Property Investment - Types of Property

When you're looking at the underlying real estate, one of the most important criteria (aside from location, location, location!) is the type of property. When considering a purchase, you need to ask yourself whether the underlying properties are, for example, residential homes, shopping malls, warehouses, office towers or a combination of any of these. Each type of real estate has a different set of drivers influencing its performance. You can't simply assume one type of property will perform well in a market where a different type is performing well. Likewise, you can't assume one type of property will continue to be a good investment simply because it has performed well in the past.
 Income-Producing and Non-Income-Producing InvestmentsThere are four broad types of income-producing real estate: offices, retail, industrial and leased residential. There are many other less common types as well, such as hotels, mini-storage, parking lots and seniors care housing. The key criteria in these investments that we are focusing on is that they are income producing.
Non-income-producing investments, such as houses, vacation properties or vacant commercial buildings, are as sound as income-producing investments. Just keep in mind that if you invest equity in a non-income producing property you will not receive any rent, so all of your return must be through capital appreciation. If you invest in debt secured by non-income-producing real estate, remember that the borrower's personal income must be sufficient to cover the mortgage payments, because there is no tenant income to secure the payments.
Office PropertyOffices are the "flagship" investment for many real estate owners. They tend to be, on average, the largest and highest profile property type because of their typical location in downtown cores and sprawling suburban office parks.
At its most fundamental level, the demand for office space is tied to companies' requirement for office workers, and the average space per office worker. The typical office worker is involved in things like finance, accounting, insurance, real estate, services, management and administration. As these "white-collar" jobs grow, there is greater demand for office spaces.
Returns from office properties can be highly variable because the market tends to be sensitive to economic performance. One downside is that office buildings have high operating costs, so if you lose a tenant it can have a substantial impact on the returns for the property. However, in times of prosperity, offices tend to perform extremely well, because demand for space causes rental rates to increase and an extended time period is required to build an office tower to relieve the pressure on the market and rents.
Retail PropertyThere is a wide variety of Retail properties, ranging from large enclosed shopping malls to single tenant buildings in pedestrian zones. At the present time, the Power Center format is in favor, with retailers occupying larger premises than in the enclosed mall format, and having greater visibility and access from adjacent roadways.
Many retail properties have an anchor, which is a large, well-known retailer that acts as a draw to the center. An example of a well-known anchor is Wal-Mart. If a retail property has a food store as an anchor, it is said to be food-anchored or grocery-anchored; such anchors would typically enhance the fundamentals of a property and make it more desirable for investment. Often, a retail center has one or more ancillary multi-bay buildings containing smaller tenants. One of these small units is termed a commercial retail unit (CRU).
The demand for retail space has many drivers. Among them are: location, visibility, population density, population growth and relative income levels. From an economic perspective, retails tend to perform best in growing economies and when retail sales growth is high.
Returns from Retails tend to be more stable than Offices, in part because retail leases are generally longer and retailers are less inclined to relocate as compared to office tenants.
Industrial PropertyIndustrials are often considered the "staple" of the average real estate investor. Generally, they require smaller average investments, are less management intensive and have lower operating costs than their office and retail counterparts.
There are varying types of industrials depending on the use of the building. For example, buildings could be used for warehousing, manufacturing, research and development, or distribution. Some industrials can even have partial or full office build-outs.
Some important factors to consider in an industrial property would be functionality (for example, ceiling height), location relative to major transport routes (including rail or sea), building configuration, loading and the degree of specialization in the space (such as whether it has cranes or freezers). For some uses, the presence of outdoor or covered yard space is important.
Multi-family Residential PropertyMulti-family residential property generally delivers the most stable returns, because no matter what the economic cycle, people always need a place to live. The result is that in normal markets, residential occupancy tends to stay reasonably high. Another factor contributing to the stability of residential property is that the loss of a single tenant has a minimal impact on the bottom line, whereas if you lose a tenant in any other type of property the negative effects can be much more significant.
For most commercial property types, tenant leases are either net or partially net, meaning that most operating expenses can be passed along to tenants. However, residential properties typically do not have this attribute, meaning that the risk of increases in building operating costs is borne by the property owner for the duration of the lease.
A positive aspect of residential properties is that in some countries, government-insured financing is available. At the expense of a small premium, insured financing lowers the interest rate on mortgages, thereby enhancing potential returns from the investment.

Location Location Location

Real Estate Investments:
How about location within location?

