All about investment

By: Jose D. Roncal And Jose N. Abbo

Lost in all of the media frenzy surrounding Wall Street, the “meltdown” and the sub-prime lending debacle are certain lessons from history that can offer some useful perspective — and even have a calming effect. Economic “bubbles” are nothing new, and contrary to what the media might have you think, they don’t signal the end of Western Civilization, either.

In his book, Memoirs of Extraordinary Popular Delusions and the Madness of Crowds, Charles Mackay wrote, “Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.”

That fact is as true today as it was when originally penned in 1841. Even then, speculative market bubbles had come and gone. One of the most curious spread through Holland some 200 years earlier, in the early 17th century. It was a financial epidemic that’s come to be known as “Tulipmania.”

When Carolus Clusius planted that first tulip bulb in the Botanical Garden in the Netherlands in 1593, no one could have predicted the absurd financial maelstrom that would eventually culminate in the “Great Commodity Crash of 1637.” By 1620, tulips had become a status symbol in the wealthiest of circles.

About that time word spread among high society that a mysterious plant virus had infected some of the bulbs. But rather than spelling the imminent demise of the tulip, the virus actually created unusual and beautiful streaks of vibrant color throughout the petals, making the new varieties even more coveted. The rich and famous always clamor for the rare and exclusive, so the prices for all tulip bulb varieties shot sky high. Greedy speculators came from far and wide looking to make a profit; the stage was set for a thundering herd approaching on the horizon.

There was so much excitement that tulip bulbs began trading on the local market exchanges, which operated much like modern-day commodity exchanges. Soon, the fever spread to the Dutch middle class, and everyone from noblemen to chimney sweeps was jumping on the tulip bulb bandwagon. They hadn’t suddenly developed green thumbs or a desire to take up floral arranging — far from it. They were swept up in the mass hysteria, hoping to strike it rich by buying low and selling high. A few did, but most did not.

A single bulb cost as much as a house

The bulb market rocketed out of control so fast it was not uncommon for the price to escalate 20-fold in a single month. In 1637, a single bulb of a particularly popular variety cost 10,000 florins. To put this in perspective, the same amount of money would have bought a nice little house along a canal in Amsterdam.

People who had worked their entire lives for the few possessions they owned began trading everything they owned — including that nice little house on the canal — just to purchase a single bulb. According to journals kept at the time, one person offered the fee-simple of twelve acres of building ground for a single Harlaem tulip. An Amsterdam variety fetched 4600 florins, a new carriage, two grey horses, and a complete suite of harness.

Munting, an author of that day, preserved the following “bill of lading” delivered in exchange for a single root of a rare species called the Viceroy:

Two lasts of wheat
Four lasts of rye
Four fat oxen
Eight fat swine
Twelve fat sheep
Two hogsheads of wine
Four tuns (barrels) of beer
Two tuns (barrels) of butter
One thousand lbs. of cheese
A complete bed
A suit of clothes
A silver drinking cup

As the mania spread, major local exchanges continued trading the bulbs without letup, and even expanded the market by offering option contracts to speculators. In essence, this gave those with less money to spend an opportunity to lose even more. Using leverage, one could purchase an option for a fraction of the cost of the actual bulb.

Leverage is risky business, especially if you’re putting your prize possessions on the line and hoping that the price will rise enough to not only make up for what you still owe but also to return a sizable profit when you sell.

But people swept up in herd mentality don’t stop to consider the risk/reward ratio — or, rather, the risk/ruination ratio. Otherwise, they might never have leveraged themselves so fully. They would have stopped to think that the slightest drop in price could mean not only losing their initial investment but going into debt — or even complete ruination. But of course, bolstered by lusty and mindless hope, people were mesmerized into believing that prices could go nowhere but up.

When a few of the more savvy speculators heard rumors that the Dutch government would soon attempt to set controls on the market, they started pulling out. Thus began the big unraveling. Buyers balked, sales slowed and prices faltered. But nothing can stop Mother Nature; there were still bulbs in the ground ready to be harvested.

Soon the bulb supply outweighed demand, and a slow downward price spiral began picking up speed. Panic set in. The once vibrant, if unrealistic, market for tulip bulbs quickly lost its luster. In less than six weeks, it ended in a resounding crash.

After sorting through all the bankruptcies and defaults, the supreme judges of Amsterdam simply declared tulip bulb speculation nothing more than gambling. All contracts negotiated during the frenzy were made null and void. In other words: worthless.

