Sometimes referred to as the ‘southern gem’, Dunedin is the South Island’s second biggest city, characterised by a unique Scottish feel and architecture imposed on it during the time of New Zealand’s colonisation. Surround by beaches, forests and dramatic scenery, Dunedin is noted for its youthful and charismatic population being attracted by the educational and tertiary facilities contained within. With a population of just over 125,000, the city is one of the best preserved Victorian and Edwardian cities in the Southern Hemisphere. Becoming a desired location for students, families and businesses alike, the demand for Dunedin real estate is increasing at above average rates.

According to the latest Quotable Value New Zealand figures, southern Dunedin real estate figures have surged, recording the highest percentage increase in the country. The southern region extends from Waverley to Green Island, including the suburbs of St Kilda and St Clair. The figures illustrate that the area has experienced an increase in home values by 8.7% with an average sale price of $264,000. Likewise, Dunedin overall, showed a 4.9% increase in property values with the average sale price rising to over $276,000.

The increasing prices are a direct result of increasing demand. As many of the main centres in New Zealand are experiencing continued growth in house prices and valuations, Dunedin is presenting itself to many as an attractive option. With the average house price in New Zealand just a little under $410,000, properties in Dunedin represent real value in the marketplace where many families are struggling to find suitable and affordable housing options. According to Glenda Whitehead from QV Valuations, some of the increase in market activity in Dunedin is due to a rise in purchases by existing homeowners, who realise the benefits of purchasing prime real estate at well below national averages.

There are many advantages to purchasing Dunedin real estate, apart from the scenic and natural beauty that the city is surrounded by. With the security of tenure, you will be able to enjoy the cycle of the real estate market, accessing capital gain as the property naturally appreciates. If, like most kiwi’s, you enjoy a little ‘do it yourself’ (DIY), then additional capital gains can be achieved through renovations. There is nothing like the sense of pride that comes with homeownership. The freedom and ability to personalise your property to suit your tastes and requirements has long been an aspiration of nearly all New Zealander’s. However, with the current price hikes in property prices, renting is fast becoming a reality for many who cannot afford the deposit or repayments on their first home. However, Dunedin is offering the consumer real value and choice. Why not consider a move to a new place, where the people are friendly, the amenities are first class and most of all, your dream property is within your reach.

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Real estate is a term that is gaining importance nowadays. It refers to the land, with its other aspects, which are of a fixed nature. This includes house, trees, other facilities such as wells etc. Real estate is thus a very important sector for any country or economy.

Its improvement and development is vital for a countries development, and for the improvement in the standard of living of the people. It is gaining its importance with the rise in population. It is also growing in its popularity for its business value. It has proved to be a very lucrative means. It is in fact a big thing nowadays. There are other factors and people associated with, such as brokers etc, in the business scenario.

Real estate which is also a business area is viewed as a very profitable area by many. In this field, one thing that is important is a sufficient amount for initial investment. One the biggest securities about this filed is that, your investment is always safe. Risk factor is pretty low here, as compared to other fields. In fact value of land is on rise day by day, as its demand is increasing. Different kinds of land and its fixtures have different purpose. Depending on this and the demand there are various types of it, such as residential, industrial etc.

There are various aspects to this field. For a transaction to happen, there are various elements involved, first of the valuation of the property. Appraisal is what does the professional valuation of the property. For the transaction, most of the time a broker is involved, an amount called brokerage is fee charged by the broker for the transaction to happen. Real estate marketing is another aspect, this involves with the marketing and promotion of it. There are also other factors that are involved in it, such as the property management, real estate investing etc.

This business is thus gaining in its popularity. There are various builders etc who construct resident areas, such as flats etc, and sell them out as read to live in areas. This is easy for the buyer as well. This especially satisfies the present day life style. There are other types of it such as the industrial and commercial real estate apart from this. One thing that can be made sure is that it is good means for investment. For people who are looking for areas to invest, it can be a good area.

It can be lucrative even without much effort in a small level. In the present day world, real estate is a very crucial sector. For the development of the country, and as a business filed. It is an area that can be trusted than most of the other investment areas. With an initial investment, it can definitely help you raise the ladder of success and riches, if managed in the right way.

