Tracking Down a New Business Venture - How About Buy to Let?

A buy to let property can be a best best for UK investors. But the prevailing question is how to know you’re making a good choice and how to find the perfect property. Instability in the financial sector has resulted in investor uncertainty in the buy to let as well as other investments. That said, everybody has to live somewhere, therefore it stands to reason that buy to let still offers some opportunities.

Tracking Down a Solid Piece of Land to Let

There are many factors to consider when choosing a property. BUY TO LET opportunities can be found in the UK and around  the world. Of course lots of deals outside the UK are off-plan—in other words, you purchase the property prior to construction (from the blueprints). Based on the type of real estate you’re searching for, and the location, you must be capable of assessing the potential revenue from making a go of it.

Assuming that you are looking at a property that is already being let, you can do a calculation of the incoming revenue in relation to the asking price. Just remember that the house will involve spending money on energy, insurances, tax, general maintenance, not to mention various other expenses. You must be sure to fully understand the shape of the property. Will any costly fixes rear their ugly head shortly after the purchase?
Unless you factor all this in, you may find yourself making less money than you were expecting.

Think About the Tenants

If you will be inheriting tenants who already let the property, you can assess how stable they are. Is the property generally inhabited or are there empty places—this is something you must figure out. Keep in mind that empty space (space not being let) means less revenue, whatever the reason. It will be necessary to determine through some local market investigating how long you can expect to wait before you can let the units or property; you’ll also need to find out how much you can charge to new tenants.

Looking At the Money Aspect

In recent times, individuals were encouraged by very attractive mortgage rates to join the BUY TO LET market. When this report was released, the entire banking sector is rather chaotic. As it looks right now, it may now be a bit more difficult to secure financing for these investments, at least at the rates that were available previously.

This isn’t an indicator that there will be less opportunities in this field, however. Without a doubt, the industry will recuperate and potential will reveal itself. There are advantages to be uncovered even in the face of a dismal financial market. Here’s an example: cautious investors may be disinclined to enter the market. This can leave some new doors open. Keep a watchful eye on the economic situation in the UK if you’ve decide to go for it and prepare to jump at the next opening in the buy to let industry.

Fixer Uppers - Five Steps and Two principles

Most new investors in fixer uppers have the basic idea that you buy a house in need of some repairs and cleaning, you fix it up and sell it for a profit. That's a good start, but how do you know if there will be a profit, and what changes to make? Many investors have lost money on their renovation projects, after all.

You have to have a clear idea of the profit potential before you make an offer on a house. How do you do this? Try the following five steps.

1. Make a plan for repairs and improvements.

2. Determine what the house will sell for when it is ready.

3. Estimate the total expenses for repairs and all buying, holding and selling costs.

4. Decide what you would like for a profit for the project.

5. Subtract all projected expenses and your desired profit from the estimated selling price. The resulting figure is the most you can pay for the house if you want a safe investment. You'll want to make an offer lower than this to leave room for negotiations.

That's the safe formula for fixer uppers. It is much better than the "intuitive" process that loses so much money for unprepared investors. But it doesn't answer the question of what repairs and improvements to make. There are two important principles to consider when deciding that.

Fixer Uppers - What To Fix

The first basic principle is to do those things which pay the most for the money spent. It can be easy to put more into a fixer upper than you can recover, so you want to choose those repairs and improvements that do the most to increase the value of the property. For example, painting kitchen cupboards might cost you your time and $25, or $125 if you pay someone to do it. They may look new as a result, and so add $1,000 or more to the selling price of the house.

Actually installing new cupboards could cost $6,000 and add only $6,000 or $7,000 to the home value. In that case, the painting is clearly a better value. Of course, there will be times when the new cupboards make more sense, especially in some high-end homes. Do the math.

As you consider the options you have, always think of return on investment. You may need the help of a good real estate agent to determine this. Describe the house with all your planned changes done and see what an agent thinks it will sell for. Try another set of improvements and see if that has a better return. As you gain experience you'll know what buyers in your area value, and so what changes will pay the most. And always look for all the simple high-return improvements, like a new mailbox, a few flowers and a thorough cleaning.

One thing not mentioned yet is the cost of time. Some repairs and improvements add not just the cost of the change itself - the materials and labor - but also add to the time the project takes. Every day that goes by you are paying for interest on loans, electricity, heating, water, insurance, property taxes, and other holding costs. You have to take those into account, which brings us to the second principle: As much as possible, do those things which make the fastest return on your investment.

Suppose new windows are a possibility, and will add about $8,000 to the value of the house, while costing you $6,500. It seems that you make a profit on the investment, but what if they cannot be installed until a month after the rest of the repairs and improvements would otherwise be done. If your total holding costs are over $1,000 per month, you are probably cutting it too close and you might want to drop the new windows from the list.

