Baby boomers, baby boomers, baby boomers; we all hear this term over and over again. So who are the baby boomers? Baby boomers are people in the United States who were born between 1946 and 1964. Approximately 78.2 million people fall into this category.
As a group, baby boomers comprise the largest population cohort in the history of the United States. The size of the group gives it vast influence over American politics, popular cultural, and of course, real estate. To evaluate the influence of the baby boomers on the future of real estate, the National Association of Realtors (NAR) conducted a study in 2006. The findings of the research were published in report entitled Baby Boomers and Real Estate: Today and Tomorrow. Below are some highlights from the NAR study.
According to the NAR report, baby boomers now range in age from 42 to 60 years old. The typical baby boomer is 50 years old, and the oldest of the baby boomers turned 60 in 2006. About 46% of baby boomers are in their 40s, and about 25% are at least 55 years old.
As a group, baby boomers are in their peak earning years. In 2005, baby boomers had a household income of $64,700, and about 25% them had a household income of at least $100,000 per year.
About 78% of baby boomers own a home, which is higher than the national ownership rate of 69%. About 96% of baby boomers believe that home ownership is a good financial investment.
FUTURE REAL ESTATE PURCHASES
About 10%, or 7.8 million of all baby boomers, said they were likely to purchase additional real estate in the next 12 months. Of these potential buyers, two-thirds were planning on buying a primary residence, 26% want to buy land, 19% want rental property, 15% want a vacation home or seasonal home, and 14% want a commercial property.
WHAT FEATURES ATTRACT BOOMERS
When baby boomers were asked about what features are most important to them, 38% wanted a lower cost of living, 38% wanted to be near family, 38% wanted easy access to quality health care, 37% wanted a better climate, and 36% wanted to be near a body of water.
PREFERRED COMMUNITY AMENITIES
When baby boomers were asked about the type of community amenities that interest them most, about 18% wanted to be near cultural offerings, 9% wanted to be closer to their family, 4% wanted to be on a golf course, and 3% wanted easy access to educational facilities.
WHERE DO BOOMERS WANT TO RETIRE
When baby boomers were asked about where they want to retire, 33% of them want to retire in a rural area, 30% in a small town, 25% in a suburban area, and only 12% in an urban community.
BOOMERS AND THEIR REAL ESTATE AGENTS
Baby boomers consistently use the services of a real estate agent. Approximately 60% of homebuyers and 79% of home sellers used a real estate agent in their last transaction.
The baby boomers have had and will continue to have a significant impact on the real estate market. As the boomers near retirement, they continue to value real estate and will continue to invest in properties and land. Real estate agents would be well served to understand what baby boomers want in terms of their real estate investments, and design strategies that target the needs of this enormous population cohort. For more information, read the NAR report entitled, Baby Boomers and Real Estate: Today and Tomorrow
If you live in a condominium will no doubt have encountered something a lot of condo dwellers think is a problem- the incorporating of a but of green in the home. Having a garden all to yourself is something you give up when you decide to live in a condo. The common areas are designed to make up for the fact that condo owners cannot have their own patches of land to tend to. But, you can still get some green in the home in spite of this.
Choose spots around the house where you would like a planter or two and do the research on plants that need little sunlight and water to survive. These are the plants best suited for condo living. If you have a balcony, you have more freedom in choosing these plants. Depending on size and location, you can even grow veggies in pots.
It is entirely possible to have plants in your home. You just have to research on the ones that are indoor friendly and then be a bit creative about placement.
Net present value (or NPV) is a real estate investing measure widely used by investors for investment real estate analysis for a specific purpose: Net present value tells the investor whether his or her target rate of return will be achieved by a property and in turn, whether the property should attract the investor’s capital into that investment.
Here’s the technical interpretation.
The net present value model is based on a decision rule that states if the discounted present value of future benefits is equal to or greater than the cost of those benefits it is a profitable opportunity. Whereas, if the present value of the future benefits is less than the cost for those benefits, the rate of return will not be achieved and chances are good that the investor should take another look.
Okay, let’s frame the idea with a simple illustration.
When you place your money into a savings account (i.e., invest your capital) you expect it to earn interest (i.e., provide future benefits). The bank dictates the return and you are either willing or unwilling to tie up your capital based upon your acceptance of that return. For example, whereas you might deposit $10,000 to earn 3.8% interest, you might not make the investment to earn 1.2% interest.
