Monday, April 30, 2012

Investment Property - Finding Discounted Properties


Investment Property - The Future

Investment property continues to be a popular form of investing for the future. Some chose investment property as a way of funding educational fees in the future. Others may chose investment property to help secure a more financial future, fund additional investment property purchases, or they may simply choose investment property as a way of creating passive income so as not solely dependent on their mainstream employment.

Investment Property - Interest Rates

Despite recent interest rate rises, the property investment market in the UK remains strong. There are a number of reasons why investment property in the UK has remained a strong contender in the investment market. The UK investment property market has experienced a high level of growth especially over the last six years. But historically property in the UK has doubled every 10-15 years. In the last few years, the UK has seen dramatic increases in investment property and incentives for landlords and investors which has seen some investors buying investment property in the UK for up to and occasionally with over 20% discounts. These represent significant savings to a property investor buying multiple investment properties and subject to sourcing the best buy to let mortgage products for these investment property deals, can often result in the property investor having the ability to buy an investment property with little or no deposit.

Investment Property - Finding Discounts

Finding investment property from property developers with genuine discounts can be a time consuming exercise. It is important to identify whether the discount being offered for the investment property is genuine or whether the gross price has been inflated on the investment property to allow for the discount. Establish whether it is a genuine discount on the investment property by getting comparables of other investment property that has recently sold and at what price. Although bear in mind, some investors are able to negotiate better discounts on investment property than others. This may be due to the volume of investment properties that they have either bought already from the property developer or the number of investment properties they are intending to buy. Just as important, is to establish what the likely rental figure will be for the investment property as this will often determine the overall loan amount you can achieve on the buy to let mortgage loan for the investment property.

Investment Property Hotspots

If an investor is looking at investment property in property hotspots or areas that are experiencing high levels of regeneration, it can sometimes require them to fund a higher level of deposit for the investment property initially whilst the rental figure remains relatively lower than the general market average for a new build investment property of the same value in another area. Property investors with a long term view on investment property will still see this as a positive action to take for their investment property portfolio in the knowledge that as the regeneration area becomes more developed, the potential rental demand for the investment property will increase at which point they will use this time to look at re-mortgaging their investment property to release the capital that they had additionally funded. Typically a buy to let mortgage for an investment property will require the property investor to fund at least 15%. Although some buy to let mortgage lenders are offering up to 90% buy to let mortgages on investment properties.




Jenny Tweed is the founder of http://www.buytolet4sale.com, the UK's fastest growing investment property portal. UK & Overseas agents advertise for FREE their suitable investment property and landlords and investors regularly visit this popular site to find investment property for sale ranging from new builds, development projects, auction properties, discounted properties, pre-tenanted properties and more ..




Seven Mainstream Fallacies About Investing With Self Directed IRAs


With the current downturn in the stock market and the likelihood that interest rates will remain low in the long term, there has been considerable interest in investing self directed 401(k) or IRA funds in real estate.

Ironically, there seems to be a direct correlation between the surge of interest in this area and the lack of accurate information about it. There are several fallacies promoted as fact about this kind of investment. I would like to address each of them in turn.

Fallacy #1 - This kind of investment is not considered appropriate by the IRS

This is flatly untrue. It has been perfectly legal to purchase real estate with your IRA funds since 1974 and to direct any profits, whether rental or capital, back to your IRA. You can also use your IRA funds to pay for the maintenance fees and development, decorative and other upgrade or modernization work on your real estate holdings.

Where the confusion lies is that any real estate investments you make may not be used by yourself or your immediate family, otherwise the 'profit' you make from their use would be regarded as a withdrawal from your IRA and subjected to the usual taxes and penalties.

While the IRS is sometimes accused of not reading its own code, what this actually means is that your parents, grandparents, children and grandchildren may not use the property for any purpose. Yet your brother or sister and their family may. So, if, for example, you invested in a holiday property in Mexico, your brother, sister in law and their children can use it for their holidays and pay you the rental but you couldn't go and stay with them during their vacation.

Fallacy #2 - If it's legal, why haven't I heard of it until now?

Who would tell you, your current financial advisor? They will only let you invest your IRA in investments that their firm offers because they earn a commission off what they sell you. At a bank you will be limited to CDs. At a brokerage firm you will be limited to stocks and bonds.

There are any number of companies that help investors take their IRA cash and use it to purchase real estate for investment purposes or for any other legal investment purpose. The company's representatives who do this are called 'IRA Custodians' or 'Self Directed IRA Custodians' - depending on the exact financial arrangements you have made.

Third-party IRA custodians look after your investments and will advise you on the kinds of choices - stocks, shares, bonds, mutual funds, CDs, business opportunities or real estate - you can make. They retain a degree of control over the disposition of funds and over the writing of checks.

Self directed IRA custodians are not allowed to advise you on your investment choices. They are mainly there to help you properly and legally administer your funds and to avoid accidentally making withdrawals or incurring penalties and taxes.

Both types of custodian take fees - and there is considerable variation in the rates charged and the services offered. So it pays to shop around.

This contrasts with the behavior of traditional investment community which has control over 97% of retirement accounts and has been making considerable profit from it for over 30 years. They have no motivation to inform you of alternatives that would be of no benefit to them.

As investors become ever more depressed and disappointed with poor investment returns in traditional funds, they want to take control of their own investments and to make more tangible investments such as real estate or more profitable ones such as business ventures.

But the response of their current custodians is that such investments are either illegal, over complex, too expensive or simply un-doable - advice which is neither objective, impartial or factual.

So in order to take advantage of these opportunities, investors have to take their business elsewhere.

Fallacy #3 - It is prohibitively expensive to invest in real estate

In Publication 590, " Traditional IRAs", you are prohibited from taking the following actions with your IRA -

* borrowing money from it

* selling property to it

* receiving unreasonable compensation for managing it

* using your IRA as security for a loan

* buying property for personal use (present or future)

These regulations do not prevent you from using your IRA funds to purchase investment property outright. Nor does it prevent you borrowing money (through a non-recourse loan) or using other people's IRA in partnership in order to part fund the investment.

(An alternative route is to take a low-cost option to buy a property within 60 days and, if you manage to find a buyer at a higher price, you can make an immediate profit for with little up-front cash.)

Neither of these routes makes it prohibitive to procure real estate. Real estate investments should not eat up all your cash, particularly if you partner with others.

Not being permitted to receive unreasonable compensation for managing your IRA is not the same as not being permitted to receive reasonable compensation. If you check out the fees charged for administration as long as you stay within the current price range available on the market you cannot be accused of being 'unreasonable'.

I have already covered the restrictions on buying property. But it should clarified that 'future' use does not preclude you taking your property out of your IRA after you have reached 70 ½ when you are forced to take distributions and using it as a retirement home or vacation property.

Fallacy #4 - Real estate investment is trouble with a capital T

Real estate prices have been undergoing a considerable boom in prices over the past few years, but, despite the obvious gains, it is often considered a risky and troublesome form of investment with at least as many headaches as owning your own home. You may have to find tenants, or improve the property before selling it, or just maintain it.

All of this is true, but there are people and companies who will do this for you. Arguments that this will eat away at your profit leading to a poor final return on your investment are also fallacious as fees are charged for all investments you make. The difference is that you can see where the fees are applied and what you are getting for your money.

In addition, you gain some advantages over the stock market - lower risks, less market volatility, property insurance. While mutual funds and corporate stock have both been subjected to sudden and sharp nosedives over the past few years and slow and uninspiring recoveries. Nobody insures you against the loss of investment funds in the stock market. Ask Enron's investors!

Fallacy #5 - Real estate funds are not liquid investments

It's difficult to see why this argument is put forward in what has been a seller's market for several years. Besides when has liquidity been the only benefit on a losing proposition in the stock market? And, at least until IRA funds are available for withdrawal, liquidity is not going to benefit most investors.

Fallacy #6 - Real estate investment is riskier than the stock market

It is difficult to comprehend how anyone could believe that real estate is more risky than the stock market. While it is true that in the long run the stock market returns a solid 10% per year overall, the danger in the short term is that any gains can be wiped out by a sudden drop in the market or in individual stock. Companies can afford this risk, individuals on the other hand cannot.

It is true that real estate prices can also drop, but this normally happens only in very unusual circumstances. Prices do not fluctuate the same way they do on the stock market.

So when given the choice be it owning and managing investment property or taking the cash from your IRA and investing it in an S&P 500 index fund, you are being given the choice between sticking all your eggs in one shaky basket or properly diversifying your holdings and increasing your money earning opportunities. The choice is obvious. Nor is the advice ever to put all your funds into real estate either. About 25 to 40 % of your portfolio should go into real estate and the rest into other more traditional investments. The percentage will depend of course on the level of risk, the investment's profit potential, and on your individual financial position.

Nor are property returns less than those in the stock market. On average the stock market returns 10%; property returns in recent years have been as high as 23 % a year. Ideally, when you self direct your IRA if you can locate pre-construction projects, lend your IRA funds and participate in an equity position you can compound the rate of return. Your return on investment therefore can be much higher without turning a wrench, fixing a leaky faucet or swinging a hammer. Best of all, all the gain goes into the IRA either tax free or tax deferred.

By diversifying your holdings you can invest in several different kinds of assets so that you can weather any investment climate from a bear market to a real estate crash.

Real estate deals are therefore no more and can be a lot less risky than other forms of investment. However, as with any financial deal, you should do your homework first and run the numbers with your financial advisor.