Staying on the lookout for quality real estate investing tips is something everyone who invests in real estate needs to do. Whether you’re just researching the possibilities in this field or you’ve been investing for decades, there is always something you can learn. Not only that, but the real estate market is dynamic and laws change, too, so it pays to stay on top of the most current real estate investing tips. Here are a few for today’s market.

1. Calculate profitability

It may sound obvious, but for some reason in this field far too many people rely on general statistics and hunches to find what they hope will be profitable investments. There is no reason to do this, though. Instead, before you invest, closely examine property values and rent prices that pertain specifically to the type of property you’re considering and the location it’s in.

2. Be realistic about costs

While this tip ties in to tip #1, it’s really a separate issue. Just because one investment was profitable, that doesn’t mean your overall real estate investment strategy will be. Before you even get started in this type of investment, understand the cash flow issues, taxes, legal and accountancy fees, and all the other little expenses that can add up fast. This is why it’s a good idea to get a mentor who can point out the costs you may not have thought of.

3. Specialize

Getting good returns on your real estate investments is a lot easier when you stick to one type of investment and learn as much as you can about it. Foreclosures, commercial real estate, apartment buildings and just about any other type of real estate can be profitable, but it can take years to learn how to turn a serious profit with minimal risk. If you keep jumping around from one area to another, you may never reach the level of expertise you need.

What this also means is that you don’t need to know everything about real estate investing in general. There’s bound to come a time when you need to deal with something outside your area of knowledge. Instead of risking it with whatever information you have, hire a specialist to help you out

4 Never buy sight unseen

As tempting as it may be to pick up that unbelievably cheap property you found through an online database or real estate agent, never commit to buying a piece of real estate you haven’t inspected first. If need be, hire professional inspectors to check out the property and make sure everything is in order.

5 Come to terms with taxes

It can be a real pain sometimes, but doing your taxes correctly is part and parcel of success in real estate investing. If fact, it can make the difference between turning a profit and losing money. Because real estate tax law can be headache-inducingly complex and a full-time job to keep up with, it’s best to hire an accountant who specializes in these types of taxes rather than try to do them yourself.

Renting is now becoming a little harder for the average person. Credit checks have become a regular precaution, as landlords do not want tenants who will be unable to meet their monthly payment.

If you are a potential renter for a landlord, you may be asked about your income and about any references you have. More than likely though, your credit score will also be checked. If you have a bad credit score, beware; getting that real estate apartment you would like is probably not going to work out.

A landlord is surely not going to accept an application from someone with a poor credit score. Even if they do, the deposit will be so astronomical that it may not even be worth it in the end.

If you fall into this poor credit category, you should do everything in your power to fix it. By correcting the issues that are wrong with your credit score before filling out an application form, you will have a much higher chance of getting accepted. If you would like to accomplish this, there are a few tips and companies you should use.

Before even attempting to rent, you should take a serious assessment of your credit history and rating. This may just shed more light on your situation, and give you a grasp of how much time you need to fix it.

Perhaps you may find some mistakes on your credit history through this assessment. If this is the case, get them corrected quickly. It may make you a “go” for the rental.

If you really want to save the hassle of fixing your credit, you can research companies on the internet that do not do credit checks. Just make sure you have your spending under control, or else this could lead to quite a few consequences. Furthermore, if you really want a certain property you could try to explain that your credit is under control now, and that the items in your history haven’t disappeared yet.

Of course, one of the best ways to avoid all of these things is to just grab a co-signer. Make sure they have good credit and that if anything happens the relationship between the two of you will remain intact.

The Jamaica real estate submarket

The general market for goods and service is made up of many submarkets. When left free to operate without private or governmental interference, each submarket and the general market as a whole should theoretically regulate itself by the laws of supply and demand.

One of the submarkets of the general market for goods and service is the Jamaica real estate market. While the real estate market differs in a number of distinctive ways from other markets, it acts much like all markets with respect to changes in supply and demand, but with a slower response time. It has the appearance of being a single, simple entity when in fact the real estate market is itself composed of many complex sub markets. This would include Jamaica homes for rent as well. This would be known as a parent category.

