Saturday, March 29, 2014

Saving that Real Estate Commission!!!!!!

Everyone likes to save money. So, how can you save money in a real estate transaction? Find that new "e-Realtor" with a discounted commission? Or, better yet, don't even use a Realtor at all? A FSBO (For Sale by Owner) is bound to save you a bundle. Right?

The correct answers are No, No and No. Sorry, the old adage "There is no free lunch" is alive and well in real estate. Let's take a look at discounts and FSBO's and find out a few of the reasons why you might want to steer clear.

Discounts: "E-Realtors" who will rebate you something at closing seem to be the latest rage. You can even use their search engines and e-mail updates to find the home you want. It sounds good but did you know: It might be a problem seeing more than a few homes. It might be hard to schedule appointments. It might be difficult to get answers, advice and counsel. And, your agent might be new and inexperienced. Why all these problems? The "e-Realtors" are all on a modest salary, not commission. They have little incentive to "go the extra mile" to get the job done for you. In order to make money (after paying the rebates) they need to deal in large volumes of customers, not in quality service, assistance and details. So, is a small rebate worth the chance of less than adequate representation? Probably not.

FSBO's: The biggest problem with a For Sale by Owner is that both buyer and seller think that they will be saving money by avoiding a Realtor's guidance, expertise and cost. Unfortunately, somebody usually gets burned. Lack of knowledge and information combined with greed leads sellers of most FSBO homes to overprice them. Worse, buyers tend to be uninformed, unprepared and unqualified. For the seller this can result in the home not selling at all or an unqualified buyer trying to buy it (unsuccessfully) and wasting the seller's time. For the buyer it can lead to paying too much or buying a home with one or more unrecognized problems. In either case someone loses. Do you want to be that someone in the hope of "saving" a few dollars? Probably not.

So, if discounts and FSBO's don't work how do you save money in real estate? The best way is to find an honest, experienced Realtor and follow his/ her sage advice and guidance. You will save in the long run because that Realtor will earn his commission the old fashion way: by working long and hard for it.

Saturday, March 22, 2014

Buying a Condo, a great investment.

It is about time home buyers and investors consider the added value of investing in a high-rise residential development.
By adopting international standards in virtually all new developments in ARUBA, we are not only providing clients the convenience of having all things they need within reach, we also afford them peace of mind knowing that their properties are safe from harm.

Here are 4 reasons why “condo living” is a rewarding investment.
1.Safety ensured. Condo living is usually more appealing to most people because of ease of maintenance as compared to a high-maintenance home. The units are also easier to protect when you leave since the unit’s safety is enhanced further with security measures that have high-tech features such as camera’s, fire protection, alarm system, and 24/7 security guards. 

2.Higher appreciation. Investment in “green buildings” is recoverable not only through energy cost savings but also through higher rent and increased occupancy in the long-run. Larger units and more luxurious apartments are now being preferred by quality expatriate tenants. This market covers those who are willing to pay an average of $4,000 per month for a two to three bedroom luxury unit.
3.Lower total cost of ownership. One of the major reasons why owning a condo unit has been attracting a lot of buyers is that buying a unit does not entail individual land ownership. This way, you get to own a piece of property at a fairly good price since it basically gives full ownership of the unit without the sole responsibility of owning the land. What’s more, the combined ownership allows free use by residents of existing facilities and amenities of the condo. Some condo developments such as “Blue” also include the provision of small business establishments such as a mini-grocery, tour desk, restaurant and car rental agency, so tenants no longer have to leave the building. 

4.Proven track record. With a consistently growing number of high rise condos rising at Eagle and Palm Beach, finding one’s dream property may well seem to be just a matter of location. Top considerations such as accessibility and proximity to schools, hospital and similar conveniences are mixed with the enticement of living in developments replete with an array of exciting amenities such as clubhouses and 24/7 security, such as at Goldcoast, Divi and Tierra del Sol. But plunging headlong into such an important investment, however, should not only be dictated by these preferences. One must also consider the image and reputation of the property developer in deciding where to buy to ensure that one’s investment will provide great returns in the years to come.

