Real Estate Info

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When you hold an FROR (First right of refusal) on a real estate property (or any other asset for that matter), it basically means the current owner of the property is obligated to offer you the property (to purchase) whenever he/she decides to sell the property. In case the owner sidesteps the person holding First right of refusal, and sell it to another buyer, the FROR holder can take them to court for reparation.

To understand how FROR works, let’s have a look at this example. Mr. A owns an apartment and rents it out to Mr. B. After living there for some months, Mr. B develops an interest in purchasing that apartment, for some reasons the transaction cannot take place straight away. However, Mr. B asks for an FROR agreement and Mr. A agrees. Now, once the agreement is signed by Mr. A, he is now restricted to offer this apartment to Mr. B before he finalizes the deal with any other party. For example, when he’s approached by a third party with an offer of say, $450,000 USD, and he is willing to accept, he must first contact Mr. B and make an offer for him to buy this apartment for the same amount ($450,000). It is only after Mr. B refuses to buy, when Mr. A will be free to sell the property to the third party. Remember, Mr. A can not ask for a better price, he must offer the property to Mr. B for the same price, which was being offered to him by the third party.

Question is why a seller in his /her right mindset would agree on presenting someone with an FROR contract. Answer is, because it doesn’t really hurt the seller in anyway. However, there are some minor plus and minuses attached to this contract. For example, seller can ask for a small amount as a fee for an FROR contract, also such contract may add a little value to the property. Coming to the negative side, real estate agents are reluctant to deal with such properties, in case the holder of FROR accepts the offer and make a purchase; the agent will be deprived of any commission whatsoever. However, the best thing about First right of refusal is that it doesn’t have some predefined clauses or terms, seller and buyers are free to negotiate and jot down their own specific conditions.

There are some modified versions of FROR as well, one of them is Right of First Offer, in which seller has to approach the holder before putting the property on sale.

Investing in rental properties is not as common as investing in stocks, mutual funds or gold. In spite of this, it is equally profitable (in fact more profitable most of the times) than all of these investment options. However, it is not as simple as going to the stock market and buying some stocks or bonds. It requires a significant amount of experience along with ample research and pondering, every time you are about to purchase a rental property. Sheer amount of money that one needs to invest in buying a property makes it a very risky investment, where slackness or negligence can set you off to lose your lifetime savings. While you can hire a real estate agent to assist you in buying the right property, you shouldn’t be following their recommendations blindly. You have got to acquire ample knowledge and understanding of the rental market before you commit your capital.

Analyzing the rental market:

How beneficial is a rental property without renters, who are ready to rent in? Quite obviously, a rental property lying vacant is of no use. Therefore, your best bet is to buy the rental property in a market where the demand is higher than supply. You can get the idea about the demand by comparing its prices from real estate markets in adjoining areas (high prices mean higher demand, while low prices mean the supply is somewhat higher than demand). Don’t get too much into your likes and dislikes, unless you are looking to move in at some point of time. You may prefer to live in a peaceful neighborhood, but normally tenants tend to live at busy places in close proximity of their offices or markets.

Research, Research, Research:

Research can be time consuming, tiresome or something that you don’t like doing a lot, however it is something worth doing, especially when you look at the setbacks and loses that you can avoid by just going through basic research work. Look for the vacancy rate, talk to other residents or tenants living in the neighborhood. Visit other real estate agents in the area and try to get their views on that particular property. Hire some home inspection service or go through the basic inspection yourself. Get hold of the data regarding prices/rents in the area and see the trend.

Just like any other management firms, a property management firm or professional will manage your property related matters, be it the collection of rents from your tenants, maintenance work at your second home or dealing with real estate attorneys and insurance companies. If you own just one or two properties, you probably don’t need any of these property management services, but if you are the owner of an apartment complex, shopping centre, multiple properties, maybe a property management service can come handy.

The nature of a property management service is akin to the services of a real estate agent. A real estate broker helps you with all the proceedings before the purchase of a property, whereas a property manager will assist you in all regards once you’ve purchased the property. Just like you are not required to hire a real estate agent, it is also not compulsory to hire someone as your property manager, you can handle all these tasks on your own, however it will require lots of time and experience.

Managing Condominiums:

Most property management services are hired by the owners of condominiums or apartment complex. These professionals then carry on the tasks of marketing apartments, and collect all types of fees and rent from tenants once these apartments are rented out. These property management companies employ banners, amenity signs, classified ads and other techniques to attract the tenants.

Property Maintenance & Home Improvement:

A property maintenance service can take tasks like household repairs, roof repairs, paint or whitewash, plumbing, carpeting, installing various systems like sewerage, irrigation or air-conditioning system. Property management companies have experts specializing in residential or commercial maintenance, making sure that your properties are kept in good condition throughout the year. Similarly, these property management services can assist you in construction work as well. 

Gardening Services:

If you have got a big garden or lawn inside your home or apartment building, it will require plenty of look after, much more than the occasional watering or mowing. A property management service firm may help you in re-designing garden; take charge of the routine tasks like mowing, weeding, plant placements, path clearance, constructing fence and the rest.

Accounts management:

Property management services can also take up the duties of account management, from budgeting to collecting payments. They’ll do the basic book keeping, keeping record of all debit and credit accounts. They can also help you with property related taxation by compiling monthly reports and providing advises based on years of experience.

When people directly exchange their products or services with the goods or services of others, the trade is known as barter. Barter system was the most commonly used trade system before the advent of currency notes. As a matter of fact, invention of money hasn’t put an end to the barter system altogether, as it is still used in various forms (even more after the arrival of internet). A relatively new phenomenon being introduced on the internet is some websites offering their services for individuals who are looking to trade their real property for any other asset of the same value. Given the fact that there are not many assets that can be exchanged with a real property, therefore most of these barters are supposed to be a real property exchanged with another real property. The idea has slowly picked up traction and many websites are providing a similar service (which means people are taking interest in property bartering).

Barter creates a win-win situation for both parties (not like the normal sale and purchase where usually one party’s gain is another party’s loss). Buyer doesn’t need to go through the long procedures of arranging finance or mortgage for property purchase, which makes a lot of difference especially in the situations like recent financial crunch when it’s extremely hard to get your hands on required funds. The barter system eliminates the need of property agents and other types of middle man, reducing selling cost to a bare minimum. Even though it sounds really difficult to find some willing property owner who’s ready to barter his/her property with yours, it’s not that difficult anymore, thanks to the Internet which makes advertising and searching so easy. Also, you can also save some certain types of taxes in case of barter trade.

Coming to the flip side of this trade system, the first and the most obvious problem is the valuation of properties or assets being exchanged. That is why you might need to hire an independent valuator to see if both properties are of the same value. Also, you need to remember that the value of the property will be different for both parties (valued less for the one who currently owns the property and who’s looking to exchange it for another property). In addition to the complexity in property valuation, barter exchange is also subject to legal complexities, therefore you must arrange for proper documentation.
Source:
Dubai Property

The real estate market tends to be cyclical with some periods favoring buyers and other periods favoring sellers. As with other free markets, the pricing and availability of real estate is directly related to the forces of supply and demand. While many real estate markets in the United States are experiencing a substantial slowdown, other markets remain robust, and some even continue to grow. What makes the situation even more c Read the rest of this entry »