REASON #3 - Appreciation
When it comes to appreciation, the old saying is true: location, location, location. But did you know that real estate, on an average appreciates approximately 6 percent per year? This means that real estate appreciates depending on where it is located. Great locations, yield great returns. Poor locations, yield poor returns. So, if the average is 6 percent, then there are areas that have lower appreciation rates, than areas that have higher ones. Let's talk about that for a second.
If you are purchasing a property that cash-flows, appreciation is just icing on the cake. Do a little bit of homework, and you will find which areas yield higher appreciation levels. For the United States, these areas are: Phoenix, Seattle, Boise, New York City, and Washington C.D. For Belize: this area is Ambergris Caye.
For the sake of discussion, lets discuss how appreciation can really benefit you. Assume for a second you are purchasing a piece of property worth $200,000.00 and you put 20 percent down (or $40,000.00) it then rents for $1,000.00 per month. Where do you think that investment will be in thirty years from now?
Here is what is so exciting about investment real estate: Over time, your property is appreciating while the resident or tenant is paying down your loan. On top of that, the rental income grows on an annual basis!
This is how the purchase of real estate can be a powerful part of your retirement. After thirty years, (average life of a mortgage), the property (at a 6% appreciation rate), is now worth $1,083,678.00. Not only is the property now paid off, it is worth $883,678.00, more than what you paid for it. Yet you only purchased it for $40,000. of your own money. Every month you receive a rental check, this check is then paying down your mortgage.
By using the bank's money; your money realized a much higher return than if you had invested it in stocks or bonds. That is called leverage, and leverage is the ultimate power offered by purchasing real estate. Appreciation grown on the "loaned" amount.
So the bank loaned amount of $160,000.00 - appreciated on an average of 6 percent per year (over 30 years), has now turned into $918,959.00! You then get to keep this added value, not the bank. All the bank receives, is the interest on the original loan amount of $160,000.00. Not to mention, depending on where you file your taxes, you may even get to write off the bank interest come tax time.
REASON #2 - Control
A unique advantage to real estate is that you can control it, unlike other investments. In other types of investments, often you give your money to a financial advisor - they then place it for you in a company's stock, a bond, or a mutual fund. What happens after that is completely out of your control.
You now no longer have the ability to make operating decisions for the company you have invested in. For the most part, you are now at the mercy of its managers. Managers you hope make good decisions. If bad decisions are made, then they can virtually ruin your portfolio - just ask the people who invested in Enron.
With these types of investments (company stock, bonds, or mutual funds), the only control you have is choosing whether to buy or to sell.
With real estate, it's different. You purchase a tangible asset and then you have the ability to control the management of it. While it is true that there are still external market conditions that affect your investment, the difference is that you have the ability to manipulate the operations of your investment and to respond to these conditions. Instead of being reactive (buying or selling), you can now be proactive.
Let me give you an example, if you are a property owner, you have the ability to control rents based on market changes. This you do, in order to maximize your potential income. I do this all the time in my company - both with properties that I own and assets I control. Each month a manager should complete a market survey. A market survey is a simple study that involves doing some homework. This can be done by reviewing your competitors websites, and by calling them, to find out what they are charging for rents, deposits and what they are offering for concessions, if anything. By gathering this data, managers are able to make market decisions by comparing their rents, deposits, and concessions - against their competitors and then adjusting accordingly.
This doesn't always mean raising or lowering rents. Remember, the goal is to maximize income. Since that is a dynamic process, that might mean lowering rents or offering an incentive. This is when the property's occupancy comes into play. If you have the highest rental rates compared to your competitors, then most potential residents will go down the road and rent from your competition. This then becomes lost potential income. The dynamics of real estate require you to keep occupancy, as well as rents, high. If lowering rents by $15.00 per month is the difference between being 95 percent occupied or being 88 percent occupied, then by all means lower your rents! Consider the following example.
$685.00 per month - 95% occupancy = $65,075.00 Rental Income
$700.00 per month - 88% occupancy = $61,600.00 Rental Income
In this example, just by lowering your rent by $15.00 per month on average, you actually gain close to $3,500.00 per month in income - that's nearly $42,000.00 per year. Lowering rents gradually can lead to higher occupancy. Based on a 6 percent capitalization rate, that is $700,000.00 ($42,000 / 6 percent) in value, all because you were on top of the market and able to make a real time proactive decision.
