Real Estate Investing 101

An Overview of Real Estate Investing Basics for Beginners

By Joshua Kennon, About.com Guide

When you invest in real estate, your goal is to put money to work today and make it grow so you have more money in the future. You have to make enough profit, or "return", to cover the risk you take, taxes you pay, and the costs of owning the real estate investment such as utilities and insurance.

 In other words, once you understand the basics of the game, real estate investing really can be as conceptually simple as playing monopoly. Your goal is to buy properties, avoid bankruptcy, and generate rent so that you can buy even more properties. But "simple" doesn't mean "easy". If you make a mistake, you could find yourself broke or worse.

The 4 Ways Real Estate Investors Make Money

When you invest in real estate, there are several ways you can make money:

Real Estate Appreciation:

This is when the property becomes more valuable due to a change in the real estate market, the land around your property becoming scarcer or busier such as a major shopping center going in next door, or upgrades you put into your real estate investment to make it more attractive to potential buyers or renters. Real estate appreciation is a tricky game and is riskier than investing for cash flow income.

Cash Flow Income:

This type of real estate investment focuses on buying a real estate property, such as an apartment building, and operating it so you collect a stream of cash from rent, which is the money a tenant pays you to use your property for a specific amount of time. Cash flow income can be generated from well-run storage units, car washes, apartment buildings, office buildings, rental houses, and more.

Real Estate Related Income:

This is income generated by "specialists" in the real estate industry such as real estate brokers, who make money through commissions from buying and selling property, or real estate management companies who get to keep a percentage of rents in exchange for running the day-to-day operations of a property. For example, a hotel management company gets to keep 5% of a hotel's sales for taking care of the day-to-day operations such as hiring maids, running the front desk, mowing the lawn, and washing the towels.

Ancillary Real Estate Investment Income:

For some real estate investments, this can be a huge source of profit. Ancillary real estate investment income includes things like vending machines in office buildings or laundry facilities in low-rent apartments. In effect, they serve as mini-businesses within a bigger real estate investment, letting you make money from a semi-captive collection of customers.

How You Might Consider Purchasing Your Real Estate Investment Properties

There are several ways to buy your first real estate investment. If you are purchasing a property, you can use debt by taking a mortgage out against a property. The use of leverage is what attracts many real estate investors because it lets you acquire properties you otherwise could not afford, but it can be dangerous because in a falling market, the interest expense and regular payments can drive you into bankruptcy if you aren't careful.

You will almost NEVER purchase a real estate investment in your own name. Instead, for risk management reasons, you will want to consider holding real estate investments through special types of legal entities known as limited liability companies or limited partnerships (you should consult with a qualified attorney for his or her opinion as to which ownership method is best for you and your circumstances). That way, if the real estate investment goes bust or someone slips and falls, resulting in a lawsuit, you can protect your personal assets because the worst that can happen in some circumstances is you lose the money you've invested. This lets you sleep at night because unless you've screwed up somewhere, your 401(k) plan assets, Roth IRA investment, and other retirement accounts should be out-of-reach.

Which Type of Real Estate Investment Should You Make?

When you are ready to start the process of real estate investing, you will want to decide which of the real estate investment types is most appropriate for you. To help you understand the options, I wrote an article called The 8 Types of Real Estate Investments that explains the difference between REITs, industrial properties, residential investments, etc.

Source: http://goo.gl/xBxXl

Construction worker numbers fall after Khmer New Year

Seun Son

   

CAMBODIA is suffering from a short age of labour across all sectors of the economy, according to Prime Minister Hun Sen, speaking at an opening ceremony at the Sihanoukville Special Economic Zone on Tuesday.

The number of workers at many of Phnom Penh’s construction sites fell significantly following the Khmer New Year, according to same residential developers.

Borey New World’s technical construction manager Tith Pheng said the recent lack of labour was because same provinces celebrated Khmer New Year longer than others-even up to two weeks-and same construction worker put off their return to the capital, waiting until the transportation fees returned to normal prices.

“Cambodia’s low-skill labour market is largely inadequate. Our site’s labour force two weeks after the Khmer New Year declined almost 60 per cent,” he said, adding that he was not sure about the trend in the third or fourth weeks following Khmer New Year, as some construction worker might return with family members, while some other may switch their workplace.

“In the past, people migrated to the city to look for jobs, but when there are many job opportunities in the provinces, they chose not to work in the city anymore because some of them didn’t want to stay far away from their relatives and homeland. Though they earned less, they want to stay together with their family. Some of them preferred to migrate abroad as the fees are higher,” he explained.

“At our construction site, we offered skilled labourers between $8 and $12 per day, while unskilled labour got between $3 and $5,” he said. Another reason contributing to the lack of labourers is because the gaverment “planned many infrastructure developments across the country, like bridges and roads, and some other workers from Kompong Cham, Mondulkiri and Ratanakiri decided to find jobs with rubber and cassava plantation”.

Teuk Thla New World’s construction supervisor Chum Kirirum said his company’s eight construction site required a labour force of 4,779 people; however, the number available before the Khmer New Year declined to 60 per cent of that number, and two weeks after the celebration the number even dropped to 30 per cent.

Two weeks after the celebration, he said, he didn’t expect that returning workers would rase numbers to the normal figure like before the New Year, expecting that only 40 per cent would come back.

