by dbking

Article by Greg Hook

Tips and Truths About “Turn-Key” Real Estate Investments

Real estate investing often lures many people into thinking that with a few swings of a hammer, hefty profits will follow. In fact, real estate investing is a very complex subject with lots of moving parts, risk and pitfalls. That’s one reason why so many educational products, programs and gurus stay in business.

In recent years, numerous companies have created real estate investments to simplify the process for new and existing investors.

America’s Home Program is defining as an all-inclusive service that acquires, renovates, sells and/or rents properties for the investor.

But do they really work? The answer is, some do, some don’t. Be careful.

Let’s take a closer look. First, real estate investing is a “profession” that requires the investor to master numerous disciplines and nomenclature in an ever-changing market climate, including:

• Market Analysis• Property Analysis• Acquisition Strategies• Exit Strategies• Asset Protection• Property Management• Financing• Renovation• Contracts and Contingencies• Sales & Marketing• Negotiation

Whether you’re getting started, part- or full-time investing with real estate, there are always new tricks to learn. So using turn-key platforms gives the investor the ability to leverage the expertise of the individuals within the company, and supplement any gaps in his/her own knowledge.

Next, turn-key programs can deliver the benefit of bulk pricing. In some cases, the turn-key provider has greater buying power than an individual, and therefore can offer discounted properties. This saves the investor the time and trouble of researching hundreds of properties, trying different acquisition strategies, and making lots of offers.

Can’t swing a hammer? No problem. Turn-key real estate investing programs often include renovation work in the purchase price. However, many pitfalls lurk in the renovation process. I’ve heard of turn-key providers who made promises about the quality of work and later were found to be untrue.One thing I like about turn-key programs is an investor can diversify his/her portfolio by accessing properties in stable markets, perhaps outside of their primary residence. Numerous markets are doing well, although news reports rarely say anything about that. So whether you live in Florida or California, through a quality turn-key program, an investor can create income from solid markets with low unemployment, low vacancy rates and good economies.

Look out for “hidden costs.” Some turn-key programs don’t disclose the related costs associated with closing, pre-paids, property & casualty insurance, home warranty, and renovation.Turn-key operations require numerous affiliated partnerships to get the job done. So check out who is on the team doing the various tasks.That brings me to one of the biggest challenges with businesses.

There’s no profit or return on investment without a retail buyer or rental tenant. So know your exit strategy and verify your turn-key business has a sales and marketing plan in place to solve this challenge.

Ask “what if” questions, like what if the tenant or buyer defaults? What if the renovation work exceeds what I was told? What if the provider doesn’t find me a buyer or tenant?

I created a real estate investing company called America’s Home Program which is a comprehensive service that successfully addresses each of the challenges mentioned in this article. I’ve put everything together for the investor, so the only decision to make is “how much do I want to invest?”

Comparing REITs? Why "Funds From Operation" Matters
Funds From Operations, or FFO, is the most widely watched performance metric when evaluating real estate investment trusts (REITs). As defined by NAREIT, a real estate trade group and lobbying organization, FFO is "The most commonly accepted and …
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Real estate happens to be a commodity that is finite in its existence. What there is of it happens to be all there is of it. Investing in real estate adds diversification to your investment package. Additionally, it typically provides a lower risk over the long term as well as a higher rate of return. Individuals can decide to purchase real estate properties and turn them around for a profit.

They can also decide to rent the property out. If they decide to rent their purchase, then they need to be concerned with locating and renting to good tenants. Moreover, the rent must be enough to cover all costs and operating expenses associated with the property including the mortgage, taxes, homeowners insurance, renovation costs, and the cost of upkeep and repairs in order to turn a profit.

Real estate for sale is listed in public newspapers and online. Contacting the listing agent or any local real estate office is the best way to go about purchasing real estate. Some sellers may elect to use a lawyer rather than a realtor for the sale.

A certain risk element exists when investing in real estate, especially with a foreclosure. Foreclosures may have undisclosed problems that can add to the cost of your investment.

Additionally, you will deal with lots of tenants, good and bad, over the years, and some of these may end up costing you money in costly repairs or legal fees.

It is best to have a plan before you begin investing in real estate. Chart out what you intend to accomplish and include when and how. Investing in real estate full time allows you to be your own boss and to create financial freedom for yourself.

