| Investment Property – Protecting Your Real Estates Value as Prices Fall |
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Saturday, January 12, 2008
Let’s look at this in more detail. 1. Prices are historically too high House prices are far in excess of any historically known relationship to rents or salaries. Salaries on the whole cannot cover mortgages except in the short term, by the use of adjustable interest-only loans. 2. Interest rates. Interest rates have risen over the last few years and are likely to rise further. If this happens, house prices must therefore drop as liquidity is squeezed from the economy and money is more expensive to borrow. 3. Many recent loans are adjustable, not fixed rate. As more adjustable rate mortgages (ARMs) get adjusted upward upwards and the figure is in excess of 3 trillion the more home owners will be squeezed Even, if the Fed were to keep rates on hold, all above will go up anyway, which has the same affect as an interest rate rise. 4. First-time buyers. First time buyers are simply being squeezed out the market by high prices and interest rates. 5. Speculators. Around a quarter of houses bought in 2005 were speculative purchases and a high number since. These are pure investment properties and are not to live in. As with any speculative bubble it bursts as the housing market slows and prices fall these speculators face huge losses. 6. Empty housing. Builders are being forced to drop prices faster than owners. They have been in on the speculation and have overbuilt and have excess inventory that they cannot sell unless they drop prices. 7. Restriction of credit As interest rates go up risky loans, get riskier and credit gets harder to get. The total money available for buying houses in the economy falls as lenders become more risk averse. The above is common sense. When money becomes more expensive liquidity in the economy drops and the first thing that happens is house prices are hit. Even if rates don’t go up low cost starter mortgages will and this is the equivalent of a rate hike to many home owners. How can you protect yourself and make profits. If you are investing in property then there some courses of action open to you and you can make a profit even when prices fall. 1. Keep to prime locations with firm demand. Don’t speculate go for safe options, that historically have held their value. 2. Renovate If you upgrade properties the increase in value will be far more than the renovations thus helping you increase the value above the cost 3. Diversify overseas There are many booming overseas economies so consider swapping to these booming locations. For example, property in Central America is cheaper and the growth potential for more than in the US for investment property. 4. Take advantage of this! You can get schemes that protect your property value and make sure that even if prices fall, you do not lose. This gives peace of mind that you lock in a price and gives peace of mind that some protection is in place if the market falls. Amounts paid for this type of protection are reasonable and more investors than ever are taking advantage in uncertain times. If you have the above in place and renovate wisely you can still make great profits. Finally As with all historical bubbles speculators will lose eventually as greed pushes prices to far from realistic values. This bubble is no different, however take the right actions and you can not only weather the storm but possibly make some good profits to. MORE FREE INFO - Protect Your Property Value. Make sure that even if prices fall, you do not lose. for free info and no cost or obligation quote go to our website at: http://www.net-planet.org/property-value-protection.html Real Estate Investing and the SEC While speaking all over the nation, meeting thousands of real estate investors the past couple of years and getting asked these same SEC questions, I realized that there is a lot of confusion concerning SEC regulations Vs private lending. The confusion seems to arise because of the following: 1) Each state establishes their own regulations and exemptions. Therefore there are different guidelines depending on where you live. 2) If you cross state lines with your private lending, i.e. houses in one state and lenders in another, the Federal SEC regulations come into play. 3) There are a lot of half truths floating around and when people hear these, they get confused and possibly fearful. To be better equipped to answer everyone's questions, I decided to hire an attorney to do some research. Since each state is able to establish their own regulations, I decided to have the attorney start his research with the state of Ohio. Some highlights while working with my attorney: 1) As long as my properties and lenders are in Ohio, just the state regulations apply. If I have lenders and/or houses in different states, then the Federal SEC regulations apply. 2) I need to give a disclosure statement to potential lenders. 3) Can't pool lender money, but I can if I file the proper paperwork. 4) Can't use the word 'guarantee' in my advertising. 