When we speak of the real estate economy, we use national statistics but we are speaking locally. On the other hand the stock market is based on the national and even the world economy. The real estate markets are based on local or even micro-local economy. Meaning, what is happening in Chicago may not directly affect what is happening in Toledo.
What affects all real estate markets together are the interest rates, inventory, buying activity and social-economic events such as corporate headquarter relocation plans, unemployment and re-development plans. There is no single barometer to measure the entire housing industry in the USA.
So, while statistics calculations and economic factors are relevant, equally important is using one’s common sense. We must keep our eyes wide open and take a look around and see what is happening around us. Talking to real estate agents, investors and lenders in a particular area can be a big help to access and tap into new markets. Equally important are conversations with contractors, freight companies and looking at the money state governments are putting into attracting new companies and tourists.
These are issues one must consider while dealing in real estate.
One major issue facing corporate real estate managers is how to effectively manage the real estate assets in the current market environment. Now more than ever before it’s important to buy low and rent commercial properties competitively to decrease turnover and increase ROI.
Secondly, real estate agents and consultants provide information about utilities, zoning, schools etc. But two common issues a buyer faces while buying are:
i. Will the property provide the right environment we want for a home?
ii. Will the property have a good resale value when we are ready to sell?
These questions are especially important to anyone looking to use buy and hold as their investment strategy.
Another important issue that any buyer/investor faces are the legal issues. Real estate laws vary from state to state. Including properties that must be closed by an attorney in some states instead of a title company. One must consult an attorney licensed to practice real estate law in the state in which the property is located.
Third; there are times a property a buyer is interested in is available but not properly advertised. It may take you some time and effort to search for and locate the right property. Thinking outside of the box is going to be where you will earn your keep here! The value you bring to the table as a consultant to investors and sellers is outlining the ROI as investors outline their investment sweet spot.
The issue of finance. We must know our financial reserves plus our borrowing capacity. If we know about our current savings, income and debt, then we can take help from lenders; banks and mortgage companies, which offer some choices according to your financial capability. There are additional options to Real Estate Consultants; such as connected with private money lenders who lend based on the performance of the asset. This is a option that will help you to stay engaged and active in the marketplace until you develop a strong financial portfolio.
In America, some real estate associations and commissions have sponsored regulations that require all real estate brokers to provide a minimum level of services which forces sellers to buy services they do not want or need. This alone is what opened the door to a new way of selling real estate. Most sellers do not want to forgo 6% of the profit on their profit in addition to the additional service brokers sometimes ask for. Most seller prefer to work with Real Estate Consultants as a way to pay less fees; often only 3% consulting fee is added to the accepted offer price. Also in most cased, because of the network of most real estate consultants the deal can be closed in a fraction of the time.
Issue of rebates on transaction fees. Some states in America allow rebates of commissions or fees on real estate transactions but some states have legislated regulations which prohibit rebates. These regulations were very much needed especially after the 2008 real estate fall out. Understand contract law and if you don’t partner with someone who is. You do not want to sign an agreement for private funding that succeeds state legislation and caps on interest rates and fees.
Next is the issue of consumer participation. The consumer federation of America released a study that real estate boards and commissions are dominated by real estate practitioners and they recommended greater participation by consumers; which is opposed by practitioners – this works against the interest of ordinary buyers and sellers.
Last but not the least, a lot of hoopla has been floating around in the news media about the ‘bubble’ theory of real estate and that the real estate market is going to burst – this may have a psychological impact on the potential buyer or seller. What this means is there will be more investors and buyers that will be very conservative in their buying approach.
For more information on starting a career in real estate investing contact me for an appointment to discuss. If this article was helpful please leave a comment below.
See you at the Top!