Friday, March 14, 2014

How much money will I make, buying a rental income property?

What does ROI (return on investment) mean for real estate income properties?
Return on investment for income producing properties is a measure used by investors to estimate the profitability of a real estate investment.  It measures the annual percentage income return on the initial amount invested in the property. When analyzing income properties or any other type of investment, smart investors look at past, current and anticipated future returns to determine if/ where they should invest their money. 
What financial data do we need to calculate return on investment?
All of the financial detail associated with the purchase, sale and operation of an income producing property should be included in the return on investment calculation.  The ROI calculation should incorporate anticipated purchase price, estimated future sales price, closing costs, operational expenses, mortgage fees, interest expense, rental and other income, depreciation, investor tax rate, and so on. 
When calculating current and potential future return on investment for real estate income property, we need to obtain the most recent annual financial data for that property.  To be sure that the annual income and expense data is viable it should be verified with a current owner’s tax return. The annual financial data can then be projected into the future on a year to year basis over a given period of time by applying an income growth rate, expense growth rate and appreciation growth rate.  I believe that it is sufficient to project financial data for up to the next 5 years. The farther you go out, the less reliable the projections.  As we have seen in recent years, economic conditions can change quickly.  Projecting the income and expense data forward over a five year period will enable us to estimate future annual cash flows and sales proceeds.  Our growth rate assumptions should be conservative and should be based on a good understanding of the local and national economic environment.  With a good real estate investment program, we can look at worst, average and best case scenarios to get a range of future wealth values and return on investment projections.
To calculate return on investment, we would use an initial investment amount, a projected after tax sales proceeds amount in 5 years and a series of anticipated annual after tax cash flows for each of the years.  It should be noted that current and future return on investment for real estate income properties should be calculated on an after tax basis since a properties income is taxed yearly. The ROI calculation for an investor is a subjective calculation, by that I mean that different investors are subject to different income and capital gains rates.  Investors with higher tax rates will have a lower ROI than investors with lower tax rates when analyzing the same property.    
What factors affect return on investment for real estate income producing properties?
The real estate investor should have a good understanding of income tax brackets, capital gains rates and recapture depreciation tax rates since they impact return on investment.  Investors should look at every aspect of their real estate investment with the objective of improving ROI. In favorable economic conditions, if you purchase an income property under market value and in the future sell it above market value, you can increase your return on investment.  The level of leverage utilized can greatly impact return on investment.  The use of accelerated depreciation can increase ROI.  Having a good understanding of the conditions that cause income properties to go up in value or down in value can help the real estate investor to increase ROI?   Property values are impacted by many factors such as location, over-/ under supply, mortgage rates, inflation/ deflation, property upkeep, general condition of an area, supply of potential renters, cost of construction materials, proximity to infrastructure, local and national economic conditions, etc.  These factors and many others impact real estate values and can increase or decrease future return on investment.   
Return on investment can be increased by reducing operational costs, minimizing vacancies and making sure that rental rates are at market value.  The investor should periodically check to see if rental rates reflect current market conditions.  To put it another way, smart hands on management can increase ROI. 
The lower an investor’s tax bracket, the greater their return on investment.   Mortgage interest rates and fees can impact ROI.  The real estate investor should seek the best mortgage rate with the least fees.   

Saturday, March 08, 2014

I have listed my house, now how can I help sell it?

So I have de-cluttered, cleaned the place and listed it. What can I do to help selling it?

Answer: stay out of the way. Make it as easy as possible for the Realtor to do his/her job. Not only should you hand a key copy to the house, you should make the showing as painless as possible. That may mean that you must take on a lot of inconvenience.

You must be able to get out of the house on short notice and make it easy for the selling agent to schedule showings for others. The easiest house to show is one that is already vacant, although vacant houses are harder to sell, so make it easy to schedule an appointment to show your house. 

You do not want to be there during a showing. The Realtor doesn’t want you there and the buyers would feel awkward if you were there; so take a drive, go to a store - just go. Let the real estate professionals do their jobs. Believe me when I tell you that all of your helpful information about the house, as you trail the showing around, is not what these people came to hear. Do not hang around. Disappear. 

