Real Estate 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; 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: Real-estate agent explains new fees to homebuyers, he's not worried Business Insider Dr. Phil left speechless after real estate agent claims that squatting is justified by colonization New York Post Think You Can Buy a Home Without a Real Estate Agent? You Can—but Here's Why You Might Botch the Job Realtor.com News Office market collapse: Commercial foreclosures spike 117% in a year Business Insider Banks Believe They Are Well-Prepared for Commercial Real Estate Fallout The Wall Street Journal Inside Chris Pratt and Katherine Schwarzenegger's Real Estate Portfolio Architectural Digest Real Estate Sales Include Two Falconer Commercial Properties Jamestown Post Journal Real-Estate Agents, Investment Advisers Chafe at New Anti-Money-Laundering Rules The Wall Street Journal Real estate expert says several factors impact farmland prices brownfieldagnews.com OT Real Estate Spotlight of the Week: 4218 Edgewood Court The Owensboro Times LOCAL REAL ESTATE TODAY 4.19.24 – KQEN News Radio kqennewsradio.com The Michael Houck Real Estate Guide for April 20 and 21 Oil City News How environmental insurance diligence can shape commercial real estate transactions Insurance Business The HYM Investment Group, Cathexis and National Real Estate Advisors Announce Pre-Leasing at Amaya Boston Real Estate Times Big Tech Is Downsizing Workspace in Another Blow to Office Real Estate The Wall Street Journal EG Real Estate: Busy Spring Market – East Greenwich News East Greenwich News East Bank Master Developer Agreement with The Fallon Company Approved Boston Real Estate Times Critical Survey: Wheeler Real Estate Investment Trust (NASDAQ:WHLR) and Cousins Properties (NYSE:CUZ) Defense World Prologis Warns of Slowing Industrial Real-Estate Market The Wall Street Journal S.F. housing market: Still very few homes, selling even faster San Francisco Chronicle Top 25 Columbus Residential Real Estate Deals for January 2024 Columbus Monthly Healey-Driscoll Administration Names Alison Brizius New Coastal Zone Management Director Boston Real Estate Times How Real Estate Helped Taylor Swift Become A Billionaire Yahoo Finance An investigation into the University's controversial real estate holdings Johns Hopkins News-Letter Darien and Rowayton Real Estate Report: April 11 to 18 darienite.com Q1 2026 EPS Estimates for Alexandria Real Estate Equities, Inc. (NYSE:ARE) Decreased by Zacks Research Defense World 21 Largest Real Estate Companies in the World Yahoo Finance Ohio Department of Commerce Division of Real Estate and Professional Licensing offers tips – Daily Chief-Union Dailychiefunion Robin Hunden of Hunden Partners honored with Jeffrey D. Fisher Real Estate Legacy Award from Indiana University's ... Daily Herald Robert Bailey on Real Estate TPG Online Daily SAGE Investment Real Estate Advisors sells 24-unit Bergen County garden-apartment complex ROI-NJ.com See the latest Coles County real estate transactions Journal Gazette / Times-Courier Oregon Senate strengthens consumer protections in real estate transactions Curry Coastal Pilot Real Estate Broker Commission Settlement ClassAction.org SVN|J. Beard Real Estate adds chief investment officer to Houston office – REJournals REjournals.com Dream Industrial Real Estate Invest Trst (TSE:DIR.UN) Stock Price Passes Below 200-Day Moving Average of $13.02 Defense World Two Weichert real estate agents in Willmar recognized for work in 2023 West Central Tribune Tortured Poets or Real Estate Rock Stars? Taylor Swift's Past Boyfriends—and Their Incredible Homes Realtor.com News TikTok’s Origin Story: Court Files Show Role of GOP Megadonor Jeff Yass The New York Times Real estate brokerage firm Marcus & Millichap arranges $12.8 million sale of Fayetteville, NC mobile home park ... Greater Fayetteville Business Journal China home prices slumped in March as property crisis drags on Business Insider Importance of home inspections in Indianapolis real estate WISH TV Indianapolis, IN Downtime: Pairing wine and real estate RichmondBizSense Navigating the changing role of real estate agents WISH TV Indianapolis, IN Blackstone Earnings Rise as Investment Giant Projects Commercial Real Estate Recovery - CoStar Group Real estate mogul concerned how Americans will deal with squatters: ‘Something really bad is going to happen’ Fox Business PICTURES: See Inside Johnny Cash's Spectacular Real Estate Holdings Taste of Country Fannie Mae, Freddie Mac clarify real estate commission rules National Mortgage News How Alexico's $180 Million Deal With St. Francis College Fell Apart The New York Times Former HGTV star from Los Gatos sentenced in $10M real estate fraud case CBS San Francisco Housing Market Predictions for 2024 & 2025 Remain Subdued Norada Real Estate Investments Meet Samantha: Your A.I. Real Estate Agent of the Future The World Property Journal |
RELATED ARTICLES
Dealing With Dual Real Estate Agents Historically, real estate agents have represented the seller of a property. The seller, after all, is usually the one who pays their commission, and agents therefore have a fiduciary relationship with the seller. Condos Vs. Condo Hotels For Vacaton Home Ownership Condo hotels, also called condotels, are a relatively new concept in vacation home ownership. Rapidly gaining popularity, numerous condo hotels are now being built in Florida, Las Vegas, Chicago, Toronto, the Caribbean and many other locales around the U. How Do You Profit From O.P.P.? In a previous article we introduced you to the concept of O.P. 3 Mistakes to Absolutely Avoid in a 1031/TIC Exchange We've all made bad decisions in the past. Don't you just hate to hear "I told you so" from your friends and family? Or, maybe you catch yourself saying "If only I'd have. Buy or Sell First? When it comes to home buying, the ideal situation would be to find a new home, just as you receive an offer on your existing home. You would