The Benefits of Fractional Ownership in Private Residence Clubs

A New Way to Own a Vacation Home - For the Select Few: Fractional ownership of vacation homes, also called private residence clubs, is a relatively new concept that allows you to enjoy four to 12 weeks of home ownership privileges per year at an upscale, luxury resort but at a fraction of the cost of whole ownership.

If you want to own an impressive second home complete with personalized services and located in an expensive resort area but can’t quite justify the expense because you’ll only be using it a few weeks or months of the year, this type of real estate arrangement may appeal to you.

Amenities Galore

Most private residence clubs offer extensive amenities. These may include an extravagant clubhouse and spa, plus five-star hotel services, the kind you couldn’t expect to have in a wholly-owned vacation home, high-end condo or timeshare.

Imagine this: You are going on vacation and you call ahead to the staff at your private residence club home. At your request, the staff shops for your groceries, dry-cleans your clothing, makes your restaurant reservations, heats your private splash pool, and places knick-knacks and favorite pictures of family members around your residence. You are met at the airport by a staff person who shuttles you to your home where a just-detailed Jaguar is sitting in your parking space for use at your disposal.

Get the picture? Private residence clubs are NOT your ordinary second home.

Outstanding Locations

Fractionals or residence clubs have sprung up in exclusive, world-class resort destinations worldwide. St. Thomas, Virgin Islands, Puerta Vallarta and Mexico are popular locations.

In the U.S., the first fractionals were in major ski areas out west, particularly Colorado where real estate was so costly that wholly-owned second homes were out of the question for most people. Eventually they spread to northeastern ski areas. Since then fractionals have begun appearing in golf-oriented communities like Hilton Head Island, South Carolina and popular beach states like Florida.

Some of the most popular fractionals can be found in Jupiter, FL; Aspen Highlands, Bachelor Gulch, and Aspen Snowmass, CO; Lake Tahoe, CA; and Whistler, British Columbia. Fractionals located in the U.S. usually offer good access to major airports that allows for easy transportation arrangements.

Management by Five-Star Companies

The key to the success of fractionals is their professional management. Most are operated by well-respected hospitality companies known worldwide for their world-class resorts. Among them are Ritz Carlton, Four Seasons, Starwood, Intrawest and Millennium, brands known for their five-star services and amenities.

Hassle-free Ownership

Part of the appeal of fractionals is that they are completely hassle free. In addition to having a staff for personalized service at your disposal, at a private residence club you never have to worry about repairs, maintenance or housekeeping. Everything is included in the price and annual fees and taken care of by the professional management company.

Appreciation Potential

To date there have been very few fractional resort developments. The demand is high. As a result, it is likely there will be substantial appreciation, rather than the depreciation that usually occurs with timeshares.

Real estate experts say that the outlook for investment appreciation appears excellent. You can expect at the very least an appreciation parity against other real estate in the resort area in which the fractional is located.

Prices

To buy a fractional, you pay a one-time purchase price and then a yearly upkeep fee that covers all of the expenses associated with property ownership and its use and services.

What do fractionals cost? Prices vary based on the size, amenities and location of the individual property. But most are in the $100,000-$500,000 range. Keep in mind that these are truly top-of-the-line homes that would cost you two to five times as much if purchased outright as wholly-owned vacation homes.

Comparison of Fractionals to Timeshares

How do fractionals compare with timeshares? They really don’t. Fractionals are far more exclusive and include many more luxury amenities and services than timeshares. They tend to be larger homes, usually three to five bedrooms. Timeshares usually allow you use for just one to two weeks per year. Fractionals offer from two to 13 weeks, and those don't necessarily have to be consecutive weeks. Pick the weeks you want. With regard to financing, obtaining a bank or mortgage company loan on a timeshare is difficult. Rates are high, regardless of how good your credit. That's because it’s a well-known fact that most timeshares depreciate over time. Conversely, banks and mortgage firms consider fractionals to be appreciating assets and will often treat them like any other second-home purchase.

Why do fractionals tend to appreciate while timeshares usually depreciate? There are a couple of reasons. With fractionals, more of the buyer's dollar goes to high quality finishes and "bricks and mortar" vs. sales commissions which can be as high as 40%-50% with timeshares. Furthermore, timeshare values have historically been poor because of the large number of resales on the market, not to mention a continuous stream of new developments. The fact is the secondary market for timeshares has never really developed.

Conversely, there are a limited number of fractionals on the market. Most likely, that number will stay small because fractionals are built in only the very best, most highly desirable locations. Therefore, demand outpaces supply and results in property appreciation. Comparison of Fractionals to Condo Hotels

Fractionals (private residence clubs) differ from condo hotels in that you have a set amount of time when you can use your vacation home. Condo hotels are in fact, condos located within hotels. You can use your unit whenever you want, and place it in the rental program when not using it. Fractionals do not offer rental program participation.

Fractionals tend to be larger than most condo hotel units. Most fractionals offer three to five bedrooms, while most condo hotel units are studios, one bedrooms or two bedrooms. Currently, most condo hotels are located in Miami and other surrounding cities in South Florida. Fractionals are most prevalent on the West Coast, particularly in ski areas. However, both types of real estate are rapidly gaining popularity and soon there will likely be more of a supply across the country to meet the growing demand.

For more information on fractional ownership in private residence clubs and on condo hotels, including listings and photos of available properties, visit www.condohotelcenter.com.

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Joel Greene is the President of Condo Hotel Center located in Miami Florida which specializes in the sale of condo hotels and private residence clubs. Visit his information-packed web site, www.condohotelcenter.com, for more details on these unique real estate products and to see listings, photos and prices for condo hotels and private residence clubs. You can also sign up for his free Property Alert newsletter to be notified when new properties come on the market.

Condo Hotel Trends - A Look at the Big Picture in Vacation Home Ownership

Condo hotels are one of the hottest products in today’s real estate market. New properties are cropping up in different parts of the country and new buyers are entering the market daily. Things have been moving so quickly in terms of condo hotels, but sometimes it's worth taking a moment to step back and look at the big picture.

Condo Hotels In General: There is a spreading enthusiasm about the condo hotel concept. More people are recognizing its potential and therefore creating demand for more inventory.

Condo Hotel Buyers: The average buyer is 35-50 years old. Buyers for Florida properties, where condo hotels are most prevalent, come from all over the U.S. On the international front, most foreign buyers interested in U.S. property are from South America and Europe.

