In real estate, value is the perception of the buyer. Value plays a predominant role in real estate. Most of the problems that hinder value appreciation of a property is more of physical and psychological things. The value of a property has more to do with human sentiments. Some of the factors that influence the value appreciation of a property are:
1. CONDITION OF PROPERTY
The condition of the property is a very vital point considered for value estimation of a property. A property in a deteriorating state will definitely have a reduction in value. Some properties have so much deteriorated that they sink over time. Imagine a house with broken tiles, damaged drainage system, washed-off paint and broken glasses. Such condition definitely has a negative effect on the value of the property.
2. POWER
In real estate, power is very important in rental value. Places that have constant and reliable power supply readily experience appreciation in the value of properties located within such area. Properties include both land and buildings. There is a place in Lagos mainland in , very close to a government specialist hospital where residents often enjoy a good power supply. For this reason, rental value of properties in this place is high. The cost of a two-bedroom flat in that environment is higher than a three-bedroom flat in another environment. Constant power supply attracted such high rental value.
3. URGENCY TO SELL
Urgency to sell a property badly affects the value of such property. When a property owner needs money urgently, buyers tend to capitalize on that factor and price such property below its value. Urgency to sell is a problem created by the seller himself. In real estate business, there are real estate investors normally searching for properties on the down side, which are properties that the owners need quick money to solve a serious problem. Such circumstances make the owners ready to sell at any price to the owners disadvantage and to the buyers advantage. Urgency to sell a property reduces the value of the property and value is the worth of the property.
4. CRIME
Security of lives and property is very essential to mankind. People don't want to live or work in a place where there lives and properties are not secured. As such, real properties that are located in crime-prone areas hardly experience value appreciation. Some places are more volatile than others and the higher the volatility of a place the lower the value appreciation of real properties located in such area. Security is an additional factor to value appreciation in real estate.
5. DETERIORATING INFRASTRUCTURE
In real estate, Infrastructure plays a major role in value appreciation of a property. There are many causes of deterioration in infrastructure. Lack of maintenance culture affects the value of a real property. Bad drainage could lead to flooding environment and erosion could wear away road and all these will affect the value of real properties located in such areas. Nobody wants to live in areas with bad roads and bad land topography. Locations suffering from deteriorating infrastructure also suffer from value appreciation.
6.TRAFFIC
Traffic is another factor that seriously affects the rental value of real properties in an area. Everybody is scared of traffic. Nobody wants to waste useful time stuck in a traffic congestion. Real properties located in places prone to high traffic congestion usually have less patronage, hence lower value appreciation. Akute area of Lagos state have lower rental value than Ojodu Berger, but most of the real proprieties in Akute are aesthetically better than those in Ojodu. The real properties in Akute are also new unlike the old ones in Ojodu, but the rental value is lower than those in Ojodu. The cause is that there is only one road that leads to Akute and traffic is always heavy on that road, hence people are scared to live there. Here, traffic becomes the main factor that determines value appreciation of the real properties.
Sunday, August 31, 2008
mortgage refinance - points to consider before getting a mortgage loan
Mortgage loan is usually needed to finance a real property purchase. There are some questions that the mortgagor must provide answers to before signing up for such mortgage loan. These questions if properly answered will help the mortgagor avoid mistakes and regrets during the mortgage refinance.They include:
1. Find out how long it will take to process your mortgage loan. This is crucial if mortgagor have already placed an offer on a property with a contingency of obtaining finance. This is to avoid losing the deal while you are still waiting for the underwriting to go through. So try to get a clear idea of how long the mortgagee (lender) expects the process to take.
2. Ask the mortgagee if there will be any kind of pre-payment penalty on the mortgage loan. There may come a time in the future when you either have an opportunity to pay-off all the loan or to re-finance the mortgage. In either of these cases, the existence of a pre-payment penalty will be crucial. So it is necessary that you find out now if such pre-payment penalty exists in the mortgage loan that you are about to accept.
