Buy Properties Below Market Value

Any good property investor should not focus on just one method of sourcing below market value property. Employing clever marketing techniques to source property is the intelligent way of buying below market value property. Here, we discuss various sources of cheap property and how a property investor can use different techniques for quick profit.
Buying properties that will ultimately be repossessed can be a great way to harness quick profit from property. These are properties where the mortgagors are adjudged in default and are held liable to pay the mortgage debt. Hence, the property is already a subject of a repossession proceeding. The owners of these properties will often sell for below market value rather than face the consequences of repossession.
It is also profitable to buy properties that have already been repossessed. These properties are usually owned by banks and financial institutions after the repossession proceedings, but before they have been sold on.
Some property owners end up in financial trouble because they have secured debt on their property. Unable to pay their debts, their house faces imminent repossession. An investor can often come in at this stage, pay off the secured debt and buy the property from the current owner for a much reduced price.
Another source of good value property is to buy direct from the property developer. Here, it is always better to deal with the senior manager rather than the admin staff who sit in the office. Using clever negotiation techniques you can often secure property for over 20% discount of its true value.
A lot of property developers also purchase land with potential for development. There are various things you can do here. For example, you could obtain planning permission, subdivide the land and resell lots for profit. This is definitely a lucrative way to earn a living and definitely worth considering. Alternatively, you could obtain an option to purchase land and only exercise the option if you are able to secure planning permission. If you do purchase the land, it is then up to you whether you want to build on the land yourself, or resell at a heightened price, achieved as a result of the planning permission obtained.
Buying properties and not immediately disposing of them is another income generating strategy. Here, you could hold the property and allow its price to increase as a result of market conditions or you could obtain cash flow from rental income. Whichever strategy you do choose, you will need to be aware of any maintenance, taxes and financial factors which come into play. Alternatively, rather than holding the property, you could choose to dispose of it immediately for market value and pocket the difference in prices.

