Monthly Archives: April 2018

Singling Out The Best Real Estate

You know you are halfway there once you find your dream home. The only thing that remains is coming to a consensus with the seller, regarding his or her ask price. Ideally, the asking price is to be brought down to the price that you want.

It is common for buyers to be mistaken in assuming that they can easily persuade the seller into selling their home using some natural negotiation tactics. The truth of the matter is that this may only be possible for those that have a horseshoe, rabbit’s foot and four-leaf clover in their possession.

Individuals that have never done any type of negotiation before and are in the dark about this sort of thing ought to seek the help of a real estate attorney that can assist in closing the deal. Attorneys that specialize in real estate will work to ensure that the totality of legal documents is thoroughly evaluated and recorded and that as a buyer, your rights are fully safeguarded.

It is true that acquiring the help of an attorney that specializes in real estate means spending more money. Consider a few suggestions below, in order to single out the best attorney that will be able to help you out best, provided the extra cost for the attorney’s service.

Real estate brokers or agents that may be helping you with the purchase of your dream home often have plenty of contacts and referrals that you may need the help of. Just the same, bear in mind that having both a broker or agent and a real estate attorney can bring about conflict of interest, on account of the fact that the relationship that your attorney and agent may have may be forced when it comes to settling the deal, regardless of your demands or desires, just so the deal can be closed and the Realtor can get his or her fees.

This sort of predicament can be dodged by seeking referrals from relatives or close friends. Internet searches also ought to yield quick searches and results that are impartial; just be sure to find a reputable site.

Prospects must be interviewed one at a time, prior to singling out the best real estate attorney. You may want to do a background check on each candidate, as well as educate yourself on their track record, and also request client referrals for references you could get in touch with.

Tips to Help You Select the Best Real Estate

I decided to write this post because if I had read something similar to this when I was first starting out in Real Estate, I would have saved myself a lot of time, headaches and stress. Without getting into my personal real estate agent horror stories, here are my 5 tips for selecting the best real estate agent:

1. Make Sure they are Full Time Agents

Without a question this is one of the most important aspects in selecting a great realtor. I’ve come to notice that a lot of people think that real estate agents make a lot of money and that it is a short cut to becoming well off. So as a result, a whole bunch of people get their realtor license for the wrong reasons. They have “hopes” of getting a 5% commission on a $1,000,000 house ($50,000). The truth is, being successful at anything requires a lot of hard work and dedication no matter what business you are in. Real Estate is no different – in fact, about 20% of realtors do 80% of all real estate transactions (within a particular geographical area).

2. Help Without Action

A realtor, much like a lawyer or a doctor must have your best interest at heart. Unfortunately, as I mentioned above, not everyone gets his or her license for the right reasons. If the realtor you are communicating with expects you to sign a commitment agreement right away (even if they tell you they are required by their broker) I would be seriously alarmed. Like in any successful and harmonious relationship, there has to be the right fit first. In order to determine if there is a fit to work together or not, your potential realtor should be willing to help you a little bit (learn the market, see some comps etc.) without any contracts or expectation of you to take action – ever; no-pressure type of relationship. Great full time realtors know that that is the best way to attract business and long term success. Meanwhile amateurs and likely not very serious agents will feel more confident in themselves if they “locked” you up legally. Sadly, many clients out there will feel obliged to the realtor under the terms of the agreement.

3. Area Expert

Despite the claims you might see on the front page of newspapers that might be something along the lines of “Canadian Real Estate Market is Down”, any savvy, experienced and knowledgeable real estate agent will know to ignore that. Every market (ex. Toronto) also has many sub-markets (ex. Down Town Core, Harbor Front, The Annex, etc). All of these sub-markets have different trends and fundamental factors affecting the rise or fall in the price, supply and demand, or properties available at a given time. Throughout GTA there are hundreds of different submarkets. Great real estate agents know that being an expert in only a few close by sub-markets will yield them better quality clients and a much more successful business. Their clients will also be much happier because their agents will be able to give them expert advice. Meanwhile amateur agents will help clients almost anywhere just to get a deal done. In other words, throw pasta on the wall and hope that something will stick! Do YOU want to be their client?

4. Specialty

Many people might find this a silly thing to do, but I like to compare realtors to doctors. A realtor without a specialty is much like a general walk-in clinic doctor, not that there is anything wrong with that. But if you are having sight problems, an eye specialist will be able to give you much better advice than a walk-in doctor. Not only do specialists have much better knowledge, but they also have the right tools to help you. The same goes for realtors. Are you in the market for a condo? Then you should be looking for a realtor who specializes in condos. Are you trying to be an investor? Then you need to be working with a realtor who specializes in working with investors. Realtors that specialize in condos within a particular sub-market are different than realtors specializing in working with investors for rental properties. Real estate agents who work with investors know exactly what type of properties cashflow, how much that cash flow will be, and where to look for these types of properties. Condo specialists will know exactly which buildings in the area have lower maintenance fees vs. condo prices vs. sizes of each unit.

5. Chemistry

Chemistry? Why in the world would this be relevant? Lets face it… we are slowly shifting away from a suit & tie corporate environment and transitioning into “Apple-Google” like business culture. Not to say that these top companies are not corporate, but the culture overall is just much more laid back, relaxed and fun. This is why they are able to attract the best and most talented programmers and employees all around. The same goes for realtors. Make sure you have the right chemistry. Be sure that the relationship and process is fun, easy going enjoyable and all at the same time professional.

The Best Real Estate Investment

A lot of folks would like to find the best real estate investment, but even the best real estate investment strategy requires time, effort and hassles doesn’t it? Not so for 2014, 2015 and well beyond… with this strategy.