Fallacy #7 - My CPA, my financial planner and Family Lawyer understand all there is to know about self directed IRAs

Your family attorney, financial planner, and CPA are unlikely to be experts in self directed IRA regulations and self directed IRA investing market. For specialized expert advice, you should add a self directed IRA advisor to your advisory team, in the end their advice will save you both time and money. Of course, you should check out the company the Better Business Bureau, your state's Attorney General's office and make sure they comply with any state licensing requirements.

Some Conclusions

* With poor stock market performance likely to continue now is the time to think about diversifying your holdings

* Real estate IRA investment is legal and need not be overly expensive, complicated or inconvenient

* You should take the time to thoroughly investigate the process, the self directed IRA custodian and his or her company before you sign any documents

* You should run the numbers with an independent financial advisor

* Remember signing with a self directed IRA custodian does not oblige you to buy real estate - you can make any of the traditional investment choices as well as considering other lucrative business or property ventures

* You don't have to buy real estate solely from cash in your funds you can borrow money or work in partnership with others

* All investments carry risk but using real estate to diversify your holdings can also give you protection against stock market vagaries

To find out more, simply go to Google.com and type in "use IRA cash to invest in real estate."




Joshua Geary with Best Online Results Best Online Results is an avid writer, business strategist and online marketing consultant. For more information on self directed IRA real estate investing, then visit the link.




Sunday, April 29, 2012

Buying Investment Properties


Investment may be counted on the gross or the net basis. Net investment is gross investment minus depreciation. Investment may be ex-ante or planned or anticipated or intended investment; or it may be ex-post, i.e., actually realized investment, or when investment is not merely planned or intended, but which has actually been invested or implemented. This is so true when Buying Investment Properties.

Another classification of investment may be private investment or public investment. Private investment is on private account, i.e., by private individuals, and public investment is by the government. Private investment is influenced by marginal efficiency of capital i.e., profit expectations and the rate of interest. It is profit-elastic. Public investment is by the state or local authorities, such as building of roads, public parks etc. In public investment, profit motive does not enter into consideration. It is undertaken for social good and not for private gain.

Investment which is independent of the level of income, is called autonomous investment. Such investment does not vary with the level of income. In other words, it is income-inelastic. Autonomous investment depends more on population growth and technical progress than on anything else. The influence of change in income is not altogether ruled out, because higher income would probably result in more investment. But the influence of income is negligible as compared with the influence of population growth and progress of technical knowledge.

Examples of autonomous investment are long-range investments in houses, roads, public buildings and other forms of public investment. Most of the investment is undertaken to promote planned economic development. It also includes long-range investment to bring about technical progress or innovations. Public investment means investment which occurs in direct response to invention, and much of the long-range investment, which is only expected to pay for itself over a long period, can be regarded as autonomous investments.




Investment Properties provides detailed information about investment properties, investment property loans, investment property mortgages, buying investment properties and more. Investment Properties is the sister site of Loan Factoring [http://www.i-factoring.com].




Saturday, April 28, 2012

A Guide to Investments in Indian Real Estate


Real estate has traditionally been an avenue for considerable investment per se and investment opportunity for High Net-worth Individuals, Financial institutions as well as individuals looking at viable alternatives for investing money among stocks, bullion, property and other avenues.

Money invested in property for its income and capital growth provides stable and predictable income returns, similar to that of bonds offering both a regular return on investment, if property is rented as well as possibility of capital appreciation. Like all other investment options, real estate investment also has certain risks attached to it, which is quite different from other investments. The available investment opportunities can broadly be categorized into residential, commercial office space and retail sectors.

Investment scenario in real estate

Any investor before considering real estate investments should consider the risk involved in it. This investment option demands a high entry price, suffers from lack of liquidity and an uncertain gestation period. To being illiquid, one cannot sell some units of his property (as one could have done by selling some units of equities, debts or even mutual funds) in case of urgent need of funds.

The maturity period of property investment is uncertain. Investor also has to check the clear property title, especially for the investments in India. The industry experts in this regard claim that property investment should be done by persons who have deeper pockets and longer-term view of their investments. From a long-term financial returns perspective, it is advisable to invest in higher-grade commercial properties.

The returns from property market are comparable to that of certain equities and index funds in longer term. Any investor looking for balancing his portfolio can now look at the real estate sector as a secure means of investment with a certain degree of volatility and risk. A right tenant, location, segmental categories of the Indian property market and individual risk preferences will hence forth prove to be key indicators in achieving the target yields from investments.

The proposed introduction of REMF (Real Estate Mutual Funds) and REIT (Real Estate Investment Trust) will boost these real estate investments from the small investors' point of view. This will also allow small investors to enter the real estate market with contribution as less as INR 10,000.

There is also a demand and need from different market players of the property segment to gradually relax certain norms for FDI in this sector. These foreign investments would then mean higher standards of quality infrastructure and hence would change the entire market scenario in terms of competition and professionalism of market players.

Overall, real estate is expected to offer a good investment alternative to stocks and bonds over the coming years. This attractiveness of real estate investment would be further enhanced on account of favourable inflation and low interest rate regime.

Looking forward, it is possible that with the progress towards the possible opening up of the real estate mutual funds industry and the participation of financial institutions into property investment business, it will pave the way for more organized investment real estate in India, which would be an apt way for investors to get an alternative to invest in property portfolios at marginal level.

Investor's Profile

The two most active investor segments are High Net Worth Individuals (HNIs) and Financial Institutions. While the institutions traditionally show a preference to commercial investment, the high net worth individuals show interest in investing in residential as well as commercial properties.

Apart from these, is the third category of Non-Resident Indians (NRIs). There is a clear bias towards investing in residential properties than commercial properties by the NRIs, the fact could be reasoned as emotional attachment and future security sought by the NRIs. As the necessary formalities and documentation for purchasing immovable properties other than agricultural and plantation properties are quite simple and the rental income is freely repatriable outside India, NRIs have increased their role as investors in real estate

Foreign direct investments (FDIs) in real estate form a small portion of the total investments as there are restrictions such as a minimum lock in period of three years, a minimum size of property to be developed and conditional exit. Besides the conditions, the foreign investor will have to deal with a number of government departments and interpret many complex laws/bylaws.

The concept of Real Estate Investment Trust (REIT) is on the verge of introduction in India. But like most other novel financial instruments, there are going to be problems for this new concept to be accepted.

Real Estate Investment Trust (REIT) would be structured as a company dedicated to owning and, in most cases, operating income-producing real estate, such as apartments, shopping centres, offices and warehouses. A REIT is a company that buys, develops, manages and sells real estate assets and allows participants to invest in a professionally managed portfolio of properties.

Some REITs also are engaged in financing real estate. REITs are pass-through entities or companies that are able to distribute the majority of income cash flows to investors, without taxation, at the corporate level. The main purpose of REITs is to pass the profits to the investors in as intact manner as possible. Hence initially, the REIT's business activities would generally be restricted to generation of property rental income.

The role of the investor is instrumental in scenarios where the interest of the seller and the buyer do not match. For example, if the seller is keen to sell the property and the identified occupier intends to lease the property, between them, the deal will never be fructified; however, an investor can have competitive yields by buying the property and leasing it out to the occupier.

Rationale for real estate investment schemes

The activity of real estate includes a wide range of activities such as development and construction of townships, housing and commercial properties, maintenance of existing properties etc.

The construction sector is one the highest employment sector of the economy and directly or indirectly affects the fortunes of many other sectors. It provides employment to a large work force including a substantial proportion of unskilled labor. However for many reasons this sector does not have smooth access to institutional finance. This is perceived as one of the reasons for the sector not performing to its potential.

By channeling small savings into property, investments would greatly increase access to organized institutional finance. Improved activity in the property sector also improves the revenue flows to the State exchequer through-increased sales-tax, octroi and other collections.

Real estate is an important asset class, which is under conventional circumstances not a viable route for investors in India at present, except by means of direct ownership of properties. For many investors the time is ripe for introducing product to enable diversification by allocating some part of their investment portfolio to real estate investment products. This can be effectively achieved through real estate funds.

Property investment products provide opportunity for capital gains as well as regular periodic incomes. The capital gains may arise from properties developed for sale to actual users or direct investors and the income stream arises out of rentals, income from deposits and service charges for property maintenance.

Advantages of investment in real estate

The following are the advantages for investing in Real Estate Investment Schemes

• As an asset class, property is distinct from the other investment avenues available to a small as well as large investor. Investment in property has its own methodology, advantages, and risk factors that are unlike those for conventional investments. A completely different set of factors, including capital formation, economic performance and supply considerations, influence the realty market, leading to a low correlation in price behaviour vis-à-vis other asset classes.

• Historically, over a longer term, real estate provides returns that are comparable with returns on equities. However, the volatility in prices of realty is lower than equities leading to a better risk management to return trade-off for the investment.

• Real estate returns also show a high correlation with inflation. Therefore, real estate investments made over long periods of time provide an inflation hedge and yield real returns

Risks of investment in real estate

The risks involved in investing in real estate are primarily to do with future rental depreciation or general property market risk, liquidity, tenancy risk and property depreciation. The fundamental factors affecting the value of a specific property are:

Location - The location of a building is crucially important and a significant factor in determining its market value. A property investment is likely to be held for several years and the attractiveness of a given location may change over the holding period, for the better or worse. For example, part of a city may be undergoing regeneration, in which case the perception of the location is likely to improve. In contrast, a major new shopping center development may reduce the appeal of existing peaceful, residential properties.