The vast majority of buyers want condo hotel units primarily as investments and are focused on the potential for appreciation with the side benefit of hassle-free ownership. They see the ability to actually use their condo hotel unit as a vacation home as important but secondary to their goal of investment diversification.

Condo Hotel Market: Virtually every single property that has come on the market to date has sold out in pre-construction. Most of these properties are mega high-rise buildings with on average 200-500 units, and with some in excess of 1,000 units.

The speed with which these properties sell out is often as surprising to buyers as it is to the developers themselves. For example, the MGM Grand in Las Vegas, a 576-unit condo hotel, was expected to sell out in two years. It sold out in two months! The Platinum, a 255-unit property in Las Vegas, also sold out in just a matter of a couple months.

Hot Areas: South Florida continues to be an extremely popular area and one that has shown strong and steady appreciation. As already mentioned, the condo hotel trend which began in South Florida has now spread out west. Las Vegas is leading the pack with many new condo and condo hotel developments in all price ranges being built.

Growth in Florida: Looking at South Florida, it's easy to see what is happening. Miami Beach, the hottest area, is all built up. There just isn't any undeveloped land. That's causing a couple of things to happen. Developers are heading to the northern end of Miami Beach (North Beach) and areas still further north such as to Sunny Isles and Ft. Lauderdale.

A new trend is developers buying existing structures in Miami Beach and either upgrading them, as in the case of The Mimosa which was the former Brazil Motel, or knocking them down and starting over, as in the case of One Bal Harbour in which a multi-family, high-rise building (Harbour House) was demolished and a five-star condo hotel built in its place.

Finally, some properties are beginning to crop up inland. These condo hotels may not have oceanfront views; however, they're within a few short blocks of a beach. Because they're not on the ocean, these properties tend to be priced more economically.

Properties: The most popular properties continue to be those with a franchise name, one that brings a reputation for four- to five-star quality or a name that is already well-known. A prime example is Canyon Ranch Living in Miami Beach. People recognize the Canyon Ranch name and feel confident that this property will be of the same five-star caliber as its Arizona counterpart. Of course, it doesn't hurt that this property will have a 60,000 sq. ft. rooftop spa and fitness center.

The Selling Process: A lot of properties take reservations of more than half the total project long before they've even prepared their purchase contracts. This means that many of the best units are reserved months before any money changes hands and often before even the first spade of ground has been turned over. Those early investors are seeing some amazing appreciation on their investments.

Prices: Like anything for which there is more demand than supply, prices keep going up, up, up. Developers often raise their prices 3-5 times from when they start selling until they sell out.

Developers are no longer discounting prices at the beginning of the selling process when they are anxious to get a few sales under their belt. This used to be common practice; it is no more because demand is so great.

There are sometimes, however, some price adjustments made at the very tail end of the sellout phase when developers want to close out their property and move on to their next project. Generally speaking, with regard to price, the best time to get in is usually early on in the first pre-construction offering.

Quality: Most condo hotels being built are of four- to five-star quality. The reason is two-fold: 1) There is demand for the types of services provided by four- and five-star properties, and 2) Oceanfront land is so costly that it makes more sense for the developer to put in a luxury property with units that he can sell at a premium price rather than lower priced units.

Financing: It's getting a little easier to get condo hotel financing. There was a time when most banks and mortgage companies weren't even familiar with the term condo hotels. They now know it and also recognize the viability of these properties. They are more accommodating in expediting these loans.

Contracts: Contracts that allow assignability have become rare. In the past, at some properties buyers could place a deposit on a unit in the pre-construction phase and then flip their unit prior to when they had to close. Developers now want to be sure that they don't compete to sell their last few units with investors who purchased early at pre-construction prices and are now re-selling them at below the developer’s current prices.

Resales: Some condo hotel unit resales come on the market. Of course, this is to be expected. Some of the earliest buyers now want to move on to something or somewhere else. However, the resale market is still relatively small, and it's hard to find a bargain.

Advice to New Buyers: How can buyers choose a condo hotel unit that will be a good investment? It’s best if they can work with a real estate broker who specializes in condo hotels and can make them aware of all products on the market. Aside from that, they should look for the following elements:

Location: Real estate is all about location. Beachfront properties in South Florida have done exceptionally well in recent years. Their appreciation has been significant. If you prefer a property that is not on the ocean, it's a good idea to select one in an area where you can expect to have business driven to your property, such as near a major convention center or in Downtown Miami near the financial district.

Franchise: It's always safest to go with a major company, well-known internationally. Four Seasons, Hilton, Starwood, Rosewood, Setai and Trump are excellent examples. Ask yourself, would you likely stay in a Holiday Inn for $69 or the independent hotel across the street for $62? Many investors or hotel guests will pay a little more for the comfort level they get with a well-known, well-respected franchise.

Management Company: Compare the management companies and their rental sharing program. You will likely feel more comfortable investing your money in a condo hotel with an experienced, top-notch management company vs. an independent operator. Also, it's worth noting that an established management company does worldwide marketing and likely has a state-of-the-art reservation system that will help ensure your unit is rented as much as possible.

For more information on condo hotels including listings of available properties, visit www.condohotelcenter.com.

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Joel Greene is the President of Condo Hotel Center located in Miami Florida, which specializes in the sale of condo hotels. Visit his information-packed web site, www.condohotelcenter.com., for more on condo hotels and to see condo hotel listings, photos and prices. You can also sign up for his free Property Alert newsletter to be notified when new properties come on the market.

Condo Hotels Offer Luxury and Great Investment Potential

Not Your Typical Vacation Home

What could be more perfect that owning a luxury vacation home at a landmark resort and receiving rent revenue whenever you’re not using it? Condo hotels are the newest trend in vacation home ownership. Live in it when you’re there; rent it when you’re not.

So how do condo hotels differ from owning a traditional vacation apartment or condominium? These are not your typical second homes. They are fabulously-furnished condominium suites in some of the most famous hotels and resorts around the country. The properties are usually large, high-rise, luxury hotels operated by a big name like Four Seasons, Ritz Carlton, Sonesta, Starwood or Hilton. Prices range from $200,000 to over $1 million for prime properties.

