Wednesday, June 26, 2013

Cost Saving House

Tip 1 - Acquisition a acceptable contractor. Sound simple enough, but award a acceptable architect can accomplish or breach your account if flipping house. Things that can go amiss if you appoint a bad architect for your acreage are they over allegation you, bad workmanship, and time delay. People ask me what is the best way to acquisition a acceptable architect to do plan on your acreage and I say chat of mouth. I begin one of my contractors from a advocacy from a adult from work, and all I had to do was ask. Remember that a bad architect will cesspool your time and accumulation from your abode flip, so chose carefully. If you do get a bad architect and they are not alive out the alone affair to do is FIRE them and blaze them quickly. Tip 2 - Line up all your contractors or subcontractors. The adjustment that I acclaim is aboriginal get an analysis of the acreage to accomplish abiding it is not a money pit. If there is foundation affair get it anchored first. If you accept to fix your foundation after in the cast you will accept to adjustment sheetrock, trim, asphalt and so on. Next, forward in the electrician so the abode does not bake down. Also, sometimes they accept to abolish sheetrock to run the curve and you don't wish to do bifold work. Then get your architect in there to do the cosmetics such as paint, trim work, blind ablaze fixtures, installing sinks and so on. Endure affair you wish to do if you accept carpeting is install carpet. The endure affair you wish to do if flipping a abode with copse floors is install baseboards. Tip 3 - Buy all your abstracts at the alpha of the activity will save you a hundred trips to Home Depot. Buy your paint, trim, doors, sheetrock, ablaze fixtures, sinks, cabinets, and aggregate abroad that you can anticipate of. If I cast a abode I accord my architect a 200.00 allowance agenda to Home Depot to buy all the assorted items that I did not anticipate of. This saves me time and money by me not accept to go to abundance every time my architect needs something, and in the abode flipping bold time is money. Tip 4 - Acquisition a acceptable Absolute Acreage agent. You charge a absolute acreage abettor that is abundant at negotiating. An abettor that looks out for your best interest, and not just aggravating to accomplish a commission. You charge to account agents and acquisition the appropriate abettor for the job. That is accommodating to go to hundreds of houses if you are searching for those precious stones in the asperous properties, and they are accommodating to do accessible houses if you're affairs your properties. Also, see if you can get them to abate their agency do to you are traveling to be the next Donald Trump of absolute acreage and accompany them a lot of business. One bisected or one abounding percent of a agency can save you thousands.

