Real Estate Investing: Acting Strategically

The vast majority of investors misses the boat and never takes any action at all. They are stuck in “webinaritis” afraid to implement any of the great strategies and tactics that they learn. Well, the first step toward success as a real estate investor is simply to take action.

The next hurdle is to take action strategically. Strategic action means taking a look at the marketplace and knowing which strategy is work best in that given market and then implementing that strategy in a way that will stand out favorably from all the other players in that market. When you both think and act strategically, this is when you begin to make money consistently, not just hit-and-miss.

1. The first step of strategic investing is to understand your marketplace.

Real estate markets are local and respond differently to various strategies. Even when the market cycle is generally up or generally way down on a national basis, the market may be entirely different in a given local area.

A college community may have a perennially strong student housing market that may be immune to the market cycles. In this type of community the primary way to make money as a real estate investor may be in buying and holding student housing rental properties. In a community that was highly affected by the housing bubble-many cities in California, Florida, Arizona and Nevada for example-the primary market strategy is in transactional flipping of short sale and REO property. These markets will also support a growing number of rental properties to buy and hold as people displaced from owning become renters.

2. The second step of strategic investing is to either adjust the market or the strategy to assure a steady supply of business.

The investor who does not have the money to invest in a community that is largely a buy and hold rental area (like the college community) may need to either find a private money partner to invest with or to invest in a different market where short sales and transactional flipping of property is more prevalent. Transactional investing in wholesale properties requires little or no up front capital, but it may require extending out one’s investment territory in order to find enough business to make this strategy successful as a full time business.

3. The next step is to refine the process so the investor can dominate the marketplace.

Strategic actions to refine the business may include becoming the perceived local authority in real estate investing in the area so people bring their referrals and opportunities to you first. Dominating in online and direct marketing is another way to set your business apart from the competition so that clients come to you first when they want or need to sell. Automate and delegate so that you can get more done and have a wider or broader reach than your competition. Alternatively, find yourself an unmet need and cultivate a niche within your market.

By thinking and acting strategically, the investor can assure greater business success

An International Marketplace – Is the Triangle Real Estate Community Ready?

With each passing year the composition of companies and the business they transact in Research Triangle Park becomes increasingly global. This globalization brings a continual influx of people from nations around the world to the area not only to work but to live and to raise families. With this rapid growth of international cultures in the area, suddenly there are people with seemingly endless investment capital from many different countries. Not only are they buying homes in which to live, but they are also seeking real estate opportunities for investment purposes. Are Triangle REALTORS knowledgeable enough in international real estate to fully and competently assist these investors? Are our agents aware of the differences in U.S. tax laws and IRS statutes when applied to foreign non-residents and their ownership of U.S. real estate? A word of caution is in order for both the international client and the professional REALTOR. International real estate is a very different and complex business with potential financial pitfalls when practiced by those unfamiliar with the laws that affect these purchases.

RTP has been a catalyst for international growth to North Carolina for many years. There are nearly 100 companies in the Triangle which have international corporate headquarters or offices located on foreign soil. It is truly a World Trade Zone. Raleigh was recognized recently as “one of the top ten most international cities” in the U.S. with over 87 foreign languages being spoken in the area. In addition to the Triangle’s draw, the nine-county area that comprises the bulk of the local real estate marketplace contains one of the fastest growing Hispanic populations in the country. This blending of people and cultures creates a common ground as resources are exchanged and opportunities are created for local industries not the least of which is the real estate industry. With few exceptions, every REALTOR in the area has either sold property to a foreign client or had a property listing that was sold by another REALTOR to a foreign client. The international growth and diversity of cultures are a large part of the mix, along with educational resources, economic health, cost of living, and moderate climate that continually keep the Triangle as one of the nation’s “Top Ten Places to Live.”

One of the many responsibilities of a REALTOR as a professional is to be informed. Their job is one of sharing knowledge and information with consumers and the general public. They must be authorities on schools, churches, malls, day care, assisted living, new construction, old construction, mold, mildew, radon, asbestos, well water, sewer systems, transportation issues, and a plethora of other disclosure items. Why would it not hold true that a REALTOR should be an authority on an international real estate transaction and the nuances of U.S. tax laws when applied to foreign clients? To enjoy the financial benefits and rewards of the local international market, REALTORS must educate themselves in this arena because it is becoming a large and viable segment of the Triangle market. Fortunately for the local real estate community many resources are available through both NAR and the Raleigh Regional Association of Realtors.

More than eight years ago the Board of Directors of the RRAR with insight and progressive thinking created an ad hoc Committee to explore the creation of an International Council of REALTORS. Since then, that Council has come into being and has grown to over 45 active members. The Triangle International Council of Realtors or TICOR serves as a resource for not only REALTORS but the public as well, bringing together the cultures of the Triangle by offering educational opportunities through printed materials, seminars and classes. They strive not only to educate themselves but also to include others who share their interest. Their varied activities include participation in Raleigh’s International Festival, other cultural festivals, and bimonthly luncheons hosting presentations by international attorneys, mortgage lenders, State Government representatives and various Chambers of Commerce.

