Real Estate & Investing

David Sessford asked:


Investment property is still a popular long term investment. Property can often appear simpler to understand than stocks and shares. I am going to share 5 tips to help you on your way to your first investment in buy to let property.

1. Make sure you do your research well

Be sure of any potential pitfalls as well as benefits.

2. Choose a location

Choosing a property for buy to let is all about the location. North East Investment Property is continuing to grow and always a good investment.

3. Always buy below market value

Never ever, buy from a property investment company offering you property at or above market value. Always buy direct from the vendor at below market value.

4. Consider looking further afield

Most buy-to-let investors only consider buying a property near to where they live. You need to ask yourself; do you want a property close to home, or do you want a property that makes you money?

5. Consider how hands-on you want to be

Buying a property is only the first step. You will need to find a tenant, deal with enquiries and collect payment. Not to mention repairs if things go wrong. At ONEPORTFOLIO we source, manage and let the property for you so you have no need to worry.

Karl Hopkins asked:


In France the house buying process starts with an initial agreement that sets out the terms and conditions of the sale. Although a provisional contract until the notaire, a state official who acts for both sides, has prepared the title deeds, the preliminary contract is legally binding on both the buyer and seller. It is therefore strongly advised to have the contract drafted by a professional (avocat or notary).

The preliminary contract can take various forms:

* A unilateral undertaking to sell: the vendor alone commits him or herself to selling within a defined timescale and at a given price; the purchaser does not commit him or herself to buying but must pay a deposit which can be lost if if the purchase does not go ahead for a reason other than those which have been agreed with the vendor from the outset (conditions supensives).

* A unilateral undertaking to purchase: the purchaser alone commits himself to buying a property under specific conditions; the vendor is held by no obligation.

* A compromis de vente (bilateral agreement – most widespread): the seller agrees to sell and the buyer to buy except if specified conditions (called conditions supensives) and only if all these conditions are complied with. The property transfer only becomes effective if all the conditions are fulfilled. The condition supensive can be obtaining a loan: if a purchaser cannot gather the funds necessary to the operation, there is no more obligation to purchase and the deposit is returned. Conversely, the deposit can be kept by the vendor if the sale is not carried out and the responsibility falls with the purchaser.

Do not pay any money before signing the contract. And when paying, it is best to pay the notary or the estate agent, but never pay the vendor directly.

Once the notaire has carried out the relevant checks and searches and all the conditions are met, the title deeds (Acte Authentique) are signed at the notaire’s office. This can be done by proxy if you cannot attend but your signature on the power of attorney allowing this must be authenticated by the French Consulate or a solicitor or notary public in your country of origin. The purchaser is given a provisional ownership certificate whilst the Title Deed is being registered. The notaire pays the vendor the balance of the price and hands over the keys to the purchaser.

In French law there are only two situations where gazumping can take place. In property transactions, a pre-emption right may arise in favour of one or several authorities. The ‘SAFER’ is an agricultural organisation that can have pre-emption rights over rural properties and agricultural land offered for sale. Furthermore, in agricultural matters, there is often a pre-emption right in favour of a farmer who has worked the land. The DPU (Droit de Preemption Urbain) allows a local authority to buy in urban areas as and when land and properties are offered for sale. Under French law, all purchases made by joint owners can be subject to the pre-emption right of the other joint owner.

There is no direct counterpart to building surveyors in France. Since the 1 September 2002, a survey mentioning the presence or the absence of building materials containing of asbestos (walls, posts, beams, floors etc) must be carried out before the sale of those buildings whose planning permission was delivered before 1 of September 1997. For dwellings built before 1948 and located in designated areas, another survey must be carried out by a qualified technician in order to establish the risks of lead poisoning. In other designated areas, a further compulsory survey reveals whether or not the property is infested with termites. The expert’s report must be less than three months old at the time of completion and is attached to the title deeds.

Whilst structural surveys are rarely carried out by most French purchasers, it is highly advisable to do so, especially when buying older properties.

Where apartments or parts of buildings are being bought, parts of the building can be the property of several owners and intended for the use of all: roof, walls, staircases, corridors, floors. These common parts are managed by a factor on behalf of all co-owners. Important decisions are taken in assembly, according to various rules of majority. Other parts of a building are reserved for exclusive use: this is the case with individual apartments for example. They constitute the privative parts. The law of 10 July 1965, which has been recently updated, provides the legal framework for relationships between co-owners.