Physical Characteristics - The type and utility of the building will affect its value, i.e. an office or a shop. By utility is meant the benefits an occupier gets from utilizing space within the building. The risk factor is depreciation. All buildings suffer wear and tear but advances in building technology or the requirements of tenants may also render buildings less attractive over time. For example, the need for large magnitude of under-floor cabling in modern city offices has changed the specifications of the required buildings' space. Also, a building which is designed as an office block may not be usable as a Cineplex, though Cineplex may serve better returns than office space.

Tenant Credit Risk - The value of a building is a function of the rental income that you can expect to receive from owning it. If the tenant defaults then the owner loses the rental income. However, it is not just the risk of outright default that matters. If the credit quality of the tenant were to deteriorate materially during the period of ownership then the sale value will likely be worse than it otherwise would have been.

Lease Length - The length of the leases is also an important consideration. If a building is let to a good quality tenant for a long period then the rental income is assured even if market conditions for property are volatile. This is one of the attractive features of property investment. Because the length of lease is a significant feature, it is important at the time of purchase to consider the length of lease at the point in time when the property is likely to be re-occupied. Many leases incorporate break options, and it is a standard market practice to assume that the lease will terminate at the break point.

Liquidity - All property investment is relatively illiquid to most bonds and equities. Property is slow to transact in normal market conditions and hence illiquid. In poor market conditions it will take even longer to find a buyer. There is a high cost of error in property investments. Thus, while a wrong stock investment can be sold immediately, undoing a wrong real estate investment may be tedious and distress process.

Tax Implications - Apart from income tax which is to be paid on rental income and capital gains, there are two more levies which have to be paid by the investor i.e. property tax and stamp duty. The stamp duty and property tax differ from state to state and can impact the investment returns ones expected from a property.

High Cost Of Investment - Real Estate values are high compared to other forms of investment. This nature of real estate investment puts it out of reach of the common masses. On the other hand, stocks and bonds can now be bought in quantities as small as-one share, thus enabling diversification of the portfolio despite lower outlays. Borrowing for investment in real estate increases the risks further.

Risk Of Single Property - Purchasing a single - property exposes the investor to specific risks associated with the property and does not provide any benefits of diversification. Thus, if the property prices fall, the investor is exposed to a high degree of risk.

Distress Sales - Illiquidity of the real estate market also brings in the risk of lower returns or losses in the event of an urgent need to divest. Distress sales are common in the real estate market and lead to returns that are much lower than the fair value of the property.

Legal Issues - While stock exchanges guarantee, to a certain extent, the legitimacy of a trade in equities or bonds and thus protect against bad delivery or fake and forged shares, no similar safety net is available in the property market. It is also difficult to check the title of a property and requires time, money and expertise.

Overall keeping an eye on market trends can reduce most of these risks. For instance, investing in properties where the rentals are at market rates, also, investing in assets that come with high-credit tenants and looking for lease lock-ins to reuse tenancy risk are simple guidelines to follow.

Future Outlook

The real estate market is witnessing a heightened activity from year 2000 both in terms of magnitude of space being developed as well as rational increase in price. Easy availability of housing loans at much lesser rates has encouraged people who are small investors to buy their own house, which may well be their second home too.

High net worth individuals have also demonstrated greater zeal in investing in residential real estate with an intention of reaping capital appreciation and simultaneously securing regular returns.

In the wake of strong economic growth, real estate market should continue to gain momentum resulting in falling vacancies in CBD areas and more development in suburbs; it is unlikely that commercial property prices will rise or fall significantly, beyond rational reasoning.

As the stamp duty on leave and license agreements has been further reduced, it should further attract to deal in this manner encouraging the investors and the occupiers.

With current budget focusing on infrastructure, it will attract quality tenants and add to market growth. Heighten retail activity will give upward push for space requirement.

Further, the proposed introduction of REMF (Real Estate Mutual Funds) and REIT (Real Estate Investment Trust) will boost these real estate investments from the small investors' point of view. These foreign investments would then mean higher standards of quality infrastructure and hence would change the entire market scenario in terms of competition and professionalism of market players.

Looking forward, it is possible that with evident steps of the possible opening up of the REMF industry and the participation of financial institutions into property investment business, it will pave the way for more organized investment in real estate in India, which would be an apt way for retail investors to get an alternative to invest in property portfolios at all levels. Overall, real estate is expected to offer a good investment alternative to stocks and bonds over the coming years.




Shobhit Agarwal is Joint MD, Capital Markets, Jones Lang LaSalle India, the Indian operations of the real estate consultancy, Jones Lang LaSalle.

With an extensive geographic footprint across ten cities, the firm provides investors, developers, local corporate and multinational companies with a comprehensive range of services including research, consultancy, transactions, project and development services, integrated facility management, property management, capital markets, residential, hotels and retail advisory.




Diversified Investing For Beginners


The very definition of Diversified Investment is that the investor plans the portfolio of investments in such a manner as to minimize the risk of any unexpected financial loss by spreading out his investments in more than one option. There are several ways that a beginner in Diversified Investment might do that: Diversified Investment Horizontally, Diversified Investment Vertically and Diversified Investments by Return Expectations.

Every investment involves risk and most beginner investors agonize over those first investment choices. Choosing to use Diversified investment is a great tool for allowing you to control your exposure to risk. Diversified investing means keeping a common sector but investing in similar stocks in that sector. This way you are keeping the same sector risk, but being diversified in how you spread out your risk. When you buy two similar stocks in the same sector, let's say the industrial sector both stocks will have the tendency to either do well or do bad at the same time because of being in the same sector. Mixing it up a little by choosing a mix of growth stocks along with value stocks means that you will have different activity within your portfolio. Growth stocks and value stocks tend to rise and fall at different times on the market.

The general idea behind a diversified investment is that when you have different investment positions going on at the same time your average of up and down action should give you a more stable overall picture. Diversified investment means experiencing smaller "waves" in your portfolio thus giving the beginner investor a calmer experience in which to get acquainted with investing.

Diversified Investment Horizontally

When you chose to diversify horizontally, you use same-type investments. This can be done in different ways. You may decide to invest in several NASDAQ companies; or you may decide to invest in stocks that are all of the same type or in the same investor sector.

Diversified Investment Vertically

Diversified investing done vertically is when you invest in different types of investment with broader differences like having bonds and stocks. You can also stick with stocks only but chose stocks from different sectors. Diversified investing is less risky then investing all in one type and gives you insurance against market or economical changes.

Diversified Investments by Return Expectations

Diversified investing using expected returns are where all of your investing parts of your portfolio will always remain below what the return is on the top-performer-part. It gives you the most insurance on your investing. You do this by giving a risk values to each part of your investment portfolio that are based not only on the risk factor but on the return expectations too.

Just remember as a beginner in the diversified investor field that you do not have to go it alone. There is plenty of help available to guide your investing path through the rocks and shoals of Wall Street. Take advantage of the multiple offers to help you and no matter which of the types of diversified investing you choose, be cautious, be prudent and do what is termed due diligence on any investment that you are interested in. For more help in understanding the various types of investments look through Diversified-investor.com




Jim Cone is an all around investor and can be found most often on http://www.diversifiedinvesting.tapwaterforgas.com [http://www.diversified-investing.tapwaterforgas.com]




Friday, April 27, 2012

Finance, Credit, Investments - Economical Categories


Scientific works in the theories of finances and credit, according to the specification of the research object, are characterized to be many-sided and many-leveled.

The definition of totality of the economical relations formed in the process of formation, distribution and usage of finances, as money sources is widely spread. For example, in "the general theory of finances" there are two definitions of finances:

1) "...Finances reflect economical relations, formation of the funds of money sources, in the process of distribution and redistribution of national receipts according to the distribution and usage". This definition is given relatively to the conditions of Capitalism, when cash-commodity relations gain universal character;

2) "Finances represent the formation of centralized ad decentralized money sources, economical relations relatively with the distribution and usage, which serve for fulfillment of the state functions and obligations and also provision of the conditions of the widened further production". This definition is brought without showing the environment of its action. We share partly such explanation of finances and think expedient to make some specification.

First, finances overcome the bounds of distribution and redistribution service of the national income, though it is a basic foundation of finances. Also, formation and usage of the depreciation fund which is the part of financial domain, belongs not to the distribution and redistribution of the national income (of newly formed value during a year), but to the distribution of already developed value.

This latest first appears to be a part of value of main industrial funds, later it is moved to the cost price of a ready product (that is to the value too) and after its realization, and it is set the depression fund. Its source is taken into account before hand as a depression kind in the consistence of the ready products cost price.

Second, main goal of finances is much wider then "fulfillment of the state functions and obligations and provision of conditions for the widened further production". Finances exist on the state level and also on the manufactures and branches' level too, and in such conditions, when the most part of the manufactures are not state.

V. M. Rodionova has a different position about this subject: "real formation of the financial resources begins on the stage of distribution, when the value is realized and concrete economical forms of the realized value are separated from the consistence of the profit". V. M. Rodionova makes an accent of finances, as distributing relations, when D. S. Moliakov underlines industrial foundation of finances. Though both of them give quite substantiate discussion of finances, as a system of formation, distribution and usage of the funds of money sources, that comes out of the following definition of the finances: "financial cash relations, which forms in the process of distribution and redistribution of the partial value of the national wealth and total social product, is related with the subjects of the economy and formation and usage of the state cash incomes and savings in the widened further production, in the material stimulation of the workers for satisfaction of the society social and other requests".

