Image by LetIdeasComplete via flickr.com

Who will step up in their place?

Robert Dietz, an economist with the National Association of Home Builders, notes in a recent article for U.S. News & World Report that “missing households” in today’s market who have delayed home ownership will eventually play catch up.

Notably, recent college grads who delayed home ownership by moving in with their parents or renting are expected to increase their homebuying activity. Also, surveys show a growth in the number of Americans living together as roommates who are not relatives. Americans have doubled or even tripled up in rental residences to help cut costs. But as more people get married and start families and jobs stabilize, household formation will likely grow, Dietz notes.

The nation’s population has grown, but the number of independent households of renters and owners has not kept pace. The Census Bureau’s American Community Survey shows that the population from 2006 to 2011 grew by more than 4 percent, but there was only about a 3 percent growth in the number of households.

Dietz expects that homebuying demand will come strongly from rental households that were created over the last seven years. In that time, the number of rental households in single-family homes grew by 2.5 million, or 22 percent. Traditional renting households in multifamily units increased by nearly 7 percent, Dietz notes.

Dietz says the “real demand for housing is on the sidelines, particularly among younger Americans. … For these younger prospective homebuyers, policy debates concerning the future of the housing finance system and home ownership programs like the mortgage interest deduction will have real impacts on their housing and wealth status in the years to come.”

The Wall Street Journal reports:

“New buildings and residences now have kitchens outfitted with wok burners to attract Asian buyers. Others have European-style bathtubs and bidets for Western tastes. South American-inspired residences include sprawling balconies that can accommodate large extended families for dining and playing games.”

In 2012, international buyers purchased $82.5 billion in residential real estate in the U.S.—an increase from $53.4 billion in 2010, according to National Association of Realtors data. What’s more, NAR data shows that international buyers spend about double the amount a typical American home buyer spends.

“I can look at an apartment or house and almost figure out the nationality of buyers who are there,” Mark Zilbert, president and CEO of Miami-based Zilbert International Realty, told The Wall Street Journal. “Whether it’s deliberate or not, [developers] are putting in a lot of features that appeal to that taste and color palette.” In Miami alone, about 60 percent of home buyers were from overseas last year, according to the Miami Association of Realtors.

Developers of twin 49-story towers are showing international models of their Miami apartments, hoping to lift sales. Before employing this strategy, 653 of the 849 apartments were unsold in the towers. However,  developers realized that the majority of buyers were coming from Argentina, Venezuela, and Brazil and so they decided to cater more to their tastes. The developer commissioned models that showcase designers from Venezuela, Brazil, Spain, Colombia, and the U.S.

“It’s really about the nuance,” Philip J. Spiegelman, who handles marketing for the developer, told The Wall Street Journal. “Colombians may like very modern-contemporary, while the Brazilians may like something more conservatively contemporary.”

photo credit: 55Laney69 via photopin cc

photo credit: zuza ritt via photopin cc

Reasons to Buy Land from the Owner

It is important to note that the law does not require you to use a real estate broker or agent to buy and sell land. Many people fall prey to this misconception, most likely because real estate agencies want you to believe they are necessary. Some people are looking for land for sale to build a house, for investment purposes, or to use as farmland in some capacity. These are the reasons why people buy land. The reasons people buy land with a sign stating, “for sale by owner” are often financially based.

Real estate agents take a sizeable commission from the sale of any land transaction. Agents charge anywhere from 2.5 percent to 7 percent. The fees from such transactions often include a number of services such as documentation preparation, loan verification, and working directly with the owner or agent of the landowner. These services often add to the cost of the land so the owner receives full land value by the time all fees and closing costs have been recouped by the realtor. Today, the services of such agents are becoming less desirable by many landowners. Landowners have access to the same information, resources, and tools as realtors. This allows landowners to keep their selling prices at a reasonable published price.

Precautions

Even though you are saving money, you should be mindful of a number of aspects. You will want to review the last land survey in great detail and acquire any environmental studies that have been conducted on the land to ensure you are not purchasing land that was once used to dispose of toxic chemicals or other environmental hazards that would cost you thousands of dollars to clean up after the sale of the land. Ask for the tax ID of the land and you can find all of the information you need to evaluate the land properly.

You should obtain as much history about the land as possible such as how many owners and for how long, information pertaining to local laws and statutes, and speak with the neighbors. You should also inquire about the utilities available on the land, whether or not the property has a water source, inquire about owner financing, and ask about any structures that may be on the property.

If you choose to buy a piece of land, do your due diligence. You may save money in the end; however, you must be thorough in your research to ensure you do not end up spending thousands of dollars more once you acquire the land.

About the author: David Darga has been writing since he graduated from the University of Carlton with a journalism diploma. He now writes for various Canadian investment magazines, including dignam.com Canada’s most respected name in acreage real estate and land for sale in Ontario.