5) You can't advertise at all with having a registered security. As a side note, some of you are under the impression that the SEC is out to cause you problems. The SEC is not the bad guy; they are looking for the bad guys. They want legitimate business owners to prosper. They are very willing to help you if you just ask. They just want you to comply with their regulations. So what is a security? The term "security" is broadly defined to mean "any certificate or instrument, or any oral, written, or electronic agreement, understanding, or opportunity, that represents title to or interest in, or is secured by any lien or charge upon the capital, assets, profits, property or credit of any person or of any public or governmental body, subdivision, or agency." That's the language used on the website of the Ohio Division of Securities. This definition includes such common items as shares of stock, warrants and options, promissory notes, membership interests in limited liability companies, bonds and debentures. Limited partnership interests are considered to be securities, while general partnership interests are generally not considered to be securities. The statutory definition additionally includes the term "investment contract," which has been construed by court decisions to include numerous investment opportunities and business opportunities, which at first glance may not appear to fit within the definition of "security." Does that mean private lending may be considered securities? When you are borrowing money from private lenders, you are offering them a security. You're making an IOU to them by borrowing their money and promising to pay them a fixed interest rate over a certain time period or when the sale of a property is concluded. When a company sells shares or stock, it's giving the purchaser of the securities an ownership interest. Shareholders make their money when they get dividends on their investment or when they sell their stock. Private lenders are lending you funds, and they make their money by receiving the interest rate you've promised them. All states allow securities to be offered to lenders when they are either registered or offered under a proper exemption . Securities laws do define debt as a type of security. This means that your business has the same kind of opportunities as businesses that sell shares of their company to the public. It also means that securities laws and regulations apply to the business. Alan Cowgill is a national speaker, author, and real estate entrepreneur. Alan had bought or sold over 200 investment properties. His step-by-step system "Private Lending Made Easy" teaches Real Estate investors and mortgage brokers how to find private lenders. Contact Alan at 937-390-0816 or 866-831-3540. For a FREE audio CD go to http://www.PrivateLendingMadeEasy.com Retiring Abroad – A Destination with Low Costs & Great Lifestyle When retiring abroad you can get lower living costs, but you also want the best in quality lifestyle and not be to far from your loved ones. Here is a destination that offers the above and much more so you can enjoy your golden years – You have earned your retirement so enjoy it! The destination is Costa Rica and Americans are moving here in record numbers and it offers the best living in Central America just a 3 hour flight from the southern US states. Compare what Costa Rica has to offer and you will not only live in one of the most beautiful countries on earth but enjoy all the following as well: 1. Affordable cost of living Retiring abroad in Costa Rica offers substantially lower costs of food, utilities, hired help and entertainment and allows a person to live comfortably on around than $1500 per month. Therefore, Social Security checks go a lot further when you retire abroad in Costa Rica. 2. Ocean view property costs less You can gain savings of as much as 70% over property in Florida making it affordable for all. Costa Rica offers people retiring abroad the same rights as residents so your home is safe and secure. 3. Modern amenities From doing business to keeping in touch with family and friends, Costa Rica offers the best in up-to-date means of communication so you never feel far away. Costa Rica also offers an excellent and inexpensive public transportation, a country free of violent crime as well as a variety of leisure facilities from, top notch casinos, and restaurants to great golfing, world class fishing all set in a relaxed atmosphere and stunning scenery 4. Healthcare Costa Rica’s healthcare service comprises a network of hospitals, clinics, and complete medical services in all major cities. Costa Rica healthcare is considered to be to be among the best low-cost medical systems in the world. Medical insurance is cheap but there is no compromise in quality and services are considered world class. 5. Tax advantages U.S. law permits permanent residents in Costa Rica to earn up to a certain dollar amount that is tax free. In addition, Costa Rica's business taxes and property taxes are comparatively much lower than North America and Europe. Finally, high interest bank accounts are also tax-free. 6. The size of the foreign community means you feel at home The huge numbers of American and European’s who retire to Costa Rica means that you will never feel lonely, you will also find the Costa Rican’s a welcoming and friendly people. Costa Rica is the most established retirement community in Central America and offers the best in terms of scenery and amenities and should be considered as a first choice when retiring overseas. Add it all up Inexpensive living, close to home, great scenery and amenities, tax incentives all set in a beautiful stable country where you can relax and enjoy the lifestyle you have always dreamed about. Take a look at what Costa Rica has to offer and you may be glad you did. more FREE COSTA RICA LIVING INFO For all the facts on Costa Rica and the luxury lifestyle you could enjoy visit our website for FREE reports and info on living, buying and seeing this beautiful country at http://www.net-planet.org/costarica.php |
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