Buy Properties Below Market Value

Once you have decided that you want to invest in property, you need to decide how to source your property at a good price.
There are several methods that you can use to source property below market value. Three such methods are listed here.
The Internet
One of my favourite Property Mentor’s Dolf de Roos talks about the 100 – 1 rule (he calls it the 100:10:3:1 rule) in his book:
“Real Estate Riches”
If you don’t have this book, I would highly recommend that you buy it. It’s one of my favourite ‘right-to-the-point’ books on real estate.
The 100-1 rule stipulates that if you were to look at 100 properties, you may end up buying one good deal! Property is very much a numbers game. The more you look at, the more chances you have of knowing exactly what it is you’re looking for, and henceforth finding your deal.
Not a day goes by when I’m not looking at property, if not physically, I will be analysing deals in the local property paper or on-line. I prefer on-line as I can literally analyse hundreds of deals in one sitting.
If you are a beginner and are not sure of the type of property that would best meet your needs, it is definitely worth spending time doing research on the internet. You can also search for properties to let.
This will allow you to understand rental values and help you to decide how much funding you will need in you purchase, as buy to let financing tends to be based on rental valuations.
Estate Agent
Regardless of what people say, I find estate agents to be a valuable resource when it comes to buying property. I have bought several below market value properties through estate agents.
By being persistent, and proving to an estate agent that you are a serious investor, you will have them ringing your phone of the hook with potential deals. However as with anything, you need to be careful that you are not receiving ‘dogs’ and that the deals are indeed deals. Once you understand your market, this should be simple.
Get to know your local estate agents and get them to know you. Be persistent in your approach. Go around in person and speak to them. Use them to give you their opinions on any particular area. If you are serious about investing in property, you need to maintain regular contact with at least three good estate agents in your preferred area. Over time, as I have found, these agents will be worth their weight in gold!
Do Your Own Marketing
This is my preferred method of acquiring property. You could start off by advertising in your local newspaper.
Typical adverts might read:
“Properties wanted. Cash buyer waiting, any area considered”
“Repossessions stopped. Don’t wait for your house to be repossessed.
Ring now for an instant decision”
TEST your adverts. What works in one location may not work in another area for any number of reasons ranging from social demographics to the type of newspaper you’re advertising in.

The Caribbean is a playground of the rich and famous. It is also seen as business-friendly. Perhaps surprising, then, that some Caribbean countries have strongly restrictive almost socialist-style housing market systems, with strict rent controls, and strong security for tenants.

In a study, the Global Property Guide(http://www.globalpropertyguide.com) examines the landlord and tenant systems of 19 Caribbean countries and territories in terms of rent control, security deposits and tenant eviction. With contributions from local law firms, each economy is rated as strongly pro-tenant, pro-tenant, neutral, pro-landlord or strongly pro-landlord.

The study notes that, against popular notions, a “pro-tenant” rental market is actually harmful to tenants in the long run. It discourages landlords from investing in new rental units, leading to less supply. As demand for rental units increases with population growth, shortages develop. Landlords lose the incentive to maintain and upgrade their rental units. The quality of the existing rental housing stock deteriorates.

The most restrictive rent control law in the Caribbean is enforced in the US Virgin Islands. For housing accommodations, the maximum rent ceiling is the rent in force and in effect on July 1, 1947. For buildings created and/or rented after July 1, 1947, the maximum rent allowed is the first rent charged for the unit.

In Jamaica, the Rent Assessment Board sets the rental for all commercial and residential premises. The annual rent ceiling is 7.5% of the assessed value of the premises.

In the Dominican Republic, there is universal rent control with the maximum monthly rent fixed at 1% of the value of the rental property, in effect, 12% annual rental returns.

Evicting tenants is a serious problem in some parts of the Caribbean. In the Dominican Republic, tenants get more or less perpetual security, notes law firm Guzman Ariza. Rental agreements normally last for three to six months. However, even if the contract has already expired, the tenant can continue living in the unit as long as rent is paid. If the landlord refuses to accept the rent, the tenant can simply deposit the amount Banco Agricola. The bank will hold the amount for the landlord and the tenant can stay in perpetuity.

The law in St. Vincent and the Grenadines also generously protects the tenant. Prior to eviction, the tenant is given at least six months to look for an alternative dwelling, according to law firm Knights Chambers.