As a real estate investor, I’m all about finding the “good deal.” However, for the amount of times the phrase “good deal” is thrown around in real estate investing discussions – many people fail to understand just what constitutes a good deal and end up making mistakes that turn a good deal into a bad deal.

photo credit: lumaxart via photopin cc

I believe a good deal is one that produces either great positive cash flow and/or a good increase in value (and equity) but many good deals fail to deliver on either due to mistakes on the part of the buyer. This post is going to look at three common mistakes to avoid when finding a good deal.

Location, Location, Location

Often times a deal will look amazing – until you drive by the property and realize your chance for making money is lower than your chance for getting shot or your car stolen. I’ve yet to see a real estate broker write a nice description such as “Great 3-bedroom home located on a loud, gang infested street.” Those details are often left out, making the numbers seem much better than they are. As a result of the bad neighborhood, tenant turnover will be much more common (and costly) adding to the strain on your cash flow and your ability to sell the property again.

Lesson: always scope out the neighborhood (both during the day and at night) and ask others about the neighborhood. Know what you are getting into.

Buying Real Estate Based on “Pro Forma” Numbers

Many “good deals” are only good deals on paper, due to what is known as “pro forma” numbers. In other words, the financials for the property are listed as what they could be not what they are. Many agents, especially on commercial or multifamily properties, will list some very optimistic pro forma numbers rather than the actual costs. They may conveniently leave off repair costs, vacancy rates, legal charges, and other expenses that could turn your asset into a liability.

Lesson: always verify the financial information independently.

No Exit Strategy

Finally, investors often snatch up “good deals” but quickly find that those deals are duds when it comes time to sell. This is especially common for house flippers, who have a very short window of which to sell a home. When the market turns, they are left holding a “good deal” that can’t be sold.

Lesson: always have multiple exit strategies in backup in case your first choice for unloading a property doesn’t work out.

Can you think of any more mistakes that can turn a deal into a dud? Share them below in the comments!

About the author: Brandon Turner is an active real estate investor and Senior Editor at BiggerPockets.com, the real estate investing social network. While not investing, Brandon enjoys writing epic posts such as his 6000+ word Tenant Screening Ultimate Guide or the Ultimate Beginner’s Guide to Real Estate Investing.

Al Akaria Residences – from the brochure

Seeking governmental approval of the construction of some 7,000 homes, Saudi Real Estate will also be committed to building the connective community elements of office, hotels, shopping, and other developments as well. Dr. Fahad A.M Al-Said, CEO of Saudi Real Estate Co. Al-Akaria, addressed the Future Housing Summit last week concerning issues facing his country where the availability of housing is concerned.

Finally, to cement the idea of Saudi Real Estate’s leadership where jump starting the youth of Saudi Arabia is considered  their chairman’s confidence in the young community there was highlighted late last year in an interview with Arab News, and I quote describing Saudi Arabia for the coming decades:

“I can describe the Kingdom using the words — flourishing continuous development. I do have strong trust in Saudi youth. I can say that every student is more intelligent than the older student generation. Our future is for the youth, and I strongly have trust on them.”

Saudi Arabia is largely a youthful country possessed of a very well educated younger set. Clearly the focus of future investment there will be attuned to not only satisfying the needs of this population, but taking advantage of the pluses excellent and youthful contributions can foster. Fahad A.M Al-Said and his company are fairly notorious in their revamped focus toward Saudi’s taking advantage of global job opportunities too.

Finally, the residential property market there in Saudi Arabia creates something of a demand vacuum not only for Saudi investment, but with the potential transformation of the country’s bank regulations and foreign investment allowances of late, a potential investment boom for outside investors too. A growing population and other factors made the country a big target for speculation where investments go.

The Plaza development by Al Akaria

© JJ’Studio – Fotolia.com

Potential lenders come in all shapes and sizes. They may include anyone from your parents, friends, or an extended family member, to a professional hard money lender or a capital company. Pitching the idea of getting them to lend you the money you need revolves around a few key points.

If the lender is a family member, friend or other “non-professional” person who does not lend money on a regular basis, they will most likely be concerned about issues such as your personal ability to pay them back, protection of their principal, and their anticipated rate of return. Your job is to answer those questions with a presentation that they can easily understand.

No matter who the lender may be, they will want to know how much money they will make if they lend to you. But family members and friends are probably not carrying a financial calculator around with them. Chances are they are not all that familiar with how the process would work and they may not be able to determine how much money they would make. When “pitching” your loan request to them, it is important to give them something in a written form that shows how the transaction will work, how and when they get paid, and how much they will benefit financially. And you want to keep it simple.

For best results you should have a specific property in mind, preferably already under contract, subject-to getting the required financing. Then you can structure your loan proposal around the specifics of that property.

