Posted by admin on August 28th, 2009 | Comments Off
“Comparative market analysis” means nothing more than doing some comparison shopping before you buy any real estate. Just as you would compare and shop prices before buying new furniture or a car, so, too, you need to compare and shop prices for similarly situated properties before making a purchase. The difference in this instance is that you are comparing a building that is for sale with ones that have already been sold.
What do you need to compare? The major considerations are:
Number of units
Square footage of the improvements (structure)
Square footage of the lot (the dirt)
Condition of the surrounding neighborhood
Age and condition of the building
Income-producing capability (current rents versus market rents)
Parking (garages, pads, carports, or none)
Amenities (view, fireplaces, multiple baths, pool, patios or decks, etc.)
The idea when conducting a comparative market analysis is to locate a few properties in the same or similar neighborhood that have recently been sold. As outlined previously, look for properties that have traits similar to the one you want to buy. In a perfect world, the sales should be within the past six months—the more recent, the better. Once you gather all the data, your job is to compare and contrast it to determine a fair price for the building you’re considering.
business opportunities . debt . economy . financial crisis
Posted by admin on August 4th, 2009 | Comments Off
Ten years ago Michael looked at both real estate and stocks. A stockbroker told him that real estate was too complex. Because stocks and stock mutual funds were simple and easy to understand, he would do better in the stock market. Ironically, in 10 years of study, Michael still does not grasp all the complexities of the stock market; yet with no study, he and Susan were able to purchase three homes. The value of his current home has far outperformed his stock investments.
Despite his own experience, Michael still believes that real estate is too complex and the stock market is relatively simple. In fact, more than 100 factors can influence the price of a stock, whereas less than six factors affect the price of real estate. At first, real estate investing appears complex. After a year or two, it becomes simple. Stocks and stock mutual funds, a first glance, seem simple. After a year or two, the complexities appear. After a decade, the complexities of stock and stock mutual fund investing can become overwhelming. Late-night online investors, including Michael, come to understand why veteran stock managers work 80-hour weeks.
So how do Michael and Susan move out from under their defended position in the stock market and into their comfort zone of real estate? Financially, this can easily be accomplished. In fact, they have so few gains
in their taxable portfolio, they will not pay any taxes to shift into real estate. They will get tax deductions from selling out. Considering the negative investment returns they have been getting in the stock market, it also would be reasonable to take a 10 percent penalty and liquidate their 401(k). But emotionally, Michael and Susan are attached to their dysfunctional relationship with the stock market.