When is the Right Time to Get Started in Property Development?

The media is currently full of real estate ‘doom and gloom’ – real estate repossessions and arrears are up and real estate prices are down … its almost as if the ‘sky is about to fall’! This situation has seen many real estate developers, and property investors generally, leave the market – and for those thinking of starting out in real estate development, these are scary times indeed.

What seems like the worst time to get into real estate development can, in reality, be the best time. Successful real estate developers today realize that they can use time to their advantage – their real estate development projects will typically not be ready for sale or rent for 2 to 4 years from inception. So if they have bought well, they are less likely to be affected by the economic situation at the time of purchasing their real estate development site.

In fact, a weak market is a real estate developer’s paradise, because a weak market is a buyer’s market, and one of the first steps to any real estate development project is securing a viable real estate development site on the best possible terms. Sell your house fast Des Plaines

Although we know that the real estate development business is cyclical, and many parts of the world are in a property downturn, we also know from history that knowledgeable real estate developers are successful in any market – falling, flat or rising.

We’re working towards what we believe the economic conditions will be in 12 to 36 months time. Indeed we ourselves are still active in the market – seeking Council permission for a number of real estate development projects. This gives us the opportunity to act quickly and build our approved real estate development projects when the market does become buoyant.

It is our opinion that the following market signals are some of the key factors that will lead to increased future opportunities, especially for real estate developers:

· The pent up demand for housing. In March 2008 leading Australian economics forecaster, BIS Shrapnel chief economist Dr Frank Gelber argued that housing prices across Australia will rise by 30% to 40% over the next five years because of the built-up shortages of housing.

· The current Federal Government has stated that they will work towards increasing Housing Affordability and have begun to announce incentives including Tax Credits of $6000 per year if the housing is rented at 20% below market rent.

· We believe that an increasing number of people, in the short to medium term, are likely to require the rental accommodation that we intend to build. This is due to either their financial stress (can’t afford to purchase a home) and/or demographic trends (including Gen-Ys who are less likely to buy Real Estate).

Even if our ‘crystal ball’ is incorrect, we know we have the resources to hold real estate development sites during possible further market fluctuations to come, and increasing rents are certainly helping with that!

Our belief is that this is a golden time to act – perhaps a once in a generation opportunity. Maybe it is not the time to sell completed real estate development projects at the moment, but it is certainly a great opportunity to secure the development site and obtain development planning approval. Now this strategy is not for everyone – you must have the necessary resources to hold the development site and especially the knowledge of real estate development to take advantage of these opportunities.

The best approach for anyone contemplating real estate development will depend on his or her own personal and financial circumstances, but the key message here is that you must do something!

There are many strategies that small real estate developers are currently using, if they don’t have the resources to complete a real estate development project right now, including to turn their real estate knowledge into cash by locating ideal property development sites, perhaps taking out an option on the site, and on-selling the ‘Development Permit Approval’ to someone who does have the resources.

Successful real estate developers know that times of opportunity like this only come along once in a while, and they’re taking action so they don’t miss the boat.

Regardless of your immediate financial situation, this is the perfect time to leverage your real estate development knowledge into current or future income. If you have any doubts about your ability to do this, or you would like an experienced real estate development mentor to guide you, act now to get the knowledge and mentoring that you need. There is no time to waste!

Adrian Zenere is a Registered Architect and Licensed Home Builder along with his wife Amber they have built a multi-million dollar sustainable property portfolio through Real Estate Development. Together they run their own architectural practice http://www.archizen.com.au specializing in Holistic Architecture combining eco sustainable development with feng shui principles and creating harmonious living that is respectful of our environment. Their projects are regularly featured in the Australian Property Investor, Luxury Home Design, Lifestyle Magazine, Home at Yellow and several newspapers.

 

 

Here Are Six Basic Steps The Home Buying Process – You Should Take Before Starting.

Before starting the home buying process there’s some basic steps we recommend to help you get the best rates and deals. Applying for a home loan is important. Most Realtor’s won’t show you homes without a letter from a creditor showing how large a home loan you will qualify for. But ideally, you should work on your home buying project long before you actually apply for a loan and start the process of actually buying a home.

