This author from Toronto, Canada, has some good ideas about real estate and long term investing. I particularly appreciate his take that real estate has proven to be a good vehicle for investors with less risk than other types of investment. I agree. Real estate investing is less risky and when done correctly can generate wealth for the real estate investor.

Article by Stefan Hyross

The number and variety of investment products that are accessible today is staggering and to the average investor, attempting to understand which one is right for you can be a tough task. There are various risks and rewards that go along with each one. One can feel that in order to understand each product requires an advanced degree, but you can improve your odds of success by doing your research.

You may have heard some investment advisers or institutions talk about a diversified portfolio. Having different types of investments instead of just one type helps to protect your money by diluting the risk. You can think of it in terms of being a multi-legged approach to investing. One prong or type of investment may be composed of stocks, bonds, and savings.

Commodities make up the second type of investment product. These are goods such as oil, gold and silver. They can result in substantial returns but at the cost of very high risk. Commodities are usually left to the experienced investor who has time to closely watch the market because they are very volatile.

Real estate has traditionally been a solid investment but not everyone has the funds to go out and start buying property. To apply the Toronto residential real estate market as an example the average cost of a home is over 0,000 with commercial properties being even more. This is where Real Estate Investment Certificates, or REITs come into play.

These are entities that go out and buy property or interests in hotels, office buildings, shopping malls and even mortgages. REITs themselves come in various forms to suit your investment style. REITs that are invested in physical real estate are called Equity REITs. The rents that are charged generate income. To use Toronto as an example again you may have shopping centers with a Wal-mart, Home Depot, Payless shoes etc. that are all leasing buildings from the property owners. All together these Toronto properties are all generating income from rents for the REIT and its investors. Mortgage REITs, however, comprises of investing, or lending, of mortgage money to property owners or developers. If you can’t decide which one you prefer you can choose to get a hybrid REIT which is a combination of the two.

One risky type of real estate invest is known as an option. This is simply a buyer is making what’s known as an “option for consideration”. The option entails an offer to buy real estate if certain conditions are fulfilled such as financing or inspections. During this period the property is taken off of the market in return for a small amount of money as a deposit. This can be risky because the buyer may be forced to forfeit their deposit if the conditions are not fulfilled. On the upside the buyer could earn a quick and substantial profit if they can quickly sell their option to a third party. To do this right a buyer needs to research the market thoroughly.

It can be confusing at times but the more you know the better off you will be. Long term investing is the key and real estate has proven to be a good vehicle for investors and even with the many possible risks involved it is considered to be the least risky when set side by side with other types of investments. And as such it is vital to include it in your investment portfolio.

Stefan Hyross writes on behalf of Lea Barclay, a sales representative and expert in the Toronto residential real estate market. Feel free visit the website for more information and to search for Toronto properties available for sale and lease.

Article Source: ArticleSpan

Real estate investing for high returns is not an easy task, especially in an environment with very high uncertainty such as the one that is currently prevailing in most property markets around the globe. The deep crisis in the global financial system that has passed to the real economies of almost every country in the American and European continents, has thrown national and local real estate markets into a downward spiral, making very difficult any prediction in terms of how long and how much more prices will continue declining.

In thinking about high-return property investments in any environment (good or bad), it is important to have in mind that after everything will be accounted for, the performance of the property and the investment will boil down to two things. The income return and the appreciation return that the property will achieve over the holding period. The income return, which is typically measured as the ratio of net operating income (NOI) over the property value, reflects the income-earning capacity of the property in relation to the price paid by the investor. Thus, the income return of a property depends primarily on the rental income it can produce and the associated expenses for operating the property. It also depends on the acquisition price. Keeping the NOI of a property constant, a lower acquisition price implies a higher income return. The appreciation return reflects the increase in the value of the property (in percentage terms) over the holding period of the investment.

The identification of markets and properties that have solid prospects for offering high income returns and/or high appreciation returns over the planned holding period is literally the key to property investing for double-digit returns. Within this context, real estate investors need to become very well versed in understanding the specific economic circumstances, market synergies and dynamics that can create prospects for rising rental income and strong property value gains. Furthermore, due to the fixed location of real estate, the understanding of the spatial dimensions of property price and rent dynamics is also crucial in locating specific properties with prospects for strong rent and property value increases. The spatial dynamics of property prices suggest that certain locations within an urban area have higher chances to register strong property value gains than other locations, under certain circumstances.

Another important aspect of investing for double-digit returns is timing. Real estate markets are rarely balanced and go through cycles of declining and rising vacancy rates, rents and property values, due to imbalances between demand and supply. In better assessing the return prospects and the risk exposures of a property, investors need to understand the interaction between property income dynamics, and property value dynamics in the different phases of the real estate cycle. Given the dynamics of capitalization rate movements over the real estate cycle, property values tend to get a double hit when the property market is declining and a double boost when the property market is rising. Since property rent and price movements are the prime determinants of income and appreciation returns, entering at the appropriate stage of the real estate cycle is crucial in achieving double-digit returns.

In assessing the income and appreciation prospects of a property during economic downturns, such as the one that is currently under way, property investors are faced with the struggling dilemma of how far within their investment horizon they must project further rent and value declines. Overestimation of such declines may result in the loss of unique opportunities, whereas underestimation may result in bad investments and capital losses. The key to investing for double-digit returns in this environment is correctly assessing when the property market will be approaching its bottom. That is why property investors aiming for high returns need to monitor very closely the movements of the targeted market and continuously reassess its outlook by obtaining competent forecasts from real estate experts that are most successful and/or more knowledgeable in making such predictions.

Dr. Petros Sivitanides, the author of Real Estate Investing for Double-Digit Returns, has a Ph.D. from M.I.T. and over 17 years of experience in real estate investment consulting, research and forecasting. More on property investing for double-digit returns can be found here.

Article Source: ArticleSpan

I just received the following alert from my local Real Estate Agency and thought it best to pass it on.

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The Agency is receiving calls from licensees asking if their fingerprint cards have expired. The licensees explain that someone stating to be from the Agency has called them and informed them that their fingerprints are going to expire. The caller is asking for credit card and social security numbers.

Fingerprint cards and criminal background checks do not expire with the Agency. Also the Agency does not accept any personal or confidential information over the phone. If you receive one of these calls, do not give your information out.

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Oregon Real Estate Agency
1177 Center ST NE
Salem, OR 97301
(503) 378-4170

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Regards,

James Kobzeff