For example, let’s say you found a nice three bedroom, two bath home in a good part of town and you want your uncle Bill to lend you the money to purchase this property. I’d take uncle Bill to view the property in person if possible. If that is not possible, I’d video or photograph the property and have photos or video ready for uncle Bill to look at.

I’d make sure that my negotiated buy price is below the appraised value, so that the Loan-To-Value ratio looks good to uncle Bill. If you find a property worth $100,000, but you only need $80,000 from uncle Bill, that would be an 80% LTV. This is a commonly held benchmark for a “safe” LTV. Uncle Bill might be willing to lend you more than 80% of the value, but as a general rule, the lower the LTV, the easier it will be for you to find a willing private lender.

I’ll plan to prepare a simple financial statement for uncle Bill, showing what rate of interest I am willing to pay, and how much the monthly payments would be. I’ll use a mortgage amortization calculator to work up the payment amount along with the interest and principal break down. This way uncle Bill can see how much money he will make on this loan, as the years go by.

I want to make sure I cover all of the important details, including the loan amount, the interest rate, the total number of payments to be made, and the total interest that will be earned by uncle Bill. Even conservative family members are more willing to consider lending money to finance a home when they can clearly see how much they may earn. Chances are your loan will pay much better than what they are currently earning on bank CD’s and other savings vehicles. You can tell uncle Bill that this loan is like creating an annuity for himself, secured by real property.

On the flip side, getting your loan from a private lender such as uncle Bill will likely be much cheaper than typical FHA or other types of government insured loans. Unlike FHA loans, which are costly, uncle Bill may be less likely to saddle you with loan origination fees and private mortgage insurance. This alone may save you tens of thousands of dollars over the life of your loan.

When dealing with more experienced private lenders that loan money on a regular basis, your own experience and track record may play an important role. No matter how much or how little experience you have, the key to success will be your ability to present an investment opportunity that makes sense for the experienced private lender.

I was once approached by a custom home builder who had a dream of creating a development in the mountains, in which he would develop and build out the entire property. He was seeking a million dollar loan to help him finance the project.

I arranged a meeting with a private investment group that was looking for such an investment opportunity. I told the builder to have a detailed presentation ready for the meeting that included such things as blueprints, surveys, maps, photos, cash flow projections, and so forth. After all, if you are seeking a million dollar loan, you need to look and sound like you know what you are doing, and you must be able to demonstrate how the loan will be paid back and what the time frame will be.

The builder showed up with the details “in his head”, and had not taken the time to put together a detailed presentation that would answer even the most basic questions that the lenders asked. The meeting was over the minute it became obvious that the builder had not prepared an adequate presentation.

Whether you are trying to raise private funds for your first house or a 50-story office building, the key is to have a clear presentation that provides all of the essential details about the property and shows the potential lender how the deal will benefit them. They are considering making the loan because they want to make money. It’s up to you to show them how much they will make and when they can expect to make it. When you properly address lender expectations, it’s not that difficult to find private money to finance a home or investment property.

Donna S. Robinson is a real estate investor and residential investment consultant located in Atlanta, GA. Follow her on twitter at donnaconsults, Facebook.com/RealtyBizConsulting and watch her videos on youtube. Her latest book, Basics of Real Estate Investing, is now available for Kindle on Amazon.com

Conceptualization of Sixty – courtesy MS Group

The future hotel will reportedly boast of 120 exclusive rooms, a restaurant, conference center, and other luxury accommodations  The hotel’s estimated cost will be in the neighborhood of €85 million, and construction is slated to start in Q1 of 2014. Plans to rebuild the famous rebuild the famous House of Sixt on the corner Old Town Square and Celetné, would appear to finally be headed in the right direction.

Architects MS Architekti have been involved in the now somewhat dated project since the early 2000′s. Some complications and back and forth use cases, would seem to finally be ironed out now so that Hotel U Sixtů, and perhaps some exclusive apartments at Prague’s center can get underway. According to the scattered reports, interior designer Jacques Garcia is reportedly on board as well.

Other key features of the property will include a luxury spa, shops, and more VIP private spaces. For more pictures of the prospective hotel readers may want to visit Metro and use Google Translate.

Industrial district of Novgorad – courtesy © JackF – Fotolia.com

The survey, entitled Real Estate: Asset Investment Trend Indicator, was taken across 15 countries in Europe, asked hundreds of companies to give data on real estate related transactions etc. According to the surveys, REOCs or REITs are focused on affordable Russian properties. Of course much of the focus is on Moscow, but other cities and regions were indicated as well. The chart below from the report (PDF) reveals more about just who is buying Russia property.

Russia buyer profile – courtesy Ernst & Young

As for the types of properties that will be popular for investment, the gambit is fairly well covered between office, retail, and residential space. However, for Russia’s big cities, retail clearly shines as the preferred conduit for profit. Along with the prospectus for 2013 investment trends, the Ernst & Young document also speaks of increasing property prices as the demand rises, and supplies get smaller. Outside Moscow, cities with populations over one million are also clear targets for retail and other investments according to the report.

