When it comes to investing in property there is no right time or wrong time, anytime is good when investing in property. The market is so wide and high that it is always possible to find some value in there. It can be easier or harder to find value depending on the state of the market but it is always there. There is always some sort of property that has been in neglect, disrepair, or simply has motivated sellers that must make a sale. Properties such as these make for a great buy at any time no matter the state of the market. Another thing to remember is that the Real Estate market moves in cycles. It never stays low or high for too long. Eventually things reverse and go back to the way they were in the previous half of the cycle. With a little bit of knowledge you can come close to predicting the cycles and making a killing in the market. The market is also unpredictable with the leading experts unable to always buy low and sell high. Most of the time it is just educated guesswork that may or may not work so you there is no point in waiting for the ideal time to invest in the market.
The Real Estate investor that always makes money is the one who makes it a habit of buy and hold. While it is true that their money is tied up it is equally true that a sluggish market or slow economy does not do them any harm. They simply have to hold on to the property and eventually when the upside of the cycle comes around they can sell it off. In the meantime they can continue to make money by renting or leasing such property. “Buy and hold” investors are very patient and they usually have more experience watching the market than short term investors. This means they are that much better at predicting the cycles. They know when they can expect peaks and valleys and they can plan their actions accordingly. They are much better at reading the signs and making the right buy or sell decision. Being active in the market for a long time also means that they have a thorough knowledge of what is available where, and they can move in and get working.
The Real Estate market is currently going through a sluggish period all over the world, apart from a few spots like Dubai and some locations in China. This turned out to be bad news for those investors who thought that the market will continue to go up indefinitely. The good news here is that since the prices are falling down it is the right time to buy. You cannot wait too long or the cycle may reverse again by the time you are done deciding and you will pay more than you ought to.
If you are looking to buy ownership property instead of investment property then there is no point in looking at the market condition. Just go ahead and buy.
Tuesday, October 28, 2008
Make Money from Commercial Property Investments
There are basically five different ways in which you can make money by investing in commercial real estate.
Strategy 1: Building equity.
The key way to make money in commercial real estate business is by building up equity in the property. You can do this in four ways that are mentioned below.
The first way is to buy the property below its market value. To do this you will have to do your due research, you will have to find out the needs of the buyer and you also have to be good at negotiation.
The next way in which equity builds up is through the appreciation of property. You can easily ensure that your property appreciates by marinating it properly and undertaking the necessary repair work. It is also important to buy a property in a location that promises to grow.
The third way to build equity is by paying down debt. The key to this strategy is to try and get the lowest interest rate possible on your debt instrument.
The fourth way in which you can create equity is the time when you sell the property. You must try and sell you property at above market value and to do this you have to put in effort to find the right buyer and again you have to have good negotiation skills.
Strategy 2: depreciation of property.
You can save a considerable amount of tax as depreciation on building is tax deductible expenditure. When you arrive at the profit before tax, you are allowed to account the expenditure on depreciation of assets as an operational expenditure. This way you have to calculate the percentage of tax on a lower amount. It is however important to note that depreciation can be charged only on the building but not on land.
Strategy 3: Charging suitable rent.
It is important that the property generates enough rent so that you can easily cover the expenditure if its maintenance and can also cover the interest payment of the mortgage. But you should not stop there, it should be your goal to try and get additional rent so that you can pay off the debts and thus create equity.
Strategy 4: Attractive financing schemes for the buyer.
When you are selling your property, you can fetch a better price if you offer convenient payment schemes to the potential buyer. For example, if you allow the buyer to pay in easy installments and do not want a heavy down payment, then the buyer may be willing to pay you a higher over all price.
Strategy 5: Add value to your property.
You can add value to you property in various ways. Try and make strategic improvements in your property that will help you to increase its worth. You can also put your property to higher and better use to increase its worth.
Strategy 1: Building equity.
The key way to make money in commercial real estate business is by building up equity in the property. You can do this in four ways that are mentioned below.
The first way is to buy the property below its market value. To do this you will have to do your due research, you will have to find out the needs of the buyer and you also have to be good at negotiation.
The next way in which equity builds up is through the appreciation of property. You can easily ensure that your property appreciates by marinating it properly and undertaking the necessary repair work. It is also important to buy a property in a location that promises to grow.
The third way to build equity is by paying down debt. The key to this strategy is to try and get the lowest interest rate possible on your debt instrument.
The fourth way in which you can create equity is the time when you sell the property. You must try and sell you property at above market value and to do this you have to put in effort to find the right buyer and again you have to have good negotiation skills.
Strategy 2: depreciation of property.
You can save a considerable amount of tax as depreciation on building is tax deductible expenditure. When you arrive at the profit before tax, you are allowed to account the expenditure on depreciation of assets as an operational expenditure. This way you have to calculate the percentage of tax on a lower amount. It is however important to note that depreciation can be charged only on the building but not on land.
Strategy 3: Charging suitable rent.
It is important that the property generates enough rent so that you can easily cover the expenditure if its maintenance and can also cover the interest payment of the mortgage. But you should not stop there, it should be your goal to try and get additional rent so that you can pay off the debts and thus create equity.
Strategy 4: Attractive financing schemes for the buyer.
When you are selling your property, you can fetch a better price if you offer convenient payment schemes to the potential buyer. For example, if you allow the buyer to pay in easy installments and do not want a heavy down payment, then the buyer may be willing to pay you a higher over all price.