Generate Revenue to Defray Mortgage Costs

How do condo hotel owners find renters? This is what makes the program so appealing. When owners are not using their unit, it is put into the rental program of the hotel. By capitalizing on a hotel’s name recognition, advertising, national affiliations, centralized reservation system and management expertise, unit owners typically receive a higher level of rental income than they would from a traditional vacation home. Plus the hotel takes care of dealing with the renters, as well as all housekeeping and maintenance of the condo hotel units. Talk about hassle-free!

The Real Appeal of Condo Hotels Is Appreciation

While it’s nice to receive rental revenue on your vacation home, the more important factor from an investment standpoint is its appreciation. Condo hotel units have been appreciating at a far faster rate than single family homes and condos in the same areas.

Most condo hotels are purchased directly from the developer. With limited inventory, condo hotel units have been moving at lightning speed. In fact, almost all condo hotels sell out in pre-construction, long before even a single spade of dirt has been overturned. And as is the case in any situation where supply is greatly outpaced by demand, condo hotel owners have been seeing tremendous appreciation in their units.

World-Famous Resorts Attract International Attention

Most condo hotels are located in seasonal resort areas. South Florida, particularly Miami Beach and Ft. Lauderdale, is one of the country’s hottest markets with world-famous properties like the Fontainbleau, Canyon Ranch Living and Trump International leading the way. Las Vegas and some of the Caribbean Islands are also popular condo hotel destinations.

Who’s buying? The answer, in a nutshell, is everyone. That is, investors and vacationers who recognize the appreciation potential of a revenue-generating vacation home. That appeal isn’t limited to U.S. buyers. The concept of condo hotels has had international appeal with buyers from Latin America and Europe competing with Americans for the best properties.

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Learn More About Condo Hotels

Condo hotels have tremendous investment appeal in today’s market because of low interest rates and a tumultuous stock market that has investors looking for safer alternatives. Investors who take the condo hotel plunge can enjoy all the amenities of vacationing in a first-class resort while watching their units appreciate exponentially.

For more information on condo hotels including listings of available properties, visit www.condohotelcenter.com.

Joel Greene is the President of Condo Hotel Center located in Miami Florida, which specializes in the sale of condo hotels. Visit his information-packed web site, www.condohotelcenter.com., for more on condo hotels and to see condo hotel listings, photos and prices. You can also sign up for his free Property Alert newsletter to be notified when new properties come on the market.

Property Auction & Why You Should Run A Mile From Them

That's A Funny Thing To Say About Property Auctions; They're All The "RAGE, Aren't They?"

From The Desk Of Colm Dillon

Hello Colm here ...

So why would I make such a comment like that; I mean, they're happening everywhere, aren't they?. They’re even on TV. property auction,

So let’s go back a bit. Can you remember back to when they were a rare happening. Some big house owned by the local rich family or the farm or antiques; that kind of thing. property auction,

Now it seems to be just about every three-bedroom homeowner is being convinced to sell that way. property auction,

So let’s look at what or who has driven this upsurge, and why they would have done it? property auction,

I like to go back to basics and ask the Question; Who Benefits? Because whoever benefits, you can bet they’re the ones driving the "A" truck, and are trying to get us all up on the tray property auction,

It’s the media barons folks … the major newspaper and TV owners have convinced the Real Estate Agents to push you into auctions, because it generates BIG ADVERTISING REVENUE. property auction,

Newspapers don’t make money out of the news. The NEWS is only the reason they can sell advertising and it is from advertising that they make a profit. property auction,

The Real Estate bosses have fallen for their line hook line and sinker. Agents have become advertising salespeople for the newspapers. property auction,

So why does the big "A" appeal to the big real estate bosses? property auction,

1. It brings a sale process to an end with a definite date … the "A" date. property auction,

2. The agent doesn’t have to commit to an achievable sale price. property auction,

3. The normal sale process is hard work requiring a higher skill level. property auction,

4. The client pays all the advertising up front.

5. Advertising makes the Agency look big and successful, but with Client’s Money. property auction,

6. All the pressure is put on the client to sell. property auction,

7. Failed auctions don’t get advertised in the mediaproperty auction,

8. They earn commission from the newspapers for selling advertising for them. property auction,

It brings a sale process to an end with a definite date … the "A" date. property auction,

It sells or it doesn’t sell! Accordingly it’s relatively easy for the agency boss to estimate his income from a regular flow of auctions. property auction,

Private Treaty sales require individual inspections and negotiations and an end date is not easy to determine. property auction,

The agent doesn’t have to commit to an achievable sale price. property auction,

At the auction sales presentation, you the owner, would like to know 'What Price" you will get for your property. property auction,

The answer is always,’THE MARKET.’ And of course, so the story goes, THE MARKET will usually recover the advertising expenses you must pay up front; especially for a beautiful house like yours. property auction,

The normal sale process is hard work requiring a higher skill level. property auction, The agent, therefore, does not have to give you a possible range, within which your achievable price will fall. By definition this allows the agency to employ people with high sell ‘the auction’ ability but reduced real estate experience. property auction,

The client pays all the advertising up front. property auction,

OH, did I mention that you now have to part with a Substantial Cheque of many thousands of dollars in order to promote your property. You will be presented with a well-prepared advertising campaign. Your only choice will be the ‘pink one’ or the ‘yellow one.’ property auction,

That is the $7,000 one or the vastly superior $11,000 one. If your house is a high price ticket, you can double these costs. property auction,

Advertising makes the Agency look big and successful, but with Client’s Money. property auction,

OK, the campaign is off and running and you first advert appears in the Color Pages. Yes it is small, isn’t it? As a matter of fact the most dominant FEATURE on the page is the AGENCY’S NAME. Then, of course, we have the sales person’s photo, perpetuating the ‘cult of personality.’ property auction,

Oh yes, then there is the picture of your house and a few lines of description in typeface you can just read. ‘Umm,’ you think, ‘maybe I should have gone for the bigger size ad. property auction,

Let’s move on to the day just before the auction, and when all your money has been spent. The agent and the auctioneer visit you and tell you that there has been a good response to the advertising. Of course, you don’t have a clue what quantifies as a ‘good response.’

‘We need to establish a Reserve Price” they continue. As someone once said, ‘please explain?’

Oh, it’s the minimum price you would accept! ‘But.’ you say, ‘I didn’t go to auction to get the MINIMUM PRICE, I want the MAXIMUM PRICE; what’s this minimum price business?’

