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Investment Opportunities July 24, 2009

Posted by Jeff Nabers in : Money, Precious Metals, real estate, Self Directed IRA Solo 401k , add a comment

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When listening to feedback from Nabers Group clients, one message is loud and clear, “We want to see investment opportunities from you.”

I sent out a survey to all of my clients recently, and I’d love your input too. With my activities in many circles, I have access to mounds of solid investment opportunities. If you complete this survey it can help me understand what types of opportunities you are most interested in.

Click here to take the survey.

Forced Appreciation April 28, 2008

Posted by Jeff Nabers in : real estate, Self Directed IRA Solo 401k , 1 comment so far

There’s a questionnaire that I go through with my new customers over the phone, and in it I ask if forced appreciation is part of their investment strategy. Often I hear a response of “huh?”

Forced appreciation belongs mostly to the world of commercial real estate. It’s natural for the new real estate investor to gravitate towards residential because everyone understands it. We all live in a home and pay a mortgage or rent payment. Prices fluctuate due to supply and demand, and we understand this. What many don’t understand is that commercial property is the investor’s preferred real estate. Why do I say this? I thought you’d never ask…

Property prices are always truly decided by the buyer and seller. But market value can be determined by a property appraisal. Here’s where residential and commercial RE appear to come from different planets. Residential property is almost always appraised by comparable sales. In other words, the market value is whatever everyone else is paying in that area for that type of property in that type of condition. The purpose of residential property ownership is living space. So “type of condition” means the physical condition of the structure & its fixtures. Bank lending plays an important role in how appraised value and actual purchase price interact. Most residential property is purchased with mortgage financing. Residential appraisals are based on what others are paying for similar properties, and the lender ends up only lending if the purchase price of the subject property (which is the loan collateral) isn’t much higher than the appraised value. So, when you are in the market to buy or sell, you’ll generally need to buy or sell for a price close the the appraised value.

When investing, the two things that indicate the performance of your property owned are cash flow and gains or losses upon liquidation. In residential real estate, your gain or loss upon liquidation is determined almost entirely by what other people are paying for similar properties at that time. So what’s wrong with that? Well, for starters (more…)