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Category: Real Estate

Where to Find Luxury MN Real Estate

Luxury communities are in high-demand for MN real estate. We list a number of properties from the 500s through the millions on our Minnesota MLS because we’re well aware of the excellent stock of jobs the state has to offer. We recognize that we’re blessed with Fortune 500 companies like United Health Group, Target, General Mills, Medtronic, U.S. Bancorp, Best Buy, Hormel Foods, St. Jude Medical, Valspar, Regis, Land O’ Lakes, Mosaic, Polaris Industries, Alliant Tech Systems and many other highly-skilled professional positions. Lots of high-powered executives, well-paid professionals and talented dual income families are looking for MN real estate that speaks to their tastes and also represents the lifestyles they’ve worked so hard to achieve. The luxury communities listed on our Minnesota MLS are close to business centers, top-notch schools, highly educated neighbors and ample amenities.

North Oaks MN real estate is a northern suburb of Saint Paul, Minnesota. Structured around Pleasant Lake, homeowners enjoy access to fresh water, hiking trails and natural beauty. Residential roads are for locals’ use only and all property is owned by the 4,500 residents – none by the city itself. Most of the houses here are in the $721,000 – $1.3 million range and are established properties built from 1970 – 1994. A whopping 96.89% of the workforce in North Oaks is employed in white-collar jobs. Sales professionals, managers, health care workers and office workers make up a huge percentage of the population. Approximately 8% of the people here are self-employed and telecommute to work, which is a relatively high percentage compared to the rest of the country.

Edina MN real estate, a first ring southwest suburb of Minneapolis, has several luxury communities listed in the Minnesota MLS. For instance, the Gleason Road / McCauley Trail community near Braemar Golf Course offers nearly a third of its real estate in the $1 million + range. Most of the three and four bedroom houses were built in the forties, fifties and sixties. Also, the 50th Street / South France Avenue community offers historic Victorians from $500,000 – over $1.8 million. In 1999, the median household income in Edina was $66,019, compared to $37,974 for neighboring Minneapolis and $47,111 for the state of Minnesota in general. Edina has been home to notable billionaires like Richard M. Schulze, chairman and founder of Best Buy, and the late Carl Pohlad, former owner of the Minnesota Twins baseball franchise.

Minneapolis, Duluth, Plymouth and Eden Prairie are other popular Minnesota MLS searches for homeowners interested in luxury MN real estate.

What Do You Need To Look For In A Real Estate Agreement

If you are intending to build a house, it is essential for you to do some researching on the builder’s reputation as well as its past records. Any complaints lodged to the Board of Contractors or even any other financial irregularities against that particular company will definitely cost you a lot of troubles. Make sure that you do your homework before deciding on one builder.

Another thing that you will need to take note is that in your contract, it should be stated that you are given an adequate time to perform inspection on your newly built home. You are advised to hire your own guy to inspect the house. This is because the agent that the builder recommends will always favour the builder instead.

Your real estate agreement should give a period of time to make any cancellation without charging you any penalty. The agreement too must have the components where you are able to look into every aspects of your home’s stability and not to mention having the right to make appropriate arrangements financially. Take note that the exact price is written in the agreement. Other items which are included need to be specified as well.

If you are considering to purchase a house owned by some other people previously, you will want to have it notated in your document of what furnishings and also appliances that will stay in that house. This is to avoid any misconduct of items where items that you thought will be there for you to use are taken away by the seller. In the agreement, which expenses paid by who are to be stated down clearly.  Negotiate with your seller on stuffs that you are required to pay for. This is to avoid you from paying excessively. One last note is that, you should read the real estate agreement thoroughly and carefully. If you have any doubts on any areas, consult those who are responsible so that these problems can be solved.

Mexican Stocks, Silver, and Real Estate–A Ten Year Review

The Consumer Price Indexes (CPI) program of the US Department of Labor produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services in the United States. Tracking the CPI data began in 1913 and by 1983, inflation had reached 100%. Therefore, today most all data is calculated using a 1983 base of 100. For example, a CPI of 215.3 in 2009 indicates 115.3% inflation since 1983. Below is the inflation calculator based on data provided by the U.S. Department of Labor Bureau of Labor Statistics showing inflation during the past decade:

CPI Inflation Calculator

If in 1998 (enter year)

I purchased an item for $100

then in 2008 (enter year)

that same item would cost: $132.09

Rate of inflation change: 32.1%

The above calculator shows that if you put $100 under your mattress ten years ago it, through the inflation of goods and services during the past decade, it would be worth $76 ($100/1.32) today, i.e., worth 76% of its original value or a loss of 24% in terms of 1998 purchasing power.