Real estate is a commodity just as wheat, gold and sugar. By combining the other factors of production with land we can produce wheat, gold and sugar or buildings.

Major sub markets of Jamaica Real Estate
Most authorities agree that the five major submarkets of Jamaican real estate are:
1. Residential homes for rent in Jamaica;
2. Commercial;
3. Industrial;
4. Agricultural;
5. Governmental and special – purpose properties

Each of these five categories is further divided into minor submarkets. For example, “residential” as a major submarket can itself be divided into minor submarkets as follows:
1. Urban;
2. Suburban; and
3. Rural

Each of the minor submarkets can be divided further into single-family and multifamily, which could then each be classified as owner-occupied and rental. The point is what appears to be one big, but simple real estate market is in reality, a complex structure of many individual submarkets, each of which contributes to the overall market.

The characteristics of the real estate market
If the real estate market were allowed to operate without any interference or restraint whatsoever, each person could use his or her property in any way that would produce the greatest return. This could result in one person’s use of Jamaican property causing a loss in value to another person’s property. Obviously, we cannot permit land to be used for whatever purpose the owner thinks best for his or her private gain.

For example, if you lived in a very fashionable up-market residential subdivision and your neighbor bought two undeveloped lots adjoining your property for use as a pig farm or for a paper mill with its offensive odors, the social costs to you and the rest of the subdivision would far outweigh the private gain to your neighbor. Therefore, the real estate market cannot be permitted to operate free of all controls and restraints.

Listed below are five primary characteristics affecting ownership and sale that set real estate apart from other markets.
1. The market is local in nature; the product is immoveable.
2. It is slow to respond to change in supply and demand.
3. There is relative permanence of improvements; land is durable and fixed in location.
4. The market is not organized and is without central control; there is no standard product and no central information.
5. Governmental controls influence the market through zoning, building codes, taxes, etc

Local in Nature – The market for real estate is uncommonly local in nature compared with other markets. The reason, of course, is that land and the improvements thereon are immoveable. For example, we cannot transport sugar cane lands from Westmoreland to Kingston. If we were in the market for tomatoes we could haul our produce to the place where demand might be greatest. However, despite the demand for housing in Area A, we cannot produce an apartment complex or single-family subdivisions on land located in Area B and take it to where there is greater demand.

Slow Response – The property market is unusually slow to respond to changes in supply and demand. Very often the number of houses (supply) in an area begins to fall behind the demand, however, since the design, land acquisition, site preparation and construction phases of real estate are so time consuming by the time demand responds the market becomes flooded. The equilibrium between supply and demand is thus destroyed because the supply of the town houses exceeds the demand at the time.

Permanence of improvements – The characteristic referred to as permanence of improvements is also closely related to the above characteristics. The typical bungalow-housing unit has a long economic life compared to other commodities. Once we have built a block of offices we are stuck with it when perhaps we could have invested our time and money in a hotel. Therefore, the permanence of the improvements created eliminates many alternatives available to markets.

Decentralized nature – Another characteristic of the real estate market is the lack of a single, central exchange for dealing with the real estate island wide. If one wishes to buy 100 shares in General Motors, California, the product will be the same as General Motors, Florida. However, if one wishes to buy 100 hectares of beachfront property in Westmoreland, Jamaica the product will be different in many respects from beachfront property in Portland. This focuses the attention on the two main reasons why there is not a central exchange for real estate.

First, the product cannot be standardized. No two tracts of land are the same. Even two lots side by side on a street have different geographical locations on this earth. This concept is referred to as heterogeneity or non-homogeneity.

Second, no central data bank or information source tells about all real property in Jamaica. Also, one needs to be careful when using information about properties in one area to assess properties in another. If one wants to know about real property in any location, it is best to go to that particular place and seek local information.

Governmental Controls – The fifth and last of the primary characteristics of the real estate market, governmental controls, plays an inordinately important role when compared to other markets. Most people are familiar with direct controls such as zoning and building codes which govern construction and use of property.

Governments also exercise indirect controls, such as the monetary policies of Central Government. For example, if Government reduces the overall money supply to slow the inflation rate, higher rates for mortgage bans turn, drives many potential buyers out of the real estate market in Jamaica. This does impact heavily on the drafting of a rent agreement in Jamaica.