Prospective purchasers should familiarise themselves with the co-ownership’s statutes (Reglement de copropriete), as these provide detailed information about what is or not permitted in the building and the way the building’s common charges (for example lift costs, general maintenance) are to be split between all co-owners.

Leasebacks, bring the benefit of tax rebates, equating effectively to a 16.4 per cent reduction in cost are available on new build apartments in designated areas. They can be an attractive formula for rental investment. The investor acquires an apartment in a residence and management is entrusted to a development company during a period ranging between nine and 11 years.

The purchaser is completely exempted from paying VAT. The management company assures the purchaser of a clear annual return throughout the rental contract(around 4.5 per cent on the purchase price net of tax).

It is the management company which deals with the furnishing and the equipment of the apartment and rules all the inherent expenditure (insurance, maintenance, collecting rents and the like.

Purchasing an apartment in a ‘residence de tourisme’ costs between 25 per cent and 35 per cent less than a traditional property, but will not always turn out to be the bargain it seems.

The costs associated with the purchase of a French property break up into three distinct elements:

* Sums due to the Treasury

These vary according to the type of property sold, the area where the property is located and the date of its construction.

* The notary’s fees

The notary’s fees are regulated by a Decree of 8 March 1978 (modified in 1981, 1985 and 1986). They are calculated according to the following scale (and are subject to VAT):

Purchase price 0 to 3,049 euros: 5 per cent

3,049 to 6.098 euros: 3.30 per cent

6.098 to 16,769.40 euros: 1.65 per cent

above 16,769.40 euros: 0.825 per cent

* Miscellaneous disbursements

These include surveyors’ fees, register searches, and excise tax, and may be paid up front by the notary. They usually vary between 458 euros and 1,525 euros.

Buildings will need to be insured. There is a multitude of insurance products whose price and services depend on each case. It is thus necessary to define the various guarantees to which you can or must subscribe.

When a property is already insured at the time of its sale, the policy cover automatically extends to the purchaser. The vendor must give the buyer the insurance policy and contact the insurer to inform him about the transaction.

Property and contents can be insured against a number of risks: fire, water damage storms, explosions, natural disasters and acts of terrorism. Insurance cover against fire hazards will include a guarantee against storm damage. Most insurers offer an electric damage cover which insures you against a dysfunction of the electric system and its consequences (provided the damage does not arise from a lack of maintenance).

Dalvin Rumsey asked:


In order to protect themselves from possible claims from other persons, the lenders will most definitely require a home property title insurance. The main reason for this matter is the fact that otherwise, the lender would risk loosing large amounts of money. So, why not thinking ahead about the worse and trying to minimize these risks? As a general rule, the lender will require a policy from a company that seems trustworthy to it. Therefore, the new house owner can freely search for and choose the best policy on the market that meets their own personal desires and money availability. The only thing that one must consider is whether the standards of the lenders are also met by their choice.

Therefore, in order to make the best decision in what a real estate is concerned, one must always keep his eyes and ears wide open. It is crucial to find out everything there is to know about a homeowner property title insurance policy. There are many services and limitations on coverage that are provided under each type of real estate policy. You must take the time to analyze your needs, no matter the hurry of finding a home you might find yourself in. Trying to save money is never a wise thing to do in what an real estate insurance policy is concerned. A coverage purchased at a higher price may better suit your requirements.

If you are buying a house that has changed owners within the last several years, you must absolutely ask the insuring company about a reissue rate. This will surely reduce your costs. In case you are wondering what such a rate is, you must know that the reissue rates are for a transfer of property after a short time from the purchase of a property. That first transaction was already covered by home property title insurance. The risks are therefore smaller, as everything must have gone well until then. You will have less to worry about, because the risk of a claim against the title is very low. This is the main reason why the insurance companies can offer this type of rate, which is in fact a discounted price on the home insurance policy.

Nevertheless, the procedure is not the same everywhere. Sometimes the company or agent directly provides the title insurance to the homeowner. Other times the attorneys are the ones to offer a property title insurance to the owner of the home. In these cases, their services in examining and providing a title opinion usually include the insurance too.

Mark G. Estates asked:


A lot of people these days are preaching about the buying and holding method of gaining wealth with real estate. There indeed may come a time in your life or business when you’ll want to hang on to a piece of property, although you’ll only be interested in keeping certain types of property. If you’re just starting out, flipping a house may be an ideal way to get started.