3. Many people seeking mortgage loan often overlook asking the mortgagee what the interest rate on the mortgage loan will be. This sounds ridiculous but it is true. mortgagors are so caught up in the excitement of acquiring a home and the anxiety of obtaining financing that they simply assume that they are getting a good mortgage deal and forget to do a proper check. Most times, quoted rates and actual interest rates are entirely different. Most mortgagee tell you the debit interest rate without telling you other charges that go with the mortgage facility. Don't get stuck with absurdly high interest rate. Make sure that you find out the total interest rate on the mortgage that you will be re-financing for the next 10 years or more
.4. Go over the document and make sure that there are no clauses on the mortgage loan that would cause the interest rate to change during the course of the mortgage refinance. Here, look out for fixed mortgage rate loans . Fixed rate mortgage loans have fixed interest rate for the entire duration of the loan refinance.
5. Ask for any tie-in clauses or requirements. Tie-ins are clauses from mortgagees that make requirements on mortgage (such as purchasing their property buyer's insurance through a specific company,etc). The additional costs of tie-ins can sometimes outweigh the advantages of low interest mortgage loan. If you see such tie-ins in your mortgage loan package, try to ask the mortgagee about it.
6. Read over the list of closing cost fees carefully and ask about anything that is unclear to you in the mortgage facility. Don't take it for granted that all charges by the mortgagee are standard. If there is something you don't understand, don't hesitate to ask the mortgagee.
7. Wherever necessary always seek the assistance of a professional. No matter how long you have been in real estate business. Quality professional advice will always help you through some circumstances.
1. Find out how long it will take to process your mortgage loan. This is crucial if mortgagor have already placed an offer on a property with a contingency of obtaining finance. This is to avoid losing the deal while you are still waiting for the underwriting to go through. So try to get a clear idea of how long the mortgagee (lender) expects the process to take.
2. Ask the mortgagee if there will be any kind of pre-payment penalty on the mortgage loan. There may come a time in the future when you either have an opportunity to pay-off all the loan or to re-finance the mortgage. In either of these cases, the existence of a pre-payment penalty will be crucial. So it is necessary that you find out now if such pre-payment penalty exists in the mortgage loan that you are about to accept.
3. Many people seeking mortgage loan often overlook asking the mortgagee what the interest rate on the mortgage loan will be. This sounds ridiculous but it is true. mortgagors are so caught up in the excitement of acquiring a home and the anxiety of obtaining financing that they simply assume that they are getting a good mortgage deal and forget to do a proper check. Most times, quoted rates and actual interest rates are entirely different. Most mortgagee tell you the debit interest rate without telling you other charges that go with the mortgage facility. Don't get stuck with absurdly high interest rate. Make sure that you find out the total interest rate on the mortgage that you will be re-financing for the next 10 years or more
.4. Go over the document and make sure that there are no clauses on the mortgage loan that would cause the interest rate to change during the course of the mortgage refinance. Here, look out for fixed mortgage rate loans . Fixed rate mortgage loans have fixed interest rate for the entire duration of the loan refinance.
5. Ask for any tie-in clauses or requirements. Tie-ins are clauses from mortgagees that make requirements on mortgage (such as purchasing their property buyer's insurance through a specific company,etc). The additional costs of tie-ins can sometimes outweigh the advantages of low interest mortgage loan. If you see such tie-ins in your mortgage loan package, try to ask the mortgagee about it.
6. Read over the list of closing cost fees carefully and ask about anything that is unclear to you in the mortgage facility. Don't take it for granted that all charges by the mortgagee are standard. If there is something you don't understand, don't hesitate to ask the mortgagee.
7. Wherever necessary always seek the assistance of a professional. No matter how long you have been in real estate business. Quality professional advice will always help you through some circumstances.
How to reduce a property's maintenance cost
In real estate, the maintenance cost of a property has a way of reducing returns on investment, hence the need to properly manage a property's maintenance cost. The following will help reduce the future cost of maintaining a property.
1. PAINTING
painting contributes significantly to a property's maintenance cost. Painting is affected by weather elements, though resistance could be created by quality of paint and some other factors which could be created by the property owner. Internally, satin can be used as a finishing coat and it has the quality of gloss and emulsion at the same time. when it gets dirty, it can be washed with soap and water. It does not cause heat and it is relatively cheap.
