The importance of following B-H property legislation
The upside of following legislation
You get a guideline
Will seem like a serious actor in the publics eye.
Lesser chance for lawsuites
What are the consequnses of not following legislations
Losing your license
The firm will lose its license
Evulation for new loans
Not giving out required/statutory information
The dees was not registered
Real estate finance and investments
Real estate finance includes the study of the institutions, markets, and instruments used to transfer money and credit for the purpose of developing or acquiring real property Real Estate Finance by Clauretie and Sirmans
The financial market Money market
Long term securities
Short term securities
More than 1 year maturities
Maturities of 1 year or less
In real estate:
Most real estate financing takes place in the capital market
Short term acquisition
Refinanced with long term loans when the project is complete.
Real Estate capital market Dept
Real Estate capital market Equity
Familie or friends
Loans from family or friends
In additions when starting/running a real estate agency
Individuals or entrepreneurs
20% of something is more than 100% of nothing
Practical considerations in the use of dept to finance real estate
Can interest be used reduce taxes.
Risk of property and bankrupcy
Can operating losses from real estate be used to offset other income and the tax rate.
If operating cash flow from the proporty fails to cover the dept service you risk foreclosure
Acces to equity
How mutch quity Vs. dept
Flow of funds in the savings-Investment cycle Deposits etc.
Surplus income units - Individuals - Businesses - Goverments
Deficit income units - Individuals - Businesses - Goverments
Direct Finance Brokers Mortgage bankers Mortgages
Secondary Mortgage Market
Risk and return
Identify threaths and possibilities
Analyse threaths and possibilities
Best scenario – Normal scenario – Worst scenario (more if necessary)
Weight the different scenarios with %
Are you willing to take the risk. Potensial benefits Vs. Potensial loss
Reduce risk and monitor
The financial crises
Started in the US i 2007/2008
Rise of subprime lending
Rise of interest rates
Subprime mortgage was misheld
People stop buying
Residence prices fall
Harder to get loans/increased quite demand
Where to get funds and alternativ financing
You need an equity – Norway 15%, US 10% in most bank
From bank or other credit institutions.
The financial crisis, recession and the pullbacks in the credit market have all impacted the private equity funds in the real estate market over the past several years
You make mortgage payments directly to the person you bought the house from.
Lease to buy
Advanced real estate principles
Market research and pricing
Whitch market segment are we looking at?
Size and place.
Who are our competitors, marketposition and their pricing
Pricing to the customer
What price do we charge for our services?
What can we do to make our price seem a little more attracitve?
Are the prices public, or only given to those who ask?
It is importent to find out how much your target market will pay for your service. Pricing is one of the key determinant in the decision making process for customers.
Pricing to the market
What can we do to make the price seems better?
Ex. Asking price of 299.000,- Euro seem better than 300.000,- Euro
Asking price on competing residence/comercial
In areas where there are easy to compare the real estate market will be sensitiv to changes in price
Supply and demand
e c i r P
Supply and demand Is it always like this for real estate?
What about the high end segment?
When to buy and when to sell.
How is the overall real estate market
Health of the economy
Handover – Have residensce buyers already sold their own
When to put out the ad online and in newspaper
What is the best day for a open house?
What time of day would be best for a open house
Urban and rural real estate markets and development
Most mayor cities are expanding
People move in to the cities, and away from the rural areas.
Urban sites are developing more services than rural places.
How does this affect the prices?
Transportation and work
There is a connection between the possibilites for work, and housing prices.
Rural areas where workplaces are terminated or moved will affect peoples need for housing. When the market for buing proporties is no longer on the same level as before, prices will fall. When new possibilities for work apear, people will start looking for residence nearby.
Transportation and easy access will also have an effect on real estate market in the local area.
With easy acces by transportation the area will be more attractive for comercial use. One key factor for many when they look for a new residence is infrastructure.
The globally real estate industri
Can we be optimists about the real estate future?
+ The health of the world economy is improving
+ The lending enviroment is improving
+ Risk appetite i heightende
+ The real estate market in big economies like Japan and several other Asian countries where property sales are rising. + Housing data for the second quarter of 2013 in the US indicate the housing market continues to gain strength. - Europe