Archive for August, 2009
What’s the Good News for Property Investors?
August 29th, 2009
Kate Faulkner asked:
2009 has been an odd year for anyone involved in property. At the start of the year there were some fantastic bargains to be had as the media told ‘doom and gloom’ stories on a daily basis. However, all this ‘end of the world’ news meant that most sellers who didn’t have to move took their properties off the market and have stayed put.
Meanwhile, the dramatic drop in interest rates and the government’s tightening of regulations on lenders repossessing property has meant that the amount of stock on the market has fallen almost, if not more than, demand fell last year!
So we are now in a situation whereby in the auction houses, according to www.eigroup.co.uk data there are less repossessions going through than there were before the credit crunch!
Investors are also hampered by the lack of finance available as well as tightening criteria, which means only cash rich buyers can really take part in what bargains can be found at the moment.
So is there any good news for current or wannabe investors? Of course there is, and here are our top 10 good news stories for investors:-
1. Property prices are 20% less than they were at their peak in 2007. Woohoo!
2. Property prices are expected to return to their 2007 levels from 2013 so, for the right property, in the right area, there is potentially 20% capital growth or more available in the next 4-5 years.
3. Although deposits have increased from 15 to 25%, if you can bag a bargain, this might mean you don’t need any more actual cash. For example, if a property was selling for £200,000 in 2007, you’d need 15% x £200k = £30k deposit. If you can get the same property for £120,000, then the deposit is the same.
4. There are less investors, buyers and developers around to compete with you on price.
5. If you are into Buy to Let, rents are forecast to grow between 5-10% in 2010, now the accidental landlord stock has virtually disappeared.
6. If you want to self build or build to let, plot prices are down by 20%, you typically only need a 10% deposit AND if you get your sums right, you’ll earn a 30% uplift in value PLUS any market increase.
7. The new HMO legislation has given investors that get this property strategy right, a great barrier to entry, so less competition.
8. The economic hardship has lead to more people needing to rent than buy – some local authorities and charities will take properties off your hands for three years and sign a contract to maintain and return it in exactly the same condition at their cost.
9. The number of ‘accidental landlords’ has now decreased to such a level that rental income, in the main, is starting to increase which will result in less voids for 2010.
10. Some areas and property types will be in very short supply over the next five years (some won’t though!) so careful property investors will be able to make some exceptional returns!
Excited about property investment – don’t make a move until you’ve read our ‘bad news’ article for property investors!
Thinking about Buy to Let or already a Buy to Let investor?
Don’t do anything without purchasing one of our Buying and Renting a Buy to Let Property Packs to ensure you avoid costly mistakes with your property investments. The pack is full of comprehensive information covering all aspects of buying and running a buy to let property. Each pack also comes with a FREE Which? Book – Renting and Letting or Property Investor’s Handbook, plus full access to the Designs on Property website, and all the expert and independent help you require from the UK’s leading property experts.
2009 has been an odd year for anyone involved in property. At the start of the year there were some fantastic bargains to be had as the media told ‘doom and gloom’ stories on a daily basis. However, all this ‘end of the world’ news meant that most sellers who didn’t have to move took their properties off the market and have stayed put.
Meanwhile, the dramatic drop in interest rates and the government’s tightening of regulations on lenders repossessing property has meant that the amount of stock on the market has fallen almost, if not more than, demand fell last year!
So we are now in a situation whereby in the auction houses, according to www.eigroup.co.uk data there are less repossessions going through than there were before the credit crunch!
Investors are also hampered by the lack of finance available as well as tightening criteria, which means only cash rich buyers can really take part in what bargains can be found at the moment.
So is there any good news for current or wannabe investors? Of course there is, and here are our top 10 good news stories for investors:-
1. Property prices are 20% less than they were at their peak in 2007. Woohoo!
2. Property prices are expected to return to their 2007 levels from 2013 so, for the right property, in the right area, there is potentially 20% capital growth or more available in the next 4-5 years.
3. Although deposits have increased from 15 to 25%, if you can bag a bargain, this might mean you don’t need any more actual cash. For example, if a property was selling for £200,000 in 2007, you’d need 15% x £200k = £30k deposit. If you can get the same property for £120,000, then the deposit is the same.
