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Things You Must Know Before Buying an Investment Property

Investing in real estate can help you get great returns; it is known for returning both capital appreciation and cash flow. Some examples of real estate investment properties include apartment buildings, bungalows, flats, single homes commercial or industrial properties etc. Often, these properties are categorized as illiquid, which means you can sell them hastily. As an investor, you must be aware of certain facts before putting your hard-earned money into real estate property. This article will be educating you about such facts.

As an individual looking to invest in real estate, you must have clear idea about the amount of money, energy and time you are ready to expend for the same. In other words, you must know how much you want to commit or have the ability to commit when making this kind of investment. You must be aware of the fact that for making profit, you will have to put in a lot of time and effort; you will need research several properties and markets thoroughly before taking any investment decision. If you are not confident about your ability to research, you should always seek assistance from a professional; an experienced real estate agent can help you in completing the research effectively and quickly. Remember conducting research is extremely important as not doing it can make you lose all your money.

As mentioned above, for achieving success as an investor, you must perform thorough research both on individual properties and market characteristics. To do that, you must have some questions ready; once you find answers to all these questions, your research is complete. Find out whether the costs of the type of property you are looking to invest in are falling or rising. Find out whether there are plenty of options available for you to choose from when making an investment. Find out whether the rent of your preferred properties are falling or rising. Gather information about the economic status of the area, in which you are thinking of buying a property. Finally, find out whether the land, home or building you are looking to buy will allow you to achieve your goals of cash flow and capital appreciation.

It has been found that the majority of the successful investors rely a lot on their instincts. However, intuition is definitely not the only thing they believe in when taking a decision in these matters. These people also run numbers for making sure that the money they are looking to invest will bring them good returns. You should decide based on the combination of both, instincts and numbers.

Source : Ezinearticles

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Tips From Realtors for First-Time Homebuyers

Being a first-time home buyer can be challenging to say the least, but realtors help demystify the process and help make sure you get the house that best fits your needs.

Determine Your Long-Term Goals

The first thing that most realtors would recommend you do is to determine your long-term goals and how owning a home will fit into those plans. You may be tired of spending your earnings on rent and would rather put your money toward something that could actually turn a profit down the road. Or, you may simply want to be your own landlord for a change. Whatever your goals may be, get a clear idea of them before you start shopping around.

Finding the Home You Want

Once you have committed yourself to becoming a homeowner, you can expect the process to be a bit chaotic. More than likely, you’ll make a lot of offers and get a great many counter-offers in return. But don’t be intimidated or allow yourself to get frustrated. A professional can walk you through each and every step so that you’re not overwhelmed.

Financing

You will more than likely have a wide range of financing options, even if you don’t have the best credit. You may be able to find a loan backed by the federal government or get financing that doesn’t require the standard 20 percent down payment. In addition, the state you live in may provide special incentives for first-time buyers. Realtors can provide you with easy-to-understand information on all your options so you can feel confident while shopping around.

Making the Offer

Once you have honed in on the house that meets your needs, your real estate agent can help you decide how much you should offer, as well as any conditions you should request before signing on the bottom line. For example, you could ask the seller to pay your closing costs. Your agent will then take your offer to the seller’s agent, who will then either accept your terms or reject them and make a counter-offer. This back-and-forth will continue until you reach a deal or decide to move on to another option.

When you reach an agreement with a seller, you may be asked to put down a good-faith deposit. The transaction will then move into escrow, which is a period of time (about 30 days, typically) that the seller takes the house off the market. He or she will do so with the expectation that you will buy the home – provided that an inspection does not uncover any serious problems.

Realtors can help you find homes in the neighborhoods you prefer at prices that fit your budget. Once you’ve made your decision, they can help you through the entire purchasing process, from making an offer to getting a loan and wading through the seemingly never-ending paperwork. Realtors can provide invaluable assistance through a trying time.

Source : Ezinearticles

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Capital Raising

Capital raising has many pitfalls. To avoid some mistakes that others have made in the past, here are our top three, most costly capital raising mistakes:

Capital Raising Mistake #1: Having a 2-4 month capital raising goal.

It is important in the capital raising game to set concrete goals and timeframes for meeting those capital raising goals. Otherwise, you may drift along without any real sense of whether or not your efforts are paying off and if you are on track to meet your ultimate goal of closing the fund. Moreover, setting a goal of just 2-4 months is unrealistic and the wrong mindset to go out of the gates with.

You need to plan, build relationships, educate potential clients, and design high quality marketing strategies and materials for the long term. Make plans for 12-24 months and beyond, and make sure that you are maintaining those relationships even after your current campaign ends so that you can be ready to start the next one. While it is important to set goals for a reasonable timeframe, I prefer to view capital raising as a constant cultivation and nurturing of relationships. In a relationship, either business or personal, you typically do not impose an expiration date on that relationship. Why would you do so when raising capital?

Capital Raising Mistake #2: Counting on building a track record and then simply hoping to outsource all marketing to a great third party marketing firm or placement agent down the road.

This puts all of your eggs into the one third-party-marketing-basket. Third party marketers have hundreds of potential clients approach them each year. It is risky to assume that one will not only take you on as a client but actually raise a sustainable level of capital for you.

