For the past few years, we saw house prices rise all over the U.S. It definitely seemed to be a seller’s market. But now we are seeing a change, and a big change. The U.S real estate market is experiencing some difficult times at the moment with prices steadily falling. The main cause of this is the sub prime market. This is a high risk market where lenders lend to people who have a poor credit history. Their interest rates are higher to cover the higher risk of the loan, so as interest rates start to rise, and people borrow more and more, the sub prime market is the first to be hit.
People with poor credit ratings who don't pay their bills are going to be the first to cause problems for the housing market. Those who bought homes out of their price range are also beginning to water down the market. The older generation are opting for community housing, and even apartments, where upkeep is virtually nonexistent. They’re dumping their mortgages and adding to the tide of available houses which is in turn adding to the problem. This, experts predict, could be the beginning of a huge opportunity for people prepared to buy real estate.
As the prices fall from the recent real estate boom, this could be the means to lower prices for investors. Basic principles of investment – buy it for less, sell it for more – still hold true. But if housing prices in the U. S are dropping, how long will this trend last? and is it still wise to put your money in real estate? All business trends see peaks and troughs. Real estate, however, is REAL. It has tangible value that may have momentary dips but will always rise in the long term. Well it always has before. Still, smart money managers are finding property that has plenty of potential and is still cheap enough for its purchase to make sense.
The real bargains are to be had in for sale by owner property. This property tends to be available at less than you would buy from a real estate agent as their commission is not on top of the asking price for a start. You can always haggle a little bit more too when you are buying direct from the owner. But invest wisely, and invest for the long term, short term profits are not always guaranteed in a falling market, even if you are buying at below market value.
Tuesday, September 18, 2007
Tuesday, September 11, 2007
Property Development Finance For Regeneration Schemes
Arranging Property development finance for projects in inner city areas is getting easier as more lenders are waking up to the idea that excellent profits can be made by helping property developers in regeneration areas.
Areas of cities that are run down but in good central location often present good investment opportunities, especially if they are surrounded by more upmarket areas which are already popular places to live. In these regeneration areas property can be found at very reasonable prices, often up to 10% to 20% lower than in the fully developed area of the city.
However investors still need to do some careful research and check there is a well-funded regeneration plan in place. Areas such as Stratford East in London, parts of Manchester and inner city areas of Bristol all have regeneration schemes in place and are proving irresistible to investors and buyers. A good example of the perfect regeneration project would be an area like Stratford in London with the 2012 Olympics being hosted in the area.
Demand for property development finance in regeneration areas is exceeding all records with property developers eagerly snapping up brownfield sites. It is far easier to develop a brownfield site than to try and get planning permission on greenfield sites. The location of brownfield site makes property development funding more attractive as they are already in prime locations for amenities such as shops, cinemas, bars and employment.
Planing restrictions on greenfield sites means that regeneration is the way forward. Finance for property development in these areas is very often geared to the expected increase in value once the whole site has been finished. Although far more care is taken by the lender when researching the risk involved in this type of property development. Thorough investigation of the local regeneration plan will be carried out by the lender to ensure the project falls within the local planners requirements.
Mortgage lenders have improved their product offerings to accommodate the inner city type of property, this includes helping property developers arrange mortgages for residential dwelling situated above commercial premises. In particular the buy-to-let mortgage has really come into its own in this environment. It is not unusual to see an entire development of apartment being snapped up by investors before the project is even ready for viewing.
When researching the property development finance options available it is vital that the builder tries to use a specialist broker. The mainstream residential mortgage broker is sometimes tempted to dabble in commercial finance, usually attracted by the idea of large commissions. In reality arranging finance for property development is a highly skilled job, and relies on experience and personal contacts.
Property developers trying to arrange finance for regeneration projects are also well advised to try to use local brokers wherever possible, this is because a local broker is more likely to know of any regional issues which may adversely affect the project.
Central government funds, the EU and local authorities all often try to encourage regeneration schemes with subsidies and grants. Very often a scheme will be enhanced by the provision of improvements to local schools, hospitals and transport links. In order to capitalize on positive publicity there will often be some media interest in these announcements, it is worth following these stories carefully.
Bridging finance is another tool for the developer to use, particularly useful if property development finance can not be raised because of planning problems. Bridging lenders can help fund the purchase of a site prior to planning permission being granted. The developer can then take advantage of the increased value when arranging the property development mortgage.
Areas of cities that are run down but in good central location often present good investment opportunities, especially if they are surrounded by more upmarket areas which are already popular places to live. In these regeneration areas property can be found at very reasonable prices, often up to 10% to 20% lower than in the fully developed area of the city.
However investors still need to do some careful research and check there is a well-funded regeneration plan in place. Areas such as Stratford East in London, parts of Manchester and inner city areas of Bristol all have regeneration schemes in place and are proving irresistible to investors and buyers. A good example of the perfect regeneration project would be an area like Stratford in London with the 2012 Olympics being hosted in the area.
Demand for property development finance in regeneration areas is exceeding all records with property developers eagerly snapping up brownfield sites. It is far easier to develop a brownfield site than to try and get planning permission on greenfield sites. The location of brownfield site makes property development funding more attractive as they are already in prime locations for amenities such as shops, cinemas, bars and employment.