‘Well,’ says the auction agent, ‘now that we have completed this big campaign for you,’ they continue, ‘you want a result don’t you, so let’s not send the people who turn up get away.’ ‘No,’ you should reply, ‘I don’t want any result, I want the best price plus my advertising cost back.’ Question! How well do you sleep that night?

All the pressure is put on the client to sell.

Let’s skip now to the BIG DAY, and ask the question, “who is under the greatest pressure, you or the agent? I THINK IT ‘S YOU!

How many will turn up? Will they be ‘Tyre Kickers & Sticky Beaks’? I’ve just spent thousands of dollars to get to this point. Boy I hope we sell, and MOST IMPORTANTLY, sell at a great price. A price that will beat the price I could get just selling it normally + my advertising costs.

THE AUCTION

Let’s just say that the ideal prices for your home is $550,000.00, OK!

In the crowd there are a number of genuine buyers, whose profile range from:

* Investors (who want to steal your property for a low price, say $100,000 under)

* Normal home buyers (who will pay a fair price, say $520,000.00)

* And finally there is one ‘heart’ buyer who will pay up to $580,000.00).

Once the auction starts it is easy to see how the investors get knocked out of the bidding, after all they are only there to grab a bargain when an auction fails and the seller is desperate. But they do get the ball rolling.

Next the bidding stops at $520,000.00 where the normal buyer has reached their limit. They get knocked out as soon as the Heart buyer goes another $5,000.00.

So your house is now at a bid of $525,000.00 with no other bidders to get it up to the possible top bid of $580,000 which is the capacity of the person who last bid.

The auctioneer will now halt proceedings and have a private “pressure” chat with you. Now remember you do not know the highest bidder can go higher.

No matter what words come out of his mouth the essence will be,‘the best bid I can get is $525,000.00 and no matter what I say I cannot get another bid. So do you want to sell at $525,000.00 or not?’

I did mention pressure earlier on. Are you beginning to feel it yet, after all, you have spent thousands of dollars, and now you are $25,000.00 under the price you wanted. If you say NO the audience walks, and you are left with a debt, and the hope of selling privately after the auction.

Failed auctions don’t get advertised in the media.

Now comes the next problem. As an auction is such a PUBLIC event, all the agents and all the neighbors know at what price your auction failed. So I’m sorry but that failed price is now “THE PRICE” AND IT IS HARD TO GET PEOPLE TO PAY MUCH MORE AFTER AUCTION.

Ever notice how auctions that fail never seem to be newsworthy. Well, you see, it’s bad for the organization that has a vested interest in promoting auctions. If you happen to own newspapers and a TV network you could always create a program and why not call it Auction.

Just like any soapy, before long all the people start to believe in auctions. They can even see themselves as being the person on TV. But folks we have to remember that it is ENTERTAINMENT.

They earn commission from the newspapers for selling advertising for them.

Remember I told you that the agents who promote auctions are really working for the newspapers, so naturally they’re entitled to be paid? As a matter of fact their employers are so happy that they put on a big annual celebration black tie dinner.

And they give out prizes and plaques. So when you go into a big agency’s office have a look at the plaques on the wall. “For the Agency that booked the biggest Dollar Value Advertising for the Month – Year; For the Agent within the Agency who booked the biggest Dollar Value Advertising for the Month – Year etc.

You bet, every little dedicated worker gets a prize. They unfortunately don’t have a prize for the Agency that rebates the newspaper kick back commission to the vendor!

And so we end the sorry saga of:

Auctions & Why You Should Run a Mile From Them?

Are You Saying Auctions Should Never Be Used for Selling Property?

No. I am not saying that at all. If you have a unique property that has features that may only appeal to a limited number of people in your immediate market, then you should auction.

The vast majority of Aussie Home sellers can get a better and cost effective result from selling by normal Private Treaty method. Remember it is the Net Result after all costs that ends up in your pocket.

And I did mention the ‘pressure’ of the auction process and the ‘public profile’ of the failed price does not work in your favor.

PS: The correct way to sell your property is by Private Treaty with a knowledgeable real estate agent with whom you are comfortable and in whom you have confidence.

The Real Estate Development Coach

Copyright Colm Dillon, October 2003
All Rights Reserved.

Colm Dillonauthor of "Residential Development Made Easy" the only 'How To' Become a Developer eBook, selling in 38 Countries, has developed $1.2 Billion worth of real estate - read more on his web site http://realestatedevelopmentcoach.com/realestatedevelopment.html

How To Get The Best Rental Accommodation In The Area By Using "Your Capital"

My report is for you to use your power to negotiate, not only a reduced weekly cost of accommodation, but also to get the best accommodation available in the area in which you wish to live.

Hello Colm Dillon here ...

Market conditions will effect the final outcome.

Irrespective, a good negotiation, following these guidelines, will save you money. Get to know the state of the market before you commence.

Determine how much you can afford to pay and then go higher. For example if you can afford $200 per week, start looking at a figure of say $250 - $260 per week. If you fall into a higher bracket; say $400 per week, start looking at $500.

Go to several real estate agencies and ask them what they have on their books at the amount you nominate. Also tell them your preferred areas.

Go through the normal selection process and pick the best place in which you would be happy living.

Confirm the weekly/monthly rental with the agent and the length of the lease term i.e. 6 months etc

Confirm with the agent that you really like the place, although there are a few others you like as well. Don’t say which ones, just give the impression that their agency is not the only 'cab on the rank.'

Note: Final selection by you will be made on the basis of the landlord attitude, as you intend living in the property for a ‘while.’

Start The Negotiation. Ask the agent to find out how much the landlord would accept for a 12 month lease. He will probably reply by stating the same amount back to you as you would pay for a six month term.

Start ramping up your approach by enquiring about a 2 year term. At this stage you should be getting the agent to phone the owner and coming back to you with a discount.

You could leave the agency for a hour or so ... allows time for the agent to see that you are giving serious consideration to the other properties, as well as theirs.

Don't be to automatic in your process. "Time" is a wonderful tool in negotiation.

Generally talk a bit more to the agent and raise the question of what discount the owner would accept for a 3 year lease term.

Again a phone call to the owner should take place. If the agent is making all the decisions without calling the owner, you should insist, as h/er does not have a big latitude in rental decision making. The owner is the agent's ‘boss.’