The second hidden danger of this strategy is that you maintain an infant-level of capital raising experience and knowledge until you start actively raising capital. You need to start moving up the capital raising learn curve immediately. Even if you rely primarily on third party marketers, investors require near-constant affirmation that they have invested their money with the right manager. This demand of regular attention is often at odds with the other demand that investors have, which include full-time attention to managing their capital. This can often frustrate a busy fund management team who prefer to simply focus on investing assuming investors will be satisfied as long as the returns are strong.

Instead of simply ignoring the problem in favor of focusing wholly on investing, the management team can instill greater confidence in their investors and cut down on the investors’ questions, concerns, and requests for updates by proactively communicating and interacting with investors on the GP’s schedule. I have known many managers who are brilliant traders and money managers but put little effort into developing as communicators and marketers. This makes the capital raising process more difficult when introductions are made and may even hurt current client relationships. By improving your own marketing and communication skills, you can more easily assuage investor fears and doubts, instill confidence in new and existing clients, and reduce the amount of time spent answering questions that you could address proactively.

Capital Raising Mistake #3: Under-estimating the value of a first name basis relationship with your top investor prospects.

Some professionals, especially those with technical backgrounds, think that marketing is a numbers game: you simply contact thousands of investors and you’re bound to come up with a few interested LP’s. This is only partially true. At times, you might have to reach out to many to develop relationships with a few investors, but relationships are at the core of everything that gets done. Most private equity firms we’ve worked with have found that by maintaining a strong, active relationship with a core group of limited partners. This way, the capital raising process is much easier when it comes to your next round as it doesn’t feel like a call for money. It is an investment opportunity from a close contact with an existing relationship. You can then use a database of new investors to supplement your existing network and start fresh relationships with less pressure to close immediately.

I’ve found that it’s best to upload my database of investors into a CRM system that allows me to keep real-time notes on my investor contacts and set reminders to stay in contact-that way I know I’m always keeping up with my best relationships and can better strengthen that relationship going forward. Investors like to place capital with people they know and trust, the more investor friends you have the better.

By following this approach and avoiding the mistakes highlighted here, capital raising becomes a much more effective process and hopefully more lucrative for all involved.

Source : Ezinearticles

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5 Common Residential Finance Questions of Home Buyers

No matter where you live, a home is a basic requirement and a necessity for life. Sadly, no necessity is available free of cost. If you want to buy a home, you need a home loan. Don’t think applying for residential financing is difficult. It’s simple when you read this article. It includes answer to the most common questions asked by home buyers.

1 – What Type of Residential Finance is available to you?

Today there are several types of loans in the field of residential finance.

• Owner Occupied Residential Purchase

• Residential Investment Purchase

• First-Time Home Buyer

• Renovations, Extensions and Construction Purposes

• Refinance of your Existing Loan

• Debt Consolidation of your Existing Home Loan Debts

• Home-Equity/Cash Out purpose

• Restructure your Home Loans with Current Lenders/Credit Providers

2 – What are Features of Residential Finance?

Each lender/credit provider offers different interest rates and finance/loan conditions. Residential loan packages often incorporate many of the following options and features for you to consider:

• Variable or Fixed Rate Loans

• Interest Only or Principal & Interest Loans

• Combination (Split Loans)

• Line of Credit

• Offset Account

• Impaired Credit History

• Redraw Option and Access Availability

• Non-Conforming Loans

3 – What is Home Equity/Cash Out? How can it benefit you?

A Home Equity/Cash Out can unlock relatively large amounts of money for borrowers who want to borrow against the value of their home or property. More and more consumers are finding this type of finance arrangement to be very attractive. Such loan programs are very easy to qualify.

The concept of how Home Equity/Cash Out works for you is best explained by the following illustration. The illustration also assumes that you have an existing residential finance loan on your home or property:

The value of your home or property is valued at: RM800,000

Less Your current home loan balance owing: RM350,000

Your home equity amount is: RM450,000

From the example illustrated above you can clearly see that you have RM450,000 equity in your home or property, which you can use to:

• Buy your second or third investment property

• Invest in shares or managed funds

• Renovate, remodel, or otherwise improve your existing home and property

• Purchase vacant land and construct a new home on the vacant land

4 – Why Pre-Approval is better in Residential Finance?

With a pre-approval, you will have the peace of mind knowing that:

• You have a clear picture of what your borrowing limits are

• Your finance request has already been pre-approved and you will know the conditions of your pre-approval

• You have the upper hand when negotiating the sale price with the vendor, real estate agents, etc.

5 – How to get Lower Rates on Residential Finance?

Getting lower rates on home loans is very simple. Take help of the internet. There are many online companies that provide residential finance opportunities. Because of heightened competition in the financing market, lower interest rates are offered. Also, web companies offer faster approval because of their online nature of business.

So, these are the questions that often trouble other home buyers. But, now that you have answers to them, finding an affordable residential loan will be easy for you.

Source : Ezinearticles

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Important Things To Know Before Buying Property

Property laws vary from state to state but there are general guidelines real estate buyers would do well to know before investing in property. It isn’t simply a matter of having enough money to purchase real estate: you want to make sure it doesn’t turn out to cost more in the long run.