You have the power in real estate to control the operational performance of your asset more than any other investment. This is where investing in real estate gives you control. The capitalization rate is the net operating income divided by the purchase price, and is determined by evaluating recent sales statistics of similar properties in a given market. Your broker will be a valuable tool in determining your market's capitalization rate.
JUST REMEMBER: Capitalization Rate = Net operating Income (divided by) Purchase Price
TEN (10) ADVANTAGES TO REAL ESTATE INVESTING OVERSEAS
Investing in real estate is the ultimate return on your money. Nothing else provides the same kind of dollar for dollar returns and has the same kinds of advantages as buying real estate. Let me ask you this, if you had one million to invest, would it be better to invest in real estate or Microsoft stock? If you choose real estate, then you choose the correct answer. Here's why. Even if your real estate investment, appreciates at half the rate as the stock - you would still come out way ahead of the game. This is because a piece of real estate can allow you to leverage against it, you can receive various tax discounts or advantages and a investment piece of real estate can produce residual income or cash flow.
This concept runs pretty much contrary to mainstream thinking by most people. As consumers, the media constantly bombards us with information on why it is critical to invest in stocks, bonds, and mutual funds. But as with most people, who keep their money in various banking institutions, you are beginning to see your dollar disappear right on paper by banks, before your very eyes. Let's take a look at these ten (10) advantages to real estate investing.
REASON #1 - Cash Flow
Always purchase property that can cash flow. It may take time to find them, but it is well worth the effort. The simplest definition of positive cash flow is that you collect more revenue, usually in the form of rent, than it takes to pay for and operate the property. A big advantage of real estate over other investments is that it can produce cash flow on a monthly basis. The cash generated by a real estate investment will always be a much larger percentage cash on cash return than any other investment. The reason for this is the leverage, something we'll go into deeper later.
The beauty of cash flowing real estate property is that it can help you become financially free. Here is an exercise that I like to do. Take out a pen and a paper and write down your net monthly income after taxes and social security. Now write down every expense that you have in a given month. It might look something like this (mortgage, insurance, car payment, gas, groceries, utilities, clothing, entertainment) If you take your hand and cover up the income portion of your statement, then this is what your retirement will look like. A whole bunch of expenses with no income to offset them. To turn this process around, you have to start investing now.
At the end of every month, if you have discretionary income - what do you do with that. If you are like most people, they will purchase items that depreciate. This in turn does not help you become financially independent. If you were to take this same discretionary income (saved for one year) and use this to place as a down payment on an income producing piece of real estate that cash flows - you have just boosted your monthly income. If you soon buy enough properties that cash flow, soon your expenses will be covered by your assets alone. Each and every month, cash flow from your investments will then kick in. If you had to stop working, you would have the peace of mind now, that your investments earn enough to produce or cover your cost of living
ANNOUNCING A BRAND NEW PROPERTY
Address: Ambergris Caye
City: San Pedro Town
Neighborhood: San Pedro Town
Reference Number: rib508
Full Description: Diamante offers a select few an opportunity to live in unsurpassed luxury, overlooking the crystal-clear Caribbean Sea, in the heart of San Pedro Town, on the beautiful island of Ambergris Caye. Diamante Beachfront Suites-2 Bedroom Condos Beachfront -$705,000-$795,000 USD
This boutique beachfront development, on one of the most coveted locations on the island, offers 20 beachfront suites--all with elevator access - with four story construction in five stand-alone buildings. Each lavishly appointed two-bedroom (and three-bedroom) condo will include floor-to-ceiling windows, lofty 10' ceilings, private balcony, a luxuriant master bath, gourmet kitchen with granite countertops and high-end appliances and off-street parking.
We proudly present to you a richly appointed Ambergris Caye treasure in the heart of San Pedro, Diamante Beachfront Suites, Marketed exclusively by RE/MAX Island Real Estate.