In the manuals of the political economy we meet with the following definitions of finances:

"Finances of the socialistic state represent economical (cash) relations, with the help of which, in the way of planned distribution of the incomes and savings the funds of money sources of the state and socialistic manufactures are formed for guaranteeing the growth of the production, rising the material and cultural level of the people and for satisfying other general society requests".

"The system of creation and usage of necessary funds of cash resources for guarantying socialistic widened further production represent exactly the finances of the socialistic society. And the totality of economical relations arisen between state, manufactures and organizations, branches, regions and separate citizen according to the movement of cash funds make financial relations".

As we've seen, definitions of finances made by financiers and political economists do not differ greatly.

In every discussed position there are:

1) expression of essence and phenomenon in the definition of finances;

2) the definition of finances, as the system of the creation and usage of funds of cash sources on the level of phenomenon.

3) Distribution of finances as social product and the value of national income, definition of the distributions planned character, main goals of the economy and economical relations, for servicing of which it is used.

If refuse the preposition "socialistic" in the definition of finances, we may say, that it still keeps actuality. We meet with such traditional definitions of finances, without an adjective "socialistic", in the modern economical literature. We may give such an elucidation: "finances represent cash resources of production and usage, also cash relations appeared in the process of distributing values of formed economical product and national wealth for formation and further production of the cash incomes and savings of the economical subjects and state, rewarding of the workers and satisfaction of the social requests". in this elucidation of finances like D. S. Moliakov and V. M. Rodionov's definitions, following the traditional inheritance, we meet with the widening of the financial foundation. They concern "distribution and redistribution of the value of created economical product, also the partial distribution of the value of national wealth". This latest is very actual, relatively to the process of privatization and the transition to privacy and is periodically used in practice in different countries, for example, Great Britain and France.

"Finances - are cash sources, financial resources, their creation and movement, distribution and redistribution, usage, also economical relations, which are conditioned by intercalculations between the economical subjects, movement of cash sources, money circulation and usage".

"Finances are the system of economical relations, which are connected with firm creation, distribution and usage of financial resources".

We meet with absolutely innovational definitions of finances in Z. Body and R. Merton's basis manuals. "Finance - it is the science about how the people lead spending `the deficit cash resources and incomes in the definite period of time. The financial decisions are characterized by the expenses and incomes which are 1) separated in time, and 2) as a rule, it is impossible to take them into account beforehand neither by those who get decisions nor any other person" . "Financial theory consists of numbers of the conceptions... which learns systematically the subjects of distribution of the cash resources relatively to the time factor; it also considers quantitative models, with the help of which the estimation, putting into practice and realization of the alternative variants of every financial decisions take place" .

These basic conceptions and quantitative models are used at every level of getting financial decisions, but in the latest definition of finances, we meet with the following doctrine of the financial foundation: main function of the finances is in the satisfaction of the people's requests; the subjects of economical activities of any kind (firms, also state organs of every level) are directed towards fulfilling this basic function.

For the goals of our monograph, it is important to compare well-known definitions about finances, credit and investment, to decide how and how much it is possible to integrate the finances, investments and credit into the one total part.

Some researcher thing that credit is the consisting part of finances, if it is discussed from the position of essence and category. The other, more numerous group proves, that an economical category of credit exists parallel to the economical category of finances, by which it underlines impossibility of the credit's existence in the consistence of finances.

N. K. Kuchukova underlined the independence of the category of credit and notes that it is only its "characteristic feature the turned movement of the value, which is not related with transmission of the loan opportunities together with the owners' rights".

N. D. Barkovski replies that functioning of money created an economical basis for apportioning finances and credit as an independent category and gave rise to the credit and financial relations. He noticed the Gnoseological roots of science in money and credit, as the science about finances has business with the research of such economical relations, which lean upon cash flow and credit.

Let's discuss the most spread definitions of credit. in the modern publications credit appeared to be "luckier", then finances. For example, we meet with the following definition of credit in the finance-economical dictionary: "credit is the loan in the form of cash and commodity with the conditions of returning, usually, by paying percent. Credit represents a form of movement of the loan capital and expresses economical relations between the creditor and borrower".

This is the traditional definition of credit. In the earlier dictionary of the economy we read: "credit is the system of economical relations, which is formed while the transmission of cash and material means into the temporal usage, as a rule under the conditions of returning and paying percent".

In the manual of the political economy published under reduction of V. A. Medvedev the following definition is given: "credit, as an economical category, expresses the created relations between the society, labour collective and workers during formation and usage of the loan funds, under the terms of paying present and returning, during transmission of sources for the temporal usage and accumulation".

Credit is discussed in the following way in the earlier education-methodological manuals of political economy: "credit is the system of money relations, which is created in the process of using and mobilization of temporarily free cash means of the state budget, unions, manufactures, organizations and population. Credit has an objective character. It is used for providing widened further production of the state and other needs. Credit differs from finances by the returning character, while financing of manufactures and organizations by the state is fulfilled without this condition".

We meet with the following definition if "the course of economy": "credit is an economical category, which represents relations, while the separate industrial organizations or persons transmit money means to each-other for temporal usage under the conditions of returning. Creation of credit is conditioned by a historical process of fulfilling the economical and money relations, the form of which is the money relation".

Following scientists give slightly different definitions of credit:

"Credit - is a loan in the form of money or commodity, which is given to the borrower by a creditor under the conditions of returning and paying the percentage rate by the borrower".

Credit is giving the temporally free money sources or commodity as a debt for the defined terms by the price of fixed percentage. Thus, a credit is the loan in the form of money or commodity. In the process of this loan's movement, a definite relations are formed between a creditor (the loan is given by a juridical of physical person, who gives certain cash as a debt) and the debtor.

Combining every definition named above, we come to an idea, that credit is giving money capital of commodity as a debt, for certain terms and material provision under the price of firm percentage rate. It expresses definite economical relations between the participants of the process of capital formation. Necessity of the credit relations is conditioned, from one side, by gathering solid quantity of temporarily free money sources, and from the second side, existence of requests of them.

Though, at the same time we must distinguish two resembling concepts: loan and credit. Loan is characterized by:

o Here, the discussion may touch upon transmission of money and also things form one side (loaner) to another (borrower): a)under the owning of the borrower and, at the same time, b) under the conditions of returning same amount or same quantity and quality of the things;

o The loaning of money may bear no interest;

o Any person may take part in it.

With the difference with loan, credit, which is somehow a private occasion of the loan, represents:

o One side (loaner) gives to the second one (borrower) only money, and _ for temporal usage;

o It may not bear no interest (if the assignment doesn't foresee something);

o In it creditor is not any person, but a credit organization (at the first place, banks).

So, a credit is the bank credit. To our mind, it is not correct to use "credit" and "loan" as the synonyms.

Banking crediting is the union of relations between bank (as a creditor) and its borrower. These relations touch upon:

a) Giving a certain amount of money to the borrower for definite purpose (though, we meet with the so-called free credits, aims and objects of crediting are not appointed in the assignment);

b) Its opportune returning;

c) Getting percentage rate from the borrower for using the sources under his/her disposal.

The essential foundation of the credit essence and its important element is existence of trust between the two sides (in Latin "credo", from which comes the word "credit", means "trust").

From the position of circulation of money forms (in the abstraction, historical process of formation economical relations and social budget and banking systems expressed by them) comparing different definitions of finances and credit, the paradox conclusion appears: credit is the private occasion of finances. And truly, from the position of movement of the money forms, finances represent the process of formation and usage of the funds of cash means. Very often such movements are fulfilled without returning, but sometimes, it is possible to give loans from the budget for the investment projects of other needs. Also, when a manufacture or corporations use their cash funds and we mean the finances of industrial subject, such usage may be realized as inside the manufacture or corporation (there is no subject about returning or not returning of the usage), so gratis under conditions of returning. This latest is called commercial form because of transmitting the sources to others, but even in this occasion, it is the element of financial system of the manufacture and corporation.

From the point of cash means movement, main character of credit is the process of formation and usage of the funds of cash means under the conditions of returning and, as a rule, taking the value-percentage. If gating the credit value doesn't take place (even in the exceptional occasions), according to the movement form, credit becomes a private occasion of finances, as from the net financial funds (consequently from the state budget) the loans which bear no interests may be used. If gating credit value takes place, by the appearance form, credit is discussed to be financial modification.

From the historical point of view, finances (especially in the sort of the state budget) and credit (beginning with usury, later commercial and banking) were developing differently for considering credit to be the part of finances. Though, from the genetic-historical point of view, previous loaners, before giving loan, needed gathering the permanent capital not returning, that is the net financial foundation. The banks analogously needed concentration of the important own capital for influxing the consumers' means and for getting higher percentage rate under the conditions of returning. Herewith, exactly on the financial basis, in the sort of financial fund (which later partially becomes loan fund) part of the bank capital appears to be the reservation (insurance) part of the fund, which by nature is financial and not loan. So notwithstanding the essential distinctions between finances and credit form the genetic-historical point of view, credit appears to be formed from finances and represent their modification.

From the essential position of expressing economical relations of finances and credit, we meet with cardinal distinctions between these two categories. Which mostly expressed by the distinction of the movement forms notwithstanding they are returnable or not. Finances express relations in the aspects of distribution and redistribution of social product and part of the national wealth. Credit expresses distribution of the appropriate value only in the section of percentage given for loan, while according to the loan itself, a only a temporal distribution of money sources takes place.