 

When deciding about a property purchase as capital investment, the selection of the correct location plays an important role. “Location, location, location” is probably the oldest wise saying in the field of real estate; even the Roman Emperor Caesar evidently recognized this and built his forts at top-locations, like Rhine (Rhein) and Main.

Until today, nothing much has changed about it. "Rhein Main" could be said to be a typical major or macro location.

But once one has agreed about the macro location, the rest of the homework is far from being complete. About just as crucial is the question of the micro location.

What is a micro-location? Let’s consider a city as Cape Town as the macro location; it is the city (or if applicable the region - in this case the Western Cape), the larger perimeter of choice.

In other words, the micro location is the small location, the “mini location” within the larger scope, the macro location.

This can be explained easily with some current examples. As before, we are taking Cape Town as a model. Without question, Camps Bay is always part of the top real estate locations in Cape Town ; it generally ranges traditionally next after Stellenbosh as number two or sometimes number three but seldom further down.

However, for a private investor, who wants to invest in a property as capital investment, normally the residential property is what interests him most – hence we can examine the best micro locations with regard to living.

Which are the best living locations in Cape Town? No problem to answer that, if one is an insider and knows the city – of course one first would name Camps Bay, Paarl, Stellenbosh and almost in the same breath.

But strictly speaking however, these are only districts and no real micro locations.

 

If we allege that some areas are less desirable, we need to ask: Less desirable for whom? For everone? Or reverse: Are there people who like to live in locations that are “less desirable for some”? When going for a stroll in the streets around the local station one will find out very fast that no flat stays empty apparently, thus some people obviously don’t mind. Someone is always living there – after all, it is still Camps Bay.

Here enters the question of one’s own investment philosophy. Let us take the example of an average investor who would like to let out lastingly for a good rent to a clientele who works in Cape Town, has a good level of income and more elevated demands to the living ambience.

Didn’t we just define a target group for our acquired property? Exactly so!

Thus we, as potential investor, always need to ask the following questions first:

Whom would I like to have as tenant? Which kind of future tenant do I have in mind as my partner, who shall pay the major part of the property for me in the long run, but who is also willing to take care of it and to treat it well?

Admittedly, most capital investors seldom ask themselves such difficult questions, or they simply work out that point of the checklist without further ado in their subconscious.

Also this is easily understood:

Anyone who spent half of his life in a certain city, knows intuitively the areas he should avoid and those he should look for. And he knows which clientele of tenants likes most to live where. In accordance with this, he will make his pre-selection without needing any sophisticated preparations.

We have however asked a crucial question for the understanding of the term micro location. That question is: Which clientele of tenants do I want to get?

What Makes a Good Property Investment Company?

If you want to make a profitable property investment then you will most likely look for a property investment company to point you in the right direction. As with most things in life, there are good ones and bad ones so let’s check out what sets the best ones apart from the rest.

The Experience
There is a world of difference between someone telling you what they could do for you and someone else who can back this up with evidence of how they have helped other people. When we talk about investing in properties there is simply no substitute for experience and proven expertise. With such a big investment in their hands you will want to be sure that your adviser is telling you know he knows and not what he has read but never actually put into practice.

The Trust
Any firm you deal with on financial matters has to earn your trust. This comes from them being clear and transparent with you on the most important issues and not just trying to sell you something without properly explaining it first. The hard sell approach is something which needs to be avoided and you should also feel the confidence which comes from knowing that you are receiving the best advice around but that the final decision is always going to be yours. You should never feel under pressure or that you are wasting the adviser’s time with your questions or by taking your time over the final decision

Easy to Deal With
You certainly don’t want to get lumbered with a property investment company which never returns your calls or which his hard to get in touch with. You will want to be in close contact with them whenever there are decisions to be made or opportunities to be discussed, and the service you choose should be one which gives you the confidence of being able to get through to the right person every time.

The Inside Knowledge
One of the rather more unexpected benefits for many first time investors is the fact that a top property investment company can use their knowledge and contacts to provide details of great deals for their clients. This means that the issue of finding the right property is going to be a lot easier for you if you use an adviser who will provide you with a long list of possible deals to decide on.

House and Land Packages

House and land packages are really in a class of their own. Why, you ask? What’s so special about the house and land package? Well, put simply, it is the land. Yes, the land.
Land is an extremely scarce and highly treasured resource. In fact, other than religion and women, it is one of the few things that can boast a hand in the division of families, countries and even dynasties. Yes, wars have been fought, empires have fallen and entire races have been wiped out in the quest for acquiring more and more land.