Strategy 5: Add value to your property.
You can add value to you property in various ways. Try and make strategic improvements in your property that will help you to increase its worth. You can also put your property to higher and better use to increase its worth.
The future of the Dubai real estate market.
Last week saw more than 70,000 people descend on the Dubai International Conference Centre for the annual Cityscape Exhibition. A traditional focus of activity for people interested in investing in the Dubai real estate market, this year’s show promised to be far more interesting given the recent turmoil in the world’s financial markets.
Like so many Cityscape exhibitions before, the main news emanating from the show was on the new projects that were being announced by the developers. Again this year we saw the launch of many unique and genuinely innovative projects, many of which will shape the landscape of the emirate for many years to come.
From the developers Nakheel, we saw the launch of the Nakheel Harbour and Tower development. An inconic project, which as its centrepiece will include the Nakheel Tower, destined to be the world’s tallest tower at over one kilometre high. Nakheel were not on their own however in making the news. The Podium Commercial Tower launched its new office tower, which on one side will be the world’s largest screen, covering all 33 floors of the building. In Abu Dhabi, the new waterfront project at the Micheal Schumacher Tower went on display, with its range of luxury penthouses on the ground floor, allowing you to literally park your boat in your front room.
What most people really wanted to see however was the reaction from investors to the recent turmoil in the global financial markets, especially as for so many years people have literally considered the Dubai real estate market immune from outside market dynamics. Would investors still be spending, or would they be turning their backs on the Dubai property market choosing instead to consider emerging markets further afield?
The answer was to be seen in the numbers of people coming through the doors to the Cityscape exhibition, with over 70,000 people coming through the doors of the Dubai International Exhibition Centre over the course of the four days. Whilst the days of people pushing to place deposits on units may have passed, what is undoubted is that there is still a considerable level of interest in the market for property in Dubai, with people prepared to believe in what New Dubai has the undoubted potential to become.
The future direction of the Dubai property market was probably best summarised by His Royal Highness Sheikh Al Maktoum, who suggested that the market for property in Dubai will thrive, as the macro economic fundamentals are in place for future growth. We are seeing a change in the nature of the market, but these changes will prove to be beneficial for the long term growth of the market as a whole as they will be dictated by realistic expectations and a gradual harmonising of market demand and supply.
These fundamentals, such as the increasing numbers of tourists and companies seeking to relocate to the region are undoubtedly where the future of Dubai lies, as it strives to move away from its previous reliance on its finite reserves of natural resources. What we are in fact witnessing is the beginning of the second phase of Dubai’s growth. Today, Dubai is slowly moving away from the short-term model of expansive growth which has characterised its recent development, and is moving towards the model adopted by more mature real estate markets. This model is destined to be shaped by more realistic expectations, and a shift in supply to cater for the increasing mid-level demand.
What was noticeable at Cityscape was that the serious and more discerning investor was evident, and these are the individuals who seem set to shape the Dubai property market in years to come.
Like so many Cityscape exhibitions before, the main news emanating from the show was on the new projects that were being announced by the developers. Again this year we saw the launch of many unique and genuinely innovative projects, many of which will shape the landscape of the emirate for many years to come.
From the developers Nakheel, we saw the launch of the Nakheel Harbour and Tower development. An inconic project, which as its centrepiece will include the Nakheel Tower, destined to be the world’s tallest tower at over one kilometre high. Nakheel were not on their own however in making the news. The Podium Commercial Tower launched its new office tower, which on one side will be the world’s largest screen, covering all 33 floors of the building. In Abu Dhabi, the new waterfront project at the Micheal Schumacher Tower went on display, with its range of luxury penthouses on the ground floor, allowing you to literally park your boat in your front room.
What most people really wanted to see however was the reaction from investors to the recent turmoil in the global financial markets, especially as for so many years people have literally considered the Dubai real estate market immune from outside market dynamics. Would investors still be spending, or would they be turning their backs on the Dubai property market choosing instead to consider emerging markets further afield?
The answer was to be seen in the numbers of people coming through the doors to the Cityscape exhibition, with over 70,000 people coming through the doors of the Dubai International Exhibition Centre over the course of the four days. Whilst the days of people pushing to place deposits on units may have passed, what is undoubted is that there is still a considerable level of interest in the market for property in Dubai, with people prepared to believe in what New Dubai has the undoubted potential to become.
The future direction of the Dubai property market was probably best summarised by His Royal Highness Sheikh Al Maktoum, who suggested that the market for property in Dubai will thrive, as the macro economic fundamentals are in place for future growth. We are seeing a change in the nature of the market, but these changes will prove to be beneficial for the long term growth of the market as a whole as they will be dictated by realistic expectations and a gradual harmonising of market demand and supply.
These fundamentals, such as the increasing numbers of tourists and companies seeking to relocate to the region are undoubtedly where the future of Dubai lies, as it strives to move away from its previous reliance on its finite reserves of natural resources. What we are in fact witnessing is the beginning of the second phase of Dubai’s growth. Today, Dubai is slowly moving away from the short-term model of expansive growth which has characterised its recent development, and is moving towards the model adopted by more mature real estate markets. This model is destined to be shaped by more realistic expectations, and a shift in supply to cater for the increasing mid-level demand.
What was noticeable at Cityscape was that the serious and more discerning investor was evident, and these are the individuals who seem set to shape the Dubai property market in years to come.
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