It has been a dismal year for house prices, according to the Global Property Guide’s latest survey of publicly-available house-price time-series for the year 2008. And seen from a global perspective, the downturn is still accelerating.The collapse of the world’s housing markets can be seen from three points of view, and unfortunately, all of them reinforce the bad news. During 2008, the downward price momentum accelerated, as compared to 2007. Only 2 countries saw positive momentum in 2008 (a slower downward house price movement than last year, or faster upward movement), while 28 countries saw their housing market momentum deteriorating, compared to the previous year. The two countries with a positive momentum were Germany and Switzerland. During 2008, house prices fell in most countries. During 2008 only 8 out of 32 countries saw house prices rise, after adjustment for inflation, while 20 countries experienced house price falls. In contrast, during the year 2007, the downturn was just beginning, and only 6 countries saw house prices fall, while 24 countries saw house prices rise (all figures inflation-adjusted).Many house-price falls during 2008 were extremely severe. Countries with house price falls of over 10% during 2008 were Latvia (Riga) (37%), Lithuania (Vilnius) (27%), the US (20%), the UK (18%), Iceland (16%), Ireland (12%), and the Ukraine (Kiev) (12%) (all figures inflation-adjusted). During the final quarter (Q4) of 2008, the downward price momentum significantly accelerated, as compared to Q3, suggesting that the situation is deteriorating. During 2008’s final quarter, 9 countries saw house price falls of 5% or more during just that quarter. Price drops of more than 10% during this single quarter occurred in three countries – in Latvia (Riga), which saw price falls of 15%, in Ukraine (Kiev) (13%), and in Hong Kong (15%). Other countries with Q4 house-price falls of 5% and over, included the UAE (8%), Lithuania (7%), Iceland (7%), Singapore (6%), Bulgaria (5%), and the UK (5%) (all figures inflation-adjusted, except UAE).These price falls were much greater than during the previous quarter, Q3. During that previous quarter, only two countries experienced house-price falls (inflation-adjusted) of 5% or more, and no countries experienced house-price falls of more than 10%. REGIONAL SURVEY BY GLOBAL PROPERTY GUIDEEurope has major problems The Baltic countries of Latvia and Lithuania suffered the hardest price falls both in nominal and real terms. In Riga, Latvia, the average price of standard-type apartments plunged 37% during 2008. Prices have been going down in Latvia since late 2007, after a remarkable increase of about 70% in 2006. The most alarming decline took place in the 4th quarter, when prices declined by 15%, the steepest quarterly drop in real terms in any country. These price falls were triggered by increased interest rates, and by the tightened credit rules which Latvia imposed in 2007. Average prices of apartments in Vilnius, Lithuania, fell by 27% during 2008. House prices started slowing in mid-2007, and crashed in early 2008.House prices in the UK plummeted by 18% in 2008. Although mortgage interest rates dropped slightly, to 4.48% in December 2008, the number of loan approvals for house purchases fell 58% in 2008. There is serious trouble in Iceland (house price fall of 16% during 2008), Ireland (12%), Ukraine (12%), Malta (9%), Portugal (8%), France (8%) Finland (7%), Norway (6%) and in Spain (6%). North America’s woes In the US, the centre of the global financial crisis, in 2008 house prices fell 20% according to the Case-Shiller house price index, which emphasizes urban areas. OFHEO and FHFB figures, which are associated with Fannie Mae and Freddie Mac loans and have somewhat lost credibility, suggest a smaller decline of 6% and 3% respectively, during 2008. The US government recently approved a $ 787 billion economic stimulus package, of which $275 billion will be allocated to rescue the ailing housing market.Canada has been much less affected than the US.Pacific heads downBoth Australia and New Zealand saw house price declines during 2008, of 7% and 8% respectively. Asia no longer insulatedHousing markets in Asia have not been insulated. Singapore, Hong Kong and Philippines recorded house price falls during 2008. Singapore’s private residential prices dropped 9% during 2008, in sharp contrast to the 26% price increase of experienced during 2007. The developed countries’ economic troubles adversely affected Singapore’s exports, and during 2008, output in the manufacturing sector, particularly of electronics, precision engineering and chemicals, shrank by 10.7%. Singapore was officially in recession in Q3 2008.Hong Kong has been badly hit by the crisis. House prices were down by an average of 6% in 2008. But during the last quarter, Hong Kong experienced a severe decline in prices of 14%. In Makati, Philippines, prime 3-bedroom condominium prices fell by 2% during 2008, after an 11% price rise during 2007. Nevertheless construction of high-rise residential buildings continues, with residential condominium stock rising by 7% during 2008, according to Colliers Philippines. Japan recorded modest Tokyo condominium price rises of 1.2% during 2008. On the other hand, land prices in Japan’s six major cities fell by 6% y-o-y to Sep-2008. In Shanghai, China, house price rises slowed to 5% y-o-y by the end of 2008, after peaking at 30% y-o-y to May 2008. However Shanghai is likely to be somewhat exceptional, and Xinhua News Agency reported house prices declines in 70 major cities during 2008. Shenzhen suffered the hardest fall, with prices down by 18% during 2008UAE on shaky groundIn Dubai, UAE, despite the bleak global picture, saw surprisingly large dwelling price rises of 41% during 2008. However during the year’s final quarter, prices fell by 8% in nominal terms. This downturn is attributable to strongly tightening lending criteria, an increase in interest rates, multiple layoffs, and alarm among buyers. Forecast: No recovery in 2009History suggests that in a crash, housing markets take many years from peak year to full recovery. In view of this and of the pessimistic IMF forecast for the global economy, no real recovery is likely in the global housing markets this year. The IMF has predicted that the world economy will grow by 0.5% in 2009, the lowest level in 60 years. GDP in advanced economies is expected to decline by 2% during 2009. The United Kingdom and Japan will be hit the hardest. Output in the UK may contract by 2.8%, while Japan’s may fall by 2.6%. Growth in emerging economies is expected to slow to 3.3% in 2009, down from 6.3% in 2008. Developing Asia is forecast to be the least affected, with growth of 5.5%. China’s economy is predicted grow by 6.7% in 2009, but this is a substantial decline from 9% growth during 2008.We cannot be optimistic for five reasons:• Valuations still clearly remain stretched in most countries, in terms of price/rent ratios. • Economic growth is slowing or negative in many countries, which is negative for housing values.• There are no signs that banks are becoming more willing to lend.• The unprecedented nature of the financial system’s collapse has greatly added to the difficulties facing the world’s housing markets. • Some national governments are experiencing difficulty in refinancing their national debt, putting their currencies under pressure. Currency instability is likely to aggravate housing sector problems in countries where many loans were taken out in a foreign currency.The positive news is that the US government and several others are acting with vigour, as has the IMF. Nevertheless, there is a long tough road ahead. ###Description of the Global Property Guide: The Global Property Guide (http://www.globalpropertyguide.com) is an on-line property research house, specializing in analyzing residential property valuations around the world.Terms of Use: On-line newspapers, magazines, sites, etc wishing to use material from this press release MUST provide a clickable link to www.globalpropertyguide.com Sites and newspapers found not to be providing a link to us will be removed from our press list. Requests for Comments:Requests for comments are best made by telephone to +(63) 917 321 7073. UK-based callers should telephone before lunchtime. Our local time is Hong Kong time, i.e., standard time + 8.00Economics Team:Prince Christian Cruz, Senior EconomistPhone: (+632) 750 0560Email: prince@globalpropertyguide.comPublisher and Strategist:Matthew Montagu-Pollock Phone: (+632) 867 4220 Cell: (+63) 917 321 7073Email: editor@globalpropertyguide.comAddress: Global Property Guidehttp://www.globalpropertyguide.com 5F Electra House Building115-117 Esteban StreetLegaspi Village, Makati CityPhilippines 1229info@globalpropertyguide.com