Herewith, there is a lot of common between the finances and credit as from the essential point of view, so according to the form of movement. At the same time, there is a significant distinction between finances and credit as in the essence, so in the form too. According to this, there must be a kind of generally economical category, which will consider finances and credit as a total unity, and in the bounds of this category itself, the separation of the specific essence of the finances and credit would take place.

Funding of the cash means is common to the researched economical categories. It takes place in any separate system of finances and credit, which have been touched upon during the analyses of defining finances and credit. Word combination "funding of the cash sources (fund formation)" reflects and defines exactly essence and form of economical category of more general character, those of finances and credit categories. Though in the in economical texts and practice, it is very uncomfortable to use a termini, which consists of three words. Also, "unloading" with an information hardens greatly its influxing into the circulation even in the conditions of its strict substantiation and thoroughness.

In the discussing context we consider:

1) wide and narrow understanding of economical category of the finances;

2) discussing finances in narrow understanding under general traditional meaning;

3) discussing finances, as funding of the cash means, in wide understanding, which concerns finances - in narrow meaning and credit - in complete meaning.

Termini "funding" and its equivalent "fund formation" are used by us as the purposeful structuring of cash means, which is based on two poles - accumulation of money sources (gathering) and its usage for definite purpose in the way of financing and crediting.

We have established a new termini - "finance-investment sphere" (FIS). Analyses about interrelation of finances and credit made by us give us an opportunity of proving, that in the given termini, the word "financial" is used with the meaning of funding cash sources, its purposeful structuring. In this process we consider at the same time financial, credit and investments' economical categories.

Let's sum up middle results of discussing new concept - "finance-investment sphere" and discuss its investment consisting parts.

The concept "investments" was brought into the native economical science from the West. In the Soviet economical science they for a long time used in the place "investments" the termini "capital placement", which expressed the usage of the industrial factors in the sphere of real industrial activities during realization of capital projects. From one glance, this termini in its concept is identical to the "investments", consequently it is possible to use them as synonyms. Though the termini "investments" and "investing" have the advantage towards the termini "capital placement" from linguistic and philological points of view, because they are expressed with one word. This is not only economical and comfortable in the process of working with the termini "investment" itself, but also it gives an opportunity of termini formation. More concretely: "investment process", "investment domain", "finance-investment sphere" - all these termini are much more acceptable.

Changing native economical termini with foreign ones is purposeful, if it really matters (by keeping parallel usage of the native termini for the inheritance). Though we must not change native economical termini into foreign ones all together, when by ordinal traditional language easy to explain private and narrow concrete processes and elements get their own termini. The "movement" of these termini is approved in the narrow professional bounds, but their "spitting out" into the economical science may turn economical language into the tangled slang.

Let's discuss termini - "investment" and "capital placement's" usage in the economical literature.

Investments are placement of funds into the main and circulation capital for the purpose of getting profit. "Investments in material assets - are the placements of funds into the mobile and real estate (land, buildings, furniture and so on). Investments in financial assets are the placements of funds into the securities bank accounts and other financial instruments".

We don't meet with the termini "investments" in the earlier economical dictionary, but we meet the combined termini "investment policy" - the union of the industrial decisions, which guarantee main directions of the capital investments, the activities of their concentration in the determinant suburbs, on which the reaching of planned rates of development of the society production is depended, balancing and effectiveness, getting more and more production and profit of the national income for every lost Ruble". For today, in the most actual definitions, the capital investments are bounded only by financial means, when not only financial, but also the investment of natural, material-technical and informational resources takes place. Labour resources take an actual place in the investment process. They themselves fulfill this or that investment process.

A positive side of the discussed definitions is that they connect investment policy and capital placements (investments):

- economical development according to the key directions to the concentration;

- providing high rates of economical growth;

- raising an economical effectiveness, which is expressed:

a) by growing the throw off of the production and national income for every lost Ruble;

b) by fulfilling the branch structure of the investments;

c) by improving their technological structure;

d) by optimization of their further production structure.

Compared with such definition of the investments (capital placement) the definition of investments in the dictionary attaching the "Economics" seems to be unimproved: "investments - the expenses of gathering production and industrial means and increasing material reserve". In this definition current expenses (production expenses) are mixed with the investment (capital) expense. Also, not the investment expenses but (though the investments are followed by the appropriate expenses) exactly advancing. It differs from the expenses by that the means (means) are put by returning the advanced values, also, under the conditions of growth, to which the concept-advanced capital is corresponding. the advancing may be realized in the money, natural-material and informational forms.

Except the termini "investments", there are two more termini related with the investment. They are shown below.

"Human capital investment" - any activity provided for rising the workers labour productivity (in the way of growing their qualification and developing their abilities); at the expenses of improving the workers' education, health and raising the mobility of the working forces". It is very useful to use the mentioned termini, though it needs one correction: the human capital investments do not concern only workers, but also the servants, representatives of every kind of labour.

"Investment commodity, capital goods - a capital."

In the official manuals of political economy of the reformation time the capital investments are discussed as "expenses for creating new main funds and widening, reconstruction and renewing the active ones". In this definition the investments (capital placements) during separation of the forms (types) of further production of the main funds are bounded only by main funds (without increases of the circulation funds and insurance reserves):

a) creating new ones;

b) widening;

c) reconstruction;

d) renewing.

Also, the concept of the industrial gathering appears, at the expenses of widening of basic, circulation funds and also insurance reserves takes place".

You'll meet below the definitions of investments from "the course of economy": the investments are called "placements of fund into the basic capital (basic means of production), reserves, also other economical objects and processes, which request long-termed influxing of material and cash means. "According to the division of capital into physical and money forms, the investments too must be divided into material and cash investments".

They apportion investment commodity, to which belong industrial and nonindustrial building objects, vehicles purposed for changing or widened technical park and the furniture, increasing reserves and others.

"They call the total investments of production an investment product, which is directed towards keeping and increasing the basic capital (basic means) and reserve. Total investments consist of two parts. One of them is called the depreciation; it represents important investment resources for compensation of renewal till the level of before industrial usage, wearing out and repairing of the basic means. Second consisting part of the total investments is represented by net investments - capital investments for the purpose of increasing basic means". Depreciation is not a compensation resource of wearing the basic funds out, but it is the purposeful financial source of such resources.

Human capital investment is "a specific kind of investments, mostly in education and health protection".

"Real investments are the investments in the economical branches and also, they are kinds of economical activities, which provide influxing the increases of real capital, that is increasing material values of the industrial means". We can agree with such definition with one specification that material and nonmaterial values too belong to the real capital (wealth), consequently science-researching experimental-construction results, various information, education of he workers and others. Such service as organization of the excitable games, also the service of redistribution social wealth from one private person to another (except charity).

"Financial investments represent placement of funds into the shares, obligations, promissory notes, other securities and instruments. Such investments, of course, do not give increases of the real material capital, but they help getting profit, consequently at the expenses of changing the course of the securities in the time of speculation, or distinguishing the course in different places of sell and purchasing". We share wholly such definition, hence it follows that financial investments (if it is not followed by real investments as a result) do not increase real material wealth and real nonmaterial wealth. According to this context, the expression below is very important: "we must distinguish financial investments, which represent placement of the funds in the ways of selling and purchasing the securities for the purpose of getting profit and financial investments, which become cash and real, moved to real physical capital."

In the "economical course" quoted before long and short-termed investments are separated. Recognizing the existence of the bounds between them, the authors ascribe short-termed investments to "one month or more" investments. If we get such conditioned criteria, that we can call the investments which overcome the terms of some months, long-termed ones, which is very doubtful and we don't agree with it. A long-termed character of the fund placement is a significant feature of the investments (short-term doesn't combine with the concept of investments). Principally, it would be better to point out quick compensative, middle termed compensative and long-termed compensative investments:

- less then 6 months - quick compensative;

- from 6 months up to the year and a half - middle termed compensative;

- more then the year and a half - long termed compensative.

We stopped at the definition of the investments in the capital work "economical course" for the special purpose, as, in it the author tried to discuss the concept of investments systemically and quite completely, herewith the book is published just now.

We'll return to the discussion the definition economical category of "investments" in different publications in the following chapter. The definitions given here are quite enough for having a notion of the level of lighting up the given category in the economical literature.

What conclusions may be made according the definition of the mentioned economical category in the published works, except the made notions and specifications?

There is quite deeply, concretely and thoroughly defined the concept of "investments", different definitions in the economical literature; but mostly in every works about the investments discussed by us until now, there is not opened the essence of investments as an economical category. In every monograph , even if it has a title investment, as an economical category , there is given only the definition, concept of investments. But, as the Academician Vasil Chantladze explains, "a concept is a discussion, which proves something about the distinguishing feature of the researched object. A concept out of much essential characteristic features represents only one, and essential in it is only - definition".

But the categories are much wider; it is "a key, the most fundamental concept of every science". Economical categories theoretically represent real, objectively existed productive relations. A category is the defining of occasions of existed characters, connections, relations of the objective world. Generally, any educational process is fulfilled by the categories, which give opportunities for dividing the processes and occasions semantically, for expressing the definitions of a subject and realize their specific peculiarities and economical relations of a material world.

Our goal is exactly to substantiate investments - as an economical category and also, as a financial category in the narrow understanding.

