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The Pros and Cons of Real Estate Speculation | 29 January 2008 |
The longer it's kept, the better it gets. That's the story of wines. In some ways, real estates can be compared to this unique property of wines. Unlike other tangible valuables such as cars and jewelries that depreciate each passing day, real estates, at least most of them, appreciate by the hour. The longer it's kept, the more expensive it gets. This, however, is still subject to a lot of factors which needs to be considered in making a real estate investment.
There are ten types of real estates and ten different ways on how to invest on them according to writer Steven Gillman: rental houses, rent-to-own-houses, low income rentals, fixer-uppers, buy for cash, sell for terms, buy land, split it and sell it, boarding houses, commercial real estate, buy, live in it, and sell, and speculation. Each of these types has their own pros and cons. However, reaps of one's investment within a given time frame may vary for each type of real estate.
Most real estate owners can be considered speculators since majority of them expects the prices of their properties to appreciate or maintain the price since the day they bought it. In investing on real estates, it is important as well to understand some economic factors that could affect the price movements of one's property.
The basic economic law of supply and demand for instance is one major factor that may affect the success of having a real estate investment, just the way it affects other commodities. This law simply states that with less supply and high demand, prices of real estates will go up, just as when there is high supply and low demand, prices will definitely go down. In the case of real estates, however, appreciation of properties will continue as long as there is a positive human growth rate. But just the same there are still factors that could increase or decrease the demand for real estates particularly on a neighborhood scale. Real estate investors highly consider the location of the property and the demographics of their market in choosing the best real estate on which they should invest in and would give them the most profit.
Inflation is also one factor that can affect the appreciation of one's real estate. Unlike other investments, which lose value during high inflation periods, real estate values have always tended to keep pace with inflation and maintain their values. Being directly proportional to each other, a higher inflation rate tends to result into higher value properties, even when demand for them is low.
Knowing that real estate value appreciates, it would now be important to understand how one can speculate or determine the appreciation value of their properties. The real estate industry normally considers a property's value in terms of its fair market value, the price that most accurately reflects the market's supply and demand situation.
No two properties are exactly the same, even when all houses in a village or subdivisions are of same model, age, lot size and materials. The property's value can still be affected by other factors such as the location of the property, the buyer's options, maintenance histories and sale date. These factors however small they may be will definitely make a difference in determining a property's value.
In determining a property's value, licensed appraisers are restricted in using the appraisal industry standards. Most appraisers take into consideration at least three comparables: date, type, and proximity.
Appraisals typically require comparables to have sold within the past six to 12 months. Sale prices more than 12 months old are considered weak comparables. Comparables should be of similar types as well. Condominiums should be compared to condominiums, 2-flats for a 2-flat, gas stations for a gas station. Finally, comparables should be near the subject property. In urban and suburban areas,
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1001 Ideas: Teach Businesses To Do E-Business |
10 December 2007 |
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If you can teach businesses how to accept checks from customers over the Internet, or by phone, fax, e-mail, or web form, you're on your way to a healthy earning opportunity. It's fairly easy to do, and fairly easy to teach, and with a good ad, you should be able to develop a good second income. If you've never done this before, there are tutorials on the Internet, and books in your local library.
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