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Double Closing Real Estate

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Double closing real estate is defined as the purchase and sale of a real estate or property at the same time. This process is actually a three party transaction, the initial vendor or seller, the real estate investor otherwise known as the middleman and the purchaser. There are varying reasons for double closing real estate. The most fundamental reason for double closing real estate is to allow the investor to utilize the purchaser’s money to purchase the property from the initial vendor. Double closing real estate transaction also allows the vendor some level of anonymity. The vendor uses the investor to mask his identity. The process involves the real estate investor entering into a sales contract with the initial vendor to purchase a property and then subsequently (before closing the purchase) enters into a simultaneous contract to sell the property to the final purchaser at a higher price. The investor or middle man then utilizes the double closing real estate transaction to close both transactions at the same time. There are different methods of double closing real estate; this depends specifically on the method of purchase and the type of vendor and type of purchaser. Primarily a purchaser would hand over the money to the investor who in turn would acquire the property but at that time a HUD-1 or settlement statement would be signed between the investor and purchaser, who would then have to wait until the transaction was closed to take possession of the property. In most instances the investor instructs the vendor to deed the real estate directly to final buyer.

There are of course several disadvantages of this double closing real estate transaction. There may be a problem in transfer tax collection where the initial vendor is not listed on the final closing document. Most mortgage lenders object to transactions between middlemen as they conduct their own real estate closings. The initial vendor might disapprove of the end profit made by the investor and cancel the transaction. Closing agents would require payment twice for conducting two transactions for one sale. Real estate agents will object to getting a lower price for the initial vendor and ultimately a lower commission. What is paramount in a double closing real estate transaction is that the closing agent is accommodating. This makes the process of keeping the anonymity of the purchaser and vendor and that the closings can take place at different locations. One of the easiest ways that we recommend to complete double closings is to create only one (1) settlement statement (HUD-1) between the vendor and the final purchaser, then include his profit margin as a clause or line item in the statement. This can be titled as a purchasers cost making the transaction less tax weary on the vendor and easily dealt with as an assignment or finders fee. Though the investor may be subject to a higher tax rate other than the on going capital gains tax, if it is run through a business then taxes can be reduced depending on how the business is set up. In these transactions the vendor might see only the disadvantages of double closing. This means that not only may the seller get a possibly lower final sale price but still have sales taxes on the final price; this is a definite annoyance to most sellers.

High Net Worth Real Estate

Understanding high net worth real estate is a very concept, first you must understand the concept of net worth. Net worth invariably means the difference between the value of your net assets and the value of your net liabilities. Your assets include land, machinery and current assets (cash in hand, stocks and other paper assets) and your liabilities are the debts that you owe. Once you have calculated

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both then you find the net difference. If it’s positive then that’s your net worth and if it’s negative then it’s your net position at a loss. High net worth real estate can be calculated based on the estimated value of the real estate versus any mortgages and encumbrances that are levied on the property. This means that if you purchase real estate using a mortgage and that is the only asset that you have then the equity that you hold in the property is your net worth. This is at times is a very good thing because of the appreciation of real estate in certain countries is on the rise. However if the property value depreciates in value then this is a major dilemma. Hence to calculate your net worth in real estate the formula is as follows:

Estimated Market Value (emv) – (Mortgages (mv) + Encumbrances (en)) = Real Estate Net Worth (Equity)

However on to the concept of high net worth real estate is one where the emv continues to appreciate over time increasing your equity in the property and at the same time increasing your net worth. This is calculated quite easily, the rate of appreciation should be higher than the rate of the mortgage loan that you have. This means that if the emv increases by 10% per annum and the mortgage loan is at 7% per annum, this is a high net worth real estate mortgage. These can be found all across the world. You can actually use the calculators to work out net worth.
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However over the last six (6) months the losses in the sub prime mortgage market has severely crippled the emv of properties. This has in fact lowered the values and in fact has effectively wiped out any equity or net worth of many real estate investors and owners. This has brought to the fore even more the concept of high net worth real estate. Real estate investors can search for these scenarios or in fact make them for themselves. We examine these methods,

  • Purchase foreclosed properties for sale below market value
  • Purchase properties in real estate auctions at below par prices
  • Acquire decrepit properties and ‘flip’ this real estate and sell it at a higher rate. (Flip real estate)
  • Purchase property before it is constructed and holds after. Purchasing properties before construction has a great value.
  • Add value through construction to existing real estate.

These are the best ways to acquire high net worth real estate in the US. A very good concept that has the potential to provide an increasing net worth.

Corner Lots – A look on the benefits or plus, disadvantage or loss of buying this type of real estate

Corner Lot House PlansWhen purchasing real estate many people have a choice of choosing a corner lot versus a regular lot. In this decision there are many advantages and disadvantages involved. This is also dependent on the community as well. We examine these benefits and disadvantages of living on a corner lot both if you live in a very crowded community or one off the beaten track.

Advantages of living on a corner lot

  • You normally get a bit more land space when you buy and live on a corner lot
  • You can have two driveways and walkways at your disposal
  • Corner lots in a dead end provide lots of privacy
  • You have more front lawn to beautify and increase property value.
  • Can add a garage and a front yard in specific design.

Disadvantages of living on a corner lot

  • Motorized traffic on two sides of your house reduces privacy and increases noise levels
  • Head lights on all sides of the house
  • Exposed backyard to pedestrian traffic
  • Safety hazard for children to run into the streets.
  • No definition of yard space.
  • Becomes a shortcut from one sidewalk to the next sidewalk.

