Thursday, 18 September 2014

Property Partner lowers barriers to investing in real estate | Webrazzi ... | Real Estate Investing

Property Partner lowers barriers to <b>investing</b> in <b>real estate</b> | Webrazzi <b>...</b> | Real Estate Investing

Property Partner lowers barriers to <b>investing</b> in <b>real estate</b> | Webrazzi <b>...</b>

Posted: 18 Sep 2014 01:04 AM PDT

| September 18, 2014 |

propertypartnersCrowdfunding has become increasingly popular as a means for "ordinary people" to access services which might have been previously unavailable. Whether investing in companies, backing a project, or something else, one of the more exciting possibilities about crowdfunding is breaking down barriers to participation. Real estate remains one area with significant barriers to less-wealthy individuals. London-based Property Partner is aiming to lower these obstacles to those who may be interested in this type of investing.

Daniel Gandesha, who previously headed the office for investing in startups at telco BSKyB and who founded the startup, says that he decided to create the business out of his own negative experience. You can invest in property if you have the money or connections, but potential investors frequently must contribute significant funds up-front and they do not necessarily maintain control over their properties when they commit to an investment fund.

Once you sign up for the service, users can select investments and then monitor them as they change in value. Each month, users will receive rental income and can then sell their holdings whenever they decide to exit. The company says that everyone, down to the smallest investor, will have the option of exiting the investment at market value after 5 years.

There are several competitors out there, including Fundrise, Realty Mogul, CrowdStreet, and RealtyShares in this market, but they are based in the United States and appear to focus on the American market. Fundrise does not require a minimum fee, but the others stipulate that potential investors put in at least $5K and $10K if you go with Crowd Street. As opposed to the other services, Property Partner lets users invest for a minimum of £50.

When Property Partners launches (in the coming weeks, they say), they are planning to go with a commission-based model for raising revenue. The company says that they will take 2% from each initial transaction and then a 12.5% (+VAT) for advertising, letting, and managing the property.

Property Partners has not yet launched, but they already claim solid financial backing. Just last week, the startup announced that they had picked up £1.25 million from Octopus Investments, Seedcamp, and private investors. This latest round follows an unannounced £150K that the startup raised back in February 2014.

<b>Investing</b> In <b>Real Estate</b> Versus REITs - Investopedia

Posted: 06 Aug 2014 02:47 PM PDT

The U.S. real estate market is finally starting to fire on most, if not all, cylinders, with investors' enthusiasm gathering steam seemingly each passing month.

According to a study from the Urban Land Institute and PwC,expectations on profitability from the U.S. real estate sector are on the upside going forward. "In 2010, only 18% of respondents felt the prospects for profitability were at a good or better level," the ULI reports. "This has improved steadily each year, with 68% of respondents now feeling that profitability will be at least good in 2014."

The study reports that myriad investment demographics are pouring into the market, including foreign investors, institutional investors and private equity funds, as well as leveraged debt from insurance companies, mezzanine lenders, and issuers of commercial mortgage-backed securities.

"The anticipated interest in secondary markets is indicative of how the U.S. real estate recovery is expanding beyond the traditional investment hubs," says Patrick L. Phillips, chief executive officer at the ULI. "Access to greater amounts of both debt and equity financing, combined with a sustained improvement in the underlying economic fundamentals, means that the opportunities and returns offered in smaller markets are potentially very appealing."

A burgeoning profit avenue for investors is the real estate investment trust market, a market that is truly growing by leaps and bounds. Ernst & Young reports the REIT (Real Estate Investment Trust) market has grown from $300 billion in 2003 to $1 trillion by 2013, with growth expected to accelerate going forward. (Check out our great video on REITs here.)

By definition, an REIT is a corporation, trust or association that owns and, in most cases, operates income-producing real estate and/or real estate-related assets. Modeled after mutual funds, REITs pool the capital of numerous investors. This allows individual investors to earn a share of the income produced through commercial real estate ownership, without having to go out and buy or finance property or assets.

REITs differ from traditional real estate investing, primarily due to the fund-heavy strategic asset flow from REITs, versus the traditional free, more direct access flow from real estate investing (like becoming a landlord or buying stocks from homebuilding companies.) But both investment offer distinct advantages, as follows:

Advantages of REITS:

Lower entry costs – REIT investors can invest in a fund for as little as $500 or $1,000. That can offset the costs of buying a property for six-figures, and having to pop down a hefty down payment.

Increased liquidity – REITS are very much like stocks where you can sell shares whenever you like, just like a stock. Compare that to a home purchase, where liquidity is a bigger challenge, and is often dependent on fickle market conditions.

No muss, no fuss – If you own a rental property, you are subjected to tenant complaints, late payments, broken appliances, and yard, driveway and home maintenance. Not so with REITS, which only require you track your investments on a reasonable and regular basis.

Investment flexibility – With REITs, you have the option to flex your financial muscles and invest in commercial properties, shopping malls, even a marina or a group of camping site vacation homes – all at a reasonable entry price. That's much harder to do as a direct investor where up-front capital can often be a challenge.

Advantages of Direct Real Estate Investment

You call the shots – There is no fund manager to answer to when you're a direct real estate investor. You decide on the rental price; you decide on the number of properties to buy; and you decide on who lives in and rents your property.