You should expect a further discount from this latest approach.

The agent may start to feel as though the negotiating should be coming to an end. Don’t worry, you are about to bring out the ‘Big Guns.’

Confirm again that you are warming more and more to the property, but there are a few other things you want to raise.

Tell the Agent that you would consider pre-paying 12 month rent in advance, if the owner would come to the party on the rent. Emphasize, the lack of risk to the owner; a large one off payment in his hand now that could be used to buy more property, etc etc.

Expect a reduction and Get It.

Depending on how your are going in the reduced rental stakes, in approaching your target base rent price, you may have one further go and offer 18 months or two years rent payment in advance.

You may hold off with this final offer by leaving the office after the last response.

The agent and owner have given ground on the rent so they may be feeling a bit tender. Let them 'marinate' for a few hours; maybe even over night, then put the last proposal of the 18 to 24 month prepayment of rent.

Once again, only you can judge how the negotiations are going. Most people want to ‘do a deal’ quickly and do not have the patience for a long term, several hours, negotiation.

By adding a more and more enticing offer you are making yourself more desirable as a tenant ... you will start to surround yourself with a "Golden Glow" of desirability.

When the final deal is done on rent and before you sign any Lease, you can now raise any property questions you have; i.e. carpet shampoo, condition, painting, plumbing, door locks, blinds etc etc.

Take photographs on a dated film of every aspect of the property (2 copies) one for the agent, one for you. You sign the back of the photos you give the agent and they sign the back of the copies you keep and it is noted in the lease.

When all these actions are taken, you will have accommodation, that you want, that is better than the original $xxx per week would get and you are secured for 3 years.

Finally, from these negotiation processes, both the owner and the agent will hold you in high regard, because most people admire a good negotiator.

Happy renting

Note: There is a financial mathematical formula called Discounted Cash Flow (DCF) which can be described as a means of calculating the ‘Present Day Value’ of ‘Future Cash Flows.’

So what does that mean?

Let’s say that you have got the $250 per week rent down to $230.00 before you start offering to pay rent in advance.OK?

In making the decision to pay in advance, you are giving the owner an amount of cash that they can use to make other buying investment decisions.

What this means is that the money you give them can earn them an amount of money, and we’ll call that ‘interest’ – just like the bank. This is just one concept I want you to lock away.

That concept has been given to you so that you can see, or understand, my next concept of DCF.

Imagine writing across a page a whole string of $230, $230, $230 etc for every week you would normally have to pay that rent; 52 times or 104 times.

Now imagine discounting the 52nd $230 by an interest rate of whatever; say 5% for 52 weeks. Then the next $230 is discounted by 5% for 51 weeks and so on until you get back to zero weeks. Having done all these calculations and then add them up you arrive at a $value of all those Cash Flowed $230’s for 52 weeks or for any other period.

I have not done the calculation for you because individual circumstances vary so much. However it is this discounted amount of money that you offer to the property owner.

Now going back to my first concept, you can see how the owner can invest the money. If they were to earn say 5% they would almost get back to the figure we started with i.e. 52 x $230.00 except of course the investment would also have gained in capital value.

I hope this brief explanation helps you understand why you should expect a discount for the Pre-Payment of rent or any other purchase you make where payment over time is the deal.

Last Point: If you were to leave your pre-paid rent in your bank account you would pay Tax on the interest you earned.

The Discount you get off your rent is Not Taxed and so is much more valuable to you and in effect you are getting a better return on your money invested in RENT.

This Article Shows You How To "SAVE MONEY & GET WEALTHY" by Renting & Using You CAPITAL.
Colm Dillon's eBook, "Residential Development Made Easy" is a best seller in 38 Countries World Wide, through his web site: http://realestatedevelopmentcoach.com/realestatedevelopment.html having developed $1.2 Billion worth of projects himself.

"Time" Is A Major Real Estate Wealth Growth Tool, So Use 'IT' And Watch Your...

In Real Estate "Time" is a Wealth Development Tools

Real estate wealth,

From The Desk Of Colm Dillon

Hello, Colm here ...

In this report I use figures from my area of the world ... I know they don't apply all over the world, but they should encourage you to get the figures for yourself.

After all no report is going to make your money grow ... it's the knowledge you gain and "Your Application Of The Knowledge" that makes your financial wealth Grow.

In another report I gave you a concept I borrowed from Phil Ruthven, a truly wonderful speaker on economics, on how he looks at Home Ownership.

Now I want to look at the Tools we have available to help us Grow!real estate wealth,

So folks, if you want Real Estate Development, you must use all the tools available to you to get some. Of all the tools you have, the single most important one is TIME.real estate wealth,

1. Time is your greatest friend. Time to buy good investment property and let it double in value every 8 to 10 years or better.real estate wealth,

2. Federal Government Real Estate Investment Tax Deductions are another tool the Government uses to tell you in Words, Dollars and Cents that they want you to get wealthy so you can look after yourself to your final days. real estate wealth,

3. Correct Financial tools are also vital to your wealth development. See my report of Finance. I will go into some further detail in this section on the use of Evergreen Lines of Credit and how they work.

4. Good Real Estate Management is the next tool. Well-managed and well-maintained real estate investments, that houses good quality tenants is also essential. Trying to do this work yourself, is a mistake. See my report on Property Management. real estate wealth,

In Australia, it has been instilled in our consciousness, that we must all own our own home. And there is nothing wrong with the concept. It's just that we should have been told to rent it out; Don’t live in it.

By buying a house TO LIVE IN, while we are young, we are wasting the wealth creating tools of Time, Double Income, (if married) Property Income and Tax Deductions. No wonder so many people have to play catch up later in life. real estate wealth,

So the first clue to Real Estate Wealth Development is don’t buy a residential property for you and you partner to live in. You buy a house as an investment and you rent elsewhere.

Growth Tool No. 1 – Time

Time is your greatest friend. Real Estate is a long-term investment and by being loyal to it, the real estate will reward you handsomely all through your life. real estate wealth,

You can prove this to yourself, as I did, by getting the figures of average house sale prices, from the Australian Bureau of Statistics for Brisbane, the largest City in Australia.

To save you the trouble I got the figures and I painstakingly went through them in order to validate the old wives tale that, ”real estate doubles every seven years.”

Well, it does better than that, you’ll be pleased to know.