The Global Property Guide’s view is that free rental markets, with adequate incentives for landlords, tend best to encourage the supply of rental housing. In the Caribbean, most housing projects focus on the direct provision of housing units with limited and, at times, dismal results. The misplaced focus on direct housing provision, long ago abandoned in Europe, is still in force in several countries.

By removing restrictions, most notably in the Dominican Republic and the US Virgin Islands, the rental market for local tenants could be developed, improving living standards.

—Economics Team:

Prince Christian Cruz, Senior Economist

Phone: (+632) 750 0560

Cell: (+63) 917 735 2228

Fax: (+632) 325 0642

Email: prince@globalpropertyguide.comPublisher and Editor:

Matthew Montagu-Pollock,

Phone: (+632) 867 4220

Cell: (+63) 917 321 7073

Email: matthew@globalpropertyguide.com Global Property Guide

5F Electra House Building

115-117 Esteban Street

Legaspi Village, Makati City

Philippines 1229

info@globalpropertyguide.comwww.globalpropertyguide.com

Rents have moved up much less than prices in China over the past few years. As a result, in 5 cities in China – Beijing, Chengdu, Guangzhou, Shanghai and Shenzhen â?? gross rental yields are now a modest 4.42%, based on a sample of high-end used apartments (www.globalpropertyguide.com).

Shanghaiâ??s gross rental yields average only 3.74%. These are lowest gross rental yields in our China sample, but then Shanghai is the only city where apartment selling prices have apparently not dropped, according to the China Real Estate Index System (CREIS) and eHomeday. Shanghai residential asking prices average US$2,742 per square metre (sq. m.).

Beijing apartments earn slightly higher gross rental incomes of around 4.21%. These are the countryâ??s most expensive apartments, with an average offer price of average US$2,977 per sq. m. for the high-end used apartments in our sample.

Chengdu also has rather low gross rental yields, an average of 3.88%. Chengdu apartments are the cheapest among the five cities, at US$1,060 per sq. m.

The highest rental yields are in Shenzhen, where apartments in our sample earn gross rental yields of 5.69%. The high-end used apartments in Shenzhen cost an average of US$ 1,780 per sq. m.

Guangzhou apartments earn mid-range gross rental yields of 5.41%. Our sample of Guangzhou apartment prices averages around US$1,577 per sq. m.

BACKGROUND IDEA â?? RENTAL YIELD

What does â??gross rental yieldâ? mean? Itâ??s very similar to the Price / Earnings (P/E) ratio in the stock market. Just as share prices have a P/E range, house prices tend to fluctuate around a rental yield range, research shows.

The gross rental yield is the annual rental earnings / the value of the property.

So if the rent is US$5,000 and the property is worth US$100,000, the yield is 5%.

Our rule-of-thumb is that a gross rental yield of 6% to 7% means a housing market is â??fairly valuedâ??, though importantly, developing country housing markets usually have higher yields than developed, because of structural issues discouraging housing purchase such as the difficulty of getting mortgage finance.

Where yields (and rental costs) are comparatively low:

· People will prefer to rent, rather than to buy

· Investors are unlikely to â??buy-to-letâ??

· Rents will tend rise faster than prices

Conclusion: No turnaround in Chinaâ??s residential prices likely soon.

When the Chinese housing market was roaring ahead, rents moved up much less than prices. With the current market downturn, rents have dropped together with property prices (though slightly less). Gross rental yields now average a modest 4.42%.

Why are Chinese rental yields so low? Prices in China surged till September 2007, and then paused â?? and have not substantially dropped since then, according to CREIS, which uses a hedonic methodology (eHomeday arrives at closely similar results).

How far do gross rental yields need to rise in China? Chinaâ??s gross rental yields of 4.42% are lower than would be expected in a developing economy. They are low, also, compared to other economies with similar income-per-capita.

We conclude that until one of two events occurs â?? more residential price falls, or substantial increases in rents – residential prices are unlikely to begin a sustained recovery in urban China.

The Chinese government has taken steps to support the market, such as temporarily suspending the business tax for residential property transfers, and encouraging cities to permit foreign purchases. Chinaâ??s economy remains relatively strong, because of prompt government measures. Consumption spending is strong, restaurants are full, optimism remains high.