With house and land packages, you get considerably more land than you would with townhouses and apartments.
Considering that some house and land package prices are at times on par with that of other property types, you are getting much more added value for your investment. This added value that comes with the land means that you are also looking at significantly increased capital growth for your house and land package!

We know that as house and land packages mean that the house generally comes already designed, just waiting to be matched to the right piece of land, you are saving more money than when you do the land purchase and house designing and building separately. As they come ready designed, we know that the package may include extra trimmings, like air conditioners, full landscaping, and carpets, that make it ready to rent out almost immediately. We also know that with most of the house designs in the local area complementing the others, there is a resulting picturesque effect that only adds to the property value.

We even know that the right house and land package for you can mean serious tax benefits through tax credits for the extra deductibles and we also know that house and land packages are often brand new, so they don’t require much maintenance for five years, at least. Finally, we know that you may even be able to save stamp duty on the house, albeit not the land, depending on which state you are looking to invest in.
 Give us a call and let us work out the right house and land package for you. It will only serve to accelerate your wealth creation, more so than before. EEstates

Property Investment in South Africa

South Africa follows a system of land registration where every piece of land is reflected on a diagram and ownership recorded in one of the regionally located Deeds Registries, where documents are available for public viewing. South Africa is reputed to have one of the best deeds registration systems worldwide with an exceptional degree of accuracy and guaranteed tenure. Property can be owned individually, jointly in undivided shares or by an entity such as a company, close corporation or trust, or a similar entity registered outside South Africa.

NON-RESIDENTS
There are no restrictions on property ownership by non-residents, save for a prohibition on illegal aliens owning immovable property within South Africa. There are, however, procedures and requirements which must be complied with in certain circumstances, such as, the local registration of entities registered outside of South Africa where it purchases property in South Africa and the appointment of a South African resident public officer for a local company whose shares are owned by a non-resident. In the event of a non-resident purchasing property in the country with the intention of residing here for longer periods, permanent residency will have to be applied for in accordance with the given requirements and procedures of South African law.
BUYING A PROPERTY
All contracts to acquire land must be in writing, contain certain prescribed information and be signed by both buyer and seller to be valid and legally binding. Contracts most commonly take the form of an Agreement of Sale or Offer to Purchase which once accepted constitutes an Agreement of Sale. Once an Agreement of Sale has been signed by both parties it represents a valid and binding document from which neither party can withdraw without incurring legal consequences, save for certain instances where:

• the agreement is subject to certain conditions which are either fulfilled/not fulfilled;
  
• the purchase price is less than R250 000.00 and certain additional criteria in terms of the Alienation of Land Amendment Act are present entitling the Purchaser to "cool off".

The de facto ownership of property can also be obtained by means of acquiring the shares/members interest and loan claims in a company/close corporation respectively which company/close corporation is the registered owner of a property. These contracts, strictly speaking, need not be in writing and can be concluded verbally which, although legally binding, is not advisable and it is recommended to record the agreement in writing to ensure that the material terms agreed to are accurately recorded.
It is important, furthermore, to note that only a natural person can acquire the members' interest in a close corporation. Accordingly, if it is intended for a non-resident company or trust to be the ultimate purchaser, provision can be made for the close corporation to be converted to a private company at a nominal expense to facilitate same and this should be a condition of purchase.
Accordingly the decision to enter into and sign an Offer to Purchase/Agreement of Sale is not a decision to be taken lightly and it is recommended that an inexperienced purchaser obtain independent legal advice if uncertain in any respect.

Brazil Property Investment

 ABOUT BRAZIL

Brazil is Latin America's largest country. It covers almost half (47.3%) of South America's territory, totaling an area equivalent to 8,547,403 square kilometers. It is the world's fifth largest country, following the Russian Federation, Canada, China, and the United States. Except for a minor number of islands, the Brazilian territory extension is uninterrupted and continuous. The Equator line crosses the northern country, next to Macapá, while the Capricorn Tropic crosses the southern country, next to São Paulo.

Brazil's east-west territorial extension (4,319.4 km) is almost equivalent to its widest north-south distance (4,397.7 km). Brazil borders with ten countries: the French Guyana, Suriname, Guyana, Venezuela, and Colombia at north; Uruguay and Argentina at south; and Paraguay, Bolivia, and Peru at west. Ecuador and Chile are the only two countries of South America with which Brazil makes no frontiers. The Atlantic Ocean extends along the entire Brazilian east cost, forming a 7,367-km seacoast.

