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Creating value by changing the purpose of your property or business

How Re-Purposing Vacant Commercial Property Can Lead to Economic Growth
Cities across the country are filled with vacant commercial properties, especially those left when big box stores close. These properties can bring blight to neighborhoods. In some cases, they may stand empty for years, causing the economy in the surrounding area to decline. Some innovative companies, such as Starwood Ceruzzi, have started purchasing, renovating and re-purposing such properties. Doing this can lead to economic revitalization for the entire community in several ways.

Re-Purposing Leads to Higher Property Values
A major issue when a retail space is abandoned and left vacant is a drop in the property values of property in the surrounding area. As property values fall, more businesses may also lose money, leading to additional closures and an escalation of the problem. When a commercial property is renovated and opened again, surrounding property values normally rebound, increasing with the presence of the new businesses. This can also draw new residents as the neighborhood becomes more desirable.

Re-Purposing Brings in New Business
Large renovated and reopened retail spaces can be used to attract new big-box businesses or to be divided up for use by numerous smaller ones. They can also be transformed into distribution or manufacturing centers. All of these new uses can help revitalize the local economy of the city in which the property is located. New business means new tax revenues for cities as well as additional money being poured into the local economy, benefiting all residents in turn.

Re-Purposing Helps to Reduce Crime
A link between vacant commercial properties and increases in crime rates has been repeatedly demonstrated. As property values fall and more businesses close, the crime rate for the entire city may increase. When these vacant properties are instead purchased, renovated and leased for new business uses, research has demonstrated a corresponding drop in crime.

Re-Purposing Leads to Additional Jobs
One of the best results of rehabbing and re-purposing vacant commercial properties is bringing new jobs for people living nearby. With the size of some of these buildings, potentially hundreds of new jobs can open up to the community. This can result in lower unemployment rates and more money being spent in the local economy. The availability of new jobs can improve the welfare of everyone living in a city. This has the potential to bring struggling communities back together and on their feet. Previously unemployed people who find new jobs have also been shown to have improved senses of self-worth and higher self-esteem, which lead to fewer issues with substance abuse, domestic violence and other problems.

People like louis ceruzzi, the owner of Starwood Ceruzzi, have taken the innovative approach of purchasing these types of vacant properties. They then renovate them and help to attract new businesses, leading to a better economy and environment for all. This is an example of how such activity within the commercial real estate marketplace can actively benefit entire neighborhoods, communities and cities. It brings new life to a community along with new jobs, a better economy and less crime.

What’s so hard about hard money?

The concept of hard money can be hard to understand, but it is a lot easier if you start with the basics. First, hard money refers to a loan that has most of the following characteristics:

  • The lenders are investors rather than banks.
  • The loans are used by real estate investors.
  • The cost (interest rates and fees) are typically much higher than for bank loans.
  • The length of the loan is typically short, for a few months to a few years rather than for decades.
  • The cost (interest rates and fees) are typically much higher than for bank loans.
  • The down payment is typically much h.
  • The loan is back by collateral like a real estate property.
  • Lenders care more about the value of the collateral than they do about the borrower’s finances.
  • The loan is based on the current value of the collateral rather than on the future earning potential of the property.
  • The approval process much quicker than the typical bank.

As with any kind of loan, both the borrower and the lender should do their due diligence. For the lender, that means checking out the value of the collateral, the borrower’s experience, and the riskiness of the deal. For the borrower, that means checking out their options to see what lender fits best with the borrower’s needs, as well as the track record of the lender. The graphic below provides an overview of the process behind a hard money loan:

infographic_hard_money_loans

Things To Consider When Performing A Title Search

There are numerous things to consider when performing a title search. The value of the property is necessary to know before making a purchase. The previous history of ownership is also important for individuals who do not want to make a bad investment. Making a decision about the number of owners can also help a person to decide whether or not the investment is going to be worthwhile in the long run. The history of the property can also indicate the likelihood of being able to do business in a location as the property is intended for professional purposes. For more information a person has before purchasing property the user will be for them to make the best investments with their real estate investment money.

Property Value
If a person is interested in doing a investigation into a piece of property, understanding the value of the property is important before quitting and an initial offer. If a person is going to perform a title search in vic, they will need to be working with a company that is reputable and can give me information which is up to date and legitimate. The research methods used by a company to determine the value of property is also an important part of the consideration in terms of which company to utilize the services of when having the search completed. The relevance of the information is also essential for evaluation purposes. If the information is updated on a regular basis it will be seen as credible and can be utilized to make financial decisions. The ability to make financial decisions which are going to be the emphasis for long-term investments is important for the majority of individuals who are not knowledgeable about the real estate market.