The external part of the building (property) is often affected by stains like dust and human hands (people often unintentionally touch the wall and this stain will require another coat of paint to remove). To overcome such property maintenance cost in the future; stone wall, tiles and clay finish should be used. This way , the property is not repainted constantly, hence cutting out that maintenance cost.
2. PLUMBING INSTALLATION
plumbing is another part of a building that requires constant future maintenance if not properly taken care of. Plumbing easily wears out due to quality of materials. Using pipes as an example, there are different types of pipes . The common one is PVC pipe and it is easily broken and damaged. Another pipe type called pressurized PVC can be used. It lasts way longer than the ordinary PVC if the fittings and correct adhesive are used. Conduit installation is used in some property. In real estate, conduit installation is a piping system that runs inside the building wall. Unlike conduit installation, surface pipes has little effect on the building during maintenance because only few places are broken. The ordinary PVC pipe is easily broken at the joint. Most of the connectors and elbows are easily broken or removed by the effect of human waste and waste water. Using quality and long lasting piping installation in the initial construction of the building helps reduce the future maintenance cost of the property.
3. ROOFING
Roofing can be done with several materials. One of which is corrugated aluminium roofing sheet. This comes in different ranges. The common roofing material today is Long span aluminium roofing sheet. This type of roofing sheet comes in different types and colours. The thickness of the sheet determines the cost of the sheet. The thickness can be 0.35, 0.45 ,0.55 or 0.75. Of them all 0.55 and 0.75 are the best. They are more expensive and also more durable than the rest. Unlike iron and some other materials, aluminium does not corrode . Therefore, it lasts for a very long time. It combines durability and beauty together that is why it is in vogue today. There is another type of roofing sheet called ALUZINC. Aluzinc combines beauty, durability and affordability at the same time. It is not as long as aluminium roofing sheet . It also comes in different sizes and colours. Aluzinc is very beautiful and durable. If used, it will definitely reduce construction cost and future maintenance cost.
1. PAINTING
painting contributes significantly to a property's maintenance cost. Painting is affected by weather elements, though resistance could be created by quality of paint and some other factors which could be created by the property owner. Internally, satin can be used as a finishing coat and it has the quality of gloss and emulsion at the same time. when it gets dirty, it can be washed with soap and water. It does not cause heat and it is relatively cheap.
The external part of the building (property) is often affected by stains like dust and human hands (people often unintentionally touch the wall and this stain will require another coat of paint to remove). To overcome such property maintenance cost in the future; stone wall, tiles and clay finish should be used. This way , the property is not repainted constantly, hence cutting out that maintenance cost.
2. PLUMBING INSTALLATION
plumbing is another part of a building that requires constant future maintenance if not properly taken care of. Plumbing easily wears out due to quality of materials. Using pipes as an example, there are different types of pipes . The common one is PVC pipe and it is easily broken and damaged. Another pipe type called pressurized PVC can be used. It lasts way longer than the ordinary PVC if the fittings and correct adhesive are used. Conduit installation is used in some property. In real estate, conduit installation is a piping system that runs inside the building wall. Unlike conduit installation, surface pipes has little effect on the building during maintenance because only few places are broken. The ordinary PVC pipe is easily broken at the joint. Most of the connectors and elbows are easily broken or removed by the effect of human waste and waste water. Using quality and long lasting piping installation in the initial construction of the building helps reduce the future maintenance cost of the property.
3. ROOFING
Roofing can be done with several materials. One of which is corrugated aluminium roofing sheet. This comes in different ranges. The common roofing material today is Long span aluminium roofing sheet. This type of roofing sheet comes in different types and colours. The thickness of the sheet determines the cost of the sheet. The thickness can be 0.35, 0.45 ,0.55 or 0.75. Of them all 0.55 and 0.75 are the best. They are more expensive and also more durable than the rest. Unlike iron and some other materials, aluminium does not corrode . Therefore, it lasts for a very long time. It combines durability and beauty together that is why it is in vogue today. There is another type of roofing sheet called ALUZINC. Aluzinc combines beauty, durability and affordability at the same time. It is not as long as aluminium roofing sheet . It also comes in different sizes and colours. Aluzinc is very beautiful and durable. If used, it will definitely reduce construction cost and future maintenance cost.
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