In Europe, clearly the sovereign debt crisis and the euro’s difficulties diminish confidence there,  but still residential properties in Germany, Austria, Switzerland, and the UK are stable commodities.

While some impediments exist for buying real estate in Russia, clearly the country was bound to emerge as a real estate boom economy at some point. After all, the country with the biggest land mass in the world has to gain influence for an ever growing population worldwide. While this is a sort of simple logic, the fact cannot be overlooked as important investment wise. Notwithstanding the Sochi Olympics, and other crucial Russian Federation high profile events, the country does show resilience when compared to most others economically.

For more information about this report readers should contact Olga Arkhangelskaya, Partner and Head of Real Estate Advisory Services in the CIS at: +7 (495) 755-9854. 

Listed on the National Register of Historic Places, the former light keeper’s residence on this not so easily accessible Island reportedly sold recently for a markdown of about 400 grand off the asking price of $1.9 million. The Knowles Company, a Northeast Harbor-based real estate firm that handled the sale, said the property had been listed for $1.9 million and sold for $1.5 million. The lovely house and 2 acre seashore property is located about six miles from the mainland and is accessible by private boat or ferry. Scheduled to become an Inn once again, this Island getaway, as it turns out, is but one of many such properties to be snatched up at relative bargain prices.

The Inn – courtesy Keeper’s House Lighthouse

Looking at other listings from The Knowles Company, the selling agent in the above deal, anyone with a yearning for Maine seaside should have a second and third look. Listed below are some interesting properties I found this afternoon.

Looking out over the water, Point East 3/3.5

Point East – 15 Eider Lane - Off Island, ME

Situated on 5+ nicely landscaped acres, this contemporary 3000 square feet of living space, plus 680 feet of accessible waterfront on Partridge Cove. An open floorplan, the home also has a great room, new kitchen, and several cedar decks from which to take it easy in the Maine countryside. This property is priced at $745,000

Foster Island – Narraguagus Bay – Harrington, ME

I know someone out there has always wanted to own their own Island. Owned by the Rockefeller family since the 1960’s, Foster Island consists of a small homestead and pier on 300 acres of pristine wilderness in Narraguagus Bay (image below). For a full description including plats and so forth, follow this link to the listing. The asking price for your bit of Rockefeller vacation getaway is $1,650,000

Foster Island

Lincoln Street - 69 Lincoln St – Boothbay, ME

Jumping over the Sotheby’s for my last suggestion here, we find a marvel of Maine seashore living in my book. This house, built by local boat builders, offers all the fittings you’d expect from a prestigious yacht. Expansive decks overlooking 185ft of waterfront, your own private deep water pier, mooring, a 25ft Lxmann power boat to go along, well… The asking of $1,499,000 seems low to me.

Courtesy Sotheby’s

For more information on this and other Sotheby’s listing on the Maine seashore, please visit or call Legacy Properties Sotheby’s International Realty at +1 207.729.2820. The listing agent for the home featured here is John McCarthy.

Lincoln Street BR

NuCO2 offers micro-bulk beverage carbonation solutions to quick service restaurants and convenience stores that provide fountain beverages to their customers. Through this investment, Praxair aims to expand its product offering for establishments selling draught and craft beers, giving them the possibility to include nitrogen generations and blending control systems.

“NuCO2 offers a compelling value proposition for beverage carbonation. We plan to continue to grow. the business in the United States, enhance distribution efficiency utilizing Praxair’s competencies in logistics, and extend NuCO2′s offerings to customers in other regions of the world,” said Executive vice president Eduardo Menezes (pictured). 

Praxair seems to have made a smart investment as NuCO2 will generate sales of $250 million in 2013 and an annual EBITDA of $115 million. Yet the deal will be neutral or have a minor positive effect on Praxair’s earnings per share for 2013. It will be completed in Q1 of this year after going through the process of being approved by regulatorsThe deal is expected to be neutral or slightly accretive to Praxair’s earnings per share in 2013, is expected to close in the first quarter of 2013 and is subject to regulatory approval and normal closing conditions.

At the end of 2012, Praxair, whose market value is of $32.7 billion, announced $152 million in cash and equivalents and operting a short and long term debt of $7.36 billion. The company generated $11.2 billion in revenue and net earnings of $1.69 billion, which translated into #5.61 per diluted share. 2013 full year revenues are forecast to reach $12 billion and per share earnings of $5.85-6.10, all up from the 2012 values. The market currently values Praxair at $32.7 billion. This values the firm at 2.7 times 2013′s annual revenues and 18-19 times annual earnings. Praxair pays a quarterly dividend of $0.60 per share for an annual dividend yield of 2.2%.