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In fact, retirement plans can be used to purchase real estate. However, purchasing real estate in this manner does not allow you to deduct depreciation should it occur. It does, however, allow you to include the income and the appreciation of the real estate. Both of these remain usually tax free in your IRA until the time when you begin to withdraw your money.

Investing in real estate requires some research and a workable knowledge of both your retirement plan and the real estate investment. For example, if you purchase the real estate with both cash and borrowed money, only the portion allocated to cash is tax free. This is why an all cash purchase is the best and simplest way to go. Specifically, a special tax known as the UBIT tax, or unrelatedbusiness income tax, comes into play whenever there is a debt-financed income involved in retirement plans.

The following plans may be used to purchase real estate: Roth IRA, traditional IRS, or single individual 401 (k) plan. You must be able to transfer your money from your retirement plan, probably through your broker, to a plan that includes real estate investment.

A real estate investment trust, or REIT, invests in various forms of real estate or assets related to real estate. The real estate may include hotels,shopping centers, office buildings, and mortgages that have been secured with real estate.

An Equity REIT is the most common form. Its real estate investments are designed to make money for their investors through the collected rents. A mortgage REIT either invests in property secured by mortgages on real estate or loans money to developers and owners. A hybrid REIT is a combination of the two.

Investing in real estate can lead to a higher rate of return with a lower risk for a loss. Do some thorough research before investing in any real estate property. Remember that a certain risk element exists when investing in real estate and consider your options carefully.

India Realty

Romance, melodrama, action, mystery, twist… All elements that one connects with a typical Hindi movie can easily be used as adjectives to describe the ‘India property’ of the ‘real estate’ in India’.

To justify, let’s club together last week’s happenings in the sector. The week has been a dampening one for real estate, as the dark clouds (with minimal silver lining) of global slowdown cast their shadow on the real estate sector as well. The reason is quite obvious ” there was the thumping end of those glorious days of low-interest rates. The all-time low and lucky figure of around ’7′ per cent changed to scary double digits, oscillating from 13 per cent to even 20 per cent in some cases.

Reality wee(a)k

On November 12, 2008, CB Richard Ellis (CBRE) released a report, via Press Trust of India (PTI), claiming that real estate projects in India are getting delayed due to paucity of funds, even as developers struggle to cope with decline in sales volume across residential, office and retail verticals. The report said that the real estate-investment market in India continued to remain subdued amid economic worries.

On November 14, The Times of India reported that Finance Minister P Chidambaram had assured real estate developers that the government will impress upon banks to accelerate lending to realty, which is facing one of the worst slowdown in recent times. A delegation of builders under the Confederation of Real Estate Developers’ Association of India (Credai) had met Chidambaram to complain against banks’ reluctance to disburse loans to real estate companies.

The very next day, on November 15, an Economic Times story urged people to invest in the real estate sector claiming that investing in real estate is a good idea to hedge ` against inflation. It talked about the benefits of the India property, real estate funds, and real estate investment trusts (REIT).

Realty years

Property dealers’/agents’ signboards at every nook and corner of the country, and inclusion of some of the Indian realtors in the world’s ‘billionaires list’, prove that realty, as a business, has always been lucrative and profitable.

The India property, in the recent past, has witnessed a revolution. According to a Cushman & Wakefield research, the sector has seen a growth rate of up to 30-35 per cent, and is estimated to be worth US$15 billion. If experts are to be believed, it is expected to grow at about 30 per cent annually over the next decade, attracting foreign investments worth US$30 billion.

However, in the last couple of years, realty has been affected adversely because of the rise in interest rates, which went up from seven per cent to around 12 per cent, as Reserve Bank of India (RBI) thought that price rise in realty could create a bubble. Additionally, the bank tightened the provisioning norms, making loans to the sector costlier, and when the inflation rate shot up, it constricted liquidity to keep price rise under check.

Such steep rise in the interest rates and tightened liquidity severely affected affordability and, in turn, brought down buying/investment in real estate.

Future reality

Nevertheless, the bad news will not be that bad for long, as the situation seems to be turning around, albeit gradually. On November 15, while the national dailies carried India property advisories, some of them also had news that banks are cutting housing-loan interest rates. Moreover, RBI’s policy is also expected to alter, or so assured the finance minister, thereby making at least the residential real estate affordable.