Now suppose a bank doesn’t quote an interest rate. Let’s say you are only quoted what amount of money you’ll collect in the future. That next year you will collect $10,300 with a deposit of $10,000 today and there’s no mention of interest rate. How would you know what yield your investment is earning?
That’s the dilemma real estate investors face when analyzing income property. Whereas there’s a projection for an investment amount and future benefit, there’s no mention of yield. The individual investor has no idea what rate of return is achieved based upon that data alone and therefore has no way to compare it to other potential investment opportunities adequately.
This is where net present value comes in to play.
The NPV approach to investment value takes your desired rate of return and essentially tells you if the future cash flows (benefits) from a property achieve that yield on your capital investment or not. In other words, you state the yield you want, and NPV will inform you whether that target yield is achieved.
How It Works
NPV discounts all future cash flows by the desired rate of return to arrive at a present value of those future cash flows, and then it deducts that amount from the initial equity, or initial capital invested. The result is a dollar amount that will always be either negative, zero, or positive.
How to Interpret
1) Negative dollar amount – This means that the present value of future benefits is less than the amount invested and that the specified rate of return is not met. In other words, you might want find another property to make your investment.
2) Zero dollar amount – This signifies that the present value of future benefits equals the amount of the investment and that the desired yield is perfectly met. In other words, the property will achieve the return you want with nothing to spare.
3) Positive dollar amount – This reveals that the desired rate of return is met with room to spare. In other words, you might have come across a keeper.
Net present value is certainly worth knowing, and when properly used can help you evaluate your next real estate investment opportunity. Just bear in mind that it is only one small aspect of real estate investing analysis, should never dictate an investment decision, and is certainly not without its shortcomings.
Yes, NPV will provide you the opportunity to evaluate projects using the same rate of return requirements, but it will not provide any useful information concerning one project over another from a risk standpoint.
Finally, I should add that it’s impractical to calculate NPV without a financial calculator or quality real estate investment software. If you are serious about real estate investing then by all means make the investment in a good real estate software solution that computes net present value and provides other real estate analysis features that will benefit you as well.
Here’s to your real estate investing success.
After the technology bubble burst back in 2000 the stock markets suffered a bleak period of decline and investors chose to place their focus on bricks and mortar rather than falling share prices and they began investing heavily into real estate.
As a result the second home and the buy-to-let real estate markets in many countries around the world such as in the UK, US and Australia boomed. However, as the real estate affordability gap continues to widen in these nations and fewer first time buyers can even get onto the first rung of the real estate ladder, property price increases have begun to cool off and the ability to generate impressive rental yields and strong capital appreciation has slowed right down for at least the short term.
At the same time the stock markets around the world remain volatile and so now many more investors are looking overseas for alternatives to cooling domestic housing markets and bumpy rides on the stock market. Many are finding that there’s an abundance of real estate opportunity in emerging countries around the world which has created a strong demand for real estate finance overseas.
For those considering joining the jet-to-let real estate investment set here are the three main options available when it comes to raising real estate finance, loans or mortgages to buy property abroad.
1) In many of the nations that were the first to boom the property markets are now stagnant and because lenders have fewer customers to provide finance for they are actively targeting those who have yet to upsize, release equity or take out a second mortgage and offering them increasingly favourable terms, conditions and interest rates.
For anyone thinking about buying real estate overseas in a country where they believe it will be difficult for them to secure local finance or where interest rates are unattractive, the option may exist for them to re-mortgage their existing property or take out a loan secured against the equity in their primary residence.
The negative side of this option to raise real estate finance to buy overseas property is that the purchaser’s primary residence will be the security against the loan and naturally this introduces an element of risk.
2) The second option available to buyers looking for real estate finance overseas is getting a mortgage locally in the country in which they want to buy. Some countries such as Spain, Germany and France for example offer attractive interest rates and payment schedules to buyers from other European nations and many countries offer mortgages to international purchasers who can provide a decent sized deposit.
Anyone thinking about buying abroad would do well to also research which banks and lending institutions exist in that country, whether they are allowed to lend to foreign buyers and if so, are the criteria for getting a loan and the terms and conditions of the loan favourable?