Acceptance is the unconditional and unqualified assent of the offeree to all the terms of the offer. If the offeree alters the terms of the offer, his reply will be a counter-offer rather than acceptance. Acceptance may be written, oral or implied from the conduct of the parties. Though this concept is understood by most in essence, individuals looking to rent or lease Jamaica real estate apartments often accept an offer then never return thinking that there are no legal consequences.

Mode of Acceptance

The offeror may state that he wishes the acceptance to be communicated in a certain way, such as “by return of post” or in a certain place, or in a certain form, for example in writing. It is uncertain whether precise observance of these conditions is necessary in order to make the acceptance binding. The rules are as follows:

(i) The offeror may not impose silence as the prescribed method of acceptance.

(ii) If the offeror asks for acceptance in a prescribed way, the law takes the view that he must have some special object in view. If he asks for reply by “return of post” his object is usually to secure a speedy acceptance. Thus it seems that an acceptance which accomplishes that object just as well as, or better than, the stipulated method, will bind the offeror. If, therefore, the offeree returns his acceptance by telegram the offeror will be bound even though he requested acceptance by post.

(iii) If the offeror states that a reply must be sent by a certain prescribed way and that method only the acceptance will only be binding if the offeree complies with the condition. Very clear words are necessary before the courts will construe a mode of acceptance mandatory.

Note the following rules:

1. Communication of acceptance – Generally, an offer is not accepted until it is brought to the notice of the offeror, but there are exceptions to this rule:

(i) Acceptance by letter or telegram is usually complete as soon as the letter is posted or the telegram handed in (the “posting’ rule) even though it never reaches its destination.

(ii) In the case of instantaneous communications, for example, telex and telephone, the contract is only complete when the acceptance is actually received by the offeror or his agent. Thus if through a fault in the line the offeree goes on speaking but the offeror cannot hear him, no contract will result.

(iii) Unilateral contracts: This is where the offer takes the form of a promise to pay money in return for an act. In such circumstances the act will usually be deemed an adequate indication of assent.

(iv) If no particular method is prescribed, the form of communication will depend upon the nature of the offer and the circumstances in which it is made. Thus if an offer is made by telegram, it is evidence that the offeror intends an equally speedy form of acceptance and an acceptance by post will be ineffective.

2. Conditional Acceptance – A conditional assent of an offer does not constitute acceptance. Thus an acceptance which is made “subject to a formal contract being drawn up” is not effective until the condition has been fulfilled.

3. Tenders – If, for example, a person wishes a house to be painted or certain goods to be supplied, he may ask contractors or suppliers to submit estimates. These estimates, called tenders, are offers which may be accepted by the person requesting the tender.

It will become increasingly important in the future to sensitize the all the players in the Jamaica real estate market, including vendors, purchasers, landlords, tenants, mortgage companies, Jamaica real estate apartment agents, brokers and salesmen of the proper method of operating with respect to an offer and acceptance.

Why should I rent your apartment versus all others out in the marketplace? Keep in mind this is a question that is going to be in the back of your tenant’s minds when you’re looking for tenants and also your existing tenants. You see there is competition for the tenant you’re looking for and that will always be the case. However, if you answer this question effectively for the new tenant that would be coming into your apartment or commercial investment property, you will not have a problem in getting good tenants and keeping your space filled more often than not. Remember, it’s not always about price. Price is important and tenants do have budgets, etc., however, many other things into it for a tenant as well: cleanliness, nice neighbors, convenience, close to things they like to do, (movies, shopping, etc.), close to their home, desirable location, prestigious location, etc.