4. There are less investors, buyers and developers around to compete with you on price.
5. If you are into Buy to Let, rents are forecast to grow between 5-10% in 2010, now the accidental landlord stock has virtually disappeared.
6. If you want to self build or build to let, plot prices are down by 20%, you typically only need a 10% deposit AND if you get your sums right, you’ll earn a 30% uplift in value PLUS any market increase.
7. The new HMO legislation has given investors that get this property strategy right, a great barrier to entry, so less competition.
8. The economic hardship has lead to more people needing to rent than buy – some local authorities and charities will take properties off your hands for three years and sign a contract to maintain and return it in exactly the same condition at their cost.
9. The number of ‘accidental landlords’ has now decreased to such a level that rental income, in the main, is starting to increase which will result in less voids for 2010.
10. Some areas and property types will be in very short supply over the next five years (some won’t though!) so careful property investors will be able to make some exceptional returns!
Excited about property investment – don’t make a move until you’ve read our ‘bad news’ article for property investors!
Thinking about Buy to Let or already a Buy to Let investor?
Don’t do anything without purchasing one of our Buying and Renting a Buy to Let Property Packs to ensure you avoid costly mistakes with your property investments. The pack is full of comprehensive information covering all aspects of buying and running a buy to let property. Each pack also comes with a FREE Which? Book – Renting and Letting or Property Investor’s Handbook, plus full access to the Designs on Property website, and all the expert and independent help you require from the UK’s leading property experts.
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101 things to do with a Pound Coin!
August 25th, 2009
pound asked:
Many people who follow me in property know that I am promoting Rick Otton’s strategies for buying property using no bank financing and none of my own money (except a pound)! I recently bought a house for
Many people who follow me in property know that I am promoting Rick Otton’s strategies for buying property using no bank financing and none of my own money (except a pound)! I recently bought a house for
Finding Buyers When House Flipping
August 25th, 2009
Brad Wozny – INSTANTRealEstateSolutions.com asked:
If you are flipping a property, you need to find buyers fast in order to make money. You can find buyers quickly by meeting investors and other potential customers at local business events and auctions and by building online mailing lists that you can send to potential buyers.
House flipping is attractive because it allows you to start making money right away. You don’t have to rent out the property, take care of taxes and management costs for months or years, and you don’t have to wait around waiting for buyers. The idea behind flipping is that you buy distressed property, turn it around, and sell it quickly to someone as soon as the renovations are done. The trick, of course, is to find buyers who are willing to buy quickly. If you’re planning on flipping a house but cannot find a buyer quickly, the delay in selling will mean lost profits.
To sell your investment home quickly:
1)Visit auctions to meet other investors. Local foreclosure auctions are not only a great way to find your next investment property for refurbishing and reselling, but they’re also a great place to pass out your business cards to other investors. Collect the business cards of other investors at the auction in order to build an investor list that you can contact whenever you have a property to sell. This is especially important if you plan on house flipping fairly regularly.
2)Build an e-mail list. Once you have a number of business cards and e-mails of other investors, develop a mailing list and an e-mail list. This way, you can contact investors quickly whenever you are about to sell property. However, keep in mind that you cannot simply send unsolicited information to other people. Have investors sign up for your mail newsletter or your e-mail newsletter, and this way you can send information about your latest home in the latest issue of your newsletter. Use a double opt-in list for e-mail newsletters and e-mail discussion groups, especially, because anti-spam laws can be fairly strict. Also, be careful not to abuse your e-mail list or mailing list. If you send investors a lot of information that they are not interested in, they’ll not only opt out of the mailing lists and e-mail lists, but they will become annoyed and less likely to look carefully over your property opportunities. You may wish to divide your mailing lists into a few groups. For example, send your higher-end properties to those investors interested in higher-end homes, and send rental units to those investors interested in commercial properties. This way, each investor will get the information that they’re actually interested in using.