3) The final option available to the majority of real estate investors looking to finance the purchase of a property abroad is an international mortgage provided by an international lender who usually has experience in the country from which the borrower heralds and also in the country in which they wish to invest which can make the whole finance process so much simpler…but the downside is that arranging such mortgages can be far more expensive than the first two options available to those contemplating their real estate finance options.
The availability or applicability of any type of mortgage or finance raising scheme discussed in this article is something that needs to be determined on an individual basis therefore this article does not constitute advice. Anyone hoping to raise finance to purchase real estate overseas should seek expert financial advice.
A mortgage loan is a loan secured by real property through the use of a mortgage (a legal instrument). A home buyer or builder can obtain financing (a loan) either to purchase or secured against the property from a financial institution, such as a bank, either directly or indirectly through intermediaries. Features of mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying off the loan, and other characteristics can vary considerably. Mortgage occurs when an owner (usually of a fee simple interest in realty) pledges his interest as security or collateral for a loan. Therefore, a mortgage is an encumbrance on property just as an easement would be, but because most mortgages occur as a condition for new loan money, the word mortgage has become the generic term for a loan secured by such real property.
The Internet and mobile technologies are transforming the lives of real estate professionals by challenging long-held assumptions about the business. Today’s agents not only tote on Treo’s and tablet PCs but they also buy specialized software packages to build Web sites. Just imagine a portable digital real estate office.
In commercial real estate, the difference between profit and loss depends on a company’s ability to make the right decisions at the right time. Real Estate industry is blended with vast technical experience in aligning the right technology solutions to provide access to the most important information. It can be “an appealing path if you’re looking for a technically engaging way to have a career.
Here are some tips if you are considering entering in real estate property renting:
1. Determine the actual worth of a piece of property. Check all the accounts and if tenants pay their rent on time. You may also opt for a background check on tenants.
2. Have a look see at the actual property to see its real condition. Check for fire damage, heating system, wood condition, plumbing, etc. You may bring a home inspector for a more thorough inspection. Also look out for “ghost renters” as some sellers pretend they have renters so that they can jack up their prices.
3. Determine if the house was built in accordance with the law. Make sure that the property meets government safety standards.
4. Check the existing agreements between the current seller and the tenants so you will be familiar to the policy and make changes if you desire.
Building your own home can be stressful. Wether you hire a contractor or plainly do it on your own, spells a lot of trouble and headaches. The question is, to hire or not to hire?
One good thing about doing it on your own is you know everything is being done according to your standards. You will be sure that you built that your house is constructed the way you intend it to be. Secondly, you control the accounting and expenses. These are hard times and every penny must be accounted for and spent wisely. These days, contractors earn extra income from slashing on material cost, buying substandard materials.
One major constraint in building on your own, is time. It will really take up much of it. Unless you have a big company, that earns you while you just sit at home, this remains to be a dilemma.
So try to think it over and weigh down things. And think wisely before either do it yourself or contacting that contractor.
Rental areas can have varying fees and deposits on top of the monthly rent. Just be sure which ones are your responsibility and which ones are not.
- A deposit can be given back to you once you have moved out of the premises assuming no damage has been done by you or your pet. If you have added certain features in the apartment, you can have it removed when you transfer to another place for as long as no damage has been done while removing it. Otherwise, you will be asked to shoulder the repair expenses involved via your deposit.
You will shoulder your unpaid bills also via your deposit.
- A fee is non refundable. You can kiss it goodbye forever once you pay it. However, there are also cases where a landlord asks for a $ 300 fee and says half will be refunded to you when you move out of the unit. Clarify this with him or refer to the contract to check if this is included or if this is just a promotional feature added to ensure a higher occupancy rate.
- Before paying anything other than the monthly rent and your basic utility bills, it is wise to ask the landlord or the property manager what the extra fee is for and if and when it is refundable.
A career in real estate is flexible and gives you the freedom to set your own pace. Your income directly reflects your efforts, with no limits on what you can earn as long as you are hard working. People in real estate are goal-oriented, people oriented, persevering, self-motivated, and ambitious and are therefore successful. Some incentives of a real estate career are the potential for high earnings, a well respected status in the community, freedom of time, assisting people, the intellectual challenge and the fulfillment from those accomplishments. This career allows for independence and liberty to choose your working environment.