Estates Commerce Blog

Getting trustee/investment committee approval to engage in property derivatives is not likely to impede the development of the market in the long run as the cost and speed advantages of derivatives over direct investments are clear. Further, as the market develops, the level of liquidity will also increase and so this second reason for nonparticipation will disappear. The mentioned hurdles actually apply for any new market, and will typically disappear over time.

Also of interest is the fact that 20% of those surveyed indicated that there were no major hurdles to investing. In February 2007, the Japanese Ministry of Land, Infrastructure and Transport (MLIT) established a study group to assess the potential development of property derivatives in Japan. The resulting report finds that three main actions should be taken. First, indices should be enhanced to reflect realistically the Japanese real estate market. Second, a legal and regulatory framework to monitor and control property derivative transactions effectively should be put in place. Third, market education, including studies on property derivative pricing, indices and trading systems, should be performed.

If oil deals where you do not even own the land seem odd from a real estate perspective, then even odder are my marine farms in the Marlborough Sounds in New Zealand. With the entire operation being out at sea, it stretches the meaning of the word real in real estate.

The Marlborough Sounds are an extensive waterway in the northern part of the South Island of New Zealand. The fractal shores in fact comprise one-fifth of the length of New Zealand’s coastline. With unpolluted waters, an abundance of nutrients, and shelter from the open sea, these sounds provide the perfect environment for shellfish to grow. (See Figure 18.4.) The waterways are highly regulated. Limited numbers of licenses are granted, as overharvesting would be detrimental to the entire industry. Consequently, licenses have considerable value even before a crop is harvested.

My farms grow oysters and mussels. The spat is seeded on lines that hang vertically in the water from floating racks. Depending on water temperature, nutrients, and a number of other factors, the shellfish may be harvested anytime from around 7 months to 18 months. Once harvested, the crops are sold on the open market either for local consumption or, more typically, to be airfreighted to Asia or America. As such, prices are global, being affected by world supply and exchange rates.

Always be willing to expand your concept of commercial real estate to include anything where commerce is conducted within geographically defined spaces, be it on land, in the air, at sea, or, dare I say it, out in space.

In most countries, if you strike oil or minerals on land you own, you do not automatically own the oil or minerals. Most governments have decided that a citizen may own the title to a piece of land, but the government owns anything of value underneath it.

One of the great things about the United States is that the owner of a piece of land owns whatever is underneath it. Thus, if you strike oil in your backyard, it is yours to sell, lease, borrow, or develop. Conversely, if you sell the land, then the new owner has the rights to any minerals.

In fact, only in the United States do private investors own a patch of property all the way to the center of the earth and into the sky. In this sense, real estate truly is the basis of all wealth. It includes everything on the land (buildings and structures), over the land (air rights), and under the land (minerals, oil, gas, water, thermal energy, etc.).

In Texas and Oklahoma, things get even better. In these two states, the ownership of the land and the ownership of the minerals can be separated. In other words, you can buy a piece of land, split off the minerals, sell the land without the minerals, and then go about mining the minerals, even though you no longer own the land. And in Texas, mineral rights are perpetual. These rights are the icing on the cake.

Baen has shaped mineral rights into an art form, and the icing on the cake (the mineral potential) has become the cake. The cost of drilling an exploratory well to see if there is any oil or gas can be enormous—millions of dollars. However, oil companies are willing to do this free of charge to you and give you a small percentage (12 to 25 percent royalty) of the output of the well should it be productive, in return for you giving them the contract to drill on your mineral rights, even if it is no longer your land.

Baen sits on many oil and mineral rights all over Texas. Some still need to be drilled to see if the wells will be productive. Some have been drilled and turned out to be dry (although new technology introduced by oil companies in the past five years ensures that some 90 percent of wells drilled these days are productive).

And others are quietly producing oil or gas with no overheads to Baen—no leaking roofs, tenant complaints, or other challenges associated with conventional commercial real estate investment.

I, too, have become an oil man, and while my income from this operation may not be spectacular, I get a certain satisfaction knowing that my share of oil that is pumped out of the ground is far greater than the oil I consume in vehicles.

Remember that it is a bad idea to trust any government officials to provide you with a warning of impending disaster, whether it be the next depression, war or monetary crisis. Famous French economist Bertrand de Jouvenel perceived that people in power have “the least foresight” as to where our nation and economy is heading. Government officials are well-known for their eagerness to withhold the reality of the crisis. They tend to hide facts such as the cost of war, the rate of inflation, or an impending bank failure. Sadly, big businesses are not much better. Bear Stearns announced that everything was fine merely 2 hours before JP Morgan stepped in to shore up the investment bank.

So where should you look for accurate information? Well, the best sources are private economists and independent analysts. They have been warning people of impending problems for many years.

The most essential part in finding a reputable payday loan company is to do as much research as possible and get all of the information you can. The United States Truth in Lending Act was created to make credit providers to give complete disclosure on their loans in regards to interest rates, fees, loan terms, and other items. This applies to credit card companies and all payday loan companies. They are obliged by both federal and state law to provide you with all information you would request.
Try using the web and examine various reviews of all of the sites. There are many payday loan sites present in the Internet and every one of them gives you something a little bit different. Use the internet to look for these sites and examine closely everything that they have to offer. However, that will usually not suffice. Additionally, you should consider consulting reviews from people you know and, more importantly, from some people that you trust. If someone in your immediate family has used a loan corporation, ask them about the sort of rates they paid. What is more, you should find out the attitudes of the company they used and how reliable that company might have been.
Finding a reputable company is the most important thing you can do. If you pick a good payday loan company, all of the other elements will fall into the right places. You will have the possibility to benefit from better rates, lower fees, and have the peace of mind that in typically associated with taking a loan from a good credit source.