Portuguese is the mother language, although very different from that spoken in Portugal and other ancient Portuguese colonies. Some people state that currently Brazilians speak “Brazilish”, with a pretty different accent and intonation. A comparison can be made with the English spoken by American and English people: each one has its own regional characteristics. Many Brazilians also speak German and Italian, especially in southern cities, thanks to the influence of colonization. 

 

 REASONS TO INVEST IN BRAZIL

• Brazil is the world’s seventh biggest economy with economic growth of 7.5% in 2010 and a projected 4.5% in 2011. (Source: International Monetary Fund, January 2011)
• Brazil is the world’s largest producer of ethanol. With 2 huge recent oil and gas well discoveries, it’s destined to become one of the biggest oil exporters by 2012.
• It’s the world’s largest producer and exporter of agricultural products including coffee, sugar cane, fruit juices, soy, meat and leather.
• Debt financing has become more available property prices increased by 22% in 2009 and continue to rise.
• In 2009, 5 million international tourists visited Brazil. There are also 50 million annual internal tour- ists, the majority of who holiday in Northeast Brazil.
• Population of 190 million with huge consumer power. Internal demand for 9 million+ new homes.
• Brazil will host the World Cup in 2014 and the Olympic Games in 2016. The government has approved $440BN funds for infrastructure improvements.

• Its warm all year round in the northeast of Brazil increasing rental opportunities and yields.
• Some areas in the North East of Brazil have seen capital appreciation of over 20% per year even more in hotspot areas.
• Currency exceptionally favorable at the moment making it cheap for foreigners to invest / buy property, the currency over the last few years is strengthening year on year.
• President Lula has brought huge hope and improvement to Brazil, Inflation is at an all time low
• Foreign investment is encouraged, you own 100% of land and property (there are exceptions, but we will advise you of this)
• Cost of living can be as low as 30% of the cost in the UK/Europe
• Brazil is self sufficient in Oil and is finding more and more oil fields ready for exploration.
• Beautiful Country with fantastic scenery and beaches
• Some economists say Brazil will be one of the future economic leaders along with Russia, India, China (BRIC's).
• Brazilian people are always friendly and cheerful and inviting. Smiles go a long way. Cities in Brazil are vibrant and exciting with carnivals and music
• Brazil is considered a low risk in respect of War, Terrorism, SARS or Hurricanes

Investing in Property - Brazil

Investing in Property in Brazil

Sprawling across half of South America, Brazil has captivated travellers for at least 500 years. Powdery white-sand beaches, lined with palm trees and fronting a deep blue Atlantic, stretch for more than 7000km. Along the magnificent coastline are tropical islands, music-filled and enchanting colonial towns. Inland, Brazil offers dazzling sights of a different flavour: majestic waterfalls, red-rock canyons, and crystal-clear rivers – all just a small part of the natural beauty.

With all that being said, why would you not want to invest? Without doubt, the Brazil property market is one of the hottest markets in the world and presents the serious investor with a great opportunity to achieve strong income and capital growth returns.

Whatever type of property you are looking for, there are many reasons why it makes sense to purchase your property in Brazil.

-Growing economy

Brazil is one of the largest developing economies in the world. Many economists are predicting that Brazil will be one of the future economic leaders.

-Low building cost

Compared to most other destinations, building costs are low in Brazil. This represents excellent opportunities for property investors as they can buy a property in Brazil for a bargain price compared to what the future price level will be.

Investors that invest in Brazilian property while the building costs are low, stand to gain the most.

-Lower inflation and interest rates

The steady fiscal reforms and economic stability have pushed down the Brazilian interest rates and inflation significantly.

-Low cost of living

Compared to other more traditional destinations (Spain, France, Caribbean etc.), in Brazil you can afford a far more relaxed and luxurious lifestyle at a fraction of the price. Approximately 20% lower than that in the UK.

-The exchange rate is exceptionally favourable

At the moment the exchange rate is exceptional, making it very cheap for foreigners to buy property in Brazil

-Complete lack of natural disasters

Compared to many tropical destinations, Brazil benefit from a complete lack of natural phenomena such as hurricanes, tropical storms, flooding, tsunamis nor is it affected by earthquakes.

With all of these positive points why would you not consider investing in property in Brazil.  Don’t wait to buy in Brazil, buy in Brazil and then wait.

We have land and properties  available in Brazil, so contact us for more information. Eestates your one stop shop for land and property speculation for the global investor