We could go on and on regarding reasons why a tenant should lease your apartment property. However, make no mistake they’re not only asking this before and when they move into your space, but they’re also asking it when they’re in the apartment as well. When you get a good tenant, you want to keep a hold of them as long as you possibly can, of course, raising the rent over time. Obviously, if you have an apartment building that has six tenants and you can keep those six tenants for a number of years without any turnover, you have saved a substantial amount of cost and a substantial amount of time, because remember your time is worth money.

for new tenant acquisition prepare a “special report” of all of the mistakes that tenants in your market should avoid and how by renting your apartment you are answering those mistakes. What this does is give the tenants a little doubt in their mind about what’s out there and what they have to get into and how by leasing our apt., we erase those doubts and by renting our apartment property, they are much better off and will not make any of those “mistakes”. Use a free bonus and/or gift just for them applying for your apartment. Everybody likes free gifts, free goodies, and free bonuses. Most tenants are used to paying a fee when they have to apply for an apartment and/or commercial investment property space and that’s understandable because sometimes it does cost a little bit of money to run credit reports, take time checking out the tenant, etc.

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Old Magnolia Apartments, a 16-unit apartment complex on Maxwell Road between Ga. 9 and Hembree Road, recently sold for top dollar to a California investor. After a brief inspection period and entertainment of multiple offers, Selina Chao closed on the property at just more than $77,000 per unit, or more than $1.2 million.

The complex was built in the 1960s and renovations were completed in 2000 for conversion to condo units. Renovation work included the installation of new kitchen and bathroom sinks, new furnace and air conditioning compressors and new electrical upgrades throughout. Each unit has two bedrooms, one full bath and a small kitchen located off of a family room.

However, the units didn’t sell and the project was re-converted to apartments.

Rents range around $750 per month for each unit.

The property has a rare zoning classification for Alpharetta, R-10M, which allows 10 residential units per acre. The zoning also allows conversion or redevelopment into townhomes, condominiums, new apartments or duplexes. Following a national market trend of re-conversion from condominiums to multi-family, the new owner intends to maintain the property as an apartment complex and capitalize on the strong rental demand for affordable housing in Alpharetta.

Chao, the California investor, saw strong potential in the property with its steady cash flow and a North Fulton market that is difficult to replicate small multi-family properties. That was a reason to invest in the area, she said.

“The Alpharetta/Atlanta market compared to that of California’s fundamentally comes down to fiscal prudence. The Alpharetta/Atlanta market has seen good growth and price gains in recent years but an investor can still get in the game or stay in the game at reasonable prices and make good returns,” Chao said.

Adding comments on the latest mortgage industry problems, she said residential sub-prime foreclosures are at an all time high. Banks from coast to coast are scurrying to calm the secondary markets. Residential home mortgage interest rates continue to rise and show no real signs of coming down, putting the entire financial market under stress.

“This stress has good and bad effects on different market sectors. Multi-family investments will continue to gain “good stress” from these market challenges. It is in this vein that we believe the multi-family market will continue to outperform other real estate investments in the next three to five years,” Chao said.

So, with the combined growth of the area and reasonably priced investments, along with uncertainty in the mortgage industry, investors are finding multi-family investments a good bargain. And, much to the delight of Atlanta property owners, they are choosing to invest their dollars in our local market.

Exchanging is important because it is a method of marketing property that is not limited just to tax deferral. The all important tax deferral concept of exchanging is still valid especially in cases where depreciation basis may not be a factor. A taxpayer who is exchanging vacant land for a larger tract of vacant land and is interested in preserving equity by deferring the gains, will often desire a 1031 tax deferred exchange. Older taxpayers may seek out the 1031 exchange when the holding period may exceed their lifetime and offer stepped up basis after death. Ultimate tax deferral at death may be a motivation to exchange for certain older taxpayers. A complete discussion of the 1031 tax deferral concept is beyond the scope of this text and the emphasis is on marketing and not on tax deferral. 2 However we will briefly examine the general concept of tax deferral. Assume a sale nets the owner $100,000, creating a tax liability of $20,000. If the owner exchanges his property for a qualifying like-kind property and complies with the rules of Section 1031, the entire tax may be deferred. An outright sale would reduce the equity by $20,000, leaving the investor only $80,000 to invest. Given the opportunity to invest the proceeds in an investment with an after tax return of ten percent on the equity invested, the following after tax cash flows to the investor would be

There are three general methods appraisers use to value commercial real estate:

1. Cost Approach
2. Sales Comparable Approach
3. Income Capitalization Approach

The Cost Approach arrives at a value by determining what it would cost to replace the property being assessed. The appraiser will conduct a study which will determine what it would cost to buy a similar piece of land and construct a similar building. This value is also referred to as the replacement cost.