With NAR approval, the TICOR group has hosted CIPS classes on four different occasions with participants from as far away as Northern Virginia and the state of Washington. Another CIPS course is scheduled for this October and is being sponsored by TICOR at the RRAR Board office. CIPS is a designation from NAR which means Certified International Property Specialist. It is achieved through class work and testing in five different courses of materials and subjects related to finance, international real estate, globalization, and five subjective regions of the world. Due to the efforts of the RRAR Triangle International Council of REALTORS there are more CIPS designees locally than in any other board in the state of North Carolina.

REALTORS in Research Triangle Park are most fortunate to live and work in such an exciting and lucrative marketplace. To have such nationally high rankings as one of the “Top Ten Cities” in so many categories and the recognition as such an international center of activity is a privilege. With privilege comes responsibility. REALTORS of the Triangle community must not only recognize the need to be informed and educated regarding the intricacies of the international market and it’s clients, but act on that need by using available resources to gain the necessary education to perform professionally.

For information about the Triangle International Council of REALTORS we welcome you to visit our website located at www.triangleinternationalcouncil.com or contact RRAR, the Raleigh Regional Association of Realtors at 919-654-5400.

Real Estate Property Investment Series – Focus Canada 2007

Canada has something of an evergreen appeal which means that not only does it welcome many new and affluent citizens to its shores annually as part of its active immigration policy, these new Canadian citizens provide fresh inward flow of demand and affordability to the Canadian real estate marketplace.

If you add to this the fact that more Europeans and Americans are seeking to either move to live in Canada for part of the year or holiday there for extended periods of time throughout the year and you have quite a new and active market seeking long term rental accommodation and even resale property units as well.

On top of this active flow of demand you have local demand which is strong particularly away from some of the eastern provinces where property prices have risen a little too high a little too fast of late, and overall there is a great deal of local affordability and demand underpinning a solid and positive property market.

Having said all that, not all in the Canadian real estate garden is rosy as we look forward to 2007…while an investor who does their due diligence carefully and astutely can reap dividends from commercial and residential real estate in Canada in 2007, there are certain economic facts that could negatively impact the real estate marketplace in Canada in 2007… this report covers both angles.

On the one (negative) hand – while Canada’s property market has not been shaken quite so significantly as other established nation’s markets it has suffered a general slowdown of both market and construction activity. This is because the question of ‘affordability’ has suddenly had to enter the marketplace…questions have been raised relating to whether average property prices have hit a ceiling beyond which home buyers cannot afford to enter the market.

On the other (negative) hand – the Organisation for Economic Cooperation and Development has reported that in 2007 Canada’s GDP growth rate will under perform previous expectations of it. GDP growth was around 2.8% in 2006 and this is predicted to drop to 2.7% in 2007 before bouncing back firmly in 2008 – in addition to this, unfortunately consumer price inflation is set to follow a similar pattern and core inflationary levels could rise from 1.9% to 2.1% in 2007. These statistics suggest that the property buying public’s activity could be depressed a little in 2007.

But it’s not all bad news! Far from it in fact…

The Canadian Real Estate Association is working with the government to change the way smaller property investors in Canada are taxed on their capital gains. A small investor is one with fewer than five employees and this type of investor is called a passive investor in Canadian taxation terms. Currently such an investor has to pay capital gains tax and suffer capital cost allowance recovery if they sell an investment property even if the proceeds from the sale are then reinvested in another investment property within one year. If CREA get their way investors will be able to defer capital gains tax and capital cost allowance recovery when they sell investment properties and then reinvest the proceeds of the sales back in to other investment properties within one year.

So – the question presents itself – where should an investor invest in real estate in Canada in 2007 if they are to reap strong returns?

To tap into strong real estate profitability in Canada in 2007 investors basically need to apply commonsense when it comes to doing their due diligence on whether a market has room for expansion and whether it is enjoying, and will continue to enjoy, strong consumer demand for either rental or resale accommodation.

Simple!

A good example for a potential investor to examine is the city of Edmonton in Alberta where demand for properties for sale is outstripping supply and where the local economy is being supported greatly by the current oil sands driven boom. This is the sort of market an investor needs to preempt to derive as much profit potential from their investment decisions as possible.

Investors should also examine which Canadian towns and cities are going to be benefiting from upgrades to infrastructure such as communications and transport links because where an area is improving so desirability will increase and house prices will always follow. Also worth examining in Canada is the expansion of the local and international tourism market where residential letting opportunities could arise as well as commercial investment interests.

Commercial property investment opportunities also exist in the likes of Ottawa as well where vacancy rates are attractively low and construction is underway to supply some 800,000 square feet of prime, grade A office, retail and industrial space to a market hungry for such space. Basically investors who tap into this new supply could find themselves generating attractive yields in a relatively short period of time and opportunities like this exist all across Canada…in fact it is a nation ripe with investment opportunity!