Almost 80 per cent of real estate developed in India is residential space (the rest comprising offices, shopping malls, hotels and hospitals), and five per cent of the country’s GDP is contributed to by the housing sector. According to the Tenth Five Year Plan, there is a shortage of about 22.4 million dwelling units. Thus, over the next 10 to 15 years, 80 to 90 million houses will have to be constructed, and easier availability of finance will facilitate the process. Housing Skyline of India 2007-08, a study by research firm Indicus Analytics, says that there will be a demand for over 24.3 million new dwelling units for self-living in urban India alone by 2015. Consequently, this segment is likely to throw up huge investment opportunities. In fact, an estimated US$25 billion investment will be required over the next five years in urban housing, says a Merrill Lynch report.

On the commercial side, the IT and ITES sector alone is estimated to require 150 million square feet of office space across urban India in the next couple of years; hence, there too lies tremendous opportunity and scope.

The ground real(i)ty

The India real estate sector supports more than 250 other ancillary industries including that of construction materials like cement, steel, paint and electrical. A study by rating agency ICRA says that in terms of direct, indirect and induced effects in all sectors of the economy, the construction industry ranks number three among the 14 major sectors. The study says that the sector has capacity to generate income as high as five times of the present level, and if the economy grows at a considerable pace, in the next decade the sector can create about three million new jobs.

At investinnest.com, a leading property seller globally based in india, uk, dubai, usa etc..we have ties up with top builders of delhi like emaarmgf, dlf, unitech, omaxe mantra etc…we give necessary advise to the investor about the property where they can take good return as investors, no matter how far away you are currently located.

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The chairman of the Securities and Exchange Board of India (Sebi) M Damodaran on Wednesday said the regulator was considering proposals to allow real estate investment trusts (REIT) in India.

Speaking at a conference on capital markets organised by the CII, the Sebi chief also said the rules on listing and trading of securitised debt market instruments will be finalised by December.

The regulator had put out a consultative paper on securitised debt in June this year. The draft regulations proposed a system of registration of special purpose distinct entities which were planning to offer securitised debt instruments to the public or seeking the listing of such instruments issued earlier. Damodaran further said that select companies could opt for fast track issuances.

According to the fast track share issuance programme allowed by Sebi in August this year, companies with a 3-year track record on NSE and BSE, and with free-float market capitalization of at least Rs 10,000 crore, can raise funds through rights and follow-on issues, without having to wait for the market regulator’s clearance.

Sebi, at its board meeting in June 2006, had approved guidelines making it mandatory for REMFs (real-estate mutual funds) to be listed on the stock exchanges. But the absence of valuation norms delayed the introduction of REMFs in the country.

The Institute of Chartered Accountants of India (ICAI) was looking into the valuation issue and once it clears the norms, Sebi will be ready with the rules, M Damodaran said.

“It is not going to be a REIT versus REMF issue. Consultations with people who have a better understanding of these products have commenced and we will shortly write the first set of proposals,” said Damodaran. REIT is a better product, but we will ensure that both products are introduced over time, he added.

The Sebi move comes amid plans by a clutch of companies to raise funds from the Indian market for listing REIT-like vehicles on the Singapore Stock Exchange (SGX).

The Bangalore-based developer Embassy group, Ascendas, provider of business space in Asia and the Delhi-based DLF and Unitech have announced plans to list their fund structures, mainly REITs, on the SGX, banking on its recent easing of norms.

REMFs will be close-ended funds and will invest directly in real estate properties in India, mortgage (housing lease) backed securities, equity shares/bonds/debentures of listed/unlisted companies which deal in properties and undertake property development, and in other securities.

Following the curbs on participatory notes (P-notes), Sebi has received a large number of applications from overseas investors seeking FII registrations, Damodaran said, without providing figures.

The regulator is planning to launch a nationwide campaign for investor education in 2008 and encourages the market participants to take their role as self-regulatory organisations (SRO) seriously.

Nimesh Kampani, Chairman, CII National Committee on Capital Markets and the head of JM Financial Group also stressed on the need to develop SROs for financial intermediaries.

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November 21, 2007
Fortis Invest eyes Japan pension funds
Filed under: India Real Estate News Updates, Real Estate Funds, New Development ” Administrator @ 3:05 am

TOKYO, Nov 21 (Reuters) – Fortis Investments, the global assets management arm of the Fortis group, is eyeing Japan’s multi-billion dollar pension funds as key investors for its two new investment funds next year worth a combined $745 million, its real estate chief said on Wednesday.