According to a survey taken by the National Association of Realtors most buyers take eight weeks to actually shop for and purchase a home. So don’t panic and think it will take months and months to find a home. It’s more important for you to spend some time on your financial prep work before to ensure the best home buying experience and before you apply for a home loan.

Find Out About Any Home Buying Incentives Available To You

Tom Johnston a local Phoenix realtor advises people to start to talk to a local Realtor as much as six months ahead of time. Tom says, “Most realtors have a good handle on the programs available, and there are a lot of cool programs for the first time buyer”.

For example Johnston says some of the local city governments will offer interest rate or down payment subsidies to buyers that agree to buy a home in certain areas. In fact, a good friend of mine purchased a home in Peoria, AZ because the city offered her a grant of $15,000 for being a first time home buyer! That translated to a lot less money per month in house payments.
Also governments or employers may subsidize teachers, fire fighters, police officers, nurses and other service professionals who have difficulty affording a home in high-priced communities. Many hospitals that are trying to recruit and retain nurses, might offer a down payment loan, which is forgiven and turned into a grant if that nurse remains employed at the hospital for several years.
So before you start the home buying process, contact your local chamber of commerce’s or talk to a Realtor to see if there are any incentives in the various cities around you, then concentrate on homes in those areas.

Get Your Credit In Shape: Order Your Credit Reports

Before even thinking about home buying, everyone should order their credit report (from all 3 bureaus). It is imperative that you do this before you apply for a mortgage loan and begin searching for a home. You will want to check the reports for errors now.

t is reported that 79% of credit reports contain errors and it is your responsibility to find and remove these- not the company that put the erroneous ding on your credit in the first place.
If you want to see all three reports you can order them from any number of sources or you can go to some websites. Don’t forget to order your FICO score too – that isn’t included with your free report.

We also recommend that you protect yourself against Identity Theft. According to the FBI this is the fastest growing crime worldwide. If you know anyone who has had their credit stolen then you know the horrible time you are in for if this happens to you. If you think it can’t happen to you, you’re mistaken. It recently happened to Michael Bloomberg the billionaire Mayor of New York City. It can happen to you also. We have information about this service also on our site – check it out.

Pay Down Your Credit Cards But DO NOT Cancel Any Cards!

While paying down your credit card balances will improve your financial picture and score, this is not the time to close credit accounts because reducing the amount of credit available to you can actually lower your credit score.

Also, when applying for a home loan lenders look at longevity with a creditor as a sign of stability. In other words if you have the same cards for 10 years vs. all new credit in the last 6 months.
Jumping from credit card to credit card does not show the banks that you know how to handle “long term debt” responsibly. Don’t assume you should just get rid of your credit cards because you think you have too many. It will improve your credit picture however to pay the balances down.

Get Your Financial Paperwork Organized

Before you start the home buying process and apply for a loan, collect all the financial documents that a lender will need when you submit your application. These documents will also help you put together a realistic budget and figure out your monthly payments for mortgage principal and interest, plus property taxes and insurance.

Documents To Gather When Buying A Home:

§ Tax returns for last two years § W-2 income statements § Two most recent pay stubs § Most recent credit card statement § Most recent bank and investment account statement § Divorce decrees and child support statement § Your budget (this is very important)
Create A Budget
There is a difference between the maximum payment a borrower can qualify for, which can be surprisingly high in some cases – and the amount you can comfortably afford. Before buying a home and applying for a home loan, figure out how much you know you can afford comfortably each month.

Home loan lenders will typically allow you 50% of your income towards a home. But do you really want to spend that much in payments? Are you leaving something for savings? What if the air conditioner goes out or your car breaks down. Budget yourself ahead of time so that you don’t purchase “too much house.” A good, reasonable budget is as much for your benefit as for the lender.

If you haven’t ever put together a budget we’ve provided you with a couple of simple worksheets here:

Simple 1-Month Budget Planner

12-Month Budget Planner

Don’t be intimidated, it’s actually easier than you think to create a budget and when you’re looking into home buying, it’s more important than ever to know exactly how much you’re spending each month and what you NEED vs. what you WANT.