Here we apply for another manual thesis made by the academician Vasil Chantladze: "every financial relation is an economical one and every financial category is and economical one, but not every economical relation and economical category is financial relation and financial category".

In the process of defining the investments, it is important to take in mind the sides of resources, expenses and incomes, because investment, from one side, is the result of the manufacture's activity, and, from another one, - a part of income, which, in this case, is not used for usage.

Another occasion: it is advisable to discuss investments in two aspects: as a category of reserve and flow, which will reflect exactly the connection between "placement of funds" and "investments".

As we've mentioned above, not long ago, in the well-known Soviet literature the concepts of "the placement of funds" and "investments" were accepted to be the synonyms and concerned to be investment of sources for further production of the main funds and formation of the turnover funds. We meet with such understanding of the concept of "investment" (here, they separate three types of the investment expenses: investments in the basic capital of investments, investments in the house building and investments in the reserves) in the modern economical publications and it is mostly used on the macro level during a statistical analyze of economical processes. In this concrete occasion investment is the category of reserve.







Florida Investment Real Estate and What Are Considerations Before Buying


Investment Real Estate, First Things First

Considering investing in property? What are some pertinent things to consider before taking this leap? Of all the investment possibilities, investment in land generally produces the most positive results. It is vital, however, to carefully investigate the pros and cons, benefits and deficits of real estate investment. Most people look at investment real estate as risky and feel woefully inadequate to tackle this form of investing. They feel lost, not knowing where to even begin!

A multitude of information is available and knowing how to search can seem daunting. A web site search will produce boatloads of information, some valuable and some not. Some key words to search are real estate investment, investment property, and investing in real estate. This will begin the process for you. Not all available information is worth your time, however. Beware when the site promises high return for little down. Also beware of sites whose main goal is to solicit your money. Web searching is one form of research. Another is talking to a reputable real estate broker or real estate lawyer. One of the best sources of information is a friend you trust who has done real estate investing. A trustworthy friend who started as a novice and progressed to real investing is probably your best source of reliable information. Their voice of experience rings the loudest since they are a layman like you who had to discover for themselves each step of the way how to make successful investments.

Investment Real Estate, Rental Units

Let's look at some sound reasons for investing in real estate. Real estate generally appreciates at a greater rate than the rate of inflation and offers great tax benefits. Selecting real estate in a desirable location will prove to be profitable especially in burgeoning areas, usually in suburbs which are a reasonable commute to city jobs. Of course the old adage, location, location, location is a very pertinent piece of advice to take to heart. Think of the most expensive housing markets today. If you have lived in an expensive housing market, or have visited there, you will notice that along with exquisite homes offered for sale at exorbitant rates, small, older homes you would never consider buying in another market are being offered for huge dollars. Why? Location, of course. When a housing area becomes desirable, even those small dumpy homes will sell for a considerable amount of money. Let's stop for a moment and look at the advantages of investing in rental units as opposed to purchasing property for resale. One of the largest factors to consider in purchasing property for resale is finding properties that will resell at a higher rate than purchase, of course. Finding these properties is not as easy today as it may have been in the past. It used to be that fixer-uppers and foreclosures were avoided by homeowners and investors alike. Not so today, those same homes are being feverishly snatched up in the current booming housing markets.

Florida Investment Real Estate - Why Florida Is a Good Choice

Finding homes to purchase and turn over quickly for cash is becoming more and more difficult, leading many to consider purchasing property for the purpose of renting. What are some advantages to renting and what locations would be most desirable for purchase with a rental goal in mind? Owning rental property provides some unique advantages. If you have the time as well as the finances to invest, rental property could end up paying for itself in the long term. In order for this to be true, the most important thing to search for is property in a great location for renters. You don't want to be searching for renters for months on end while you are being drained of capital. Those mortgage payments never stop, even when the list of renters has been exhausted. Buying rental investment property in a college town is a good bet for the possibility of continual renters and also buying in transient areas and tourist areas. Of all the above, tourist areas tend to be your surest source of consistent renters. Numerous high density tourist areas exist across the nation, but one of your best bets for purchase and consistent renters would be a sun-drenched spot with a year-round temperate climate. California and Texas would fit the bill, but as we all know, the most desirable locations in California may be out of reach due to the high cost. Texas may be considered a good choice, but only one state ranks as the premier tourist destination in the world and that would be Florida, the sunshine state.

Florida Investment Real Estate - The Orlando Area

With Florida's burgeoning population, Florida investment real estate is a great option. Florida ranks 4th in population behind California, Texas and New York. Florida has one of the fastest rates of growth in the nation, making Florida investment real estate a very attractive option for investors. In the 1990's, Florida grew by 23.5 percent with five counties increasing by more than 60 percent. Projected state growth would bring the population to over 19 million by 2010. An increasingly higher population obviously increases the need for housing. The increasing resident population being a great reason to pursue Florida investment real estate; let's not neglect another face of increasing housing need. Florida has a tourism rate of almost 77 million visitors in 2004, making it the top travel destination in the world and producing $57 billion of income. Tourists flock to all parts of Florida, the beaches being one of the most attractive destinations. However, Orlando pulls in the most visitors, with 2.6 million international travelers, not including the steady stream of domestic tourists. This alone would offer sufficient reason to purchase rental property. But considering that the grand total of tourists visiting Orlando in 2004 was 48 million people, what great housing investment potential for investors! The biggest drawing card in the Orlando area is, of course, Walt Disney World. The area surrounding Disney has a hotel rate occupancy of about 80 percent. It's obvious why the Orlando area is considered one of the most desirable tourist destinations in the world.

Florida Investment Real Estate - What are Reasons Tourists Come to the Orlando Area

Owning Florida investment real estate will give vacationers who visit the Orlando area a place to stay while you collect the rent. Theme park attractions are one of the biggest reasons Orlando has become a #1 tourist destination. The three most popular are Disney, which includes Disney World, Epcot, Animal Kingdom and MGM Studios, Sea World and Universal. Each attraction holds an appeal for people of all ages with families and singles alike enjoying each. Kissimmee is the town closest to Disney where families especially enjoy a few of the more laid back sights including Green Meadows Farm. Green Meadows is in an idyllic country setting with tours of the farm and more than 300 farm animals to touch and see. Also in the Kissimmee area is Horse World Riding Stables. The 750 acres of open pasture beckons horse lovers to enjoy a ride beneath the open sky. The Orlando Science Center beckons science buffs both young and old. Learning happens as a by-product here through the realistic, interactive and just plain fun exhibits. Fabulous night life is to be found both in Kissimmee which boasts two very popular dinner attractions, Medieval Times and Arabian Nights. Both serve delectable large portions of food with fabulous jousting and medieval type entertainment. For the shopper, Shopping and dining abound in the Orlando area also as do all sorts of natural environmental experiences.

Real Estate Investment in Florida - Bimini Bay Resort Florida

A well-kept secret but one located just 5 miles from Disney, in the center of Florida is Davenport, a treasure of a town close to the major attractions, yet a world away. On 80 acres of land in the Davenport area, you will find Bimini Bay Resort, Florida. A grand investment opportunity awaits you at Bimini Bay Resort, Florida where the investor participates in property appreciation but is not affected by negative cash flow during the off season. At Bimini Bay Resort, Florida you will find a planned community of luxurious town homes, offering 3 bedroom two baths that are fully furnished and equipped. Bimini Bay Resort, Florida is unique in that the investor can stay in the purchased unit while on vacation for a minimum fee while renting the unit the rest of the year. Management staff at Bimini Bay Resort finds the renters while you enjoy a guaranteed rental income each month. Planned amenities at Bimini Bay Resort include two major restaurants, a grocery, deli and food court and a sports bar restaurant. Bimini Bay Resort will also include a spa and exercise facility. A large business conference center and twin theaters are also planned at Bimini Bay Resort. Peace of mind will be yours at Bimini Bay Resort with its gated access with security cards. A fantastic real estate investment in Florida at Bimini Bay Resort awaits the investor who desires a consistent income without the headaches of day-to-day management. Bimini Bay Resort is worth investigating.

Our Featured Orlando Properties: You have an opportunity to join one of the fastest growing trends in the United States and the world. Orlando is one of the most explosive markets in the country and the Disney resort area has an average hotel occupancy of around 80%. Orlando is known as the vacation capital of the world and the top rated short term rental market, one that shows tremendous potential for real investors.

Tourism - with 76.8 million visitors in 2004 (a record number), Florida is the top travel destination in the world. The tourism industry has an economic impact of $57 billion on Florida's economy. Click here for additional tourism facts and statistics.

