Real Estate Information

Luxury Real Estate Information


Rancho Palos Verdes, California Homes
Palos Verdes, California Homes
South Bay, California Homes
Luxury Mexican Beachfront Homes

Featured Properties


Oceanfront Estate Near Trump National

Related Information


Loan Information
Real Estate Information
Mortgage Refinance Information

Is 100% Annual Return On Investments Possible With Low Risk Land Investments?


In last week's article, we discussed how substantial profits could be made by investing where baby boomers may want to relocate or buy a second home. This seemed to confuse readers since they were thinking that our web site is about preconstruction and preconstruction to them means buying condos?? In this article, I hope to broaden your horizons considerably.

Unlike many people, I have a very broad definition of preconstruction investing which can be summarized as follows:

Preconstruction investing is the pursuit of real estate projects that offer the opportunity to ride rapidly increasing prices over time without the need to put tenants in place to defray costs. Since no tenants are involved, this opens the possibility to making investments in locales that are far removed from where you live.

If you adopt this point of view, then a whole world of "alternative" preconstruction investments opens up to you. Today, we are going to look at one specific type of investment: investing in developing land projects where baby boomers might want to retire or own a second home.

Before we get into the specifics, let's talk about what all investors want:

? Low risk

? Good investment returns; and

? Minimal use of their capital;

Quite frankly, these 3 reasons are what got me into preconstruction real estate investing in the first place. Now let's see how these might be achieved on a purchase of investment land that we believe to be VERY desirable to baby boomers.

Suppose we are considering the purchase of a piece of property for speculation of future returns. If, like me, you believe in the impact of the baby boomers, then you will do 3 things to control your risk:

1. Carefully select a land project where you are solidly convinced that baby boomers will want to possess it at any costs;

2. Make sure that you believe that baby boomers will be AWARE of this project in the future do to somebody's marketing; and

3. Manage your finances and investment portfolio so that if you are wrong and you do take a loss, it is not catastrophic to you.

For the time being, let's assume that you have met these conditions on a project and now you are ready to analyze your returns and your use of capital.

Now we have to resort to hard analysis. Let's look at the following ASSUMPTIONS:

1. The land project is assumed to increase at least 25%/Yr in price;
2. We plan on holding the land for 2 yrs and then resell.
3. $200,000 purchase price with $5,000 in closing costs.
4. Annual taxes/association fees of 1%.

If you take a look at the three cases in a spreadsheet format, here is how things might turn out under this scenario.

Case 1: 10% down payment, interest only, all payments made by BUYER.

Case 2: 10% down payment, interest only, all payments made by SELLER.

Case 3: 5% down payment, interest only, all payments made by SELLER.

Cases 2 and 3 require a bit of explanation. There are some early stage land projects available where the developer will take a percentage of your purchase price and escrow an amount that will make your payments for a period of time---- typically 2 years. This means that during your 2 year hold, you would only pay taxes and association fees. To enter this in the spreadsheet, we just show a 0% rate during the holding period.

If you scroll down, you can review the performance of each case. It may surprise you that even under Case 1, where you paid in a total of $48,600 out of pocket, you still see a return on investment of 127%! That equates to 51% annual return on investment. Compare that to what your friendly banker is giving you in your CD.

For many investors, beginning or not, they would prefer not to have to put in that much money so let's look at Case 2 where the developer has escrowed 2 years worth of payments. In this case, we invest a total of $29,000 with a total, out the door profit before taxes of $81,625 thus providing a total return of 281%. If you then extend that to Case 3, where only 5% down is required, then the return goes off the charts to well over 500%!

So hopefully this article has given you a very different way to think about old fashioned land purchases in your real estate investing portfolio.

Dr. Chris Anderson is a leading authority on real estate investing and has been referenced in many venues including the New York Times and USA Today. Free sign up at GetPreconstructionDeals.com for education and articles. Visit Mastermind Group for world class investing projects.


MORE RESOURCES:
This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news


Miami Herald

Some impacts of new tax law on local real estate are clear. Some aren't.
Miami Herald
Even though the sweeping tax reform bill was signed into law on Dec. 22, the massive document is so dense that even seasoned real estate professionals aren't entirely sure what it will mean for Miami. While some of the bill's real estate provisions are ...



New York Post

Foreign investors are still snatching up NYC real estate
New York Post
While foreign investors are spending plenty of bucks in the Big Apple, they are not as aggressive as they were a year or two ago. Despite money moving into city assets, New York's reign as the top global destination targeted by foreign investment has ...



Gecina: Parisian Real Estate Player To Have A Strong 2018
Seeking Alpha
The company has made some excellent strides recently, and shareholder value has been increasing. Recent efforts on specializing on Parisian real estate assets (shedding non-core assets), as well as a recent combination with Eurosic, makes Gecina a very ...



Forbes

3 Commercial Real Estate Trends To Watch In 2018 - Forbes
Forbes
Political and economic uncertainty has pervaded the past year, with the U.S. economy showing signs of growth amid low inflation and a distressed retail segment in 2017. Here's a look at three commercial real estate trends to watch in 2018.

and more »


Bisnow

GFP Real Estate Buying FiDi Office Building For $310M In First Big Deal Since Name Change
Bisnow
GFP Real Estate has made its first major transaction since changing its name from Newmark Holdings in October. The Gural family-run company purchased 7 Hanover Square in the Financial District from The Guardian Life Insurance Co. for $310M with the ...



Mainebiz

Southern Maine's housing market still riding high, experts say
Press Herald
The marijuana industry has driven a lot of activity in the Portland industrial real estate market in recent years, said Justin Lamontagne, partner and broker at NAI The Dunham Group in Portland. The growth in that industry – along with craft brewing ...
MEREDA Index: State's real estate activity hits 10-year highMainebiz

all 2 news articles »


Pittsburgh Post-Gazette

Hanna Holdings invests in Seattle real estate tech firm
Pittsburgh Post-Gazette
Hanna Holdings, the holding company for Howard Hanna Real Estate Services, announced on Thursday it has invested in a Seattle-based real estate technology firm that provides a suite of tools to make agents more productive. The O'Hara real estate ...



New York Post

Celebrate New York real estate's best and brightest
New York Post
When the Real Estate Board of New York talks, politicians listen — because the organization provides thoughtful advice on policies that affect all the city's residents. The oldest and most influential trade association in the city represents a who's ...

and more »


Forbes

In Real Estate, It's Location; In Healthcare, It's Compliance
Forbes
Paul Martyn , Contributor I write about the supply chain industry. Opinions expressed by Forbes Contributors are their own. Shutterstock. Pointing out that hospital supply chain management (SCM) practice has left a lot to be desired is about as ...



IllinoisHomePage.net

Real Estate Technology
IllinoisHomePage.net
Indianapolis, IN - Not so long ago, if you wanted to buy a house, you drove around, paged through books of homes for sale and walked through open house days. But in today's Angie's List report, we'll see how technology is changing the real estate game ...


Google News

home | site map
© 2006 TIGER MEDIA