3)Join business groups in your area. Any meetings, events, or luncheons held by business groups in your area are a great networking opportunity that lets you meet potential investors and investors in your area. Plus, you will be meeting people who are not investors but are still interested in business. These people may still be interested in contacting you when they have a property that they need to sell quickly or hear of a property that is going up for sale. Just about anyone can refer business to you and can refer customers to you, so make friends with lots of business owners in your area.
4)Go online. The Internet has lots of discussion groups, message boards, and forums where you can meet other investors who might be interested in buying your properties. These are great resources if you are house flipping, since you can receive and send information fast.
If you are flipping a property, you need to find buyers fast in order to make money. You can find buyers quickly by meeting investors and other potential customers at local business events and auctions and by building online mailing lists that you can send to potential buyers.
House flipping is attractive because it allows you to start making money right away. You don’t have to rent out the property, take care of taxes and management costs for months or years, and you don’t have to wait around waiting for buyers. The idea behind flipping is that you buy distressed property, turn it around, and sell it quickly to someone as soon as the renovations are done. The trick, of course, is to find buyers who are willing to buy quickly. If you’re planning on flipping a house but cannot find a buyer quickly, the delay in selling will mean lost profits.
To sell your investment home quickly:
1)Visit auctions to meet other investors. Local foreclosure auctions are not only a great way to find your next investment property for refurbishing and reselling, but they’re also a great place to pass out your business cards to other investors. Collect the business cards of other investors at the auction in order to build an investor list that you can contact whenever you have a property to sell. This is especially important if you plan on house flipping fairly regularly.
2)Build an e-mail list. Once you have a number of business cards and e-mails of other investors, develop a mailing list and an e-mail list. This way, you can contact investors quickly whenever you are about to sell property. However, keep in mind that you cannot simply send unsolicited information to other people. Have investors sign up for your mail newsletter or your e-mail newsletter, and this way you can send information about your latest home in the latest issue of your newsletter. Use a double opt-in list for e-mail newsletters and e-mail discussion groups, especially, because anti-spam laws can be fairly strict. Also, be careful not to abuse your e-mail list or mailing list. If you send investors a lot of information that they are not interested in, they’ll not only opt out of the mailing lists and e-mail lists, but they will become annoyed and less likely to look carefully over your property opportunities. You may wish to divide your mailing lists into a few groups. For example, send your higher-end properties to those investors interested in higher-end homes, and send rental units to those investors interested in commercial properties. This way, each investor will get the information that they’re actually interested in using.
3)Join business groups in your area. Any meetings, events, or luncheons held by business groups in your area are a great networking opportunity that lets you meet potential investors and investors in your area. Plus, you will be meeting people who are not investors but are still interested in business. These people may still be interested in contacting you when they have a property that they need to sell quickly or hear of a property that is going up for sale. Just about anyone can refer business to you and can refer customers to you, so make friends with lots of business owners in your area.
4)Go online. The Internet has lots of discussion groups, message boards, and forums where you can meet other investors who might be interested in buying your properties. These are great resources if you are house flipping, since you can receive and send information fast.
Know More About Government Tax Liens
August 25th, 2009
Jake Trump asked:
There are services offered by many reliable websites one is the government tax liens. This kind of service gives the buyer a chance to claim for money that is higher than the other government tax liens. It is being secured by the real state as well as the mortgages. The government tax liens list provided gives the buyer the capability to filter and sort the list suitable for your own criteria. The list spares you from visiting a courthouse that is a requirement in processing the required tax.
Every government or state requires every property owner to pay property taxes. The tax is computed based on the value of the property owned. Government tax is also known as real state taxes. More often than not, some property owners were unable to comply with the obligation of paying property tax. Such situation will put the property into a delinquent position. Appropriate government authority is in charge for collecting unpaid property taxes if the property delinquency is established. Thus, tax auction or tax sale is conducted to achieve the collection.
Each government has a separate set of laws governing collection of delinquent taxes. The local government most often is in charge of collecting these taxes because it is used for government projects and other improvement. Great deals can be found at government tax sales especially if the property is foreclosure. However, you must keep in mind these delinquent properties may need some fixing. Often times, buyers get the good value for money in purchasing delinquent properties. If you want to buy a property in this market you must understand the circumstances. You must be well informed and prepared to find the best bargain.