I was able to get the figures from 1973/74 to 1994/95. I think I started there because that was when I arrived in Brisbane on transfer from Melbourne. real estate wealth,

That is a twenty-two years period, during which we had several credit squeezes, a few recessions and a few good times as well.

In 1973/74 an average house price for the whole of Brisbane was $23,234.00. That average includes the best and worst house and suburb.

Seven years later, in 1980/81, it was $43,470.00 an increase of 87%.

However by the next year, the eight-year, it had risen to $56,757.00 giving an increase of 144% from 1973/74. So you see that it more than doubles by the eight year. real estate wealth,

Going on a further seven years from 80/81 to 87/88, the $43,470.00 went up to $83,679.00; a further 92%.

Interestingly, going on one more year to the eight year, it had again increased to $113,917.00 giving an increase of 162% from 1980/81.

A further seven years from 87/88 to 94/95, the price of the average house in Brisbane went up to $163,325.00; a further 95% increase. real estate wealth,

Unfortunately the Bureau amalgamated the Shires of Logan and Caboolture into this statistical base and I could not extract the figure for the eight year.

However on the evidence of the previous 22 years I believe it is safe to assume the increase would be at least 5% making it an increase of 100%. real estate wealth,

So these figures prove that over a period of 22 years the asset has increased by seven times its original value and all you would have to do is buy it at the beginning.

I hope this gives you some idea of why TIME is so important to growth. And remember that I am talking about average prices, I am not talking about hot inner suburbs that will obviously do much better.

If you REALLY understand these figures; you should ask yourself why you are willing to miss out on buying good real estate by stopping negotiating for the sake a few hundred or a few thousand dollars. I've seen this done many times because of stubborn-ness. Crazy! real estate wealth,

For goodness sake it’s the Real Estate Asset that is in short supply; not money. If you have found real estate that fits your criteria; BUY IT!
real estate wealth,

The Real Estate Development Coach

Copyright Colm Dillon, October 2003
All Rights Reserved.

Colm Dillonauthor of "Residential Development Made Easy" the only 'How To' Become a Developer eBook, selling in 38 Countries, has developed $1.2 Billion worth of real estate - read more on his web site http://realestatedevelopmentcoach.com/realestatedevelopment.html

Strata Title Hotel Investments

Want to know why Strata Title Hotel Investments can be a "Hell Hole" for the unwary?

Hello, Colm here ...

A RESIDENTIAL INVESTMENT MANTRA FOR YOU!

WHEN ALL ELSE FAILS,
IF YOU CAN’T “LIVE” IN IT PERMANENTLY,
DON’T BUY IT!

What do I mean by that?

Flexibility should be your investment by-word. One of those important 'bench marks' that you should achieve.

Strata Title Hotels are built because:

* Major Institutions don't want to own Big Hotels.

* Not to allow you to enjoy being part of the growth in the hospitality industry.

So What Are The Facts:

Why are Hotels built and sold by Strata Title?

Why do Developer Build Strata Title Hotels?

Developers will say, “strata title allows the average investor have a part of the inner city tourism/business market.”

What’s the real reason for Building Strata Title Hotels?

Major Institutional investors in Australia do not want to own hotels any more. They got into them in the 70’s, 80’s and generally, did not enjoy the experience.

Why?

The ROI was not 'there.'

Institutions are essentially passive investors and like Flexibility in their investments. Financial institutions do not run Hotels. So they must engage Managers, like Sheraton, Hilton etc to manage the hotel for them.

Institutions want to engage the Manager on a Lease Aggreement; however Managers prefer a Management Agreement Arrangement.

Management Agreements are the NORM for the industry, and the Managers are expert at maximizing their performance bonus and the amount left over (the investment return) for the institution has generally not been good enough for institutions to continue to want to expand their hotel investment portfolios, even in CBD locations.

So if that is the attitude of the ‘Big Boys’ and a developer believes there is a market now for a new hotel, their only other option is to go the strata title route and go for the ‘Little Guys.’

Can I put it another way, with no insult intended.

The investment performance of hotels is not good enough for the Professional Institutional Investors who have 'money power' and 'high skill' behind them; so let’s go for the non-professional investors through strata title.

Remember the Big Boys employ the Big Managers. The Big Managers don't get involved in Strata Title Hotels. That's left to the lower ranked managers & the lower ranked developers.

I don’t think that is good enough, do you?

1. If the complex is run as a HOTEL, you can’t live in permanently, ‘cause it’s too small.

2. If its internal space IS UNDER 50sqm a buyer will not get bank finance.

3. And finally if it has a RENT GUARANTEE you’ve now got three good reasons to do a ‘180 degree’ turn and RUN.(See separate report)

If investors decides they still want to buy a strata title hotel unit, the most important document to read is the Management Agreement and if there are any Guarantees; who is underwriting the Guarantee; HOW STRONG ARE THEY?

Strata title hotels have a poor history unfortunately, because of the reputation and lack of experience of the developers who put the deals together AND PROMOTE THEM.

Only a few months ago I helped a family who had been in one of these strata title hotel investment for five (5) years. They sold for less than they paid. Enough said.

Let's get away from hotels:

Let’s suppose your financial world has fallen apart, and you have to cut things down to the bone.

If your investment unit/house has been designed for the investment market, it is generally smaller than what society regards as a normal size.

You and I know what a NORMAL house and unit looks like and feels like; don’t we?

When you see Rent Guaranteed Investment Real Estate, have you noticed that they just don’t look like we expect normal houses and units to look.

Usually they are much smaller and are built in a complex.

So the first rule is never buy any property that is under 50 square metres internal area. Do not include balconies in this calculation.

IF THE AREA IS UNDER 50 SQM INTERNAL AREA, BANKS WON’T ACCEPT THE UNIT AS SECURITY.

Oh, you say, ‘but my friend was able to buy one and the bank lent them the money.’ Yes, you are correct BUT it is usually a finance deal done by the developer with the bank and the bank will usually have security over other assets.

When you come to sell, a bank won’t lend BUYERS money for a property under 50 sqm internal area, and that leaves you looking for a ‘CASH BUYER ONLY.’ Your Flexibility is wounded, but you can't see the blood yet.

The unit/house is physically not considered standard, as compared to what is normally on the market. They can vary from small houses/townhouses in outlying areas or inner city units in complexes being run as a hotel/motel.