Planing restrictions on greenfield sites means that regeneration is the way forward. Finance for property development in these areas is very often geared to the expected increase in value once the whole site has been finished. Although far more care is taken by the lender when researching the risk involved in this type of property development. Thorough investigation of the local regeneration plan will be carried out by the lender to ensure the project falls within the local planners requirements.
Mortgage lenders have improved their product offerings to accommodate the inner city type of property, this includes helping property developers arrange mortgages for residential dwelling situated above commercial premises. In particular the buy-to-let mortgage has really come into its own in this environment. It is not unusual to see an entire development of apartment being snapped up by investors before the project is even ready for viewing.
When researching the property development finance options available it is vital that the builder tries to use a specialist broker. The mainstream residential mortgage broker is sometimes tempted to dabble in commercial finance, usually attracted by the idea of large commissions. In reality arranging finance for property development is a highly skilled job, and relies on experience and personal contacts.
Property developers trying to arrange finance for regeneration projects are also well advised to try to use local brokers wherever possible, this is because a local broker is more likely to know of any regional issues which may adversely affect the project.
Central government funds, the EU and local authorities all often try to encourage regeneration schemes with subsidies and grants. Very often a scheme will be enhanced by the provision of improvements to local schools, hospitals and transport links. In order to capitalize on positive publicity there will often be some media interest in these announcements, it is worth following these stories carefully.
Bridging finance is another tool for the developer to use, particularly useful if property development finance can not be raised because of planning problems. Bridging lenders can help fund the purchase of a site prior to planning permission being granted. The developer can then take advantage of the increased value when arranging the property development mortgage.
Monday, September 10, 2007
Things To Look For In A Home’s Location
When looking for a home to purchase, the seemingly endless details to consider can seem overwhelming, but it’s also important to remember to take a step back and consider the big picture.
The area surrounding a potential home.
A home located in a good area is vital, for several reasons. The mortgage amount is usually contingent upon the appraisal, and having stable property could ensure the amount needed is approved. No one will want to lend on a home that has subsidence.
Private mortgage insurance is more readily available if the home is in a good neighborhood. More loans are available if the neighborhood and home are of high quality, and a home’s resale value is greater if the neighborhood is good.
Here are a few things to consider about location when considering a home:
How is the traffic flow? If commuting is a concern, make sure to visit the home during different times of the day to test accessibility. Are there unsightly concerns near the property? Try different routes to the property to make sure there are no dump sites or overgrown lots.
How loud is the area? Take a walk around the house to check for dog kennels, highway noise, airplane flights and other noise pollution.
Is the lighting good? A well lit neighborhood reduces crime and traffic accidents.
What is the condition of roads, sidewalks, and drains? These factors could influence homeowners insurance.
Also Ask Around.
Don’t be afraid to contact neighbors about the area. They can be a great source of information about the neighborhood, and checking with several residents can provide a well-rounded view of the location.
Consider asking about the quality of schools, nearby shopping, noise level, crime or vandalism, and police response. Ask if they would buy in the neighborhood again.
Also Check Around.
Several material facts should be verified before purchasing a home, and a real estate agent can provide much of the information for you. Public records will provide current or pending assessments for the area, such as water or sewer line additions and repairs. The police department can provide an analysis of crime in the area – both the type and volume.
Real estate agents or appraisers can give an overview of property values in the area to ensure they are stable for possible resale. Be sure to check the quality of the actual house as well, including heating and cooling units, appliances, roof, structure and foundation.
Most mortgage appraisal guidelines specify that a home is in a stable neighborhood with strong property values. The top criteria for purchasing a home are always location, location, and location.
The area surrounding a potential home.
A home located in a good area is vital, for several reasons. The mortgage amount is usually contingent upon the appraisal, and having stable property could ensure the amount needed is approved. No one will want to lend on a home that has subsidence.
Private mortgage insurance is more readily available if the home is in a good neighborhood. More loans are available if the neighborhood and home are of high quality, and a home’s resale value is greater if the neighborhood is good.
Here are a few things to consider about location when considering a home:
How is the traffic flow? If commuting is a concern, make sure to visit the home during different times of the day to test accessibility. Are there unsightly concerns near the property? Try different routes to the property to make sure there are no dump sites or overgrown lots.
How loud is the area? Take a walk around the house to check for dog kennels, highway noise, airplane flights and other noise pollution.
Is the lighting good? A well lit neighborhood reduces crime and traffic accidents.
What is the condition of roads, sidewalks, and drains? These factors could influence homeowners insurance.
Also Ask Around.
Don’t be afraid to contact neighbors about the area. They can be a great source of information about the neighborhood, and checking with several residents can provide a well-rounded view of the location.
Consider asking about the quality of schools, nearby shopping, noise level, crime or vandalism, and police response. Ask if they would buy in the neighborhood again.
Also Check Around.
Several material facts should be verified before purchasing a home, and a real estate agent can provide much of the information for you. Public records will provide current or pending assessments for the area, such as water or sewer line additions and repairs. The police department can provide an analysis of crime in the area – both the type and volume.
Real estate agents or appraisers can give an overview of property values in the area to ensure they are stable for possible resale. Be sure to check the quality of the actual house as well, including heating and cooling units, appliances, roof, structure and foundation.
Most mortgage appraisal guidelines specify that a home is in a stable neighborhood with strong property values. The top criteria for purchasing a home are always location, location, and location.
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