Wednesday, November 15, 2017

Direct And Collective Investments In Real Estate Sauk Rapids MN

By Harold Gray


In these seemingly bleak days of the property cycle, fear looms. There is a build-up of cash balances in banks. Most would-be investors and savers crowd onto a flight to quality. They accept certificates of deposit (CDs) and money market accounts that pay negligibly low-single-digit interest rates. But what are the best practices in Real Estate Sauk Rapids MN?

Besides, real estate's enable you to use leverage (financing) to magnify returns from cash flows. Grow equity through amortization (that is, use rent collections to pay down your loan balance). Refinance to increase cash flows (reduce your loan payments). Refinance to generate cash (lump sum cash-out). Buy at a below - market price. Sell at an above - market price.

Within each sub-sector lies a range of possible entry points for Investors; broadly categorized as either direct investments or collective investments. Collective investments being either regulated or unregulated fund arrangements, where Investors capital is pooled to acquire a basket of assets or participate in a project with a large capital requirement.

I often read property investing advice such as, "Always buy from a motivated seller"; "Never buy unless you can buy at least 20 percent below market value"; "Always buy in an area poised for growth (or experiencing rapid growth)." Unfortunately, this stock market mentality that focuses on price growth has infected the way too many people think about property.

Direct investments - Simply the acquisition of property assets by the Investor, direct property investments take many forms; from the purchase of property for improvement and sale; through to acquisitions for leasing/rental to a tenant or operator. For the Investors with sufficient capital or finance, direct investments remove the majority of risks specific to collective investment schemes where Investors are reliant on the external management of a property portfolio. Direct investments do however carry asset-specific risks; property assets can incur significant financial liabilities including on-going maintenance, tax and round-trip purchasing costs (the cost of buying and selling an asset).

Ensure to monitor the market, i. E., existing home sales, foreclosures, interest rates, employment and unemployment figures, new construction starts, and so on. Detect turning points in the data as well as investor and buyer confidence. Intelligent monitoring and opportunistic waiting differ from inattentive procrastination. Moreover, property investing offers multiple ways to earn a good return, among which market bottom, the lowest price represents only one - and not necessarily the most important - reason to invest.

Multiple Sources of Return - Journalists and their media molls love to play the game of short-term forecasting. They do it with commodities, stocks, interest rates, gold and, for the past ten years, properties. Are prices climbing? Buy. Are prices falling? Get out of the game and watch from the sidelines. As they persistently obsess over short-term price movements, the media distort and confuse the idea of investing in property. Contrary to media hype, most experienced and successful real estate investors do not emphasize short-term price forecasts.

The structure of collective property investments varies from fund to fund. Some are highly regulated affairs, established and operated by major asset management groups; others are small, niche operations established to capitalize on current short-term opportunities or niche sectors or markets. Collective funds may be listed on an exchange, allowing smaller Investors to trade in and out of the fund as and when they please.




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