It looks like all people are running away from the stock market these days. This morning on the news, I heard a ‘financial expert’ claim that investors had ‘given up’ on stocks, that they were getting out, selling up, and that this was in fact pushing the stock market down even further.

You might ask why would anyone recommend buying stocks at times like these? As a matter of fact, I believe that now is one of the best times ever to invest in stocks. Here’s why.

In his now classic book Stocks for the Long Run, Jeremy Siegel explains that stock market returns are extremely stable over a longer period of time and outperform every other asset class in the long run. In spite of huge social, political and economic upheavals over the last two centuries, stock market returns have proven to be very predictable in the long run. Through two world wars and multiple other conflicts, through the great depression, Black Monday, terrorist attacks and all kinds of natural disasters, the long term payback provided by owning stock has been predictable and consistent.

It may look like the end of the world to you, but it is not true. Eventually, the economy will recover, the market will recover and stocks will follow their predictable path.

Buying a home – it does not matter if it is your first or your tenth one – means that you will have to purchase homeowners insurance, so it is good to think about your insurance possibilities when you look for the perfect place to call your home. Homeowners insurance premiums are influenced by various factors and many of them lay under your control. Making a few wise decisions will grant you the coverage you need and hopefully will save you hundreds of dollars every year.

Get the facts. When you become interested in a house, collect as much information as possible to establish its potential insurance costs. The age of electrical, plumbing and other systems within the home, as well as construction materials used to build the property, can have an impact on your premiums. For example, masonry homes or less flammable roofing material can easily give you an insurance price break, typically in dry areas of the country where the risk of fire damage is high.

Know the geography. Regardless of the construction materials used, where you live can have a serious impact on your insurance premiums and coverage availability. Most likely homeowners will have to pay more for insurance in areas susceptible to severe weather and natural disasters, such as tornadoes, hurricanes, earthquakes or wildfires. According to the Insurance Information Institute, the states with the highest homeowners insurance in recent years have been Texas, Louisiana and Florida, all coastal states with serious claims for water and wind damage.

Know how much is enough. Studies carried out by construction-cost estimators reveal that more than 60% of homeowners in the US are underinsured, mostly because they do not insure their homes to “replacement value.” Replacement value is the current cost of rebuilding your home from the foundation up. Replacement value can be considerably different from market value, which stands for what a willing buyer is ready to pay for a home.

Gather Your Resources

You will have to make yourself certain that you are equipped with the proper resources you will need to purchase foreclosed properties. I would advise you to start a foreclosure list file to organize all the documents and research that you will gather during the time of looking for and purchasing a distressed property.

Look For a Good Source of Foreclosure Listing

Since the beginning of the Internet, there is no longer need to rely on printed listings to be mailed to you. For example, RealtyTrac offers online listings that are updated every day making it easy for you to purchase a foreclosure. Moreover, RealtyTrac is the sole national provider of both pre-foreclosure and foreclosure data, and finally it offers a very reasonable subscription rate. In any case, there are a couple of questions you should ask of any foreclosure listing service to help estimate its usefulness.

Decide Whether You Want to Use an Agent

Those who are first-time homebuyers and have never bought a house yet, let alone a foreclosed real estate, should seriously consider contacting a local real estate attorney or consult an agent experienced in purchasing foreclosures. For example, as a subscriber to an online listing site, you will probably gain access to a national or local network of referral agents, who should help you follow-up on the listings. If you decide to work with an agent, be certain he or she is aware of your priorities. Not every agent will have vast experience with foreclosed properties, so you should ask any potential agents if they have some experience with foreclosure help and sales. For first-time buyers, a good and experienced agent constitutes a comforting and valuable resource.

Prepare a Checklist of What You Want in a Home

A foreclosed property list should encompass as many items as you can think of. Then, you should prioritize them. Most likely you will never get the perfect home, but a checklist will allow you to stay focused so you will know when you find a property that will meet all your needs and wants.

In some cases people who like to do things by themselves get stung before they even start working on a remodel of their home. It happens mostly for two simple reasons. Either because they paid too much or they purchased their real estate investment in the wrong neighborhood – for example slammed up against the freeway, next to railroad tracks or that lonely single-family tucked in a row of commercial.

Both these problems can be avoided by closely examining comparable sales for the neighborhood before you purchase a house and asking about the setbacks connected with the location. If you don’t feel like living under a flight path, the chances are a new buyer won’t either. Bear in mind that the best time to consider selling is when you buy as well. As the most beautiful remodel is not likely to pay back in spades if your real estate backs up to the city dump.

When looking for suitable home loans, always remember to compare your home loan opportunities in the proper way. This means that you cannot actually compare a 30 year fixed home loan at 6.5% to a 5/1 ARM at 3.8% without real knowledge of what you are doing. What does it all mean anyway? Below is an easy home loan guide:

1. Loan Term – The loan term is the repayment time of your loan. In most cases mortgages are 30 years, but some of them may be 10 or 15 years. The longer the term the lower your monthly payment, but at the same time you are paying the higher interest!
2. Interest Rate – A fixed interest rate indicates that you will be offered the same interest rate for your entire loan period. An adjustable interest rate may change after a period of time. If you are comparing a fixed rate and an ARM loan, use a mortgage calculator to compare your payments down the line as well as those up front.
3. Closing Costs – Lenders, closing agents and attorneys, state regulations should be taken into account when calculating closing costs. Choose the lender with the smallest amount of junk fees or the one that will cover your closing costs out of his own revenues.