Real Estate/Property Investment

These are businesses that buy real estate property as income generating investments. One of key succes factor in real estate investment is correctly valuing the asset itself. The common way of valuing real estate is to value each of the properties and to aggregate them. Once you know where are the under valued properties, you can effectively decide where is asset to be bought. At the opposite, knowing real value of real estate also help you setting the price strategies apply to your assets. However, a premium may be attached to this value, if a business has shown the capacity to repeatedly buy under valued properties.

The factors we should think about when valuing real estate businesses are the same factors we think about in any valuation – the capacity to generate not just cash flows but also excess returns and the uncertainty associated with these cash flows. The valuation models developed for financial assets are applicable for real assets as well. The value of real estate property should be the present value of the expected cash flows on the property.

Real versus Financial Assets

Real estate and financial assets share several common characteristics - their value is determined by the cash flows they generate, the uncertainty associated with these cash flows and the expected growth in the cash flows. Other things remaining equal, the higher the level and growth in the cash flows and the lower the risk associated with the cash flows, the greater is the value of the asset.

To use discounted cash flow valuation to value real estate investments it is necessary:
- to measure the riskiness of real estate investments and to estimate a discount rate based on the riskiness.
- to estimate expected cash flows on the real estate investment for the life of the asset. The following section examines these issues.

Risk in Property Investment

There are some risk exist in real estate/property investment In spite of their potential advantages:

- Market Risk. It is similar with market beta in the CAPM and its factor betas in the APM. Market risk appears instantly as the price affected by change in market condition (inflation, others instrument volatility, etc)

- Liquidity Risk. The markets for many real estate investments are less liquid than markets for financial assets – transactions occur less frequently, transactions costs are higher and there are far fewer buyers and sellers. The less liquid an asset, it is argued, the more risky it is.

- Tax and Legal Exposure. Real estate investments are particularly exposed to changes in the tax law, because they derive a significant portion of their value from depreciation and tend to be highly levered.

- Information Risk. Real estate investments often require specific information about local conditions that is difficult (and costly) to obtain. The information is also likely to contain more noise. There are some who argue that this higher cost of acquiring information and the greater noise in this information should be built into the risk and discount rates used to value real estate.

Comprehensive reading about real estate valuation could be read in Damodaran (Investment Valuation)

Easy Way To Have Dream Home At Miami Real Estate Property

For newly wed, home is the primary thing that they usually want to have. This is where they can build their own family and to start a new life with someone they have promised to live for the rest of their lives. But getting a new home in Miami real estate market is not that easy, thinking on how much does your pocket need suffer to have a dream home.

Let's make this dream possible, as everyone says "If there is a will, there is a way". Let's find ways on how to own a house even if you have a tight budget. But of course if you really want to own a home, you must to save money and if it is not sufficient, then there will be some tips on how to get immediate money to make your dream come true.

Aside from saving money; you can apply for a loan on a mortgage company. Lending money on a mortgage need some requirements and the very imperative requirement is having good credit score. You can ask for an help of a mortgage broker.

A mortgage broker is someone that can help you out in looking for lending investor so you can loan money for your home. As mention above you need to have a good credit score to qualify for the loan. Most mortgage broker have a lot of record of lending investor, and it is better to apply to a lot of this investor and wait for one that will approved your loan.

For faster approval of your loan credit score must be high. This means that you have enough resources to pay your loans; you must not have any unpaid credits and must have a track record in terms in paying loans or credit card. Once you have a high credit score, the lending investor will pre-approved your loan. When you have a pre-approved loan you can now scout for your dream home.

Maximize the aid of your broker, usually broker have a lot of list of house that are for sale. But before choosing to a home you should have to think things like, water and power supply, accessibility to different establishment like school, church, work office and other government offices.

Pick at least 5 you like most and conduct some inspection for each home. You can hire certified inspector to check if all facilities and amenities are all in good working condition. Check internal and external part of the house. And as much as possible, you should also be there to look at the house and check it yourself. Make a comparison to all houses that you have inspected and pick the best one for you and make sure to consider if it is worth paying for.

Aside from inspecting the home in Miami real estate market, you can walk around the neighborhood and see if you have friendly neighborhood. After making evaluation and before deciding to buy the home, bid for a lower price if possible, you might persuade the owner to lower the price and have a good deal.

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