However, gross rental yields are still too low. Therefore, it is unlikely that there will be a convincing upturn in Chinese residential prices soon, the Global Property Guide believes.

Description:

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.

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 + 8.00

Publisher and Strategist:

Matthew Montagu-Pollock

Phone: (+632) 867 4220

Cell: (+63) 917 321 7073

Email: editor@globalpropertyguide.com

Address:

Global Property Guide

http://www.globalpropertyguide.com

5F Electra House Building

115-117 Esteban Street

Legaspi Village, Makati City

Philippines 1229

info@globalpropertyguide.com

Rents have moved up much less than prices in China over the past few years. As a result, in 5 cities in China – Beijing, Chengdu, Guangzhou, Shanghai and Shenzhen â?? gross rental yields are now a modest 4.42%, based on a sample of high-end used apartments (www.globalpropertyguide.com).

Shanghaiâ??s gross rental yields average only 3.74%. These are lowest gross rental yields in our China sample, but then Shanghai is the only city where apartment selling prices have apparently not dropped, according to the China Real Estate Index System (CREIS) and eHomeday. Shanghai residential asking prices average US$2,742 per square metre (sq. m.).

Beijing apartments earn slightly higher gross rental incomes of around 4.21%. These are the countryâ??s most expensive apartments, with an average offer price of average US$2,977 per sq. m. for the high-end used apartments in our sample.

Chengdu also has rather low gross rental yields, an average of 3.88%. Chengdu apartments are the cheapest among the five cities, at US$1,060 per sq. m.

The highest rental yields are in Shenzhen, where apartments in our sample earn gross rental yields of 5.69%. The high-end used apartments in Shenzhen cost an average of US$ 1,780 per sq. m.

Guangzhou apartments earn mid-range gross rental yields of 5.41%. Our sample of Guangzhou apartment prices averages around US$1,577 per sq. m.

BACKGROUND IDEA â?? RENTAL YIELD

What does â??gross rental yieldâ? mean? Itâ??s very similar to the Price / Earnings (P/E) ratio in the stock market. Just as share prices have a P/E range, house prices tend to fluctuate around a rental yield range, research shows.

The gross rental yield is the annual rental earnings / the value of the property.

So if the rent is US$5,000 and the property is worth US$100,000, the yield is 5%.

Our rule-of-thumb is that a gross rental yield of 6% to 7% means a housing market is â??fairly valuedâ??, though importantly, developing country housing markets usually have higher yields than developed, because of structural issues discouraging housing purchase such as the difficulty of getting mortgage finance.

Where yields (and rental costs) are comparatively low:

· People will prefer to rent, rather than to buy

· Investors are unlikely to â??buy-to-letâ??

· Rents will tend rise faster than prices

Conclusion: No turnaround in Chinaâ??s residential prices likely soon.

When the Chinese housing market was roaring ahead, rents moved up much less than prices. With the current market downturn, rents have dropped together with property prices (though slightly less). Gross rental yields now average a modest 4.42%.

Why are Chinese rental yields so low? Prices in China surged till September 2007, and then paused â?? and have not substantially dropped since then, according to CREIS, which uses a hedonic methodology (eHomeday arrives at closely similar results).

How far do gross rental yields need to rise in China? Chinaâ??s gross rental yields of 4.42% are lower than would be expected in a developing economy. They are low, also, compared to other economies with similar income-per-capita.

We conclude that until one of two events occurs â?? more residential price falls, or substantial increases in rents – residential prices are unlikely to begin a sustained recovery in urban China.

The Chinese government has taken steps to support the market, such as temporarily suspending the business tax for residential property transfers, and encouraging cities to permit foreign purchases. Chinaâ??s economy remains relatively strong, because of prompt government measures. Consumption spending is strong, restaurants are full, optimism remains high.

However, gross rental yields are still too low. Therefore, it is unlikely that there will be a convincing upturn in Chinese residential prices soon, the Global Property Guide believes.

Description:

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.

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 + 8.00

Publisher and Strategist:

Matthew Montagu-Pollock

Phone: (+632) 867 4220

Cell: (+63) 917 321 7073

Email: editor@globalpropertyguide.com

Address:

Global Property Guide

http://www.globalpropertyguide.com

5F Electra House Building

115-117 Esteban Street

Legaspi Village, Makati City

Philippines 1229

info@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