Fortis Investments, which has about 130 billion euros ($190 billion) in assets under management, will launch two new “funds of funds” ” funds that hold a portfolio of other investment funds ” focused on European and Asian property.

“We were very Europe-specific when we started two years ago but have diversified outside of Europe since,” Bart Coenraads, chief investment officer and head of real estate for Fortis Investments, told Reuters at the sidelines of a conference in Tokyo.

The firm currently has two Europe-focused fund-of-funds vehicles and a third invested in Asian assets.
Coenraads said he was particularly keen to attract Japanese pension fund investors as their allocations for real estate were minuscule relative to other asset classes.

“A lot of Japanese pension funds already invested in Japanese real estate now see opportunities in Asia ex-Japan,” he said, adding that Fortis Investments had already obtained a $40 million commitment from a Japanese pension fund investor for an existing fund of funds focused on Asia ex-Japan property.

Japan’s pension funds have traditionally parked their money in low-risk corporate and government bonds but are raising their investments in riskier assets such as equities and property to boost returns for the country’s ageing population. Fortis Investments has about 2.5 billion euros in global real estate exposure ” 25 percent of which is run through its fund-of-funds vehicles. The remaining 75 percent of its property-related holdings are in publicly traded securities.

“Many pension funds don’t have the internal capabilities to get the sort of exposure that they can get by buying into a fund of funds,” Coenraads said.Coenraads plans to raise about $300 million for the new Asian fund of funds, about half of which will be invested in Japanese funds. The remaining portfolio will be invested in China, Malaysia, Vietnam, India and Singapore assets.

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Omaxe may tap West Asia as Indian real estate market cools
Filed under: India Real Estate News Updates, Commercial, Residential, New Development ” Administrator @ 1:26 am

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New Delhi: Real estate company Omaxe Ltd has decided to develop properties overseas in places such as Dubai in the United Arab Emirates (UAE) as the real estate market in India starts to cool and profits get squeezed.The developer plans to build commercial and residential properties in Dubai.

“Last year was very bad for developers,” Rohtas Goel, chairman and managing director, Omaxe, said. “Prices declined by 10% and even by 30% in some locations, which has forced developers to look at overseas markets for expansion,” he added.

The company has decided to enter the Dubai real estate market as the average yearly return on an investment in Dubai is slightly better than in India, Goel said. “It is also easier to do real estate business in Dubai compared to India,” he added.

Omaxe will float an offshore development company to enter the Dubai market. Goel declined to say how much money Omaxe had earmarked for overseas development.

The company will develop real estate through joint ventures with a local real estate developer. Omaxe has to find a local developer to market property in Dubai in keeping with regulations of the UAE government. “We can acquire the land on our own, but to market the property we need a local partner,” Goel said.

Omaxe is in talks with several developers from Dubai for a possible tie-up. But nothing has been finalized yet, Goel said. In the last seven to eight months, the real estate market in New Delhi and its suburbs has seen a decline in demand mostly because of the high interest rates on home loans, which are at a five-year high. The interest rates have increased to 12%, compared with 9% just a year ago. That, coupled with the rising value of land, is making homes more expensive and less affordable”keeping buyers at bay.

“A few developers might be looking at overseas markets because of the high cost of land in India,” said Ganesh Raj, head, real estate practice at audit and consulting firm Ernst & Young India. “As return is a function of price of land, given the present cost of land, developers probably feel that returns in the overseas markets will be better. However, very few developers have actually started real estate development in offshore markets,” Raj added.

Omaxe’s plans to go global comes in the wake of similar efforts by other developers. Parsvnath Developers Ltd has decided to venture into real estate development in the UK, Singapore, UAE, Muscat and Mauritius. DLF Ltd is looking at international acquisitions, and Ansal API Ltd has a partnership with Malaysia’s UEM Group to bid for government projects in Malaysia.Investors are not willing to buy residential properties any more as the interest rates have shot up and it is costlier to buy homes on borrowed money.