The Sales Comparable Approach analyzes recent sales on comparable properties and makes assumptions based on the sale price per foot and then applies that sale price per foot to the subject property in order to arrive at a current market value. The Income Capitalization Approach analyzes the income and expenses generated and incurred on the property and then capitalizes the Net Operating Income (cash flow before debt service) in order to arrive at a current market value. Typically, appraisers will conduct all three approaches and then perform some sort of reconciliation analysis in order to arrive at a single final concluded market value. Despite what the appraisal states however, lenders will still conduct their own valuation analysis.

The most popular and heavily relied on by lenders today, of the three methodologies listed above, is the Income Capitalization Approach. (This assumes of course the property does in fact generate income. Some commercial real estate loans are made on development or construction projects for instance that do not generate income and therefore this approach would not apply. The appraiser’s analysis only serves as a means of checks and balances to the lender’s own analysis. This is a common misconception among borrowers. Some borrowers feel that the appraised value should be the value underwritten by the lender. Unfortunately for borrowers that is not always the case.

Reverting back to the definition of the Income Capitalization Approach, we know that in order to arrive at a value, a cash flow figure is capitalized using a capitalization rate. The definition of a capitalization rate “cap rate” is expressed in terms of the following formula:

Cap Rate Net Operating Income / Value (or Purchase Price)
A cap rate is merely an expression of the unleveraged annual return on one’s investment. It measures the borrower’s cash flow before debt service (NOI) in terms of a percentage of the value of the asset. In terms of underwriting however, the cap rate is an assumption that is used to back into the underwritten value of the asset. From an underwriting standpoint, lenders restructure the formula as follows:

Value Net Operating Income / Cap Rate (input)

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Borrowers can now more easily observe that the higher the cap rate used, the lower the underwritten value. What the lenders are analyzing is how to capitalize the net operating income. After analyzing the income and expenses on a property and then arriving at a net operating income (NOI), lenders must then determine what type of return on the investment should that NOI be representative of. Riskier projects are typically subject to higher underwritten cap rates and vice versa. By using a higher underwritten cap rate or in other words a higher rate of return , lenders are thereby decreasing the value of the project in accordance with the type of return the lender feels an investor should be receiving given the risks and rewards of the project.

Lenders have very strict leverage constraints. Typically lenders, Commercial Properties, will lend a maximum of approximately 75%, and at times 80% of underwritten value. Therefore it should be clear that when lenders underwrite a loan using a higher cap rate, thereby decreasing the underwritten value of the asset, that the maximum loan amount offered will likely be reduced. Although, Commercial Properties approach the valuation analysis using the same basic methodology, the Income Capitalization Approach, it is important for Borrowers to understand that the underwriting cap rate may be substantially different than the market cap rate (the cap rate properties are currently trading hands at in the market). This can be a difficult concept for some Borrowers to get their arms around but it is the foundation to understanding how there can be such a big disparity in maximum loan proceeds offered by Commercial Properties. In the current commercial real estate market where cap rates remain at forty-year lows, lenders find themselves in the precarious position of addressing the sometimes vast disconnect between low cap rates and weak real estate fundamentals.

When striving to reach the full loan dollars sought by borrowers, lenders are conflicted with the idea of using market cap rates or artificial cap rates. Market cap rates are cap rates that can be supported using data from other transactions currently taking place or recently achieved in the marketplace. Note however, that just because a certain cap rate is achieved in today’s market that that is not necessarily an indication of the cap rates to be achieved in the marketplace at various points throughout the loan term. If you recall from the discussion above that compares the two types of Income Capitalization Approach, the Direct Approach, which is the most commonly used of the two, only kicks out a single NOI figure. Therefore, unlike the Indirect Approach, which can account for specific, future annual adjustments in the NOI analysis, the single NOI derived using the Direct Approach must be representative of the average of what is expected to take place over the life of the loan term. And therefore the cap rate applied to the NOI in the Direct Approach must also take on that same philosophy. That should through the real estate loans. Therefore, in order to sell (securitize) the loans successfully there has to be sufficient evidence that the loans can support the coupon payments promised to the bond investors.