Sit back for a moment and try to envision what your idea of the best real estate investment strategy would involve. Picture the upside potential to make money; but also the financial hazards and downside risk. If you’ve ever watched the popular TV shows on the subject you’ve seen people make money flipping houses. You’ve also seen blood, sweat and tears.

Here we look at the advantages and disadvantages of traditional strategy, and then move on to the best real estate investment strategy for people who just want to put their money to work to make money vs. working for their money. Traditionally you buy, finance, improve, maintain, and manage a property. Your primary objective might be price appreciation (buy low, sell high) or it could be income (rental income). In other words, your strategy may be to flip it; or it could be to hold it. Either way, some day either you or your heir(s) will likely sell it.

Traditionally, the huge advantage of investment properties has been the financial leverage achieved in financing it with OPM (other people’s money, like a bank). This magnifies profits because you can own a $100,000 property with $20,000 or less down, out of pocket. In other words, with $100,000 you could own five properties or more… each of them going up in value and producing rental income… instead of paying cash and owning just one. Implicit here is the assumption that the value of real properties generally go up in value.

The financial crisis of 2008 drove home the reality of financial leverage (OPM) and the risk that’s involved. High leverage with little or nothing down was the best real estate investment strategy for making money quick – until the bubble burst. But there are other disadvantages in owning properties. To name a few: poor liquidity, costs and expenses, questionable market values, and property taxes. You can’t buy or sell quickly and easily, and the market value of a property is always subjective. Whether you are buying, selling or holding there are significant costs and expenses involved.

If you can buy right (cheap), put a property to its best use, and make improvements with sweat equity (do it yourself) your best real estate investment strategy for 2014, 2015 and beyond could be to go for it – with or without financial leverage. Just hope that the market remains favorable, the creek don’t rise, and interest rates don’t rise too much either while you own it. Interest rates have been historically low for years now and are forecast to rise in 2014, 2015 and/or beyond. Higher rates are a negative for both market prices and marketability.

So, what’s the best real state investment strategy for busy people who don’t want the hassles and disadvantages of property management? Let the professionals do it for you, without personally owning real properties. Simply buy shares in REAL ESTATE mutual funds that manage a portfolio of stocks (equities) in the real estate sector – like home builders and REITs (equity real estate investment trusts) that own/manage office buildings, housing complexes and other commercial properties.

You can profit from both rising share prices and dividend income. You can buy or sell shares and find the value of your account on the internet anytime; and you can invest a few thousand dollars or a few million. The best real estate investment strategy for minimizing costs and expenses: go with NO-LOAD fund companies and avoid sales charges when you buy or sell. Total expenses can be 1% a year or less with the best real estate investment funds. To find them type “no-load funds” into your favorite search engine.

Your best real estate investment strategy to avoid the hassles and other inherent disadvantages of owning real properties is to invest in no-load real estate equity funds in 2014, 2015 and beyond. If the economy and the markets start to sour, you can sell some shares and buy back later at lower share prices.

Real Estate Analysis Software

Ask any real estate analysis software developer about the best program available and, naturally, you will get a resounding, “Mine is”. Fair enough. After all, a lot of blood, sweat and tears go into the development of a real estate investing program. So with the same patience we afford to a proud father publicizing that his child is remarkably special, we should be willing to give all software developers a pass; at least once.

Okay, that’s enough love to get the birds chirping, so let’s get on target: How do you find the best real estate analysis software to meet your particular objectives?

Namely, it depends on what you hope to accomplish. That is, are you willing to stick with the basic essentials for your rental property analysis and eliminate the more robust elements for time value and tax shelter; or are you prepared to take the plunge and go for an in-depth analysis with all the trimmings?

Here’s what I mean.

The return that real estate investors covet most is cash flow. This is the essence of real estate investing: that what investors really are purchasing when they make an investment is the cash that the property produces. If not on a monthly basis, or maybe not even on an annual basis, then at the very least, at the end of the day when the property is sold, they will fully expect to collect some amount of money that exceeds the amount they invested; and this is cash flow.

But cash flows are not created equal (at least not to an investor). Because there is income, and then there is income after Uncle Sam takes a bite out of it. In the world of real estate investing this unavoidable event results in what is known as cash “before” and cash “after” taxes; or CFBT and CFAT respectively.

A good real estate analysis software solution that provides only the basic elements will enable you just to determine the former CFBT whereas one that provides for the elements of tax shelter will allow you to also consider the latter CFAT.

So you must decide how far you want your rental property analysis to go. It’s probably safe to start with the basics, but if you’re serious about investment property, you should also plan to upgrade to the more robust features in the future.

The same is true for time value of money. In this case, when the real estate analysis software does make the computations for time value you can also measure cash flows in light of “when” they are received as well as the “amount” received.

This is important to investors because there is a value of money associated with time, otherwise characterized as the “purchasing power” of money. This requires little explanation because as a consumer you know that $20 five years ago purchased you more gasoline than it does today (i.e., the purchasing power of the exact same amount of money was affected over time).

Now take that idea and apply it to the thousands (perhaps hundreds of thousands) of dollars an investor is going to shell out to purchase an apartment building and hold maybe for five years. There really can be no true measurement of profitability by owning that particular rental property without considering the time it will take for the investor to collect his earnings.

In this case, prudent investors look at such returns as internal rate of return, net present value, and financial management rate of return when making an investment decision; and a good rental property analysis program with the elements for time value typically computes these returns.

This one-two punch of tax shelter and time value will cost slightly more than the basic elements, but the best real estate analysis software you can buy will best satisfy your objectives. I tend to believe that real estate agents who primarily sell residential properties and are merely looking to get started with investment real estate can do quite well without these more robust elements (at least initially). Whereas those more engaged who are looking to build an ongoing real estate investing business should have these features.