City Population Rank (2000):

(Rounded to the Nearest Thousand)

1. Jacksonville - 736,000

2. Miami - 362,000

3. Tampa - 303,000

4. St. Petersburg - 248,000

5. Hialeah - 226,000

6. Orlando - 186,000

7. Ft. Lauderdale - 152,000

8. Tallahassee - 151,000

9. Hollywood - 139,000

10. Pembroke Pines - 137,000

11. Coral Springs - 118,000

12. Clearwater - 109,000

13. Cape Coral - 102,000

14. Gainesville - 95,000

15. Port St. Lucie - 89,000

16. Miami Beach - 88,000

17. Sunrise - 86,000

18. Plantation - 83,000

19. West Palm Beach - 82,000

20. Palm Bay - 79,000

21. Lakeland - 78,000

22. Pompano Beach - 78,000

23. Davie - 76,000

24. Boca Raton - 75,000

25. Miramar - 73,000

Most Populous Metro Areas (2000):

(Rounded to the Nearest Thousand)

1. Tampa/St. Petersburg/Clearwater - 2,396,000

2. Miami - 2,253,000

3. Orlando - 1,645,000

4. Ft. Lauderdale - 1,623,000

5. Jacksonville - 1,100,000

6. West Palm Beach/Boca Raton - 1,131,000

7. Sarasota/Bradenton - 590,000

8. Daytona Beach - 493,000

9. Lakeland/Winter Haven - 484,000

10. Melbourne/Titusville/Palm Bay - 476,000

11. Fort Myers/Cape Coral - 441,000

12. Pensacola - 412,000

13. Fort Pierce/Port St. Lucie - 319,000

14. Tallahassee - 285,000

15. Ocala - 259,000

16. Naples - 251,000

17. Gainesville - 218,000

18. Fort Walton Beach - 170,000

19. Panama City - 148,000

Home to 11 of the country's 100 fastest-growing counties, a Florida investment property has high potential as a profit-maker, unlike most other areas. Port St. Lucie, Miramar and Cape Coral are the fastest growing cities in Florida. It's unlikely you will make a mistake investing in Florida real estate considering the vast number of tourists and new residents flocking to the land of sun and surf. The most difficult decision to make will be which location in Florida to purchase. Good investments abound in each area of the state, from Miami in the south to Clearwater on the gulf coast, going east to Daytona Beach and north to the panhandle. Selecting a location depends on your goals for purchasing Florida investment property. Carefully consider what you intend to do with your Florida investment property. Will your purchase be used mainly as a rental property for vacationers? Do you intend to have access to the property during certain seasons? Or is your goal rental of the property to local tenants? Some of these questions will help you in narrowing down your search. Once you have determined whether your Florida investment property will be used primarily for vacationers or for local renters, and whether you intend on using it as a vacation resort yourself, it is easier to choose the location.

"Each year is better than the previous one," said Abe Pizam, dean of the University of Central Florida's hospitality management college. "But it's not yet where it should be, or where it was."

Pizam said that, while a weak dollar has helped renew interest in Orlando among some foreign visitors, many are continuing to stay away because of heightened security measures in the United States and the hassles that accompany them, as well as increased opposition to the war in Iraq.

"It's a miracle that, despite that, we have improved our visitor counts," Pizam said. "We cannot deny there is still animosity toward the United States in many parts of the world."

Struggling economies in South America also put the brakes on many potential tourists' travel plans in what historically has been a strong market for Orlando.

According to the bureau's figures, the number of South American visitors have dropped substantially in recent years, from 659,000 in 2000 to fewer than 300,000 last year.

Other signs point to a recent upswing in international traffic, however. Orlando International Airport officials said in June that the airport recorded a 20 percent increase in international passengers compared with the same month last year.

On International Drive, a tourism corridor that benefits heavily from overseas travelers, merchants are noticing the difference.

"It's maybe picked up," said Zach Marino, manager of Texas de Brazil restaurant on International Drive. "In this area it's hard to tell because this is the spot to be. We have a strong international clientele."

Asian visitors increased by nearly 40,000 in 2004, and about 100,000 more Canadians traveled to Orlando last year than in 2003.

The visitors bureau noted that it has stepped up its national and international marketing of Orlando, having pulled back on such advertisements after 9-11.

"Our plan is more back-to-normal in terms of marketing thrust," Peeper said.

New York remained the No. 1 source of domestic out-of-state vacationers to Orlando last year. The Tampa Bay area held on as the top source of in-state visitors.

Experts are predicting that 2005 will exceed last year in terms of both international and domestic visitors.

Earlier this month, Walt Disney World reported percentage growth in the low double digits among international tourists, while the number of domestic customers remained relatively flat during one of the rainiest Junes on record.

"If everything stays stable, we should come out on the international side real well" in 2005, Peeper said.




Sharona Murvin
Florida Investment Real Estate Expert
http://www.biminibayresortinvestment.com




Thursday, April 26, 2012

The 7 Most Common Property Investment Mistakes and How to Avoid Them!


Hey there,

Thanks for releasing me from the confines of this page. You see, unless I am being read by someone like you who understands me, I am no more than a collection of shapes (called letters) that make no sense on their own. But once read in my entirety, I have the power to impart knowledge and experience on you.

And just like the 'Genie' rewarded ' Aladdin' for releasing him from the confines of the lamp, for every sentence that you release from this page, I am going to reward you with a piece of priceless information that is sure to help you achieve your investment goals.

Before I continue, it would be safe to assume that you are someone who is very serious about your financial future, right?

Thought so - I recognised that quality in you the moment you read to this point. In my time I have come across 3 main types of reader:

i. Those that just read the main title and subtitles for each section and then think they know what the contents they have not read are.

These guys always tend to come back to me at a later date - usually after they have made all 10 of the most common property investing mistakes and lost themselves a fair bit of money in the process.

ii. Those that read me a bit at a time and because of this, I never get a chance to share with them all the treasures that lie within me.

These guys tend to make about 5 of the 10 most common property investing mistakes and therefore, are always one step away from financial disaster.

iii. And finally, those who take the short time required to read me in my entirety. These are the smart ones who receive the knowledge I posses and use it to create treasures and the type of life that most people only ever dream of!!

These are the guys who retire early, have fun and exciting lives, have great relationships with your family & friends, be loved & admired by everyone you meet!! This is the future I foresee for you!!

Ok - as much as I sincerely enjoy your attention, I know that 'time is money'. And it would be selfish of me to keep you here longer than I need to.

So it's time I shared with you 'The 7 Most Common Property Investment Mistakes' and showed you 'How To Avoid Them'!

Mistake #1 - Failing to Create An Investment Plan

Surprisingly, there are many property investors out there investing with no plan. Those guys fail to recognise the importance of having goals to work towards - and some even go as far as dismissing this concept outright.

Take it from me - investing without a plan is a sure route to financial disaster. I am confident you have heard the saying:

'If you fail to plan, you plan to fail!'

On the other hand, setting clear goals is the first step towards becoming a successful property investor. You see, successful investors have the following 3 things in common;

i. They set their own specific goals

ii. They develop a plan for achieving those goals

iii. They remain focused and take action on implementing their plan

With clearly defined goals you can easily devise a plan to realise them. But before setting goals, it is important to have an end result in mind - a dream to work towards.

This dream must be your dream and not someone else's because when it belongs to you, it will keep you focused and motivated at all times. Especially at times when things may not appear to be going to plan.

However, in order to turn your dreams into reality, action is required. And a plan will enable you to take consistent action towards achieving your goal.

So how do you avoid this common mistake?

Easy - just set up a plan using the following simple steps:

a. Set your property goals & write them down

b. Set a time-frame for your goals

c. Identify the things you need to do to achieve your goals and put these into an easy to follow step-by-step plan

d. Take immediate action & remember to review your plan on a regular basis to make sure you are on track

So now you know how to avoid making No. 1 of the 7 most common property investment mistakes, let's move straight on to No. 2!

Mistake #2 - Taking Investment Advice From Friends & Family

Please believe me when I sincerely state that my intention is not - in any shape or form - insult your family and friends.

What I am simply trying to remind you is of what you know already - and that is; although you may have a lot in common with friends & family, what works for one person may not be right for another. Especially when it comes to financial decisions and investment planning.

Where I'm from, we have a saying that sums up this wisdom and it goes:

'One persons meat is another persons poison!'

I mean think about it - do you and your friends & family;

• Like exactly the same colour, football team, food, film, book, career, choice of partner, etc?

Exactly!

So although our friends and family may have our best intentions at heart - we hope - we know that the advice they give us is not always the best for achieving our personal goals and realising our dreams.

So how do you avoid this common mistake?

i. Remain fully aware of your personal and financial position and how it relates to the advice giver. You might want to think twice about taking advice from someone who has a history of making bad financial decisions. Also, never take investment advice from someone who has never invested in property.

ii. Be aware of the advice givers area of expertise and see how that relates to the advice they are giving. For example, a friend may be great at giving you relationship advice - but that does not automatically qualify them as a property investment expert.

iii.Only ever take advice from people who have already achieved the goals that you are aiming for, as these are the people with the experience to help you navigate the inevitable obstacles you will face.

iv. Make sure that you have current knowledge of the property market at all times. That will help you identify whether the advice you are being given is relevant to today's market.

v. Refer back to your investment plan that you created to avoid mistake No. 1 - this will help you establish whether the advice you have been will take you closer too or further away from your goals.

vi. Find yourself an experienced property investor to act as your guide and mentor. Ok - now you know how to avoid mistake No. 2 - let's move on to mistake No. 3!

Mistake #3 - Not Buying Property Significantly Below Market Value

This mistake is very common among other investors because although they see why it would be 'nice' to have, they rarely see why it is 'important' to have.

Getting a property at £5,000 pounds below the original asking price is 'nice to have'. But it is important to secure a large enough discount that will cover all your major purchase costs (e.g. deposit and stamp duty). This approach will greatly lower the amount of personal capital you need to invest in any one opportunity.

Another important reason to always buy property significantly below market value is because: Profit is made at the time of buying, and realised at the point of selling!

You still with me? Good. Because I know that the last statement may not be an easy one to digest. When I was first exposed to this concept in Robert Kiyosakis' bestselling book 'Rich Dad, Poor Dad', I was 'more than confused'. So if you are confused at this stage, let me congratulate you because 'confusion' is a sign from your brain that you're about to expand your cognitive awareness and learn something new!!