Investors are gradually exiting the real estate market, say developers. While investors constituted 70% of the buyers last year, it is now the reverse, Goel said. “Now the actual end-users constitute 70% of the buyers,” he added. Omaxe is present in 30 cities and nine states in India. The company operates across residential, commercial and retail verticals. Omaxe made an initial public offering of shares in July and raised around Rs600 crore.

Doesn’t T.V. make Real Estate Investing look like it’s so much fun and simple? If you flip the channel to such stations as “TLC” or “Home and Garden” (HGTV), you become instantly bombarded with shows that teach people how to “flip” homes or renovate them, making it look easy, efficient and do-able in an hour’s time. Although we all know it’s T.V. and we know that buying a home then selling is more work than it seems, we still get lured into the idea that investing in Real Estate can be do-able in no time. But before entering the “hoopla” of making “easy money” a few precautions should be made.

Educate Yourself
Before you delve into the Realm of Housing and dreams of making a profit, the ideal thing to do would be to educate yourself with what you’re getting yourself into. The first way in doing this would be to find places that offer real estate seminars or workshops near you. When you enroll in such a program, make sure that it’s a legitimate firm or company that is offering it and rather than some get rich scheme or plan. If you’re not sure what to look for when it comes to seminars or workshops, know the red flags.

Know What You want
As you start to research and educate yourself about your investment endeavors, you should ask yourself how much time or patience do you have? Are you looking for making some quick cash? Do you have the time to invest in all the maintenance and paper work if you were to become a landlord? Or would you rather leave all that to someone else? When it comes to Real Estate two approaches can be made: residential and capital. Residential investing is investing in homes, while capital/ commercial investing has less of a “hands on” approach, and has to do with investing in buildings or commercial properties. Acquaint yourself with professionals within these areas. Meet up with real estate agents and ask for their opinions and advice to see what would be the right fit and choice for you. These people are most likely the best in answering any questions you may have.

Research The Field
Researching what you’re looking for is always the safest solution when it comes to investing in anything. Know the law, meaning the rules and regulations in regards to the field you’re planning to invest in so you don’t get yourself into trouble in the future. Know your choices and different types of investment ideas that are out there. Investing in property doesn’t just mean buying a home to give it out as rent or waiting for the property value to rise so you can sell it. There are so many different ways to invest in Real Estate. For example, there are Real Estate Investment Groups, Real Estate Trading, Real Estate Investment Trusts (REITs), Leverage and “Flipping” homes. Researching the cost of major expenditures is also vital, paying attention to property taxes and capital improvements is important.

Pay Attention
When it comes to real estate, paying attention to the market trend and environment is also a good idea. You should ask yourself: “What’s available at what price right now?” or “How high, or how low are the interest rates?” Pay attention to the signs and trends of the market. For example: one should pay attention the employment trend, housing trend, and economic trend. Regardless if you choose invest in residential or commercial real estate, all trends mentioned above is crucial information that will help you in determining whether or not you will make a profit with your investment.

Things always look easier when other people do are doing it, but reality is, nothing in life is easy, especially when it comes to money! The best solution in getting started with any type of real estate investing would be to educate yourself with the right information, so that you’re making sure you’re putting your money in the right place.

BusinessWeek Online – Dan Fasulo crunches data for commercial real estate investors all day. Still, the managing director of researcher Real Capital Analytics doesn’t understand what’s happening with one stock in his personal portfolio, AvalonBay Communities . The real estate investment trust (REIT) has an interest in more than 51,000 apartments in coastal cities such as Boston, New York, and San Francisco, where rents are high and new construction is hard to pull off. Yet the stock is down 27% this year. “These are premium assets,” says Fasulo. “Someone should tell Wall Street.”

FT.com – AIG, the US insurance group, has cancelled the initial public offering of its Japanese real estate investment trust, highlighting the weakness of Japan's Reit market after the US subprime mortgage turmoil.

FT.com – Mitchells & Butlers said it was considering demerging its pub estate into a real estate investment trust (Reit) and was studying a proposal from R20, the investment vehicle owned by Robert Tchenguiz,

FT.com – Mitchells & Butlers said it was considering demerging its pub estate into a real estate investment trust (Reit) and was studying a proposal from R20, the investment vehicle owned by Robert Tchenguiz,

FT.com – APL Japan Trust, a Japanese commercial real estate investment trust, has postponed its initial public offering on the Singapore Stock Exchange as a result of worsening market conditions.