Just like the tax lien auction, government tax liens are categorized as tax lien certificates and tax deed sales. Under tax lien, the buyer purchases the rights to the tax lien. In this instance, the homeowner owes you the money but there is no transfer of the property yet during the auction. Nevertheless, the delinquent taxpayer is required to pay you back the amount of the lien as well as the charges and interest. The deed of the delinquent property can only be awarded to the new owner of certificate just in case the delinquent owner fails to pay within the given period.
On the other hand, a buyer actually purchases the rights to the properties once you have entered in tax deed sales and eventually ownership is awarded to the buyer. The minimum bid is computed on the total sum of delinquent tax liable and the administrative interest and charges incurred. The highest bidder is awarded the deed of the property outright during the auction. However, there are also some rules to be followed regarding the restrictions on possession.
Engaging in government tax liens requires a buyer to be armed with more knowledge. You should look for information regarding the properties you identified to purchase without inspecting the interior of the property. Check for the market value of the property so that you will know if it is worth your money.
There are services offered by many reliable websites one is the government tax liens. This kind of service gives the buyer a chance to claim for money that is higher than the other government tax liens. It is being secured by the real state as well as the mortgages. The government tax liens list provided gives the buyer the capability to filter and sort the list suitable for your own criteria. The list spares you from visiting a courthouse that is a requirement in processing the required tax.
Every government or state requires every property owner to pay property taxes. The tax is computed based on the value of the property owned. Government tax is also known as real state taxes. More often than not, some property owners were unable to comply with the obligation of paying property tax. Such situation will put the property into a delinquent position. Appropriate government authority is in charge for collecting unpaid property taxes if the property delinquency is established. Thus, tax auction or tax sale is conducted to achieve the collection.
Each government has a separate set of laws governing collection of delinquent taxes. The local government most often is in charge of collecting these taxes because it is used for government projects and other improvement. Great deals can be found at government tax sales especially if the property is foreclosure. However, you must keep in mind these delinquent properties may need some fixing. Often times, buyers get the good value for money in purchasing delinquent properties. If you want to buy a property in this market you must understand the circumstances. You must be well informed and prepared to find the best bargain.
Just like the tax lien auction, government tax liens are categorized as tax lien certificates and tax deed sales. Under tax lien, the buyer purchases the rights to the tax lien. In this instance, the homeowner owes you the money but there is no transfer of the property yet during the auction. Nevertheless, the delinquent taxpayer is required to pay you back the amount of the lien as well as the charges and interest. The deed of the delinquent property can only be awarded to the new owner of certificate just in case the delinquent owner fails to pay within the given period.
On the other hand, a buyer actually purchases the rights to the properties once you have entered in tax deed sales and eventually ownership is awarded to the buyer. The minimum bid is computed on the total sum of delinquent tax liable and the administrative interest and charges incurred. The highest bidder is awarded the deed of the property outright during the auction. However, there are also some rules to be followed regarding the restrictions on possession.
Engaging in government tax liens requires a buyer to be armed with more knowledge. You should look for information regarding the properties you identified to purchase without inspecting the interior of the property. Check for the market value of the property so that you will know if it is worth your money.
Should you Use an Attorney’s Fee Clause
August 24th, 2009
Attorney William asked:
Most “standard” real estate contracts and leases contain provisions that state something to the effect, “If there is any dispute as to the agreement, the winning party is entitled to attorney’s fees.” Is this a good idea?
Well, yes and no. First, understand that attorney’s fees are generally not awarded by the court to the winning party in a lawsuit. There must be either a specific statutory provision or a clause in the disputed agreement that calls for attorney’s fees. In addition, a court may award attorney’s fees where there is “bad faith” on the part of one of the litigants, but judges rarely enforce this rule.
If you have to sue another party to a lease or contract for $100, it hardly seems worth the effort if you have to pay your attorney $2,500 to file the lawsuit. In such cases, the opposing party may thumb his nose at you and say, “so sue me”. The court system is very unfair to the poor in this regard. However, if you are the potential defendant, it works in your favor if someone is thinking of suing you for some bogus reason and you know that they can’t afford an attorney.