Let me now use the following example to help you through your confusion:

Let's say a property is worth £100,000 and you buy it for £100,000. You would have £0.00 equity/profit in the property.

I see a similar property for £100,000 but buy it for £80,000. I would have £20,000 instant equity/profit in the property from day one.

Let's assume a few years have gone by, the market has fallen and both our properties are now only worth £90,000. When you sell, you are down £10,000. When I sell I am still up £10,000, because I bought with a £20,000 profit.

So you see: Profit is made at the time of buying, and realised at the point of selling! You may be wondering why I have chosen to use an example where the property drops in value. The reason for this is that you need to be fully aware that the housing market can go up as well as down.

And to be successful in property you have to make sure that you have sufficient downside protection so that you never lose money - even when the market is on a downward trend. Typically, buying property at least 10% below market value will give you a sufficient 'buffer' to protect your investment in the unlikely case the market drops in value. So, from here on, you might want to make it one of your investment rules to never invest in property unless you are getting at least 10% discount of its real - not speculative or inflated - market value.

So how do you avoid this common mistake?

i. First - adopt the 10% BMV rule. ii. Next - sharpen up your negotiating skills. A good place to start is by reading Donald Trumps' bestseller 'The Art of The Deal'. iii. Finally - find the ideal property and close the deal!!

Pretty straight forward, but potentially time consuming, right?

No need to worry - because if you send an email now to enquiries@genieproperties.co.uk, you will instantly benefit from access to a wide range of investment opportunities, as much as 25% below market value!

We're now done with mistake No. 3 - so, without further ado, let's take a look at No. 4 of the most common investment mistakes.

Mistake #4 - Joining The Wrong Property Club/Syndicate

In the previous section I presented you with a tried-and- tested option for acquiring your 25% below market value properties through a trusted & established property network.

And to be totally honest, you are not just limited to this option because if you go to Google now (or any other search engine for that matter) and type in 'discounted properties', you are sure to come across a long list of 'property clubs/syndicates' that may be able to offer you similar opportunities.

However, do be aware that not all such companies work to the same high standards you deserve - in fact, an alarming number of property clubs/syndicates are notorious for inflating prices by up to 25% so that they can offer fake discounts to unknowing investors like you!!

In addition, some of these clubs/syndicates fabricate the rental information so that they can pass-off bad investment opportunities as ones that stack-up.

I cannot begin to tell you the number of investors who I have come across that have had their whole hand - not just their fingers - burnt from such unscrupulous practices. And the last thing you - or I - want is for your to share that experience with them.

That said, it is important for you to be aware that not all property networks are dishonest. In fact there a few that conduct themselves with Integrity, Due Diligence & Transparency in all they do - and all you have to do is sift through the muck to find them.

Here are some simple measures you might want to take to help you easily indentify the 'good' and avoid the 'bad':

i. Find out what the club/syndicate/networks mission objective is. This may help you establish whether you share the same core values.

ii. Check with Company House to see if the club/syndicate/network is registered. You may find that a registered company is more likely to act in a honest & professional manner.

iii. Speak with other property investors to find out what the property club/syndicate/networks general reputation is. Also, get the club to provide you with testimonies from past clients.

iv. Make sure to conduct your own due diligence into any information the club provides you with. Ask them for the source and full disclosure so you can verify its accuracy for yourself.

If followed correctly, these measures will go a long way in protecting you from falling afoul of unscrupulous property clubs/syndicates and help you identify 'the good guys' that you should be associated with.

Mistake #5 - Not Conducting Sufficient Due Diligence

Everyone knows that it is easy to lose money, right? Which begs the question:

'Why do so many investors insist on investing without first carrying out sufficient due diligence?'

Do you know the answer - because I don't!!

Let me be totally frank with you here; investing without conducting due diligence is not investing - its gambling. And we are not gamblers, we are investors. Many so-called 'investors' have made this very costly mistake and lost everything they own as a result - including the shirt off their back and the ones on the washing line!!

It is very important that you are aware the outcome of any due diligence process is only as good as the qualify of the information it is based on.

If you are reading this right now, it is safe to assume you are alive and living in what is being referred to as the 'Information Age' - an age where timely, accurate information is a highly prized & sought after commodity.

The thing about information is that it is always changing, ever evolving and very far from being static. Therefore, to be confident in all your investment decisions you need to have instant access to relevant, up-to-date, accurate and honest information obtained from reliable sources.

As with most things, information gathering and analysis is a time consuming process. It also requires a certain level of expertise to be able to sift through all available information to find that which is relevant to your requirements. And in an age where we are constantly being bombarded by information from all angles, this activity can become overwhelming.

Because of this and the fact that we all have our everyday responsibilities to take care of (family, jobs, social, etc) some investors choose not to conduct necessary due diligence and make investment decisions based on incomplete, old and even wrong information. This is a sure route to eventual financial disaster.

So, if you want to learn from the experiences of others and avoid making this mistake, pay attention to the following:

i. Always investigate every opportunity before investing. You should at least spend as much time researching a prospective investment opportunity as the amount of time it takes to earn the capital you intend to invest.

ii. Demand honest, accurate and transparent information on every investment.

iii. Where possible, always ask for full and complete disclosure of every detail of the investment.

iv. Verify for yourself that the information provided is accurate. v. Make sure that you are always getting timely, accurate information from an, honest, reputable and reliable source. This will greatly reduce the amount of time, money and energy you will personally need to spend conducting accurate due diligence.

Disregard these rules and you are in for some very costly lessons.

Follow this advice and you will eventually become a very successful investor!

Mistake #6 - Making Emotionally Based Investment Decisions

As you already know, investing has nothing to do with emotions and everything to do with financial returns.

For example - it does not matter if you have a spa in the bedroom at home and the investment property does not, or the window coverings are not what you have at home. You are not going to live in it - it is an investment and you have to look at it from that point of view.

Remember: its all about your return on investment - let the figures and supportive information do the talking and not your personal preferences.

The flip side of this is that some investors become emotionally attached to a particular investment property once they have acquired it - and because of this are reluctant to offload it when it stops being an asset and becomes more of a liability.

Newsflash - a property is an inanimate object or thing. And I am sorry to be the bearer of bad news but regardless of how much love you have for it, it will never, ever return that love back to you. Or anyone else for that matter!! So do not try and have a relationship with it - because that relationship is doomed for certain failure - in fact, it's a non-starter.

You should only invest in property for one reason - to make money - and not for any other purpose. And as soon as that investment starts losing you more money than you are comfortable with losing - and/or is no longer taking you towards the achievement of the goal you set yourself in your original plan - it's time for you to 'get out' and 'move on'.

To avoid this common mistake, all you need to do is:

i. Do your due diligence ii. Assess all the relevant information available to you iii. Refer back to your investment plan iv. Never lose sight of the reason you are investing. And that is to make money - preferably loads!!

Right - you are now one step away from being well ahead of the pack!! So without further ado, let's move on to the last - but not least - of the 7 most common property investment mistakes!!

Mistake #7 - Investing Without The Guidance Of A Trusted Mentor

What do all the following people have in common?

• Bill Gates

• Warren Buffett

• Michael Dell

• Donald Trump

• Oprah Winfrey

• David Beckham

• Richard Branson

• Tiger Woods

If you said that they are all mega-rich, you are right! And if you said that they are all very successful at what they do, you are also right!!

But are you also aware that one of the reasons why they are so rich and successful is because they all have mentors/advisors/coaches?

You see, they fully understand and live by one of the major secrets to success - which is seeking the personal guidance of those who are experts in your field of interest to assist you in getting to the next level.

A mentor is 'someone whose hindsight can become your foresight'

They are accessible to you in many forms, including - and not limited to - in person, through books, via emails, phone calls, etc.

Mentors use their experience and knowledge to guide and motivate you towards the goals you set ourselves.

They encourage you to step outside your comfort zones and move to the next level of success. They support you on every step you take on your journey to the top - and once you get there, they will help you to stay there!!

Because you want to be successful, here is what you need to do to avoid this mistake: Find yourself a trusted mentor with the knowledge and experience to guide you to where you want to get to!

To do this you need to start by keeping your eyes and ears open to identify the best people from whom you can learn professionally.

Seek out a successful professional whom you share common values with and can relate to. Look for someone who conducts their business relationships with Integrity (at all times), Due Diligence (at all stages) and Transparency (at all levels).

Find a mentor that is consistent, honest and trustworthy, who has a proven track record for delivering results and a reputation for always providing value.

Follow this advice and one day, you too will have your name listed above with the mega rich and very successful.

So there you have it - you now know the 7 most common property investment mistakes and how to avoid them.

But be aware - all that has been covered here are the 7 most common property investment mistakes. It would not be possible to cover all property investment mistakes here - especially since new mistakes are being made every day by some investors somewhere in the world!! And some of these other mistakes are even more crippling than the ones we have covered here!

That said, what we have covered here is enough to see you safely on your way to success - but only if you take instant action on the knowledge and wisdom that I have shared with you in this ebook.

Because, as you already know:

'Knowledge is power - only when combined with action!'

So start today, right now and take the necessary actions required to avoid the 7 most common property investment mistakes.

I am here if you need me - all you have to do is ask, and 'Your Wish Is My Command!'




Author Ade Shokoya provides FREE support and guidance on personal development and personal empowerment. View personal empowerment articles, profiles, tips and more by simply clicking: Personal Development or Personal Empowerment now.