There were winners, of course — those who jumped in early, understood the psychology of the herd mentality, and got out in time, leaving fools in the rubble. When you compare Tulipmania to the recent “bubble” in real estate, you’d be hard pressed to find a more fitting aphorism: “Those who fail to learn from history are destined to repeat it.”

About the Author
Co-authors Jose D. Roncal and Jose N. Abbo share some 50 years of senior executive experience in international business, finance and economics. Both have authored numerous articles on business strategy, finance, accounting, capital markets and the global economy. For more on the authors and their book, The Big Gamble: Are You Investing or Speculating?, visit: Financial Speculation.

By:Karen Stephens

In real estate, private equity remains impartial. When the deal goes in hands of privatization it becomes more specific in spite when it was under the government. It is not necessary that every time this thing happens but with observational studies it has been retrieved that privatization has provided the equity to the real estate investments. Nowadays, people like to make their investments in real estate instead of any banks or other investment companies. This is because it is a long term investment source and when it comes to private equity it becomes more reliable.

Such investments are particularly made via private equity real estate fund which acquire funds from investors. It is not a new act to do the investments through private equity. It is having a long history in real estate investment through both direct dealing and through pooled investment capital. Previously the real estate investment were used to come under crux of real estate but now due to private equity of real estate it has become more opportunistic. Private equity real estate now comes into sight as an independent character class. It all happened because of large growth in private equity real estate in last few years. The private justice in real estate gives following investment features:

- Private Investment Management: - It relates to money advisory services leveraging all the benefits of the firm to both individual and business.

- Skill Management: - It offers diverse distribution channels to individual and association.

Thus private equity negotiates the private transactions to individual and company investors.

The real estate private equity group is full service banking business which operates two occasional equity funds. One is equity capital and the other is mezzanine investment. They provide online real time services constantly by keeping in mind about client's attention. Many such online services are available today which really got popular because of its well known service about private equity real estate. Private equity real estate is worldwide advantage class and in 2007, 46% of capital elevated in US, 26% in Europe and 27% was the targeting ratio in Asia including the rest of the world. Such service providers also take suggestion from their clients about purchasing the real estate properties. This makes client feel more comfortable with service providers. Some times when the client requests to pay the fees on real estate attainment, these service providers act as a broker at that time. They also provide a free service to their IRA clients who are a regular user of their services in locating the correct supervision to tune their account.

The service provider for the private equity real estate work on the following three basic strategies:

- Core Plus: It means to invest the fund in core properties.

- Value Added: It involves buying of property; make an improvement in it and sell it for the maximum gain on opportune time.

- Opportunistic: It requires a high degree of enhancement including development, raw land, etc.

Hence winding the discussion I will make a point focused that investment in right direction with appropriate source and equity is always helpful.

For details visit http://blog.ira-401k-realestate.com/about/

During your training as a new Realtor, you undoubtedly received coaching from managers and brokers on many subjects designed to help you build your business. Despite this, many Realtors don't do all of the exercises that they promised themselves they'd do. As a result, many agents find themselves doing the same marketing plans month after month without analyzing how hard their advertising dollars are working for them.

Ask a Simple Question With Big Results

Nearly everything that a Realtor spends money on is designed to promote him or herself as an agent. Direct mail, ads, websites, promotional items, even your yard signs, are all speaking to clients on your behalf. But not all of these things are equally effective, and it's important to determine which of your marketing materials are working hardest for you.
All it takes is a little research to determine what's working, and what can be cut back or eliminated altogether. Create a spreadsheet on your computer, or even use a notebook divided into columns, and list every form of self-promotion that you use - even those that you don't pay for. Be disciplined and ask each and every potential buyer or seller that you speak to, "How did you hear about me?"

Use Your Money Wisely

Once you've collected data for an entire month, review your results. Let's say that your data breaks down to five leads from referrals, one lead from your weekly newspaper ad, five leads from your website, and four leads from the promotional calendars that you sent out to your farming area. If you’re spending a significant portion of your budget on your newspaper ad, you might want to put that money into other areas of advertising. You’re not getting the return on investment that you should from a newspaper ad.

In addition, a good real estate website should be generating many more leads than just five. Invest in a professional, fully-customized website and you will generate the bulk of your leads online. Once you’ve made the initial investment, your website will work for you 24 hours a day, 365 days a year. A truly professional website requires very little upkeep and maintenance on your part. This is fortunate, since you will be busy with all of the new clients who find you online.