Less IRS debt – With direct real estate, you can save big on taxes, and keep Uncle Sam's slick hands out of your pockets. From writing off depreciation to taking a mortgage tax deduction, there are no shortages of tax breaks linked to direct real estate investing.

Potentially fatter investment returns – Like any investment, the more money you invest, the more money you can earn. So by putting down $100,000 on a property, you'll likely earn more than a REIT investor putting $1,000 into a real estate investment.

Experts Weigh In

That's just for starters – some industry experts say the advantages of both investment classes cut much deeper than the descriptions above.

One big difference is that the market for REIT shares is much closer to the efficient market described by Nobel Prize winner Eugene Fama than the market for individual real estate parcels is, says David Reiss, a professor of law at Brooklyn Law School, and an expert on REITs.

"That means that the price of a REIT's shares is more likely to contain all available information about the REIT," he says. "Because individual real estate parcels are sold in much smaller markets and because the cost of due diligence on a single property is not as cost-effective as it is on REIT shares, an investor has a better opportunity, at least in theory, to get a better return on his or her investment if he or she does the diligence him or herself." 

Karnit Mosberg, a director with Friedland Realty Advisors and a real estate lawyer with experience representing REITs in acquisitions/dispositions, says REITs are a better deal for those who do not have the means to operate and manage real estate as well as for those who do not like the risk associated with owning real estate.

But, as always, there are caveats.

"The key distinctions are that a REIT must distribute most of its taxable income to shareholders whereas a real estate investor may have to wait to receive income from the asset depending on the operating/management costs associated with that parcel of real estate," she says. "In addition, a new investor with limited real estate experience who wants to diversify their risk should enter the real estate market by purchasing stock in a REIT."

The Bottom Line

With the U.S. real market on the upswing again, real estate investing grows more appealing. But which avenue you choose to enter that market be it a REIT or through direct investment, really depends on how much risk and responsibility you can handle.

 

 

<b>Investing</b> in Miami Luxury <b>Real Estate</b> - Wealth Daily

Posted: 16 Sep 2014 11:59 AM PDT

What are foreign buyers looking for when deciding to purchase real estate in the United States?

Three things: attractive prices, economic stability, and incredible investment opportunities.

According to the National Association of Realtors, from April 2013 to March 2014, total international sales were estimated at $92.2 billion, which is a huge increase from the previous period's level of $68.2 billion.

So where are these investors coming from? And where are they looking?

A Jet-Set Destination

Most of these affluent buyers are coming not only from Montreal and Toronto but also from England, France, Brazil, Venezuela, China, and Hong Kong.

And they're headed down south.

During the 1930s to 1950s, Miami Beach was known as the jet-set destination, offering miles of sandy beaches, beautiful weather, and vibrant scenery. And to this day, Florida — especially Miami — remains the destination of choice for international buyers.

According to this year's annual survey by Knight Frank, a London real estate consulting firm, Miami is now number seven on the list of favorite cities — ahead of Paris and Dubai and up from eighth place in 2013.

We know it's ranked high as a luxury real estate hot spot, but why?

Recently, Miami has seen a great deal of growth, and the city continues to grow rapidly. This reality has become very attractive for anyone looking for a new job or new investment opportunity.

In addition, Miami is becoming one of the best places for investing in real estate — whether it's a part-time vacation home or a vacation rental.

The future for Miami is very bright. The area is full of opportunities and highly desired locations, and this has helped the luxury real estate market to boom.

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Where the Rich Play

Miami is uniquely qualified to understand the characteristics and trends associated with the prestigious real estate market.

The city thrives on its cultural representation, which offers the internationally renown Miami City Ballet, the Miami Symphony Orchestra, major art museums, and world-class food, art, and cultural events such as The Food and Wine Festival.

Of course, the weather is a huge draw — but the city also makes sense economically.

Florida is the ultimate tax-friendly state. No personal state income tax to pay, and no state inheritance tax.

With the attraction of cruise ships coupled with the area's luxury retail outlets, daily flights to major world centers, and a growing financial district, it is obvious that Miami allows wealthy homebuyers access to first-class recreation and international business centers.

According to Joelle Oiknine, Luxury Realtor with One Sotheby's, developers are building new condos to be increasingly luxurious and spacious, offering unparalleled ocean and bay views with resort-style amenities such as pools, beach service, restaurants, hotel-style spas, dedicated concierge, and valet.

For example, new condos such as Oceana, The Mansions, Porsche, Armani, Jade, Glass, and SLS offer full-floor condominiums, two-story penthouses, private pools, rooftop terraces, outdoor kitchens, staff rooms, etc.

"Hoteliers are now partnering with developers in offering full service five and six star hotel amenities to condo owners, offering resort living with ownership. Condo hotels also offer owners the opportunity to make substantial income by putting their condo in the rental pool, when not in use. Rental income can be as high as $30 to $50 thousand a month," says Oiknine.

Miami is where the rich not only play but also stay. The global city attracts some of the wealthiest investors in the world, and supply is actually low.

It was one of the cities to recover most quickly from the recession, and four years of continued growth since means it's time to look at Miami as a long-term real estate option.

I will have detailed recommendations for you shortly.

Until next time,

Paul Benson Signature

Paul Benson


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