If you really want to help with this part of the process, here are some tips for things that you can do before you leave to make the showings go better.

 Turn on all the lights or leave all curtains opened. The showing agent will not know how your house is wired and may not be able to figure out how to get the lights on. A good agent will try to turn off lights as they go, but there will be lights left on. If there is a showing after the one that you left for, leave a note for the first agent telling him/her to leave the lights on for that showing.

 If you have freshly baked bread, popcorn or do other things in the kitchen to leave a nice odor in the air, I recommend it. We’ll let you be the judge of how much you want
to do. Try not to leave bad odors in the air;
however, lighting too many fragrant candles is just as bad and some people might think you are trying to hide something by masking a smell in the house.
Also remember to take your dog with you and your cat too if possible. Buyers don’t really want to be accosted by your pets and viewers may have allergies to pets so get them out of the house. Hopefully your house doesn’t smell like a full cat box or like your dog, but if it does, deodorize the place as you leave and put the litter box out in the garage.
If you must leave your pets in the house, please either cage them or place them in  small room that can be closed off and put a note on the door advising the showing agent that the pet is in that room. That room will be something that the buyers will wonder about after the showing, since they couldn’t see it.
Make sure that your agent has flyers or brochures available in the house for visitors and put them out in some easily spotted location, like a kitchen counter or table.
Normally showings only take 20-30 minutes, so you don’t have to be gone that long. Agents will normally ask for a one-hour window to allow themselves some leeway on travel or other showings. And remember to not let clutter creep back into the house. Keep it clean and clutter free!   
Your agent should get some feedback from every showing and most will share that with you. Don’t get offended by anything that you read; instead try to learn from the feedback and make any changes that are suggested in the feedback or by your agent.
Finally, now that you’ve mastered the three C’s of real estate – Clutter, Cleanliness and Condition; you must focus upon your role in the three P’s of real estate – Price, Patience and Persistence. Hopefully you and your agent have set the price correctly; so you need to be patient and persistent.
Real estate sales do not happen overnight, so patience is a real virtue here. As for persistence; you will need to get up every day and get the place ready to show before you leave for work or to do other things. Remember that showings can happen at any time. You’ve got to have the house ready at all times.

Saturday, March 01, 2014

retire in Aruba

    • Permanent Residence Permit

When requesting a residence-permit without a working permit, one must submit: references indicating that the applicant is financially self-supporting or any other proof that he/she will not become a financial burden to the local government or community
    1. the home and business addresses for the last ten years
    2. the reasons for wanting to reside in Aruba
    3. police-clearance (good conduct-paper, not older than 2 months)

Persons desiring a permanent residence-permit must be in possession of:

    1. a passport valid for Aruba
    2. three passport photographs of true likeness
    3. a valid vaccination certificate for smallpox, not more than three years old
    4. a medical declaration that the holder is not suffering from any contagious disease or mental sickness, issued within 30 days before the trip started
    5. a proof of payment of the required legal fee

Just Visiting
If you plan to stay in Aruba for less than 90 days you need a U.S. passport, a valid return ticket leaving Aruba within 90 days and sufficient funds to support yourself while you are in Aruba. You are not allowed to work.

Staying Awhile
If you are staying more than 90 days but do not intend to move to Aruba permanently, you need the same items mentioned in section one plus a temporary residence permit. Again, you are not allowed to work or conduct business in Aruba and must be self-sufficient. All forms can be obtained from the Directorate of Alien Integration, Policy and Admission (DIMAS).

Moving In
If you're moving permanently to Aruba, you will need a permanent residence permit. To obtain one without also obtaining a work permit, you need: a bank statement showing you have funds to support yourself without working, proof of address for the past 10 years, a valid reason for moving to Aruba, and a clear police record for two months previous. In addition you will need a valid passport, three passport-sized photos and a clear medical history with smallpox vaccination. You are advised to have your permit before moving rather than apply for it while on the island.

Working in Aruba
If you plan to work in Aruba, you will also need a work permit. These are not easily obtained because jobs are filled with local Arubans first. Generally, you will need to secure employment before arriving and have the employer file for a work permit for you.
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