About the Author:

Brett Miller is the founder of http://HoopJumper.com and has created the best lead generating real estate websites in the industry and helped hundreds of real estate professionals make the most of their Internet presence. Call 888-Hoop-Jumper for a complimentary web analysis today or visit http://www.HoopJumper.com to see how HoopJumper can help you grow your business.

by: Monique Fell

There is always a risk when investing in real estate because property values rise and fall. The best protection you can have against this risk is to become knowledgeable of the market you intend to invest in. If you do this, you will be able to buy properties that are undervalued, improve them if necessary and sell at market rates. The more properties you can turn over using this simple formula, the more profit you will reap from your real estate investment strategies.

The two main ways you can buy properties at low prices with a promise of selling much higher, is to buy individual properties that are being sold significantly below their market value and to buy when the real estate market as a whole has bottomed out and is ready to rise. Both these strategies require you to do your research about the market in general and market values of comparative properties in particular.

Before investing in a local market, spend some time researching it. What are the current prices? What has been the market growth over the past twelve months? How has the population grown over the past twelve months? Are these trends likely to continue? You also need to research current and future development plans and assess their likely impact on future prices and market demand. For example, if there are a number of major development projects for apartment complexes that will be available for sale at the same time you will be selling an apartment you may have to lower your asking price in order to make a sale.

The real estate market should not be viewed as an isolated market. It is a function of the local, state and national economies. If unemployment rises, interest rates rise or other economic pressures are placed on people, the real estate market will be affected. Therefore, you need to pay attention to what is occurring in the wider world. If you are thinking of purchasing an investment property in a location where residents are largely reliant on one or two major employers there is a risk to the stability of the real estate market in that area. If a manufacturer closes their factory, for example, people will not be able to afford their mortgages and properties will come on the market depressing prices. Successful real estate investment strategies therefore must include an understanding of social and economic impacts in a market as well as current and expected trends.

Apart from these broader issues, a successful real estate investor will carefully consider all facets of any individual purchase. The current market value, all the costs associated with the purchase, estimated costs of necessary improvements and likely selling price are all important aspects of any decision to purchase a real estate investment property.

If you do your homework and implement sound real estate investment strategies you will be well equipped to make a good profit with minimum financial risk. As you practice sound strategies you will increase your experience and develop an instinct for good buys and become an increasingly successful investor.

source:searchwarp.com

By: Kalinda Stevenson, PhD

You can always get money to fund a good real estate deal.

If you think about money with a consumer mindset, you might assume that the only way to buy investment property is to buy it with your own money and your own credit. This is based on the belief that money is scarce and you have to pay for your investment by yourself.

Where do consumers go for money? They go to banks. And what happens at the bank? If you are a consumer, the bank will require you to provide a vast amount of personal information. You might feel that you have to beg to get the money. And after providing all of the personal information, it is up to the bank to decide if you are worthy to borrow the money.

If you are a consumer who goes to the bank to borrow money, you have to deal with banks who decide whether or not you deserve to receive money from the bank. At the heart of the matter is the idea that the most important issues are your money and your credit. Many people who want to borrow get the distinct impression that the bank wants to loan money only to people who already have money. If you don't have money, the bank doesn't really want to loan any money to you.

In fact, you don't ever have to ask a bank for money to fund your real estate transactions. This is because there are private lenders who have plenty of money for real estate investments. This is one of the major differences between consumers and investors. Investors know that they can use private investors while consumers think that they must get funding from banks. If the deal makes sense, investors can find all the money they want from private investors.

If you want to buy a property, and you need $10,000 as a down payment, someone with a consumer mindset might say: "The only way I can buy this property is to pay $10,000 as a down payment. But since I don't have $10,000, I can't buy the property." Investors don't think this way. An investor's first thought would be: "Since I don't have $10,000 to buy the property, I'll use other people's money. I know that some one else has the money I need to buy this property."

If you have an investor and a consumer looking at the same property, the consumer will very likely say: \"I can\'t buy this because I don\'t have enough money and the bank won\'t loan me the money because I am not credit worthy.\"

In the same situation, the investor will say, "I know that this is a good deal. I'll find a private lender willing to fund this deal so that I can buy the property." The investor knows that private lenders first of all want to know if this is a good investment. They don't decide whether or not to fund the deal based only on your money and your credit. The fact is, if the investment really is a good deal, you will be able to find a private investor willing to provide the money.

Article Source: http://www.superfeature.com

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