It isn't just the direct holding costs either. If you turn over your fixer uppers quickly, you can make more money. There are only so many projects you can handle at once after all. If you concentrate on fast fixes you might get six houses done in a year instead of four. If you're making $15,000 on each that means $30,000 more per year. Keep that in mind the next time you try to squeeze an extra couple thousand in profit out of a project, but at the cost of a month or two of your time.

Make high-return repairs and improvements, and make fast ones. That is the basic idea. And though you'll never know for sure exactly how much value a given change will add, or even what it will cost, estimate as best you can (and get help when necessary). Perfect projections are not important for making a profit with fixer uppers. Following the right principles is.

Residential Rental Properties - Five Types

There are many more than five kinds of residential rental properties depending on how you classify them. But from the perspective of basic investment differences, there are five types that come to mind, each with their own problems and advantages. The first type is single family homes.

Single Family Rental Properties

Houses are appealing to investors for a few basic reasons. First, they provide the easiest way to get into real estate investing, because of the financing options and possibility of a low down payment. Second, they can build equity fast during times of rising prices - even if rents are not rising. Third, they can be sold to other investors or home owners. These two markets make the eventual sale easier.

Of course they have problems too. First, it is very difficult to find houses that can produce cash flow after all expenditures are considered. Also, as a single unit, if you lose your tenant, you lose 100% of your income until it is rented again. If you own multiple homes, it can be a lot of work to collect rent and maintain them versus an apartment building with a similar number of units.

Apartment Buildings

The primary advantage of apartment buildings is that the prices are based on income, because unlike houses, only investors are buying them. This means decent cash flow is normal (otherwise why buy?). Also, because the prices are based on net income more than anything else, if you can find a building with low rents, you can quickly increase the value just by raising them. Of course, the primary problem with apartment buildings is the greater difficulty in financing them, and the larger down payment normally needed.

Small Multiple-Unit Residential Rental Properties

Between single family homes and apartment buildings are the duplexes, triplexes and four-plexes. As long as you stay under five units, you can finance these like a home. Though this is an advantage, it is also the reason it is tough to make this type of rental produce cash flow. There are many people out there buying them to live in one unit and get the equity gains from the whole property. Most of them are not thinking of cash flow, so they push the prices too high. It is convenient to live where your rentals are, though, so if you can come close to breaking even, the eventual gain from equity build-up may be worth it.

Low Income Housing

Mobile homes and small houses in need of repairs get their own category because this low income market has unique advantages and problems. Normally you'll have more late rent payments and other issues with tenants. You also will have more repairs. In general, investing in low income housing means more hassles and more time invested.

What makes it worth it? Cash flow. Suppose a normal three-bedroom house costs $130,000 and rents for $750 per month. You may find a three-bedroom mobile home on a lot nearby for $45,000, and get $600 per month in rent. Repairs, though more frequent perhaps, are cheaper, as is insurance and property taxes. You can see that there is greater potential for cash flow.

Low income housing is all about cash flow. As for the added hassles, there are ways to deal with that. I know a man who has forty rental properties with low income tenants (mostly mobile homes with real estate), and he gives free rent and a small salary to a handyman/manager who does everything from fix toilets to collecting rent.

Other Residential Rental Properties

This "other" category includes the less common residential rentals. Since these properties often don't have the advantages that the ones above have, people invest in them for one reason: cash flow. For example, a large house that would lose money every month as a normal rental might do well as a boarding house, where you rent rooms out individually. This can be very profitable in a college town.

Even less common, but still potentially profitable, are rentals of RVs, or recreational vehicles. You'll see this more in the southwest than in other areas (it's almost common in Arizona). Conversion of old motels into residential rental properties is another way investors create cash flow. Certainly there are a few I have missed as well. Probably houseboats are rented by the month somewhere.

Manzanillo Real Estate a good investment

The port city of Manzanillo, Mexico promises to hold some very lucrative options for investing in Mexican real estate. Many retirees are searching for something a little more calm than the popular tourist destinations. Manzanillo real estate values in have been rising steadily in recent years and will likely continue to increase as Manzanillo gains popularity with vacationers.

Manzanillo Location

Manzanillo can be found on the western coast of the state of Colima. Manzanillo City is the municipal seat of the Manzanillo municipality. Although Copper deposits can be found in the region, a large portion for this region is agriculture. Crops such as watermelons, sorghum, and tamarind are all grown and sold in large numbers.

The areas in and around Manzanillo has become a secret getaway for vacationers and more visitors are visiting than before. Possibly this change may be because cruise lines, including Holland America, have started sailing into Manzanillo waters. Manzanillo has just become an origin port for some cruise lines as well, it will have it's own cruise ship sailing from the Manzanillo port.

Manzanillo's Namesake

The Port of Manzanillo first opened in 1825. The name came from manzanillo trees that were very common in the area at the time. Manzanillo trees are very poisonous, with sap so potent that even sleeping beneath one can result in extremely unpleasant side effects. Wood from these trees was commonly used when building ships, and by 1767 most trees had been cut down, leaving just one remaining in the city. In 1825, the story goes that the governor of the state of Colima had the last manzanillo tree cut down after several people died from snacking on its fruit.

