Don's Blog

Thinking of Investing in Real Estate?

Don Clifford (Realty Executives, Tri-County) — Sun, 27 Jul 2008 10:11:39 -0500

Buy Smart and Build Wealth

By Don Clifford, REALTOR®
Realty Executives, TRI COUNTY

There may never be a better time to build wealth through real estate. Prices are down, interest rates remain affordable and there's a large inventory of terrific property to choose from.

Income producing property, such as multi family or commercial, is one of the best ways to build wealth; providing you buy it the right way.

When knowledgeable investors analyze a property, they uncover all of the expenses involved and all of the revenue streams possible. Once this has been determined, they formulate their offer based on these factors, NOT the asking price. This is the right way to buy.

In the process, smart investors will look beyond the obvious expenses (mortgage, taxes, insurance, utilities, water, sewer, maintenance, etc.) to those that invariably make the difference between positive cash flow and a property that becomes a financial nightmare. Items such as property management, legal fees, accounting fees, vacancies, leasing fees, commissions, advertising, landscaping, snow removal, trash removal and pest control are all accounted for up front. There may be others as well, depending on the type of property and location so thorough investigation is a must.

Remember, your profit is made when you buy, not when you sell. Analyze carefully upfront and you stand a great chance of acquiring an asset that will help build wealth for years to come.

Do you have further real estate questions? Contact Don at 508-803-5028.

The Four Ways You Profit From Income Property

Don Clifford (Realty Executives, Tri-County) — Sun, 27 Jul 2008 10:08:36 -0500

It's Not Just Rent!

By Don Clifford, REALTOR®
Realty Executives, TRI COUNTY

Income producing property, such as multi-family houses, retail plazas, or office buildings can offer investors some great returns on their money. Unlike some other real estate investment vehicles, such as flipping, which is solely reliant on the market and appreciation, income property actually offers four different ways to realize a return on your investment.

Income. This includes rents and other revenue streams such as coin-op laundry services on the property, tenant parking fees, tenant storage fees, etc. Income revenue should cover your expenses and produce positive cash flow. This is the fuel that keeps the profit engine running!

Appreciation. Property values have historically, always increased. Even though this has not been the case over the last few years, history tells us that if we ride out the current down turn, values will almost certainly increase.

Amortization. One of the great things about income property is that your revenue streams pay down your mortgage debt. So, even when property values are stagnant or even decreasing slightly, the property's equity is still building. And in the ideal climate of increasing property values (appreciation), your property becomes a double-barreled equity building machine!

Depreciation. Believe it or not, the government actually credits you at tax time for depreciation of your property; even though they know the value may have increased! Why? Because the government realizes the value of property owners furnishing suitable housing for those that need it. So they use tax incentives such as depreciation to encourage investors. Depreciation is considered "phantom income" because it is not direct cash in your pocket. However, the money you save in taxes can be substantial.
Consult your accounting and tax professional for expert advice on the effects of these items; and you should always consult your real estate, financial and legal professionals before investing in real estate.

Want more information on this subject? Contact Don at 508-803-5028 or email him at donc@.DonCliffordRE.com.

The Buyer Agency Relationship: Who Really Works for Whom?

Don Clifford (Realty Executives, Tri-County) — Sun, 27 Jul 2008 10:06:16 -0500

An Often Misunderstood Concept in Real Estate Sales

By Don Clifford, REALTOR®
Realty Executives, TRI COUNTY

One of the most misunderstood concepts I see time after time in the real estate profession is the buyer agent and their relationship with clients. There are many people out there toiling needlessly in search of a home, without the guidance of an experienced real estate expert, simply because they are either unaware or do not understand how this relationship works.

In dealing with a potential buyer client for the first time, I often find their initial feeling is one of mistrust and fear. And this isn't necessarily unwarranted with the lot of unsavory and unscrupulous characters in the world. Many immediately clam up for fear that whatever they say will cost them money or will be used against them. Or if they do say anything at all, it is the traditional defense mechanisms; "We're just looking" or "We aren't ready to buy yet." It is not until I get the opportunity to fully explain agency responsibilities to them that the barrier comes down, a level of trust is gained, and a working relationship is allowed to form.

Now, for those of you that are unfamiliar with buyer agency responsibility or have found yourself in the uncomfortable position of avoiding realtors as described previously, let me explain two facts that, once understood, should give you a more positive perspective of buyer representatives.

First, a real estate agent's responsibility is to represent the best interests of their client. This is true of the seller's agent and also the buyer's agent. This is their moral, ethical and legal obligation! And it's one that all real estate professionals must adhere to. (Note: An agent can represent both parties but only with the written consent of both.)

Secondly, and this may be a surprise to some, the cost of a buyer agent is most likely already built into the listing price. How is this true, you ask? If a seller lists a property with a real estate agent, the listing agent's commission is factored into the price and agreed upon upfront. Upon the sale, the buyer agent is almost always compensated by splitting this commission with the listing agent; usually a 50/50 split. Therefore, if the commission is built into the list price, you are going to pay it regardless of having your own representation or not.

So, consider that when the seller lists with an agent, they have someone representing their best interests. The obvious question then becomes, if you are already paying the commission, doesn't it make sense to have someone looking out for you?

The moral of the story is this: If you are planning on looking for a new home (especially you first-time buyers), find a good real estate professional (I am available of course!!), trust them, use their expertise and get your money's worth! You will find their assistance invaluable.

For more information or questions on the responsibilities of buyer agents contact Don at 508-803-5028 or email him at donc@.DonCliffordRE.com.