Basically, there are three ways that you can flip a house, although each one has its own terms, motivation, and type of property. The first method is known as retailing. What this means, is that you buy a house in bad shape, do the repairs to fix it up, then turn around and sell it. There are a variety of houses in need of repairs out there, and several ways that you can quickly flip a house to net profit. All you need to know are the techniques that will get you the most money in the least amount of time.

The second way you can flip a house is though wholesaling. Wholesaling involves finding a home for sale then flipping it to an investor for a fast, yet small profit. To do this, you’ll need to know the real estate investors in your area, the types of homes that flip the best, and how to fund your property so you can flip it to them. If you live in a big area or a city, you’ll find that using the wholesaling method of flipping houses is actually easier to accomplish.

The third way to flip a house is by assigning the purchase. Using this method, you’ll commit to buy the house. Instead of closing the deal yourself, you’ll assign it to a real estate investor – of course for a small fee. The investor will take the contract over and close the purchase themselves – flipping the house. This can be very profitable, especially if you invest in the right home. You don’t need to have your contract worded any special way to be legal, although you will need to determine the assignment fee.

If you’re looking to break into the real estate market and make big bucks, you’ll need to learn all about flipping houses. Flipping houses is very profitable, especially once you have learned the basics. The first and third methods are the best, although they will both take quite a bit of work on your part. Restoring homes isn’t easy, and you’ll need to have a team qualified to handle any repairs. Assigning the purchase may be difficult when you first start out, although it will get easier with time. If you stay at it and do your best to make a profit – you’ll be an expert at flipping homes in no time at all.

Real Estate Advisor asked:


Owing a home is a big part of the American dream. But not everyone is fortunate enough to become a homeowner due to delimiting factors such as insufficient income, bankruptcy, bad or no credit, loss of employment, etc. For people with such troubles, owning a home is a distant dream and some of these people resign themselves to a lifetime of renting. But such people are not without options. Rent-to-own, which is also known as a lease-purchase option, can be an excellent alternative available to some people who are currently unable to buy a home.

A rent-to-own or lease-purchase option is an agreement between a prospective home buyer and a home seller. The agreement is basically a rental contract with a right to purchase the property after a period of time (usually 1 year). When a home seller offers a lease-purchase option, what they are really offering is the option to rent the house at some monthly rate, and to lock in the sales price of the home now, even though the prospective buyer would not actually purchase the house until a later time (if at all).

Here is a hypothetical example. Let’s say the monthly rent for a home is $1700. Under a lease-purchase option, a prospective buyer would rent the home for the $1700 a month, but would also pay an additional premium (e.g., $200-$300) every month for the option to buy the home after a period of time (usually 1 year). So in this example, the total monthly rent is actually $2000, but $200-$300 of the money will be applied toward buying the house at a later time. In other words, the home seller would apply the $200-$300 extra paid every month toward the prospective buyer’s down payment at the end of the year.

The good news for prospective home buyers is that it allows them to lock in the purchase price of the home now, even though they are not purchasing the home until a later time. The bad news is that if a buyer decides not to purchase the home at the end of lease term, the seller often keeps the premium amount paid over the year, although this is usually a point of negotiation.

Prospective home buyers should know that many of the terms described above are negotiable such as how much the monthly rent will be, how much extra has to be paid every month for the option fee (if any), the length of the lease term, etc. The other issue to consider is if it makes sense to lock in a home purchase price now in markets where real estate prices are still declining.

When compared to renting, a lease-purchase can be an attractive alternative because it gives prospective buyers an opportunity to own a home before they normally would be able to. There are some advantages to a lease-purchase option such as:

1) Low or No Initial Down Payment. Many lease-purchase options do not require an initial down payment.

2) Equity Advantage. At the end of the lease term, the value of a home may have appreciated over time, which benefits the purchaser.

3) Living Experience. Prospective home buyers have the opportunity to try out a home and neighborhood before purchasing the property.

4) Leverage Advantage. With just a small investment, a prospective buyer can control a property; yet still have the option of not buying the home if market conditions don’t warrant it.

Rent-to-own or lease-purchase option can be an effective strategy to home ownership. However, there are both positive and negative aspects to this type of approach (as described above). A good real estate agent can help you navigate the complex world of rent-to-own and lease-purchase option properties.