Santiago and Concepción are attractive for residential property investors, Viña Del Mar less so, says the Global Property Guide There are surprisingly large differences between returns on residential property in Chile’s main cities. The Global Property Guide (http://www.globalpropertyguide.com), the research site for residential property, released today the results of research into rentals in major cities of Chile. It revealed that: • Apartments in prime areas of Santiago have excellent average rental yields of 8.16%.• Apartments in the city of Viña Del Mar yield only half as much, on average, with gross rental yields of around 4.31% only.

The rental yield is the annual rental income on a property, as a percentage of today’s property purchase price. This is what a landlord can expect as return to his investment. The rental yield is one useful yardstick of whether property is over-valued or under-valued

The high yields on apartments in prime areas of Santiago – Las Condes, Providencia, and Vitacura – suggest that these Santiago areas make good residential property investments.Apartments in prime areas of Santiago cost on average US$ 98,520 for a 60 square meter apartment, according to the Global Property Guide’s research, versus US$ 87,480 for the same sized property in Viña Del Mar. However, 120 square meter apartments are more expensive in Viña Del Mar than in Santiago.

The result? Looking across the different sizes, prices in the two cities are more or less the same, on average.

Though apartments in Santiago and Viña del Mar cost around the same, per square meter, yet Santiago apartments produce twice as good rental returns – i.e., rents for the same sized apartment in Santiago are nearly twice as high. This means that Santiago is much more attractive as a residential investment.

In the southern city of Concepción, 120 square meter apartments have excellent gross rental yields of 9.04% – also, an excellent level of rental yields, making Concepción a very attractive investment.

Why consider rental yields? Some investors in residential property may ignore rental returns, being more concerned with capital gains.

Yet even they would do well to consider rental yields. The rental yield, or price/rent ratio, is similar to the price/earnings ratio in the stock market. As in the stock market, property investments with high rental yields tend to perform better, and have higher capital gains, in the long-term.

###Extensive Report – http://www.globalpropertyguide.com/Latin-America/Chile/Rental-YieldsDescription: The Global Property Guide is an on-line property research house. Terms of Use: On-line newspapers, magazines, sites, etc wishing to use material from this press release MUST provide a clickable link to www.globalpropertyguide.com. Sites and newspapers found not to be providing a link to us will be removed from our press list. Publisher and Strategist:Matthew Montagu-PollockPhone: (+632) 867 4220Cell: (+63) 917 321 7073Email: editor@globalpropertyguide.comAddress: Global Property Guidehttp://www.globalpropertyguide.com 5F Electra House Building115-117 Esteban StreetLegaspi Village, Makati CityPhilippines 1229info@globalpropertyguide.com