The real estate blog.

Know thyself and you’ll know what kind of home to buy.__________________________________
Granted, in real estate sales we do everything for a buck. If you don’t believe me, ask your friendly neighbourhood Realtor (but ask him politely). So, in the spirit that uniquely characterizes the lives of charming professionals such as myself, the real estate community routinely goes back in time throughout the annals of the history of mankind in an effort to discover new elements of the human psyche, which can help achieve exactly this goal: doing everything for a buck.
This time around someone (the competition, but I am not going to reveal who since I do not particularly care to be sued for libel) has dug up the word of none other than Heraclitus of Ephesus, who said: “Know Thyself”. Not only did he say that, he also carved it into stone literally by having it inscribed in the forecourt of the Temple of Apollo at Delphi.
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In 2006 the world’s oil rigs pumped out crude at a rate of nearly 85.5 million bbl. a day. They haven’t come close since, even as prices have risen to USD 115 per barrel and are forecasted to reach USD 150 per barrel twelve months from today (source: www.oil-price.net ). All of which raises a question of potentially epochal significance: is it all downhill from here?

It’s not as if nobody predicted this. Survivalists, despisers of capitalism, a few billionaire investors and a lot of respectable geologists have long cited the middle to the end of this decade as the likely turning point. Governments and the oil industry have typically dismissed such talk as premature. There have been temporary drops in oil production before, after all. In most official scenarios,
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Adding value to a real estate asset. ______________________
At minimum, a Realtor always must ensure that the Client has an understanding of whatever interest he/she wants in a real estate asset and the character that particular interest might include in the wide range of real estate asset types. Real estate transactions range from simple purchases of single-family dwellings to more elaborate types of transactions, such as leasing of office, retail or warehousing space to acquisition of real estate assets in liquidation.

The value any talented real estate agent can add goes well beyond the standard of care Clients are entitled to expect, which is the knowledge or competency element of such transactions. Real “value add” derives from the structural elements that flow from experience
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I’ve often stated that one of the most important factors in your success as a real estate investor is your ability to select, screen, and retain quality tenants. This is something that I think I’m pretty good at, which has helped me as an investor.

I was going to write an article about this not to long ago when, bam, I ran into a problem: tenants who stopped paying.

The tenants were a flaky young couple that I knew I might be taking a chance back when they signed the lease in May. But I decided to rent to them and mitigated my risk by signing a short lease (six months, with renewal contingent on timely payment), charged them first and last month’s rent upfront, plus one month’s rent as deposit. I won’t go through the boring details, but they ended up breaking the lease and abandoning the property while they owed me money. If you find yourself in a situation like this one here are some points to keep in mind.

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It is expected that the Australian real estate investing market will continue to grow in the near future, however, the rate of growth is expected to slow in NSW and Western Australia where the markets are expected to correct themselves.

Although, some regional areas of NSW such as the Newcastle / HunterValley area will probably continue to grow at a steady rate and Western Australia is still experiencing a high demand which is largely dependent on the resources boom.

Queensland, particularly South East Queensland, is expected to maintain strong capital growth in the residential property market as a result of continued migration from other states. However, rental yields are not expected to increase substantially despite low vacancy rates.

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I got some interesting emails from readers responding to my recent posts on real estate fraud. Here’s one of them (posted w/ permission from the author, with names and minor details changed):

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Chris,

I was approached by an acquaintance, Phil, to invest into a get rich quick scheme. I was to be the buyer and mortgage holder for two houses, but all documents and paperwork would be mailed to Phil’s residence and Phil would be responsible for all mortgage payments and monthly maintenance fees. I was promised a gift of cash in exchange for using my good credit. All was good for several months, and then I started receiving calls from American Servicing Company for non-payment.

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Yesterday I posted a YouTube video about a sting operation busting some shady “Investment Advisors” who had defrauded a group of investors using a common tactic.  This was a variation on the standard buyer-seller kickback scheme that I previously wrote about.  Here’s how it works:

I love real estate.  There are millions of honest, ethical investors out there making prudent, informed responsible investments to secure their financial future, but there are also a brigade of scumballs busying ruining it for the rest of us.  Keep your eyes peeled. 

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Examining why you are not always rational when purchasing real estate__________________________________________
Neoclassical Economics is built on the assumption that humans are rational beings who have a clear idea of their best interests and, moreover, strive to extract maximum benefit -or “utility” as economists are fond of saying – from any situation. Seeing from this viewpoint, price helps people decide which combination of work, spending and saving suits them best. In real estate, however, things are not quite this simple.

Theory of price asserts that the market price reflects interaction between two opposing considerations. On the one side are demand considerations, while on the other side there are supply considerations. In real estate, however, there is another factor
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Sub-prime mess, foreclosures, sliding home prices - today’s market conditions are causing sleepless nights for some but others are smelling the opportunity to make a quick buck.  That’s great for enterprising investors because in markets like this one opportunities abound.  But, unfortunately, it also creates a fertile feeding ground for hucksters and sham artists waiting to defraud novices. 

Your mom’s advice, general speaking, was pretty good: if it looks too good to be true it probably is.  But it’s worthwhile to understand the mechanism of the basic real estate swindle.  There are many variations to this general scheme, but if you’re considering a deal that in any way resembles this shell game then hold on to your wallet. 

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Travelling to the west this time…

Australian real estate investing in Perth has continued to show excellent results in terms of capital growth and good rental yields.

In the final quarter of 2006, ending 31st December, median house prices in Perth rose by nearly 5 per cent to $325,000. Over the past year, Perth house prices have increased by 18 per cent and rents have also risen by 25 per cent. The supply of new homes has slowed although demand is still strong.

Perth vacancy rates for rental accommodation have stayed steady at about 1.6 percent for the second quarter in 2007. The median rent in Perth has risen by approximately $44 per week since 2004. Perth has the fourth highest median house prices of Australian capital cities, with Sydney first followed by Melbourne and Canberra in that order.

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