The Real Estate Development Coach

Author of "Residential Development Made Easy"

Copyright Colm Dillon, October 2003
All Rights Reserved.

Colm Dillon author of "Residential Development Made Easy" the only 'How To' Become a Developer eBook, selling in 38 Countries, has developed $1.2 Billion worth of real estate - read more on his web site http://realestatedevelopmentcoach.com/realestatedevelopment.html

Why You Should Rent To Live And Buy To Invest

Why you should Rent a place to live in and Buy a place for Investment - Did you know that in your Bank's Accounts "Your House" is placed in "Their Asset Book." That means that the house you own and live in, is a "Liability."

Rent Your Home; Don't Buy It;
That Seems A Provocative Thing To Say,
Don't You Think?

From the desk of Colm Dillon ...

Hello Colm here ...

So Why Do The Majority Of Us
Do The Exact Opposite;
We Buy & Don't Rent?

Countless articles have been written over the years on the wealth 'make up' of the richest people. While the percentage may vary depending on the individuals leaning, the real estate proportion will vary between 20% to 35%.

Here's a thought for the day; It’s the basis of this report; It's one of the Tools you should use to create Wealth; so think about it before moving on!

In The Banks Accounts,
Your House Is In
"THEIR ASSET Column"

That Must Mean, That In Your Personal Accounts Your Home

"IS A LIABILITY"!

I want you to keep that thought in your ‘open mind’ as you grapple with this new concept. I write these articles to make you THINK and that can sometimes make you uncomfortable.

Here goes!

It’s Hard to Justify Borrowing Money To Buy A “HOME.”

Sorry, but it's economically very difficult, in wealth development terms, to justify buying real estate for you to live in, if you have to borrow money to do it, unless you put a massive monetary value on your emotions.

Please understand my purpose in writing this report and associating it to a site about real estate development.

A lot of us have to be financially smart to be able to accumulate enough capital to do our first development ... so this is for those people ... but maybe there are a few ideas in it for the rest of us as well ... so read on.

This wealth development concept, based on renting, was given to me many years ago by one of the most interesting and provocative speakers on economics I have ever heard.

He’s name is Phil Ruthven and he created a company, Ibis International, an economic analysis and forecasting company. Phil also writes for the Financial Review and is in high demand as a speaker on economics.

By any reasonably observation, Phil is successful; both professionally and financially and so can buy a home, if and when he wants.

He doesn’t, he chooses to rent and his reasoning goes something like this.

“When I started life as an adult," he said, "I was a ‘single person’ and my single status defined my real estate accommodation needs.

Later I became a ‘twosome’ and my real estate housing needs changed for the first of many changes.

When the twosome became threesome or foursome, by definition, our housing needs changed yet again.

Later in life, when kids grow up I will become a twosome again.”

Now Phil contends that on top of our family profile changing, our work situation also changes; maybe a move interstate, which further complicates this equation.

In a scenario like this every time real estate is bought or sold and not rented, there are Stamp Duty, Legal Fees and agents Commission to be paid PLUS the costs you expended on decorating each home.

Add it up! You are talking about ‘many’ tens of thousands of dollars paid by you as a direct result of the choice you made to Buy Real Estate To Live In out of your net after Tax Income.

So Phil told his audience, "he has rented his real estate accommodation for more years than he cares to remember."

"Renting," he continued, “allows me to change my place of residence, at the lowest cost, having regard to my family’s changing needs.”

He further improves the deal by pre-paying his rent, sometimes for a number of years, and getting a handsome discount from the landlord. When his needs or mood changes again, he just moves on and repeats the process.

“But what about all that lost rent he had to pay?” I hear you say, "that surely reduces your wealth development."

And I say, “what about all that interest you pay on your non tax deductible home loan?”

Understand ‘Rent and Interest’ are money that comes out of your 'net after tax' pocket, we just call them different names; that’s all!

In Phil’s case he has clearly segmented his personal real estate accommodation, as rental, from his real estate investment ownership accommodation, maximizing the benefits of the wealth growth tools and enhancing his wealth development with little interruption to his lifestyle.

The Real Estate Development Coach

Author of "Residential Development Made Easy"

Copyright Colm Dillon, October 2003
All Rights Reserved.

Colm Dillon author of "Residential Development Made Easy" the only 'How To' Become a Developer eBook, selling in 38 Countries, has developed $1.2 Billion worth of real estate - read more on his web site http://realestatedevelopmentcoach.com/re alestatedevelopment.html

The 21st Century Way To Build Equity

Here to stay and firmly established in the U.S. mortgage market, biweekly mortgage payments are gaining momentum. First introduced into the U.S. in the early 1980's by several small Northeastern Banks, the idea of biweekly mortgages has its origins in Canada.

This concept soon became the popular choice nationally within less than a decade after it's arrival placing the biweekly payment plan in the forefront of Canada's mortgage industry around 1972 for several good reasons. Consider the following:

1. Most people are paid weekly or biweekly, therefore, it is reasonable to have as an option "biweekly mortgage payments".

2. On a biweekly mortgage payment schedule, one half of a loan's monthly payment is made and credited to the account holder every two weeks. This is equivalent to making 13 monthly payments instead of the usual 12 monthly payments reducing the loan's payoff time.

3. Faster accumulation of equity build up of up to 300%, plus a reduction in interest owed on the loan due to your prepayment is the result of using a biweekly payment schedule; that's without any increase to your monthly output. In other words, you'll get more value per dollar and save thousands as well; as much as 25% to 30% in interest over the life of the loan.

Combine the benefits of a biweekly payment schedule with a union between an Electronic Funds Transfer (EFT) mode of account servicing that is governed by Regulation "E" of the Federal Reserve to a plug into the internet and you will find a super-efficient, safe, consumer-friendly method of paying a monthly obligation that won't take a huge bite from one paycheck. It doesn't take nuclear physicists to understand why this type of arrangement is frequently referred to as the "Common Sense Mortgage".

Now that there's breathing room because money has been "freed-up" and also saved by using a service such as this, go on an excursion for some sunshine, sand and surf, have dinner at a five-star restaurant, or better still, invest in your financial future. It's your money. Once you've tried this equity acceleration program (EAP) for yourself, you'll realize its value.