then be able to close concurrently and move into your new home a few days prior to closing on your previous home. Selling Your Home - What Can Go Wrong With Pricing and Loans So, you're selling your home (house, townhouse, condo, apartment, land, lot, farm, ranch, etc.), what can go wrong? The sad fact is that a lot of things can go wrong. How To Create A House Buying Wish List For Your Dream Home Buying a house is one of the most exciting things you will ever do. But there are LOTS of little details involved - details which can be very costly if they are overlooked. How Real Estate Investors Use Mortgage Note To Purchase Properties Many of you may not be aware of the various ways notes can be used. The average person's understanding about notes is that people create them because they are desperate to sell a property. Do Bankers, Bubble, Discounters, & Justice Department Cloud Real Estate Industry? Once relegated to the classified advertising section of the local paper, real estate has jumped to front-page headlines and covers of national magazines. Leaders in the real estate industry are weary from interview requests for their perspectives on market conditions, the ongoing battle with the banking industry looking for entry into residential real estate brokerage, online brokerage commission discounters and investigations into their business practices from the U. Finding A Capable Agent To Meet Your Real Estate Needs Whether you're a first-time buyer, selling your current home or relocating to a different part of the country, the support of a qualified, knowledgeable real estate agent can alleviate many of your concerns and ensure a smooth transaction. A professional agent can market your present residence, help you locate the home of your dreams and assist in making your transfer to an unfamiliar area easier. Searching for CLUEs: What Homebuyers & Sellers Need to Know About Homeowners Insurance Homebuyers and sellers should be aware about issues involving homeowners insurance and the C.L. Maximizing Curb Appeal and First Impressions to Sell your Home We all know that a home or property of any kind, in order to sell faster and at a higher price, should have what is known as curb appeal. Frequently, it is not the expensive things that make a difference. A Log Home Story Solving problems while maximizing valuesThis story has a few good lessons and observations that no doubt can be used by you to take advantage of hidden opportunities that often lie in plain view for all to see, however, most people have not been trained or instructed on how to recognize or find them.The following true story begins with a classic log home package, engineered, manufactured, approved and delivered for use in Alaska. 18 Easy Steps to Buy a Bargain House What is a "distressed" property? What is "bargain" real estate?A distressed property is one with a distressed seller. Job loss or transfer, divorce, death, pending foreclosure, and lack of money cause sellers to sell fast for less. Staging® Your Home for Sale: a Superior Real Estate Home Marketing Technique: Part 1 Every Realtor KNOWS that a home should be shown in its best light to help sell it faster and for more money! We also know that, properly done, it Is a lot more than putting fragrant pies, breads or cookies in the oven, opening the drapes and turning on all the lights; although even that helps greatly.Setting the stage to obtain the highest value, fastest, for a home has recently evolved into a real estate specialty that can pay of grandly for the seller and help the buyer overcome the immense emotional strain of making a decision on which, of many similar properties, to purchase. How to Choose the Proper Entity for Your Business First, let me state that I'm not an attorney and the rest of this article is just based on my experiences so I'd advise you to contact John Hyre at www.realestatetaxlaw. Landscaping Adds Great Value to Real Estate And Helps You Sell Over the years several of our clients have had professional landscaping done and it's amazing to me how little landscaping, can be done for $5-10,000, by a professional Landscaper, and how little value it can add to your home.Small shrubs, trees, and plantings add almost nothing, or actually nothing at all, to your home value on the open market -- until they are several years older! There is another way!Some savvy investors look for good homes that are poorly landscaped and after spending a couple of thousand dollars or less put the property right back on the market for much more money and sell it. Real Estate Website Marketing - 5 Steps to Crushing Your Competition and Doubling Your Business Getting your real estate website more traffic is easy if you know how Internet marketing works, not to mention search engine optimization. Your goal is to get as much traffic as possible to your website, but not just any traffic, targeted traffic. The Key to Real Estate Investing Success Revealed! How did you get into real estate investing? Did you read a book on it? Was it a seminar? A meeting of some sort with speakers dispensing real estate investing information, but really selling courses? Did you get really, really jazzed and pumped up by these simple ("not easy") concepts that were delivered to you in parable form from the stage by a charismatic speaker?Did you find yourself levitating to the back of the room, powerless but to slap down your plastic to buy the kits that were being sold there? Like, "Yes Mr. Ker we do take traveler's checks. Property Investing Secrets 2 Property Investing Secrets:How You Can Turn A Below Average Deal Into Streams Of IncomeWhen property investing, sometimes you'll get a seller who will say: "Sure, I'm retiring, and I need some cash flow, I need some money but if I deposit it in the bank, I'm not going to get much for it. The property market is falling, there aren't a lot of buyers and they are all beating me up on the price of my house. |
home | site map |
© 2006 TIGER MEDIA |