So, should you always insert an attorney’s fee clause in every contract or lease that you sign? Well, that depends on whether such a clause inures to your benefit. For example, if you are a landlord, chances are you will be suing your tenant for non-performance of the lease, not vice-versa. So, having the ability to get attorney’s fees if you win is to your benefit. Of course, this may be futile, since any judgment may be uncollectible, whether for $100 or $10,000. But, if you think you can collect a judgment, go ahead and put the clause in your lease.
Another example might be a purchase contract with a seller in foreclosure. Suppose you have an agreement to buy a property from a seller who is near insolvency. If he breaches the agreement, you can sue, but what will you get? On the other hand, if he can convince a court that YOU are in breach, you could lose and end up paying HIS attorney’s fees. Thus, you can see how an attorney’s fee clause may work against you. If you get into a dispute with a seller or buyer and they cannot afford an attorney, you reduce your risk if something goes bad. Remember, whether you are right or wrong in your actions involving a real estate deal, it’s what is proven in court that matters. Having plenty of trial experience, I can tell you that going to court is a gamble – sometimes you win, sometimes you lose, and truth and justice have little to do with it.
Finally, some agreements will state that if one party must enforce the agreement in court (e.g., the landlord in a lease), the landlord is entitled to lawyer fees. Many courts will apply the rules in reverse, even if the agreement doesn’t explicitly state. So, you cannot necessarily limit attorney’s fee if one party wins but not the other.
As with any transaction, you could consult with an attorney before drafting any agreement you are uncertain of.
Click Here for more info for Should You Use an Attorney’s Fee Clause
Most “standard” real estate contracts and leases contain provisions that state something to the effect, “If there is any dispute as to the agreement, the winning party is entitled to attorney’s fees.” Is this a good idea?
Well, yes and no. First, understand that attorney’s fees are generally not awarded by the court to the winning party in a lawsuit. There must be either a specific statutory provision or a clause in the disputed agreement that calls for attorney’s fees. In addition, a court may award attorney’s fees where there is “bad faith” on the part of one of the litigants, but judges rarely enforce this rule.
If you have to sue another party to a lease or contract for $100, it hardly seems worth the effort if you have to pay your attorney $2,500 to file the lawsuit. In such cases, the opposing party may thumb his nose at you and say, “so sue me”. The court system is very unfair to the poor in this regard. However, if you are the potential defendant, it works in your favor if someone is thinking of suing you for some bogus reason and you know that they can’t afford an attorney.
So, should you always insert an attorney’s fee clause in every contract or lease that you sign? Well, that depends on whether such a clause inures to your benefit. For example, if you are a landlord, chances are you will be suing your tenant for non-performance of the lease, not vice-versa. So, having the ability to get attorney’s fees if you win is to your benefit. Of course, this may be futile, since any judgment may be uncollectible, whether for $100 or $10,000. But, if you think you can collect a judgment, go ahead and put the clause in your lease.
Another example might be a purchase contract with a seller in foreclosure. Suppose you have an agreement to buy a property from a seller who is near insolvency. If he breaches the agreement, you can sue, but what will you get? On the other hand, if he can convince a court that YOU are in breach, you could lose and end up paying HIS attorney’s fees. Thus, you can see how an attorney’s fee clause may work against you. If you get into a dispute with a seller or buyer and they cannot afford an attorney, you reduce your risk if something goes bad. Remember, whether you are right or wrong in your actions involving a real estate deal, it’s what is proven in court that matters. Having plenty of trial experience, I can tell you that going to court is a gamble – sometimes you win, sometimes you lose, and truth and justice have little to do with it.
Finally, some agreements will state that if one party must enforce the agreement in court (e.g., the landlord in a lease), the landlord is entitled to lawyer fees. Many courts will apply the rules in reverse, even if the agreement doesn’t explicitly state. So, you cannot necessarily limit attorney’s fee if one party wins but not the other.
As with any transaction, you could consult with an attorney before drafting any agreement you are uncertain of.
Click Here for more info for Should You Use an Attorney’s Fee Clause