The value of property appreciates if it’s structurally sound, has essential amenities such as electricity, plumbing and water supply and is located in a neighborhood with easy access to hospitals, schools, colleges, transportation hubs, offices etc. Location is so important that it’s often the single factor that influences resale value.

Can you build a house on land?

You may have found a nice plot of land to build a house on. But can you? Some states have zoning restrictions on building houses and finding out what the laws are will eliminate expensive problems.

Know that buying land and building a house will cost a small fortune. Construction isn’t cheap especially when building for a family. The cost of materials is high and you’ll have to find a trusted contractor to advise you along the way.

Visit a house/land several times a day

When house-hunting, it’s wise to visit properties several times in the day. Evening and night visits mask problems with the house, noise levels of the neighborhood and intensity of traffic. Some buyers may be looking for a quiet street but won’t be able to tell the difference at night.

If land is being purchased, find out how close it is to amenities and whether there are any upcoming plans for commercial real estate construction. Some buyers inadvertently find themselves stuck in the middle of a commercial hub they didn’t anticipate would be built. Noise, traffic and crowds can mar the peacefulness of any location.

Do a house inspection

This is a vital part of the house-hunting process and the services of an inspector are required. Obvious problems like chipped or broken stairs, faulty doors and windows and peeling paint are cheaper to repair than those you can’t see. Inspectors may use tools like thermal imaging and draw on their expertise to pinpoint problems with insulation, plumbing and unsound foundations. The cost of an inspection isn’t very cheap but is a lot less expensive than being saddled with big repair works later on.

Check taxes

Some areas reappraise housing tax so it’s important to find out what the recent taxes are on a house. If you purchase property at a good deal only to be bogged down by rising taxes every year, you’ll take longer to pay the mortgage and the cost of maintenance will rise.

Check past renovations

The seller you approach may have made renovations to the house in the past. If this is the case, find out what it cost and what improvements were made. The cost will tell you if quality materials were used. Find out the date of the renovations as well to give an idea of whether you’ll need to make further improvements in the near future.

Don’t buy for short-term stay

Buying a house cost much more than renting one, at least for short stays. Don’t make the mistake of purchasing property if you don’t intend to live in it for at least several years. Paying off a mortgage takes time and a year or two isn’t enough for most people.

Source : Ezinearticles

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How To Finance Your Business With Bank Loans

Many entrepreneurs look to family and friends for loans, especially when they are starting up their company because it’s tough (although not impossible) to borrow money from a bank or credit union to start a business. Ignoring the personal relationships involved, personal loans are viable options not to be overlooked. They often carry lower interest rates and generally have a less formal approval process than those from standard financial institutions. There are a few IRS rules to watch out for, though, and there are about a thousand reasons to have a legally-binding written loan agreement signed, so consult with your attorney or tax advisor before Aunt Sadie reaches into her cookie jar.

For larger or longer loans-or if you want to avoid the psychological quagmire of borrowing money from your brother-in-law-you’ll want to turn to the people whose purpose in life is lending money: banks, credit unions, and savings & loans. The thought of going through the loan application and approval process can be very off-putting, but it’s kind of like spinach; you may not like it but you’re a better person for eating it. The process of compiling the necessary information and thinking through your proposal will help you focus on some important shop management factors.

It may not seem like it, but banks are actually eager to loan you money because that’s where they make their profits. These institutions will grant your loan if you can show that your business proposal is sound. They will turn your loan down, however, if they judge you to be a bad credit risk. While your personal credit history may be a factor in the decision, most of the time bank loans are denied because the proposal was inadequate or poorly presented. Your shop’s financial history alone is generally not sufficient proof that the loan you’re requesting is secure. For that, you need to show that the future of the business is rosy enough to make the probability of repayment very high.

Don’t even think about applying for a loan unless you know exactly how much money you need, what you need it for, and how you will pay it back. Every one of those items will need to be substantiated in some way, too. How much money you need is directly related to the amount of cash your shop generates now, so you’ll obviously need up-to-date financial statements (backed up by a CPA’s analysis and/or tax returns). What you need it for comes from your marketing plan and answers questions like who is going to buy the product you are going to make and the likelihood of their purchase based on competition, pricing, the economy, past purchases, etc. The question of how you will pay it back is answered by your cash flow projections.

Assuming your proposal answers all the pertinent questions, your financial institution is probably still going to ask for some sort of collateral and/or a personal guarantee. The collateral, of course, may include the assets (equipment and inventory) of your business, real estate, marketable securities, or other tangibles the financial institution can sell if they have to. They probably won’t consider as collateral the value of your company as a going concern-because they don’t want to operate it, which is what the bank would have to do if they took over your business in the event of a failure.

The personal guarantee is slightly different. A lien against your home, bank account, or other personal assets assures the bank not so much that they can recoup their money in the event of a failure, but that you have a strong incentive to keep running your shop and living up to the terms of the loan. They know it’s much easier for the borrower to walk away and leave the bank holding his unsold inventory than it is to give up his car.

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