|
|
Dhaka City Real Estate
It is also in Dhaka and all Bangladesh possible to invest in real estate, as properties and compleses and apartment buildings and areas are under development and many of them look for real estate investors. Here at Dhaka-City.com you may find information about real estate investing, development and purchases. no money down investments, foreclosure real estate, lease purchases, rehabs, quick flips.
| Real Estate |
It is very important for beginning real estate investors to focus on the important issue: Is this a good deal? rather than on techniques. Unfortunately there is a risk in learning to recognize a good deal as it takes research and education but above all it requires experience. Experience can be costly, and that is why it is vital to have a good strategy or plan for recognizing a good real estate deal. Here's a good formula to determine whether a potential real estate purchase is a deal. It's a simple acronym called C.L.E.A.R.
Cash flow
"Will this property generate cash flow?" To answer you need to look at a lot of factors, such as the strength of the local rental market, the interest rate of financing the deal, and how large a down payment you make. Another factor is if it is a single-family or multi-family dwelling. All of these factors included, ask yourself, "Will this real estate property provide income?"
Then ask a question, "How can this property create cash flow compared to other properties?" For example, a $140,000 house that rents for $950/month has a better income potential than a $350,000 house that rents for $1,550/month. A four-unit building that costs $420,000 may bring in $2,980/month in the same neighborhood.
If future equity growth is more important than earning income from this property - cause you already have a job providing enough incomd - then it might be right? There's no however right answer to these questions, but consider all factors while you look at a potential real estate purchase.
Leverage
Leverage is important for you as investor because the less cash you pay for each property, the more properties you can purchase. If your properties go up in value, the rate of your investment return goes up exponentially. But, if the value of your properties go down and you have huge debt on the properties, this might result in negative cash flow - as noted above.
Remember that eal estate is generally cyclical, and negative cash flow is therefore only a short-term problem. You can handle it if you have another income or cash reserves to take care of the negative. "Nothing down" investing (no downpayment) is very attractive for you if you are a high-leverage investor, but be carefull with this approach.
If you invest for the long-term, leverage will most of the time work in your favor if the property area in which you invest appreciates in the long run and the income from your properties pays for most of your monthly debt service.
Equity
Does the real estate property you purchase have equity? Equity sometimes takes a number of forms, for example:
* A discounted price
* A potential fixer upper
* A rezoning opportunity
* A poorly managed property
* A foreclosure
There are a number of ways to create equity, however buying into equity is for sure your best bet. Find a motivated owner who wants to sell his property and is willing to give up the equity for less than full value. Or, purchase a property that needs to be fixed for 50 cents on the dollar or less.
To rephrase it, if the property needs $15,000 in work, the discount of the price must be $30,000 or more.
Appreciation
Buying real estate in the right neighborhoods and in the right phase of a real estate cycle results in appreciation and profit. But, knowing the timing of a real estate cycle can be difficult and is often speculative. If you buy property with no equity or cash flow only for short-term appreciation, then you are entering a very risky investment.
Buying properties for moderate or long-term (10 to 20 years) appreciation is much safer and easier. Search for long-term neighborhood as well as city-wide trends to select areas that will most likely keep their values and increase at an average of 5% to 7% a year pace. Combine this approach with reasonable cash flow plus buy into equity, and you are a smart investor.
Risk
Risk is a factor that too few property investors consider. Ask yourself, "What if my considerations are wrong?" It is wise to have a "plan B"? If you bought expecting appreciation and your property did not appreciate as hoped for in value, can you rent it out to get positive cash flow?
If you buy with an flexible rate loan and your interest rates go up, will it loose the property? Imagine you have some vacancies, are you able to cope with the negative cash flow or will you need to sell it or get bigger loan? Expect the best, but have "plan B" ready. Do remember, that when you look at the property you want to buy, think C-L-E-A-R: Cash flow, leverage, equity, appreciation and risk..
|
|