Athens Gate - Luxury 3 Bedroom Beach Front Homes
: Ambergris CayeCity
: San Pedro TownCountry
: South Ambergris CayePrice
: 2 Square Feet
: ActiveReference Number
: rib505 Full Description
: Come experience luxury. Athens Gate Resort blends deluxe amenities with breath-taking views. An intimate, boutique resort, Athens Gate features 12 luxurious villas, with 2 and 3 bedroom floor plans, located on 100 ft. of pristine white sand beach front. With a discreet location 2.5 miles south of San Pedro, Athens gate offers seclusion and privacy, without compromising easy accessibility and proximity to restaurants, shopping and activities. In addition to the parking spaces on property, there are now covered parking garages being offered for sale to condo owners on the adjacent property.
The 3-bedroom villas offer a rare treat for any potential condo owner. One of the greatest benefits is that each condo takes up an entire floor of the north building, offering unparalleled 360 degree views and natural tropical sunlight from all four sides. The 3rd and 4th floor units are both available, and each offers sweeping vistas overlooking the world's 2nd largest barrier reef and Hol Chan Marine Reserve.
Each 2 or 3-bedroom villa offers 1,800 sq.ft. of total living area, inclusive of covered veranda. Kitchens feature Frigidaire Professional Series appliances, custom mahogany cabinetry with slide-out pantry, Moen faucets, and granite countertops with granite back splash. The open floor plan just calls for entertaining with family and friends, as the kitchen, dining and living areas flow nicely together, and the veranda extends the living area from inside to out. Ceiling heights of 10'2" throughout make for an open, expansive feel to all living areas.
The bathrooms are an oasis and indulgence for the senses. Relax in your 6' full-size Jacuzzi brand whirlpool tub, while you are surrounded by granite countertops, Kohler and Moen faucets, and American Standard "comfort height" toilets. On-demand electric water heaters (28kw) mean that it's never a problem how many baths and showers are running!
All utilities are available with electricity, town water, aerobic sewer treatment (septic), BTL phone and DSL as well as Coral Cable. Athens gate is one of the only luxury beach front condo resorts to offer Central Air (A/C). All HVAC units are manufactured by Nordyne Corp., and made in Florida where they are designed specifically for use in saltwater environments. The benefits of using Central Air over split-A/C units are: aesthetics (interior), noise, longevity, exterior appearance, as well as the quality of units available.
Athens Gate Resort is professionally managed for nightly/weekly rentals, while also offering the perfect location for a second home, seasonal home, or retirement destination. If you are looking for a beach front condo or home, you owe it to yourself to visit Athens Gate Resort and experience the difference that is made by personal care and attention to detail by the developer. If you don't want to feel lost in a larger resort property, and long for the intimacy and personal attention offered by a smaller, boutique resort - Athens Gate awaits you with open arms.
Athens Gate - Luxury 3 Bedroom Beach Front Homes Pricing from $699,000-$749,000 USD.
- Air Conditioning
- Cable TV
- Maid Service
Address: Savannah Caye
City: West of Ambergris Caye
Neighborhood: 11 Miles West of Ambergris Caye
Reference Number: rib503
Full Description: Own your own private 25 acre island within view of Ambergris Caye and Blackadore Caye. Savannah Caye is only 11 miles west of Ambergris Caye, and at 20-25 minutes by boat, it is the largest undeveloped private island for sale in close proximity to Ambergris Caye.
It is surrounded by gin-clear waters known for world-class (Bonefish) flats fishing. There is a government approved development plan for an internal marina and lot subdivision with approvals.
With over 3,500' of beach frontage, this island is a perfect setting for a boutique resort property, an eco-resort, corporate retreat, or a secluded island estate. There is plenty of room to lay out the internal marina and subdivide the lots as proposed, or develop the island in its entirety. Savannah Caye will require fill for development, hence the benefits of the internal marina. However, it has been priced accordingly, and there is significant upside in values once the land has been filled and prepped for finished product. Private islands west of Ambergris Caye have sold for as much as $300,000 to $750,000 per acre in recent years. By comparison, Savannah Caye offers huge return for the savvy developer, being offered at only $100,000 US per acre.
Recent changes in construction regulations now allow for over-water bungalow construction in Belize, so this island may be ideal for overwater private villas or suites. Please contact the listing agent for a copy of the Dept. of Environment Overwater Construction regulations. Private consultations can be arranged with listing agent at our local San Pedro office for all facets of real estate development.
Offered at $2.5 million USD for all 25 acres - private island.
Or, individual beach front lots are available starting at $125,000 to $180,000 US for lots that range from approx. 135' to 200' of beach frontage. Approx. $900 per beach foot.