mr Jones - decides to use his £100,000 to purchase a brand new property outright for cash. He lets the property for £600 per month giving a return of £7,200 per annum. Due to inflation, the rent will increase accordingly and eventually, after fluctuations in the property market, the house doubles in value.

Mr Smith - decides to use £100,000 as deposits (15% for each investment property) to buy £500,000 worth of properties similar to the one Mr Jones bought. This results in Mr Smith receiving five times as much rental income, i.e. £3,000 per month or £36,000 per annum. The other £400,000 is borrowed on buy to let mortgages and Mr Smith pays interest on this at a rate of approximately 5%. These monthly interest only repayments would work out to be £20,000 per annum. Therefore, net of interest they receive £16,000 per annum. Mr Smith is already better off than Mr Jones..... but what happens in years to come? Well it is probably safe to say that Mr Jones's rental income will rise with inflation as per Mr Smith. However, Mr Smith's buy to let mortgage costs remain the same. Therefore, the gap between Mr Jones and Mr Smith's rental income will continue to widen as time goes on. And finally after 10-15 years when property could have doubled again. Mr Jones would have made a capital gain of £100,000 and have £200,000 worth of investment property. Whereas, Mr Smith would have made £500,000, which is five times as much capital gain!!

The most successful landlords will use some of the best buy to let mortages to fund their buy to lets and with buy to let mortgage products becoming more sophisticated and competitive the right buy to let financing can ensure you maintain your investment property portfolios in such a way that you are always working to the most optimum cashflow situation.

Best Buy to Let Mortgages

Finding the best buy to let mortgage is crucial to your success as a property investor. Unlike other forms of investment, a lot of the money you put into a buy to let property is likely to be borrowed. Over the last few years, the buy to let mortgage market has boomed, and borrowing money to invest in this way has become easier than ever. There are a number of different buy to let mortgage products available from fixed rates, discounted variable rates, discounted rates and so on. Different products may be suitable for different investment properties. And don't be tempted to just go for the cheapest buy to let mortgage as there may be penalties that make it less attractive in the long term.

Always find out the best buy to let mortgage deals available at the time. Some investors may decide to retain their entire portfolio with one lender, but it's important to realize that different buy to let products between different lenders can provide you with maximum flexibility and cashlow depending on how you structure your funding.

However it is very important that you get the correct guidance with your buy to let finance. You will often find that buy to let mortgage brokers have access to numerous different products and lenders and some can even offer exclusive products that wouldn't necessarily be available to you if you approached the buy to let lender directly.

Questions that are worth considering when finding the best buy to let mortgage:

1. Do they have access to lots of different products in the market place? 2. Do they have the ability to create a long term property development strategy for you? 3. Are they able to secure Exclusive Products? 4. Are they able to arrange mortgages within 10 working days? Most buy to let lenders will offer a maximum loan of 85% requiring you to fund at least a 15% deposit towards your UK investment property. The buy to let mortgage industry is very competitive with new products being launched on a very regular basis.

Some buy to let mortgage brokers may charge a brokerage fee up to 2% to arrange the buy to let finance for you but don't let this put you off because if they do have the ability to secure exclusive products for you, it could be very beneficial to your cashflow as a landlord. Plus, if they are able to reach formal mortgage offer stage in a very short space of time, this could result in you being able to secure the investment property at very competitive prices if you have the ability to tell the vendor that you can have the deal completed within a matter of a few weeks.

How much you can borrow for the buy to let property will usually be worked out differently to how much you can borrow to buy your main home. Different lenders and different products carry different criteria for working out the maximum loans available. Some will lend on how much you earn, others on the rental income you achieve from the investment property. And sometimes a combination of the two.

How much rent will you make?

Before you agree on the purchase price of a buy to let property, it is important to find out from local letting agents, what the likely rent could be. They should be able to let you know which types of property are in highest demand and which areas are the most sought after for tenants. If you need to find out whether your potential buy to let is looking like a good investment, ask your broker/lender to work out the yield (ie the money you are investing and the rental income you will receive) on the property against what your repayments are likely to be. I you are investing in an up and coming area, it could still be a viable investment despite the figures not looking too healthy today. If you believe that the area will be having a lot of other investment or new businesses moving in, then there is the possibility that the surrounding property market will have a positive knock on effect. When the valuation is carried out on the property, the surveyor who visits the property will also be expected to give an assessment of the expected rent as well as the value of the property.

A local letting agent is the best person to approach for this kind of information - especially if you hint that you might let them be the property's management agent.

About the Author
Jennifer Tweed is the founder of, one of the UK's first property portals dedicated to all types of investment property for sale and everything you should need for your sale and purchase. Learn more about buy to let

Tips For Successful Apartment Hunting by Paul Smith

The hunt for an apartment may seem like an extremely challenging ordeal, but it does not have to be. People looking for an apartment usually have a good experience if they educate themselves on what to look out for, and they have a good idea of what type of apartment they want. The best tool for finding an apartment efficiently is having knowledge. Here are some helpful tips to consider when looking for an apartment.