Ownership History
Understanding the ownership history as a free is also essential to making intelligent decisions regarding real estate. If there are a lot of people making the investment and the property only to turn it over quickly people should consider the possibility that there’s something wrong with the land itself. Having a surveyor or other professional individual investigate the problems with the property prior to making an investment is essential for individuals were looking to do business on the property. This will also enable people to make the best decisions as it relates to understanding the zoning laws and regulations regarding a certain area. The more knowledge people have about the specifics expected from them when making an investment in a certain area me easier it will be for them to make decisions regarding it for long-term planning necessary when purchasing property.

Where to Invest Your Money during Recession: Real Estate

Real Estate InvestingWhen you heard about real estate investing in today’s recession, the majority would react by saying, “avoid at all cost.”

The sub-prime mortgages, the sky-high interest rates, and the sharp decline in value – all seem against real estate investing.

However, I encourage you to have a surfer’s mindset that I have occasionally mentioned in my previous posts.

The surfer mindset

Surfer loves challenges. In fact, challenges are what make a surfer perform.

For example, in a surfing competition, weak tides can be a huge, single, factor that will fail the surfer to win the competition. The stronger the tides, the more challenging they will become and the better the surfers showcase their surfing skills.

However, take heed – if your surfing skills are somewhat low, strong tides will swallow you; The key is utilising the right skill sets on the right opportunities.

In your personal finance, you need to increase your financial knowledge in order to ride the right waves, with the right skill sets. Playing too safe will hinder you from achieving the financial milestones you have set. Exposing yourself to risks too much will put you into financial difficulties, even personal bankruptcy.

One of the waves in today’s tide of recession: real estate investing

Real estate is one of the hardest hit sector that causes property owners and brokers alike struggling financially.

If you thought about investing in real estate during recession, it wouldn’t be the right decision to invest your money.

Or, is it?

Many real estates are losing their value – how can they be a good place to invest your money?

Robert Kiyosaki, the best seller writer of Rich Dad Poor Dad series, stated controversially that a house is not an asset, because it is not putting money in your pocket.

General public and many experts are slamming him for such controversial statement, but his statement proves true in today’s recession.

Homes are losing value, the interest rates are high, and the demand is low – the dreaded sub-prime mortgage.

However, as everything in life, there is always a good thing in every bad thing.

Today is probably the best time to invest in real estate, for one reason: Higher mortgage interest rate = Lower real estate demand = lower price tag.

As the real estate business crashes, property prices are in decline, too. Foreclosures are everywhere – this means, opportunities are everywhere, at a discounted price tag. Of course, your eyes for real estate values and prospects play an important role.

One last advice: never invest in real estate with an expectation that your property’s value will go up – it’s not always the case. Instead, invest with cash flow comes first in mind – your property as a rental property.

Image by terren in Virginia.

Real Estate Market Slowdown: It is Time to Self Direct Your IRA to It?

ForeclosureThe real estate market is in a decline, with some experts say that it will reach the bottom-low valley in two or three years. Worsen by the credit crunch, the real estate market is now in a defensive position.

Right? Well, not entirely.

Some investors and businesses are thriving in the real estate market – foreclosure ‘hunters’, buy and rent back, and other opportunities.

Another way to take benefit in today’s real estate market slowdown is investing in real estate through self-directed IRA.

What is self-directed IRA?

The IRA (Individual Retirement Account), along with your 401k is often invested on the stock market, which is the reason why many people lose their retirement fund due to the stock market crash.

It is about time to be independent in managing your personal finances. Knowing and understanding the whereabouts of your money is key in protecting yourself from economic downturn, as well as allowing yourself to find better investment vehicles for your hard-earned cash.

One of the ways to enjoy the pretax savings, as well as deciding how you want to invest your retirement fund (and how much profit you want out of it) is through self-directed IRA.

According to Wikipedia.org:

A Self-Directed Individual Retirement Account is an IRA that requires the account owner to make investment decisions and investments on behalf of the retirement plan.

In essence, through a self-directed IRA, you can invest your retirement fund not only on the stock market, but also on many investment opportunities, such as real estates, franchises, partnerships, and many more.

Not all investments are allowed within a self-directed IRA account, though – for example, investments in the form of life insurance or collectibles.

Nevertheless, the self-directed IRA offers you a way to grow your fund with the most yielding investment methods.

