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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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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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A Guide To Successfully Buying Property

Buying a property, whether it is your first or fiftieth time, is a stressful process. For most people, buying real estate represents the biggest financial decision of their lives. Because there can be so much riding on this one purchase, it is imperative that you do the correct research and follow the correct procedures – a failure to do this can mean financial disaster.

Below is a brief guide to buying residential property. Consider this guide a starting point for your own research into buying property – information is your best friend in the real estate game!

Research

Research forms a solid base for any major purchase and the good news is, that you are doing some right now by reading this article! There is a variety of information you need to gather about your desired property and the local area before you commit to buying.

The first thing you need to do is look at the historical sales results for the suburb you wish to buy in. It is very likely that in the last few years a house very similar to the one you wish to purchase has been bought, or sold, in the local area. By comparing the historical prices paid to the current asking price, you can start to build a picture of the local market and decide if you are getting a good deal.

The next thing you need to seriously research, is the properties boundaries and any limitations on the use of the land it sits on. As people rebuild fences and conduct home improvements, the official boundaries can often be compromised. It is important that you are aware of the exact boundaries of the property you are purchasing – you can’t just rely on what your eyes tell you! In addition to this, local councils often place provisions on the use of residential land, such as specifying drainage areas and wildlife corridors. You can contact the council responsible for the suburb you wish to buy in to find out more about any land use limitations.

Inspections

Once you have done your research on the local real estate market and selected a property that you feel is a good deal, you need to start scheduling more in depth inspections. For this, you should hire a qualified building inspector. They will go over the property with a fine tooth comb, finding any major or minor faults, which may compromise the structural integrity of the house now, or in the future. If a house has faults, this doesn’t necessarily mean you shouldn’t buy it. However, you need to consider how much repairs will cost when deciding how much you will offer for the property.

Financing

Before you even start looking, you should have finance arranged. By knowing how much you have to spend, you will be able to focus your search on properties that you know are in your price range. Without positive confirmation of finance, you could just be wasting your own and everyone else’s time by looking at properties to buy.

Source : Ezinearticles

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Should You Buy Property On Leased Land?

Most people who are searching for a home to buy don’t realize that it is possible to buy a home on leased land. Far from being an uncommon practice most people assume that when you buy a house you also purchase the land it is built on, but more and more non-traditional home buying options (like purchasing a home on leased land) are becoming available as the economy and housing markets continue to struggle.

Here are a few things to know about buying a property on land for leased as well as some pros and cons to help you decide if this is a viable path for you to go down in your home buying journey.

When looking at homes for sale you can tell if the one you are interested in is on leased land if the advertisement says something like ‘manufactured home’ or ‘leasehold interest.’ Also be aware of the word ‘association,’ which will be used to describe areas of the property that you have not explicitly purchased yourself. The price for a home on leased land will also be much lower than the average market price for other similar houses in the area. Leased-land properties are generally built close together and rarely have amenities like a private pool attached to them.

Mortgages are taken out on land for leased properties, but a monthly payment will likely be lower because the original purchase price was cheaper. A fee that you wouldn’t normally have to pay for a traditional home is a land lease fee, which will vary by property. You may also find that some leased-land properties have massive home owner’s association fees that are used to cover the upkeep and maintenance of the leased land areas.

If you are considering buying a property on land for leased it will be beneficial to come up with an outline of your budget for a regular property and for the leased-land property. When you write down the savings and additional fees for both you might find that one is a step above the other when it comes to benefits and price (and it might not be the property you think!). Be reasonable when it comes to assessing your financial goals in the purchase of property, leased-land or otherwise.

You will also want to find out from the owner or realtor how much time is left on the lease. Generally you want to look for properties with a long lease left as you won’t have to worry about the changes that will occur if the lease ends while you are still living there. If the lease is shorter you might find it difficult to get a mortgage and finance your home. If the lease is up soon and you decide to purchase the property anyways, make sure you know what you will happen to the property when the lease ends.

Buying a home on leased land could be a sound financial decision, but weigh your options before you rush into anything.

Source : Ezinearticles

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