1. Make sure you know what you want. People who are not sure about what they want can easily get swindled into bad deals. If you want a 2-bedroom apartment, then don't settle for less. If you know what area of city you want to live in, be sure to stick to your ground. Too many people are very indecisive. Indecisiveness is a weakness that many people try to take advantage of. Knowing what you're looking for is the first key to success.

2. Use all your resources. Apartments are listed in newspapers, free magazines, small ads, and even "for rent" signs in the front yard. Exploring all options will allow the apartment seeker to have the greatest amount to choose from. The more apartments you have to choose from, the better the chance that you will find the apartment that is perfect for you.

3. Visit the apartment. Too many people sign on the dotted line without ever actually seeing the apartment or the neighborhood. Take time to travel to the apartment and maybe even meet some fellow tenants or neighbors. Actually experiencing the apartment and its surroundings can help make any decision easier. Checking the apartment out can also help avoid pitfalls. Some elements may seem appealing on paper, but are not as such in real life.

4. Additionally, when you are visiting the apartment, do not be afraid of scrutinizing every aspect of the apartment. Look for cracks, bugs, dirty spots, and any other flaws. Be sure to ask the landlord about previous tenants. One of the worst things that can happen to someone is that they rent an apartment and realize that there are major problems that have to be fixed. These problems often cost the renter exurbanite amounts of money. If possible, see how the other tenants like the apartment. Even invite a friend or family member along when you are visiting the apartment. The more opinions you have, the better.

5. Read your contract! Before signing a contract, make sure that you understand what services you are entitled to and all of the costs. Many people have foolishly signed contracts and didn't realize that they were paying for utilities, or other services. Additionally, make sure you have a fair rent worked out with your landlord. Avoid paying too much for your apartment at all costs. If they advertise the apartment for one price, make sure that that's the price you are expected to pay.

The search for an apartment can sometimes seem very daunting. Some people will try to swindle you and charge you too much, or charge you hidden fees. Being educated about what you are looking for, and scrutinizing the apartment diligently can help protect you from paying too much or having a bad apartment. If you educate yourself, than your apartment search should be simple and enjoyable.

About the Author
Paul Smith writes about a variety of real estate topics, but is presently focusing on how to find a good London apartment.

Can Tenants Stop Paying Rent? by

One of the most frustrating things about being a tenant is the lack of power in the landlord tenant relationship. A tenant does have one source of power, the rent payment. Can a tenant stop paying rent to the landlord?

Most jurisdictions permit tenants to withhold rent and place the funds into an escrow account with the court or other state agency when a landlord is not maintaining property and the property is in need of repair. If the landlord does not make the needed repairs, the tenant may be able to break the lease.

In most instances, a tenant cannot simply withhold rent without court action pending. It may be necessary for you to file suit against the landlord. You should always speak with a lawyer well versed in landlord tenant law before withholding rent from your landlord.

If a tenant decides to stop paying rent becase the landlord is not in compliance with the lease, the first thing the tenant needs to do is make the landlord aware of the reasons for not paying the rent. Ideally, the tenant should send written notice of the defective condition and the landlord's non-compliance with the lease well in advance of the tenant's decision to withhold rent.

Advance written notice of a tenant's intention to stop rent payment may show the landlord how serious the tenant is about non-compliance on the part of the landlord. Written notice of defective lease conditions or non-compliance with lease terms also provide a paper trail for future court action.

About the Author is a free online resource solution provided by Digital World Incorporated to help Landlords and Tenants with important questions about their landlord and tenant legal rights.

Real Estate Rentals: A Passive Investment Technique by Teve Torbes

Real estate can be a great way to make a turn-key investment in property, but you need to go in with your eyes open. Otherwise, you could end up losing your nest egg.

To invest in real estate, you need to have a rainy day fund. Things happen - you're the landlord now, and you'll have to pay if something goes wrong. If you need to fix the walls, the plumbing, or pay for flea control, you'll want to have some money set aside. If you're handy, you can cut these costs down, but you can't eliminate them entirely.

You also need to make sure you're not paying too much. Don't buy in a super-expensive area - go for something in an "up and coming" place where you can get a good deal and watch property values rise in the future. If you get locked into a real estate bubble, you may not make your investment back. You need a place where your rental income will cover the mortgage with a cushion for emergencies.

Also, make sure to trust the company that is handling the property for you. Property management can be a great deal - it saves you from all of the hassle. But don't just go with any random, fly by night company. Call reputable realtors and ask their opinion about companies in your area. They can probably give you a good referral, and it'll be worth your time if you can find someone who will manage it well - after all, you're dependant on them to make sure your property is filled with tenants.

About the Author
Teve Torbes is an expert owner of a flea control site, who knows a whole lot about flea bites. He has also created a valuable inflatable air mattress site.