Tuesday, May 14, 2013

Simple Real Estate Valuation Method

Broadly, there are three main methods for real estate valuation: Cost Approach Market Comparison Approach Income Approach At a glance, cost approach seems like a very simple method. Cost is simply proportional to how much you buy. Actually in the real estate market, each valuation method has its special area of use. The market comparison approach is most suited for residential buildings, villas, apartments, shops, office units, and other properties with active transactions. On the other hand, the cost approach is often used for properties like public facilities, and properties for special purposes with a small market. The former approach has been discussed in my previous article; whereas in this article I will attempt to explain the latter with the use of examples and by first offering a simple introduction before diving into the subject. Still we have to look at the various definitions of the cost approach, then briefly discuss its concept. Look at Chai Qiang's well-known book, (translated as) "Real Estate Valuation"; in it the cost approach is also known as the contractor's method and depreciated replacement cost method. At any rate, this approach works by first making a valuation and then subtracting the depreciation cost in order to find an objective and reasonable valuation figure. In Cao Jian's famous book, (translated as) "The Theory and Method of Modern Real Estate Valuation", the cost approach is defined as the cost of re-building the property or similar properties and subtracting from it the depreciation cost of new properties. Finally add the value of the land to find the valuation. This definition is identical to that in Investopedia. (Investopedia's definition of "Cost Approach":A real estate valuation method that surmises that the price someone should pay for a piece of property should not exceed what someone would have to pay to build an equivalent building. In cost approach pricing,the market price for the property is equivalent to the cost of land plus cost of construction, less depreciation.) Through definitions these concepts sound abstract and vague, so let us see an example. Firstly I have to state that the cost approach is most often used in apprising new lands used for building, unprofitable properties with minimal market transactions properties in non-mature markets. In short, this approach is used for properties that cannot be valuated by other methods, like public facilities such as schools, hospitals, factories, oil fields, airports, shopping malls, and etc. Now, let us discuss about malls. The cost approach will let us look at things from both the seller's and buyer's point of view. From the former's standpoint, naturally he hopes to obtain the replacement value of the building along with a margin added to it. Thus at the very least, he will hope to recoup the cost of building the mall, land value, fee for ownership transfer, property tax, compensation for re-location, water and electricity charges, communication fuel supply building costs, constructions costs and relocation cost incurred when the building was under construction (for example, if the mall needs 2 years to be constructed, the tenants will have to incur cost for the renting of alternate premises, moving cost and other business losses) interest cost for building loans, insurance fees and natural appreciation in value. Subtracting from all these are the depreciation costs. Finally the rental to be earned (assuming that the mall is leased out) will be added. This final value is the basis that the seller will use in the price negotiation. It is a different story on the buyer's side. He will expect the valuation not to exceed the price on the open market of a similar mall in the same area; otherwise he will be better off buying a plot of land and building a mall on it. Of course, total cost is not simply the additional of cost but the subtraction of it (e.g. rebates). All in all, the cost approach does not make use of a single cost but a number of costs which summation of is complicated. Please note that the "cost" mentioned here is not used in its usual context, rather it is "price". Why? Because true cost (e.g. taxes) generally do not include profit, while price include the cost and a reasonable margin. The owner or developer is paying the "price" for the good and not the "cost" for the good. Of course the "price" also includes the true cost, but the "cost" in this essay is used interchangeably with price. We do not distinguish between the two. The key point of this essay is to simplify the understanding of the cost approach. For the detailed application of this method in valuating a property, we will leave that to a professional valuer. As a consumer, we do not have to concern ourselves with the details because when the valuation report is ready it will specifically state exceptional issues and each item used for the valuation. On hindsight, the cost approach is to strike a reasonable balance between two poles to gain a reasonable and objective valuation. The two poles referred here mean the value that is not under the original cost adding natural price appreciation and the value that is not above the cost of building a similar building in a similar area. Explained this way, it might be easier to understand. All property valuations have to adhere to four rules: Legal compliance Highest and best principle The principle of valuation point Substitution principle Among these four rules, legal compliance simply means the legal acquisition of the land and its legitimate price formation, the details are cumbersome and I will not discuss them here. The highest and best principle simply means to fully utilise every aspect of the property so as to obtain a reasonable valuation. As for the principle of valuation point, it refers to the validity period of the valuation, from the time the valuation is done till the report is ready. At a different point in time, it is possible for the valuation to change. As they say "great changes can occur", although it is somewhat of a stretch to use it here; hence using the phrase "changes can occur with time" instead is appropriate. For example, the property to be valuated had an ideal location (landmark) at the time of valuation but after a few decades when new routes are available or geographical changes have occurred in pace with development, the valuation will no longer be valid. A well-known example would be Ayer Hitam in Johor. Initially a busy transport crossroad and stopover where tourist groups definitely have to pass before returning to Singapore, shops selling souvenirs and local products, along with eateries mushroomed in the area to earn the tourist dollar. But after the highway was built, Ayer Hitam lost its crowd and businesses suffered."It can truly be said: "Where has the bustle of the bygone days gone to? Shops had shuttered and the crowd had dispersed. Valued customers now make use of the highway to return South. Black water (the direct translation of Ayer Hitam) cannot compete with the highway". Real estate prices, which is the initial cost. Including the cost of land acquisition, the entire development (including project design and construction) costs, management and legal fees, interest on bank lending, return on capital, sales fees and taxes, as well as project investment of return. Owners in the sale of properties, the lowest price expectations, the industry is estimated on the basis of the cost method. Health and Fitness Computers and Technology Adventure Travel Music and Entertainment Leadership Improvement Financial stability Forex Forum News and Social Lifestyle Health Care information Health Insurance Plan car insurance online Personal Care Product Real Estate sites 21st Century Home improvement Contractors House Payday Loan Medical Health Insurance Bad Credit Personal Loans Wedding Ideas Finance Company

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