The Most Important Factors For <b>Investing</b> In <b>Real Estate</b> - Investopedia | Real Estate Investing |
| The Most Important Factors For <b>Investing</b> In <b>Real Estate</b> - Investopedia Posted: 06 Nov 2014 09:13 AM PST Compared with other types of investments, real estate investing involves a relatively favorable risk/reward profile, but with relatively low liquidity (ease of entry and exit). Let's see some of the most important factors to be considered for investing in real estate. I. Location of the Property Why is it important? The age old punch line "Location, Location, Location" still rules and remains the most important factor for profitability in real estate investment. Proximity to amenities, peaceful conforming areas, neighborhood status, scenic views, etc. are major factors for residential property valuations; while proximity to markets, warehouses, transport hubs, freeways, tax-exempt areas, etc. play an important role for commercial property valuations. What to look for? A mid-to-long term view, about how the locality is expected to evolve over the investment period. Today's peaceful open land at the back of a residential building may be developed into a noisy manufacturing facility in future, making the residential valuations less profitable. It is advisable to conduct thorough check about ownership, type and intended usage of neighboring areas, establishments and free land in the locality. II. Valuation of the Property Why is it important? Real estate financing during purchase, listing price during sale, investment analysis, insurance premium and taxation - all depend on Real estate valuation. What to look for? Commonly used Valuation Methodologies include:
III. Investment Purpose & Investment Horizon: Why is it important? Given the low liquidity and high value investment in real estate, lacking clarity on purpose may lead to unexpected results including financial distress, especially if the investment is mortgaged. What to look for? Identify which of the following broad categories suits your purpose and prepare yourself accordingly:
IV. Expected Cash Flows & Profit Opportunities: Why is it important? The investment purpose & usage influences cash flows and hence profit opportunities. What to look for? Develop draft projections for the following modes of profit & expenses:
V. Be Careful with Leverage - Know the Pitfalls: Why is it important? Loans are convenient but may come at a big cost - you commit your future income, to get utility today for a cost of interest spread across many years. Real estate financing needs higher amounts and hence has higher exposures. Understanding it properly allows you to benefit from it to the maximum, while ignoring the risks can lead to major pitfalls. What to look for? Depending upon your current & expected future earnings and paying capability, consider the following:
VI. Investment in New Construction vs Existing Establishments: Why is it important? New construction properties usually offer attractive pricing, the option of customization, clearly documented amenities and clear titles. The investor has to deal with only the construction company as a counterpart. Risks include delay in possession, increase in costs, no awareness about neighborhood, etc. Those on resale have vice-versa factors and may need a more thorough check on ownership, documents and legal matters. What to look for?
VII. Indirect Investments in Real Estate: Managing physical properties over a long term horizon is not for everyone. There are also a few alternatives to indirectly invest in the real estate sector and aim to reap the benefit. What are the Options?
The Bottom Line Real estate investments offer a good high value risk-return profile. Thoughtful consideration of the above mentioned factors in mind will enable investors to reap the benefits while mitigating the risks.  |
| <b>Investing</b> in Russian <b>Real Estate</b> - Wealth Daily Posted: 09 Dec 2014 12:59 PM PST Where do the wealthiest people live? You might be surprised to know that most are in Russia. In 2012, Russia was among the top 10 countries with the highest number of ultra net-worth individuals. As reported in Forbes, Moscow actually takes the lead in cities with the most billionaire residents in the world.
Many of Russia's oligarchs benefited from the wave of privatization that followed the fall of the USSR. And with that, the entire country became luxury-focused. In fact, it's not just billionaires. Cars, jewelry, and other luxury items are sought by everyone from the poorest street sweepers to the hard-working middle class. Ferraris, Maseratis, and Bentleys are a common sight on the streets of Moscow. The Russian market has attracted the attention of the majority of Western luxury brands as well. Many have established their presence in major cities throughout Russia by opening their own boutiques or selling goods through major distributors. Now, Russia is practically taking over the European real estate market — largely through London. Why London? According to the host of Russia's "International Property Show," Kim Waddoup:
The Russians are Coming! Of course, Russians aren't solely focused on the UK. They are actively buying in Bulgaria, Spain, France, and even Cape Town, South Africa as well. And these buying patterns have changed the markets in which real estate is being purchased. Real estate companies in St. Tropez, Monte Carlo, and Nice all report their biggest need as having more Russian speakers on staff. This is, in turn, pushing the owners of these properties out of Europe and into the United States, where in many cases real estate still seems like a deal, even after the drop of the euro this year. Truth is, Russia is having a major impact on the trendiest areas of the U.S. — including New York, Miami, Los Angeles, and San Francisco — both directly and indirectly from those they have pushed out of Europe. In addition, the Russian ruble has had a huge influence on investors. All in all, the weak ruble is transforming the way Russians save and spend their money. Many of them turn to property, cars, and jewelry instead of allowing their money to depreciate in the bank. The ruble has lost 45% of its value against the dollar in this year alone, so most Russians are simply taking their money out of the bank and putting it into tangible assets such as real estate and automobiles. The wealthy and middle class in the big cities such as Moscow are rushing to get their hands on real estate in order to keep their savings intact. And this trend may, in fact, transform the luxury real estate market over the next decade. According to Sergey Gordeev, a realtor in Moscow, "The ruble crisis has turned cosmopolitan real estate into a seller's market. Now there's a flood of buyers. It's become a real auction." The money crisis in Russia is a winning streak for property investors. The Russians' philosophy is, "We have the money. We use it." So why not? Until next time,
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The Russian capital boasts 80+ billionaires — more than New York, London, and Hong Kong.
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