Despite these clear disadvantages there are many ways to combat these quite easily, the use of clever corner lot house plans can make the property from an almost literal disaster to a very attractive corner lot. You can use shrubs to cover the entire outskirts of the yard and to hide or prevent visibility. This can have a very ‘green effect’. In fact you can use very large hedges to block the view from the major street side. If there are bedrooms to the street side then you can use awnings to prevent street lights from entering the rooms at night. These can be very useful and cosmetic as well. Using stop short cutters is also a favorite in corner lot design. In the four corners most designers plant larger trees than the hedge to give the perception of an enclosed area. You can utilize many house plans but those for a corner lot actually provide so much more room to play with. In our opinion corner lots if the best cornet lot house plan is used is much more aesthetic than regular lots, however are definitely more costly to maintain.

 

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Best Cities To Buy Real Estate – Fort Collins, Colorado

Fort Collins In Colorado

The second place we review as one of the best cities to buy real estate is Fort Collins in the State of Colorado. We dub this as one of the upcoming and boomers in real estate purchase. The city dynamics is based on the media hype that has begun to fuel Fort Collins real estate prices. Fort Collins has been listed as one of the ten best places to live in the USA. This hype alone will drive real estate prices up and actually guarantee that your real estate prices soar. Fort Collins has been listed as one of the best places to live, the best place to live out your retirement, the place you have and raise a family, and as far as going to say it is one of the best places in North America top start over your live, as some would say reinvent. All this has complemented the prices of real estate in Fort Collins and hence makes it one of the best cities to buy real estate.

Media hype is not the only contributor to the fact that Fort Collins Colorado has such great real estate values, they have the benefit of great primary and secondary schools, a very low crime rate and a booming economy which facilitates the creation of jobs, particularly in the field of technology. Fort Collins is also home to Colorado State University which makes it an even more popular location for out of state residents wanting to go to school. Many top publications such as famed Money Magazine claimed that Fort Collins Colorado was the best small city in the USA. This was due mainly to the physical infrastructure that exists in the city; they have over 30 public parks, many running trails and places where hikers can visit. The tourism is excellent offering a wide range of attractions including golf courses, rafting, kayaking, fishing, and even skiing in the on seasons.

The migration from California in terms of the technology sector Colorado has been cited as a very good location to feed on with many qualified personnel living in and around the area. This is bound to drive up the price of the real estate. What is even more important is that Fort Collins real estate prices are at a relative low with an expected boom within the next thirty-six months 2007 and 2008 is prime time to buy to see at least a 15% to 20% increase in property values by 2011 and 2012.

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Best Place To Buy Real Estate

The recent collapse of the American real estate bubble is symptomatic of the problems that most property investors have with identifying risk. However as the investors shuffle to recover from losses in the sub prime mortgage market news ways are being investigated on how to buy real estate without risk and where is the best place to buy real estate. By examining risk will tell an investor exactly where the best place to buy real estate in the USA is. Primarily the first aspect looked on is the values of residential and or commercial properties and the rate they appreciate or increase in value over time. This is dependent on every real estate investor’s appetite for risk. The fact is most homeowners don’t view them selves as investors and hence fall into the trap of not doing their homework and having not enough equity in a property to cover the risk taken in purchase. This is the difference between a brief squeeze in cash flow versus bankruptcy in a few hours. There are five ways in determining the best place to buy real estate.

A.) ASSESS YOUR FINANCIAL SITUATION – As an investor you must first assess your financial situation, meaning how much cash you have at your disposal. This should include other current assets such as stocks and bonds and the how quickly you can liquidate these assets. Once this is ascertained then you will not only know the best place to buy real estate but where you can buy real estate. Some cities, counties, communities or towns may be well beyond your reach while some might be just within your affordability while other real estate you can buy cash.

B.) DO RESEARCH – Many investors will tell you they do research, but research on what aspect of real estate. Every property investor must research statistics. They must ensure that crime statistics, foreclosures rates, outward migration rates are very low while property value rate, standard of living and new purchases are either high or increasing. However possibly the best indicator is new housing and commercial developments. If these are basically non existent in any area then there is a likelihood of decreasing property values in the short term.

C.) THE ABILITY BUY LOW – Being able to buy real estate at a low cost that seems as rock bottom will also determine the best place to buy real estate. However the concept of buy low does not necessarily mean that you are buying the property at the lowest cost on the market, it can also mean that you purchase property before construction at a low cost and then sell at a higher cost. Some mortgage companies will finance pre construction and this means that the real estate value will increase once construction is completed increasing your equity and providing more hedge against a fall in real estate value.

D.) ACCESS TO MORTGAGE LOANS – This is very important in determining the best places to buy real estate. If there are very few mortgage companies then the rates might vary for each location based on risk to the bank. However if there is great interest then banks will lower there interest rates seeking the best creditors to come on board and take one of their mortgage loans. This provides a perfect opportunity for real estate investors to choose the best loan package available.

E.) DEMOGRAPHICS – Undoubtedly the most important of the five steps in discovering the best place to buy real estate. The study of the living standards and average income per household will determine whether or not the community is under developed, developing, developed or over developed. Under developed is not an ideal place to buy properties, developing signals increase in real estate prices and increased inward migration of middle class workers, developed is more stable and steady with lower migration inward, fixed real estate prices and more middle to upper class communities. Over developed means steady outward migration due over population, steadily decreasing property values and a fluctuating crime rate.

Using these five steps will assist even the most basic real estate investor to determine the best place to buy real estate.

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