Nowadays, economic predictions in any sector of the economy are difficult to make under conditions of the globalized economy when a political conflict or environmental disaster may trigger new waves of economic crises and slow down the general development of a country. While some sectors of the economy might be less influenced by crises or are easier to be revitalized, the real estate sector is the one that needs long-term stability and clear predictability in the field. Although the current recession is not a one-day issue, the real estate sector has benefits for investing in both short- and long-term perspectives. The top efficiency of the distressed real estate purchase is described by the assigned scenario of $150.000 acquisition and detailed strategy of maximum investment return. First of all, let us be rational and consistent. It is the most unlikely that the amount devoted to a one-time purchase of distressed real estate aiming to earn profit is a unique activity outside a more grandiose investment strategy. In the case of this scenario, the suggested purchase is a part of a wider investment strategy or multi-investment plan, which is based on the diversification concept. In other words, the main aim of the scheme is to invest in various, diverse real estate on the basis of double diversification. In this context, geographical and temporal terms are used. Subsequently, from a geographical perspective, it would be advisable to invest in projects located in different states, since the situation in the real estate market varies from state to state. Thus, possible risks would be distributed between projects and the entire investment default would be avoided (Cornell, Longstaff., & Schwartz, 1996). In order to increase the ef... ... middle of paper ... ...orks Cited Cornell, B., Longstaff, F.A., & Schwartz, E.S. (1996). Throwing Good Money after Bad? Cash Infusions and Distressed Real Estate. Real Estate Economics, vol. 24, iss. 1. 23-36. Kaiser, R.W. (2005). Investment Styles and Style Boxes in Equity Real Estate: Can the Emerging Model Succeed in Classifying Real Estate Alternatives? Journal of Real Estate Portfolio Management, vol. 11, iss. 1., 5-21. Lerner, M. (2010, October 1). Cost-Saving Found in More Than Sale Price. The Washington Times, pp. C01. Reed, J.T. (2009). Distressed Real Estate Times. Third Edition. New York, NY: John T. Reed Publishing. Valley, M. (2011, July 12). Bank Failures Will Likely Pile Up in Southeast U.S. for Months to Come, Trepp Warns. National Real Estate Investor. Retrieved from http://nreionline.com/distressedinventory/bank_failures_pile_southeast_trepp_0712/
Leonard, T., & Murdoch, J. C. (2009). The neighborhood effects of foreclosure. Journal of Geographical Systems, 11(4), 317-332. doi:10.1007/s10109-009-0088-6
In existence is $150,000, specifically set aside for the purchase of distressed real estate. This essay will outline a detailed strategy ensuring a maximum return in regard to the financial investment made on the home. Including a description of distressed real estate and foreclosure in addition to how utility can play a role in the decision-making process.
Leading up to the crisis of the housing market, borrowers got mortgages without understanding the terms. Banks were giving out loans to people the banks weren't sure could pay the money back. The closer to the crisis, the higher the frequency of illegitimate loans and mortgages. Because there were so many mortgages on houses that could not be paid back, millions of mortgages were foreclosed on, and the houses we...
Lynn, S. R. (2008, January). Reflections on the Market Correction. Mortgage Banking, 68.4, 82-84, 86-87. Retrieved from: http://search.proquest.com.proxy1.ncu.edu
America is the land of opportunity and vast wealth, but what happens when a recession falls upon the country? Will the people of America survive? In Richard Florida’s article “How the Crash Will Reshape America”, he explains the different approaches America can be transformed to help them out of the economic crisis. Although Florida presented different solutions to help get through the times of the recession, the housing market whether we are considering new construction or renovations on existing homes, will lead a path to aid us in lifting the release of the perils of a recession.
The greatest investors in the world all understand one common theme when it comes to successful investing, “markets are volatile and they fluctuate.” Whether it is real estate investing or investing in stocks, there is an inherent risk. Therefore, new investors who are trying to decide whether to invest their available capital in real estate or stocks must learn to understand their own risk tolerance. To understand risk successfully, new investors must first learn some of the pros and cons of both real estate investing and stock market investing.
The basic cause of the financial crises falls collectively on debt and mortgage-backed assets. Since the Great Depression the property prices in the U.S. were always steadily incr...
.Given the choice between two investment properties—both 3-bedroom, 2-bathroom, 1,700-square-foot single family residences listed at $125,500, one a turnkey in Stockton, California, and the other a fixer-upper in Chapel Hill, North Carolina—and the singular goal of turning the maximum profit on my investment, I would choose to purchase the Chapel Hill home. Because I believe that the listing price of that property is lower than its true value, and because I expect a growing real estate market to increase the value of the home by 10 percent over the next two years, I think that with an additional investment of $50,000 in renovations and a two-year buy-and-hold rental strategy, I could flip the Chapel Hill home for more than $180,000 in profit.
For fiscal 2011, the real estate allocation was around 28% of its assets. The real estate portfolio of Yale was reviewed by their real estate managers and Yale’s had exercised a wide range of control and continuously reviewed the investment decision of the real estate managers. Additionally, they had pared its portfolio to focus on those managers with whom the staff was most comfortable in terms of people and execution. Since there has a lot of challenges invest in the real assets, recently, Yale’s has considering to reclassify the real assets into two groups, real estate and natural resources (oil and gas, minerals and mining, and timberland).
When prices increase, the quantity decrease (Graph 1) and new firms enter the market in order to make economic profits. However this does not mean the real estate agents or brokers earn more money. On the contrary, the prices they charge may increase, but the number of houses each sell do not change (Goolsbee, 2005, Online). From this it is evident that the price of products in the real estate market is not affected by the entry of new firms.
The essay, “How a Financial Pro Lost His Finances,” was published by Carl Richards in 2011. It discussed the situation of the financial crisis in 2008 when the value of homes and mortgages dropped and how people lost their cash. The purpose of the article is to explain how people lost their fortunes during the financial crisis and the housing boom, some of whom were financial experts. The boom came unexpected and did not spare the investors in the real estate industry. The author highlights different cases of investors who lost their fortunes in the aftermath of the housing boom. Although the author is a financial expert, he also lost his resources like other investors who did not have financial and economic knowledge. The author is among those who lost their homes. He explains the mistakes that he learned from the loss and made him better in understanding the economic trends.
Investing in real estate gives the everyday person like you or me the opportunity to get into the game. It gives us a chance to build that wealth and status. To create passive income that compounds into freedom.
Like other forms of investment, real estate also has disadvantages of which the most important is the lack of liquidity.” When you buy a property you cannot sell it at a time and place that you can choose which means that the property has to be held for a period of time in order to realise the maximum advantage. Moreover, the closing costs can add to a substantial amount of money when the payment of taxes and commissions are factored in. The prices tend to fluctuate in the long-term, and it is possible to find a situation in which the current market value is lower than the purchase price. Funnily, it is hard to get genuine diversification through real estate investment though it is possible to achieve this by investing in different types of property and achieve some of the advantages of stock investment by investing in
Real Estate Finance and Investments: Risks and Opportunities (2011) regarding financial modelling. Additionally, the pitfalls of financial models will be identified as well as proposed solutions. While financial models are “as much art as science” (Mai, 2011), there are successful strategies to overcome the potential flaws of financial modelling.
More and more, real estate activity moved from the hands of individual entrepreneurs and onto the books of institutional investors