In order to hedge against inflation, many advisors suggest that you buy various commodities, oil and gas, foreign dollars, Real Estate Investment Trusts (REITS), Treasury Inflation-Protected Securities (TIPS), gold, and silver, etc. All of these investment vehicles are now available through Exchange Traded Funds (ETF’s) where you don’t have to take physical possession of the commodities; for relatively small investments, gold and silver in the form of bullion or coins is readily available and simple to purchase and hold. All of these forms of hedges against inflation can be excellent, however for the purpose of this article, we’ll concentrate on silver.

Silver has always been one of Mexico’s major export materials; in fact, until just a few years ago, Mexico was the largest producer and exporter of silver in the world. Let’s assume ten years ago, instead of putting your $100 under the mattress, you bought $100 worth of silver selling at approximately $5.50/ounce. Today, at $16.65/ounce, you can sell your silver and enjoy a gain of more than 200%, i.e., your $100 investment is now worth $303 resulting in a 1999 purchasing power of $230 (76% of $303); not bad! If you’re concerned that the recent increase in silver prices is only a temporary spike, it should be known that silver was selling at $20/ounce in 1981 and when the Hunt brothers were speculating in 1980, it was driven up to over $50/ounce; now that was a spike! The last time silver was selling for $16.65/ounce was in 1981. Taking the CPI inflation index of 2.37 (1981 to 2009) into consideration, $16.65/ounce in 1981 was equivalent to almost $40/ounce (2.37 X $16.65) in today’s money and therefore it’s not too difficult to imagine a much further increase in silver prices! This logic is further reinforced when you take into consideration the weakening dollar forecasted for the near future. (see ten year silver price graph below)

The world’s leading miner and producer of silver is the Pan American Silver Corp. (PAAS), headquartered in Vancouver, B.C. This publically traded company has silver mines throughout Latin America with a couple of its largest mines in Mexico. In fact, one of these two mines is their only open pit mine and the other huge Mexican mine, located north east of Puerto Vallarta, has been producing the purest silver of all their mines since 1929. The graph below reveals the PAAS stock performance during the past ten years.

Next, let’s analyze the performance of the US stock market during the same ten year time frame.  If your $100 had been invested in SPY, the S&P 500 ETF, it would be worth 80 dollars today per the graph below.  Let’s take it a step further and adjust for inflation; that $80 would have only $61 (76% of $80) of 1999 purchasing power. Yes, that’s correct; if you were invested in the US stock market and your return was better than average, you’ve lost almost 40% of the purchasing power that you had ten years ago!

Now, let’s compare the ten year performance of the Mexican stock market (Bolsa) to the US stock market. If you had purchased EWW, the ETF basket of Mexican stocks, in 1999, you would have realized a 150% gain and your initial investment would now be valued at $250, with a 1999 purchasing power of $190 (76% of $250); pretty decent, especially when you compare it to the $61 left from investing in the SPY’s!

Review the graph below and you’ll immediately see how much the ETF basket of Mexican stocks (EWW) and the Pan American Silver Corp. (PAAS) stock had appreciated in value through 2007 and then fell precipitously in the second half of 2008. More importantly, you can see how both are recovering beautifully as the world recovers from the global recession. Comparing both of these Mexico related stocks to the SPY’s; you may never again want to invest your $100 in a US related stock! Assuming that the global economy continues its gradual recovery, it seems quite apparent from extrapolating the curves below that Mexican stocks and silver are very attractive areas for investing a portion of your portfolio at this time. It’s amazing to see how closely the EWW and the PAAS stock prices have correlated over the past decade!

Finally, let’s look at Mexican real estate. Along the prime region of the Mexican Riviera, property values have tripled from 1999 to 2008 (we don’t have any empirical data but after being invested in the real estate market in Puerto Vallarta for more than a quarter of a century, we can state it as a fact; some properties have quadrupled in value!), after which they have remained flat to perhaps dropping by as much as 20%. Therefore, a real estate investment of $100 in 1999 was worth about $300 in 2008. Assuming a depreciation of $60 (20% of $300) over the past 18 months, it’s now worth $240. In terms of 1999 purchasing power, it’s worth $182 (76% of $240); about the same as EWW and PAAS, not as much as silver, but a whole lot more fun than owning either! When comparing these facts and figures to the $61 of 1999 purchasing power remaining from the $100 invested in the SPY’s, it’s truly disheartening to think of those of you that were fully invested through IRA’s or 401k’s during the past decade. Fortunately, it’s not too late to recoup your losses; in fact, the time could never be better!