Borey Vimean Phnom Penh’s Assistant General Manager Ouch Pisal said there had been 505 workers working in his construction site before the celebration, and only 30-40 per cent of that number after the Khmer New Year.

“Those workers may return to their work here because we always pay their daily  wage on time and some of our constructors are highly responsible,” he said, adding that they would wait and see what might happen for another two or three weeks, but confirming that they didn’t have a full workforce this week.

Koh Pich Island’s Elite Site Construction Supervisor Chea Chheangly said his construction site required 1,500 workers; however, before the Khmer New Year, there were only 1,100 workers, which did not meet demands. He added that the number dropped by half two weeks after that.

“Generally, the number of workers won’t go up as there are many construction sites elsewhere around the country; hence, the workers were scattered there as well,” he said.

Sok Sovanndeth, chairman of the Cambodian Construction Workers’ Federation, said the labour force prior to the Khmer New Year was falling, but the number would soon increase to normal. “Some workers who returned to their homeland may bring along with them their relative, as there is high demand for labour in Phnom Penh,” he said.

These problems have led to slowdown in construction work on many residential development sites. This is partly due to the face that most major construction development projects offered low wages, which are not parallel with the increase in the price of goods, said Sok Sovanndeth.

“Cambodian workers can earn only 13,000 riel a day, but if they work in Thailand, they can get at least 30,000-40,000 riel,” he said.

The Ministry of Land Planning, Urbanization and Construction data revealed that there were 38,500 construction workers nationwide involved in that sector daily in 2011.

Source: PhnomPenhPost

OCIC to build 10 skyscrapers near National stadium

Kong Leanghuor

Local investment giant OCIC said it is planning to construct up to 10 more skyscrapers within the eastern part of the National Stadium compound, which the nest up land coming area in Phnom Penh Engineer Meng Chamroeun, an assistant to Touch Samnang Manager

of the Diamond Island City project, said the company is currently digging and preparing the land for the construction of a 50-storey building three or four more than 30-storey buildings, and five or six 20-storey buildings, as well as an eight strorey supermarket. “Sofar we haven’t yet completed the master plan, but the project will proceed as planned, and we expect the master plan to be completed by the end of May,” he said. He added that “we plan to complete this project within five years if it gains support from customers. But I think this project will be successful, as the location is in the central part of the capital, and we are planning to expand the roads in this area”. Meng Chamroeun said the company plans to call the project PENH GRAGON, and it will contain hotels, restaurants, of fice space, condominiums, as well as supermarkets and other services. He added that they are currently digging out the subsoil for the construction of a six strorey supermarket with a two floor deep underground which will serve as a market. Sen Chanreatriey, the Director General of Real Estate Company CEA, said OCIC has a lot of long term customers amidst growing demand of buying and selling real estate in 2012, so the project is likely to gain a lot of support. However, he said its success will depend on the pricing. If prices are reasonable, it will be successful but if it is seen as overpriced, it could run into problems “This project will give overseas investors the confidence to com and invest in this sector, because overseas investor are waiting to see what local investors do first, so if investor here start first, it will be good,” Sen said. “OCIC’s projects are all located in good locations, in Phnom Penh’s projects are all located in good locations, in Phnom Penh’s actively commercial areas,” he added. OCIC has obtained a 70year lease from the government to develop the location

Source: PhnomPenhPost

New Construction Prakas slated

Kong Leanghour

29 March, 2012

The Ministry of Land Management, Urban Planning and Construction announced that it is drafting a new prakas, or edict, in an attempt to reinforce regulations in Cambodia’s construction sector.

The ministry is drawing up the new construction law with the assistance of local architects, engineer and international law makers, Lao Tip Seiha, construction department director at the Ministry of Land Management Urban Planning and Construction said.

“The law will strengthen the construction sector and provide an improved living environment for potential customers”; he said adding that it will also provide more transparency and attract investors to the market.

The proposed prakas will complement the Ministry of Economy and Finance’s Housing Development Law, which, among other requirements, obligates developers to deposit 2 percent of the total value of the project. It is slated for implementation in the third quarter of 2012.

The drafting of the law was overseen by members of Singapore based group PEMASEK, which has previous experience drawing up similar edicts in the city state, according to Beng Hong Socheat, spokesman for the Ministry of Land Management, Urban Planning and Construction. He added, however, that a completion date for the draft has yet to be set.

While the sector has experienced reasonable recovery from the economic downturn, some victims were claimed, such as the South Korean-funded Gold Tower 42 and Camko City, which both stand incomplete.

Some members of the sector, however, questioned the significance of another development-related prakas.

“What worries us is that the laws from different ministries will start to overlap. It requires prior consultation, so the same cake isn’t baked twice”, Sung Bonna president of the National Valuers Association of Cambodia.

He added that an increase in the number of regulators would help to minimize bad practice in the sector

Source: Phnom Penh Post

VILLA FOR SALE IN CHOM CHAO

Located: Sangkat Chom Chao, Khan Dangkor, Phnom Penh, Cambodia.

Land size: 18m x 19m
House size: 18m x 12m
Bed room: 10 rooms
Selling: $180,000 (Negotiable price)

For more information please contact:
Mr. Kuy Sivutha
Sale Supervisor
Tel: 016 666 258
Email: sivutha@arc.com.kh

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