What Manzanillo Has Going For It

Though Manzanillo has drawn more attention to itself recently, the city would never be accused of being a “tourist trap.” Manzanillo is as popular with Mexican families as it is with foreign tourists; interestingly, approximately 60 percent of holiday homes in the city are owned by Mexican nationals. Visit Manzanillo on Christmas and you will see why.

They will never put the emphasis on tourism in Manzanillo. There are hardly any timeshares, very few tourist based stores and when you walk down the street nobody tries to sell you anything. Which is more than can be said of Puerto Vallarta! It is this relaxing atmosphere that creates much of Manzanillo’s attraction to visitors trying to get off the beaten path and expats looking for a place to call home.

Another factor in the city's favor is the low crime rate. Not only does the state of Colima have the lowest crime rate in the country, but Manzanillo has the lowest in the state. When buying real estate, you can rest easy in Manzanillo.

The Real Estate Market

Due in part to its growing appeal with travelers, real estate value in Manzanillo has been increasing at a rate of approximately 20% per year over the last five years. Property values will continue to rise in coming years. In this economy, growth like that is not very common! Manzanillo luxury real estate is quickly becoming the investment choice of many foreign investors.

Just like in other parts of Mexico, foreigners must purchase property using a Mexican bank that acts as their partner. Foreigners must set up a real estate trust called a "fideicomiso" to act on their behalf if they wish to purchase property in the restricted zone. The restricted zone includes land within 100 kilometers of international borders and land within 50 kilometers of Mexican coastline, according to Mexico Law. It is very risky to buy in an area where a fideicomiso is not available.

Manzanillo isn't just a sleepy little beach town, it's also a real investment opportunity for those looking to cash in on real estate for international living. Don't overlook the real estate in Manzanillo for your future home!

Tips to Avail of a Low Interest Morgtgage

Everyone loves a bargain and getting a lower mortgage interest rate can save you a substantial amount of money over the life of your loan. There are several ways to go about ensuring that you pay the least amount of interest when you take on a home mortgage and to calculate the best way to pay and save in your mortgage payments. Listed below are some of these ways.

1. Be aware of your credit score.

Good credit is the key to not only getting a mortgage, but to getting the best interest rates available. Mortgage lenders like to reward borrowers that pay off their bills in a timely manner. Chances are if you have been faithful with your other payments, you will be faithful to pay them back, so they can afford to take a risk on you and offer a lower interest rate. Be sure you use a mortgage calculator, you can find many mortgage calculators online to help you with this process.

2. Close any existing credit card accounts that you no longer use.

The number of your credit card accounts can affect your mortgage application even if the account is no longer in use. Lenders see open accounts as potential for debt, which adds a risk of them not getting their money back. To balance this risk, they will often charge you a slightly higher interest rate.

3. Lock in interest rates before you close.

Once you have agreed on a low interest rate, ask the lender to lock in that rate. Rates can fluctuate drastically in the time it takes for you to get your mortgage and that could mean paying a totally different interest rate than what was originally quoted.

4. Make the biggest down payment you can afford.

Putting a down payment from your savings on your house lowers the amount you plan to finance thereby lowering the interest you will pay over the life of your loan. This is when, again, using an online tool like a proper mortgage calculator tool, can tell you exactly what can be the best way for you to pay your mortgage payments.

5. Shop Around.

You don’t have to work with the first lender that you approach. There are many mortgage lenders in any given place today so be sure you explore all the options available for you. Don’t be afraid to tell brokers that you are shopping around, or ask them if they can match the interest rates of a competitors quote.

Is Rent to Own Better For You?

Even though rent to own may be good for a short period of time, it proves to be an expensive way for someone to buy something they intend to keep. Rent to own merchandise for example, may sound quite compelling at a few dollars a week. The agreement is normally for around 15 - 20 months, which is where the company makes their money. Although you may be paying just a few dollars a week, the total amount quickly adds up to nearly twice the cost of the item.

Along with paying rent, you’ll also have to pay applicable sales tax as well. Similar to rent to own merchandise, rent to own real estate has its own woes also. Even though it can be great for those with not so great credit, you’ll normally end up paying back a lot more than you would with a mortgage. You’ll still have to pay back your lender with a mortgage, although that amount won’t be nearly as high as it would if you decided to get a house on a rent to own basis. (this is not just a theory, it is a fact and you can understand this easily by just looking at any mortagage calculator out there , you will see clearly the results - this strategy only works if you understand the clear value of your house, and to do this you need to use a proper real estate appraisal software to help you understand the process.)

In most cases, rent to own houses are put up on the market by the owner. This way, you’ll deal directly with the owner. It will start out as a traditional lease, then proceed to a rent to own basis if you decide you want to keep the home. You and the owner will then work out an arrangement, which will normally be quite a few years. Although there are owners that would allow a better deal, most are afer profit so that their prices are not negotiable.