The recent drop in Mexican real estate values was caused mainly by the global recession; however, the recent border town drug cartel war news (1,200 miles between PV and Juarez!) and the swine flu scare (three confirmed cases in PV!) contributed significantly to the local real estate recession. The border town drug cartel war and the swine flu scare effects will vanish over time and in all probability, the property values will soon recover to their 2008 highs. Unlike the 20% property value drop in the US, there are virtually no foreclosures dragging down the housing values in Mexico. The housing crisis in the US will probably continue for a couple more years resulting in further erosion of home values by an additional 10-20%. Currently, millions of Real Estate Owned (REO-lender owned) properties exist in the US but you won’t find any in Mexico!

In summarizing, $100 placed under the mattress ten years ago has a 1999 value of $76 today, $61 if in the S&P 500 SPY’s, $230 if in silver, $190 if in the Mexican EWW fund, $185 if in the silver company PAAS, and $182 if in Mexican real estate. Regardless of where in Mexico you had invested your $100 ten years ago, whether it was in Mexican silver, stocks, or real estate, you’ve now got at least three times as much as you would have had if you had invested in the S&P 500 SPY’s! So, here we are in 2009; the question is where best to invest your remaining money after the fiasco of the past decade? With real estate prices 20% off recent highs, long term mortgages of 50% (or more) available in Mexico, and many developers willing to short term finance up to 50%, there has never been a better time to invest in Mexican real estate.

Why hesitate; isn’t it about time that you at least consider making an investment decision totally contrary to those recommendations that you’ve been receiving from your personal financial “guru” that have cost you 40% of your life’s savings? Come on down and retire in Mexico; maybe you’ll even want to buy a bag full of Mexican Libertads or dabble in the Mexican Bolsa through a vehicle such as the EWW fund while enjoying retirement to its fullest! Who knows; as you’re relaxing in your beach front condo on the Mexican Riviera, perhaps your investments in Mexico will gain enough over the next couple of years to recover what you’ve lost during the past decade!

Investing in Real Estate

Four Ways To Make The Most Of Investing In Real Estate

One of my investor clients asked me if it’s faster Ñuñoa a rental in Las Condes, Providencia and Vitacura.

The answer to this question is as varied as the experiences each has had real estate brokers.

Generally, the profitability of real property is between 5% to 6% and is directly related to the amount invested. That is, greater investment less profitable.

As a practical example, a department whose value ranges in the $ 45,000,000, – the return should be between UF + 5% and 6% a year while a department whose value is close to $ 280,000,000, – the revenue produced is $ 1,000,000, – per month which means an annual return of approximately 4.3% UF +.

An apartment for rent should be depreciated over a period of 15 to 20 years. The higher price higher amortization period. Continuing the example above, the department of $ 280,000,000, – should be amortized in 20 years so the annual return should be skirting UF + 5% and the monthly rent should be in% 1,170,000 – subject to variation generally down.

In the case of the department of $ 45 million, depreciation should be closer to 15 years so that the expected return is UF + 5.5% and the monthly rent, therefore, would be $ 206,000, – approx.

It is important that these values can vary significantly depending on location, proximity to Metro, the area where equipment is located the property, and so on.

So much for houses and residential apartments as compared to the income earned by commercial premises and offices they can overcome UF + 12% per annum to be cases of UF + 17% per annum above commercial premises located in locations Top. But this is subject of another article.

And, responding to my client, I can indicate that the higher the rental value lower speed of placement.

I would like to clarify certain points, in this response to my client.

The decision to invest in real property is subject to several factors including which is the target market to which we want to focus our investment, investment capacity, the depreciation of property value may repurchase or what is the loss of value time?, what kind of tenant we want or can get according to the object of our investment properties, how many bedrooms, full services, if the building has more or fewer features or simply does not have, and so on., etc.

The lower the amount of our investment will have more risks in terms of quality of the building and the tenant. Probably the purchase value will be severely punished at the time of resale, the tenant will care less for what maintenance will be higher causing damage to the revenues from the income of the property, and so on. Contrary position, the annual yield could reach 12% UF +. In general these yields are obtained in departments located in the commune of Santiago with the innumerable buildings.

In contrast, a property of higher value produces a comparatively low income tenants are however more viable subject, careful with the property, generally do not have economic problems and can take the high values of lease, the property does not lose its purchasing time considerably, and so on.

The question then that all big or small investor to do when deciding your purchase is precisely whether leased faster than in Vitacura Ñuñoa if not desire to assume much risk in my investment, how long will it take me to recover my investment, if tenants are reliable or not, if you look after the property or will start after several months without pay, the resale value will be much less than that paid to buy, and so on.