With more available choices, creating enjoyable lifestyles and looking out for your family's financial well being is easier today than it ever has been. The bad news is that time is not on you side with a standard monthly mortgage payment on a 30 year loan. As a matter of fact, you are not getting the most for your money. The good news is that help is here; the technology does exists giving consumers unparalleled conveniences plus an advantaged boost.

Better Business Bureau (BBB) member, Bridgeco Central (BCC) is a distributor and national service provider in the U.S. of the on-line resource the Mortgage Manager Hi-Tech Mortgage Payment Service. To obtain an application to apply for the biweekly payment service at no cost visit http://www.eMortgageManager.net. A password-protected mortgage-auditing program is also included at no cost to the consumer after 6 months of using the service.

Welcome to the 21st Century.

For the latest free reprint articles by B.F. Boggan email articles@eMortgageManager.net.

Purchasing Property With No Money Down: My Personal Experience

Have you ever seen those infomercials about buying houses with “No Money Down?” They are really well done. They have all kinds of people offering great testimonials about how they have gotten rich, buying rental properties, with absolutely no money out of their pocket. You see this guy, standing on a street corner, talking to someone, and he says, “I own that one,” pointing to a beautiful colonial. “I also own that one next to it, and the one two doors down, and I’ll be closing on the one directly across the street from it, next week.” He then assures us that he has purchased 17 homes in the last eight or ten months, with zero money down on the properties. Plus, in many cases he’s also paid no closing costs.

And, let’s not forget, this same guy is grossing tens of thousands of dollars monthly, and his net worth is nearly one million dollars. So, he says.

Now, all of this looks wonderful, so when the person selling the course that will teach you how to do this, at a nifty price of just $297.00, speaks, you are glued to his every word. “Real estate is the safest and fastest way to make money, today,” the expert will tell you.

So, can this really be done? Can you purchase houses with no money down? Can you become a landlord in as little as one month’s time and start raking in the cash from those rent payments? The answer is an absolute “Yes.” It can be done, and I am proof positive, because I’ve done it. The question you should be asking yourself is not can I buy real estate with no money down, but should I?

You see, this is a question that the guy selling the No Money Down course, with all of his people and their great testimonials hopes you never ask. His advertising and marketing strategy would collapse, if he gave anyone a chance to ask this question, because he would be forced to lie if he answered it.

Rarely is the whole truth anywhere to be found in infomercials, especially when the advertising is about No Money Down real estate programs. The infomercial makes the idea and the program look so easy that any child could handle it. It makes it seem like every American should be doing it, and we’d all be millionaires. But every American is not doing it, and many of the ones who are doing it not only are not getting rich, they are actually going broke. The infomercial won’t tell you this. That’s why I’m here.

The Truth

Now, let’s get started with the truth about buying real estate with no money down and the truth about being a landlord. The first thing you need to know is that they are both very bad ideas. Let me illustrate by using my own experience in these areas. I started buying rental property nearly 10 years ago. The first property I bought was a deal orchestrated by some real estate con artist, who told me I needed just $2,000 to take ownership of this home and, in the process, help out a woman who was about to be foreclosed upon.

In two years, she would clean up her credit, refinance the loan on the house, and I would make $10,000. Sounded good to someone who was quick to buy into anything that returned big dollars in a short time.

This worked for the first year, as the woman paid on time, and I pocketed an extra $100 monthly. Later, though, things began to collapse, as the house began to need repairs, all of which the woman couldn’t afford, so I had to pay for them. I put nearly $5,000 into the house in a four-year period. When I was finally able to sell it, I didn’t quite make back what I had put into it.

Meanwhile, I was eager to overcome this problem by adding many more. A slick mortgage broker got hooked up with an even slicker real estate prospector, and the two of them convinced me that they had a way I could buy houses rapidly, with absolutely no money out of my pocket. Although my experience will probably be enough to enlighten you to the pitfalls of this model and of being a landlord, let me say that I can’t emphasize enough how dangerous buying property with no money down is.

In six months time, I had purchased eight houses – many with loans from the same wholesale lender. These lenders should have been concerned with all of the debt I was building, but they kept approving loans, based on my good credit and rents covering the mortgage payments. One of the biggest problems, which I was not experienced enough to detect, was that most of the rents were just $50 to $100 above the mortgage payment.

“Don’t worry,” the investor/ hustler would say. “You’ll make all your money on volume. We’ll get you into 30 or 40 houses, and you’ll be pocketing $4,000 to $5,000 every month.”

As you might imagine, my mind raced. I was making the huge deposits at that very moment. My bank account was fattening up at breakneck speed.

The Illusion

This is what people who buy houses, using the No Money Down plan envision happening. After all, if you can buy one house with no money down, why not five or ten or fifty? For some reason – the vision of the dollar sign, most likely – I failed to seriously consider the maintenance of these houses, the possibility of missed rent payments, and the chance that renters might actually stop paying, altogether, forcing me to evict them – a time-consuming and extremely costly undertaking.

As you may have already guessed, all of these things happened to me, after I had amassed 26 rental properties. In fact, oftentimes, all of these problems happened in the same month. Now, for awhile (when I had about 10 houses), if one person failed to pay rent, I could cover it with the nine other payments. But when two, three and sometimes even five tenants didn’t pay in the same month, it was devastating to my business. I had to go to my business account and pay up to $3,000 at a time in mortgage payments, with no income to cover it. Plus, I had to pay a property management company to get my tenants to pay or to evict them.

Soon, this became the norm, not the exception. There were constant problems at my houses. Unhappy tenants led to poor upkeep of the property and even more maintenance problems. About one year, after I had amassed 26 houses, I was having problems with roughly 10-15 houses and/or tenants each week. I was evicting at least two tenants each month, and approximately four to seven tenants were either behind on rent or not paying at all. Promises were made, payment plans arranged and few, if any, ever followed through.

It didn’t take long for me to realize that this was no way to make money in real estate. Consequently, I got rid of these houses as fast as I possibly could. There were plenty of buyers, willing to take over my headaches, because they had the ability to make it work, they believed.

In 10 years of being a landlord, I lost thousands of dollars and likely took some years away from my life with all the stress I had endured. So, whatever you do, avoid the No Money Down Trap. There are much better, still inexpensive ways to make money in real estate.

Learn the best ways at Directlendingsolutions.com

Check out more great loan information now at Direct Lending Solutions