Self-directed IRA to secure your money and give you peace of minds

Choices liberate people – Freedom (with responsibility) allow people to choose what’s right for them. Therefore, this will give them the confidence and peace of minds in living their life.

With so many scare stories about people filing for personal bankruptcy or losing their life saving these days, people need ways to control their own destiny.

A self-directed IRA can offer you just that.

One caveat, though – freedom without knowledge is fragile.

In personal finance, such freedom can liberate people to invest in the most yielding or the safest investment vehicles of their choices. The choices are highly dependent on the people’s financial knowledge and personal traits about money.

Why I recommend directing your IRA to real estate

I am not a real estate expert, but I learn from experience and from the mentors I have that to achieve great riches, or at least higher yield of your investment, you need to invest when the time is bad, such as today’s recession.

I mentioned above about foreclosures ‘hunters’ and buy and rent back opportunities – those people, often negatively reputed as vultures – because they are said to benefit from other people’s misery, are actually taking the opportunities to help people getting out of debt, as well as creating wealth out of it.

This niche market in the real estate industry is flourishing today, and I, again, recommend you to direct your IRA to real estates or real estate business.

How to open a self-directed IRA

You can set up a self-directed IRA account through companies that offer you such service, such as IRA123.com.

There are set up fee involved, but choosing the right partner can allow you set up the account fast and properly.

I recommend you to seek information on such companies, to see whether the one you want to help you set a self-directed IRA account offer more benefits than the other.

One of the benefits to look for is a company that is not only helping you set up a self-directed IRA account, but also holding real estate licenses or offering business financing to help you invest in real estates or businesses.

Do you want to secure your money and have a peace of mind? Control your retirement fund uses through a self-directed IRA account, as the real freedom is achieved if you can control your life and personal finance.

Image by respres.

The Neurobiology of McMansions

How Our Brain Structures Led to the Housing Crisis

McMansions.

That is the derogatory term that arose the last few years for the large cookie-cutter suburban subdivisions that seem to have sprung up everywhere. You may have driven through these subdivisions and, much like me, wondered where so many people found so much money. I know what I make. I know I’m in the top 5% or so of income earners. So why don’t I have a top 5% McMansion?

In retrospect, it has become obvious that many of these people could not afford what they bought. This leads to the question of why they bought houses that pushed the limits of what they could pay. Blame it on their brains.

It is a sad but true statement about the human race that we don’t care about absolute wealth. We care about relative wealth – how much wealth we have compared to other people. We don’t want a higher standard of living if everyone else has it too. Some books would say it is all a result of an elaborate mating game. Women and men, in an ever more intense race to impress each other, attempt to make it look as though their income and success are much higher than they really are. But it goes deeper than that. The problem with the housing market can be blamed on the ventral striatum.

Last year, the neuroeconomics lab at Bonn released the results of a study or reward that involved scanning the brains of participants. What they found was not just that brains responded well to a reward. They found that brains responded even stronger to a reward that was better than the reward given to others. The experiment involved pairs of male volunteers competing for prizes on the same task. The BBC article about the research explains it well.

Both “players” were asked to estimate the number of dots appearing on a screen. Providing the right answer earned a real financial reward between 30 (£22) and 120 (£86) euros. Each of the participants was told how their partners had performed and how much they were paid. Using magnetic resonance tomographs, the researchers examined the volunteers’ blood circulation throughout the activities. High blood flow indicated that the nerve cells in the respective part of the brain were particularly active.

Neuroscientist Dr Bernd Weber explains: “One area in particular, the ventral striatum, is the region where part of what we call the ‘reward system’ is located. In this area, we observed an activation when the player completed his task correctly.”
A wrong answer, and no payment, resulted in a reduction in blood flow to the “reward region”. But the area “lit up” when volunteers earned money, and interestingly showed far more activity if a player received more than his partner.

This indicated that stimulation of the reward centre was not merely linked to individual success, but to the success of others.

You may have heard about “keeping up with the Joneses.” This research shows that it isn’t just something that affects a few of the more shallow among us. It is a real human need with a deeply rooted anatomical cause.

So back to the McMansions… what is a man to do… let all of his friends have the bigger, nicer, newer house? It seems that the drive of the ventral striatum outweighed the rational thought process for many people. All the while, lenders and investors, whose ventral striatums were firing like crazy as they tried to rack up larger earnings and returns, respectively, played along to satisfy that same deep seated need to be better than the next guy. The irony, or perhaps the karma, is that most of them ended up looking worse.