Monthly Archives: September 2011

Luxury Real Estate Investment Remains The Best Option

Looking for a safe place to invest your savings? Then maybe you should think about luxury real estate investment. You’ve seen the headlines. Luxury homes selling for record-breaking prices. Luxury property values appreciating even while other properties remain unsold. The fact is, that even given the current poor economic climate, luxury home investment remains a lucrative option for anyone looking to make money with their savings. Now why is that?

One of the main reasons is that luxury property markets benefit from insulation from problems affecting other markets. While a poor economy might stifle other sectors of realty, these problems do not affect the wealthy in the same way. Another reason is that foreign investment is a big factor in luxury property, as the US remains one of the most desirable countries in the world in which to own a second home, thanks to its quality of life and education services, amongst others. The result is that foreign investment often helps to keep luxury real estate markets in good shape, even if the other markets are struggling.

So how can you prosper in luxury real estate investment? A real estate consultant will tell you that while there’s no strict formula you can follow to make certain your investments pay off, there are some basic rules to follow that will give you a very big chance of success.

Firstly, you need to understand the meaning of luxury on a personal level. You need to recognize the kinds of luxury homes that are going to appeal to buyers. For various reasons, the media often define luxury homes as any property that costs over $1 million, but this is just simplifying things. Luxury could mean a desirable neighborhood, ease of access to popular destinations, or those little extras such as a Jacuzzi, a tennis court or a trophy room. To be an educated buyer, you need to learn to identify the things people want.

When we buy homes, especially luxury homes, we need to be hands on in their real estate transactions, so they can increase their flexibility and the speed of their purchases when buying luxury property. In many cases with luxury real estate, it’s necessary for buyers to move quickly, or strike while the iron is hot, so to speak. This is because luxury homes attract big spenders with lots of disposable cash, or at least the ability to easily borrow the money they need. Luxury property is also advertised nationwide rather than just locally, so it nearly always attracts much more interest.

Also, it pays to keep an open mind about luxury real estate investment. It used to be that, when some mentioned luxury real estate, people would immediately think of the east coast or the west coast. Not anymore. Nowadays, there are areas in many states that are considered to be highly desirable, providing many more opportunities for investors like you. Learn what makes a desirable location, and realize that these are often found in the most unexpected of places.

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Protecting Time and Money on Your Real Estate Investment

We have all heard the timeworn phrase, “It takes money to make money,” and even though it isn’t necessarily true in real estate — so long as you have the right partners — spending a little money certainly doesn’t hurt, especially if you want to protect your residential real estate investment.

Here are a couple of the key ways we protect our investments are through inspections and by purchasing home warranties. On the purchase of a property, you may spend a couple hundred dollars extra on a transaction by buying a home warranty.

But if you go to sell the property and they do an inspection and the roof is damaged, it’s going to cost you between $8,000 and $10,000. If you have a home warranty in place, all you have to do is report the damage, pay the premium, and get that new roof in place.

Knowing where to protect yourself in order to avoid unexpected costs is incredibly important. We have seen a lot of people who neglected to take the proper precautions get hurt.

For example, recently we purchased a house. We had to react really fast, because it was priced incredibly low. It was one of those instances where we took a chance on buying it, because we were buying it at around 40 cents on the dollar.

We knew after we bought it that the property had major roof damage. Luckily, we bought a home warranty. Although we bought the house that cheap, we were able to get the home warranty and save close to $13,000. By protecting your invest when you purchase properties you’re able to save a lot of money.

Another investment you may have to make in your property is by bringing it up to FHA loan standards. If you’ve rehabbed a house and you’re selling to retail buyers, you may have to come out of pocket for things like appliances. In cases like these, it’s worth spending a little bit extra so that everything can go through smoothly.

You may also want to have your own appraisal done. There have been many times that we have seen appraisers go out to a property and it isn’t ready. If you spend an extra couple hundred dollars just to make sure the appraisal matches the selling price and that the house is ready to go, in the long run you will save time and money.

And that’s what it comes down to: Time is money. You want to make sure that you complete the right processes so that you’re able to exit your investment and get your money back in your pocket.

There’s something called the internal rate of return and we watch that carefully as we are very concerned about our investors. We want to make sure that we turn over their money over and over throughout a year or throughout that cycle.

One of the ways we’re able to do that is by making sure that all of these things are taking place and making sure we’re not wasting time. We’re not going to waste time and we’re not going to lose money or spend additional money that we could have saved by having these insurances in place.

That’s the main thing: Protect your time and protect your money. If you protect both, then you will be taking care of your investors or assets as you continue to build your business.

One deal to financial freedom? Luis Roque invites you to get access to ask the real estate experts who are mentors to millionaires today! Attend the next free commercial real estate webinar with some of the nation’s leading real estate experts: Real Deal Commercial Webinar.

Luis D. Roque has over 10 years of real estate and lending expertise working for the largest lending institutions in the U.S. Luis has also worked for investment companies as a consultant to oversee the investor relations, and residential real estate acquisitions departments achieving as many as 50 properties bought fixed and flipped for profit in a quarter. Luis is a managing partner of HIS Real Estate Network residential and commercial real estate buying group.

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