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Saturday, September 6, 2008

Luxury real estate

Definition

The characteristics that define Luxury real estate differ among countries. However, location largely defines the property's value, especially with respect to whether it offers views (particularly, waterfront ones) or amenities such as proximity to golf courses, school districts, and the downtown district. Thus, a 750-square-foot (70 m2) waterfront home with less than one acre of property might be worth more than a 10,000-square-foot (930 m2) mansion with ten acres of property.

In the previous example, the former would be called a "luxury property", whereas the latter would be called a "luxury home". Both properties, however, owing to their high value, would be classified as "luxury real estate".

Luxury real estate in any particular region is generally defined as property worth more than a certain lower limit; for instance, homes worth more than $1 million in the United States are generally classified as Luxury real estate. The classification also takes into account the presence of surrounding homes, amenities, views, waterfronts, absence of crime-rate, industrialization or unwanted commercialization, customizations of the home, and historical or architectural significance.

Differences from ordinary real estate

Luxury real estate entails greater responsibility for agents who handle transactions than ordinary real estate. They must advertise to a national audience to attract non-local buyers, whereas ordinary real estate only generally requires exposure in local media. There are also greater legal responsibilities for the luxury estate agent, which often involve attornies, trusts, and anonymity issues. Buyers often require more inspections than with ordinary real estate (which are generally bought after a single inspection)

Luxury Real Estate Magazines

Companies operating in the luxury real estate market often publish their own magazines online and in print, meant to publicize their brands. One such example is Panache Magazine, published in New York by luxury real estate broker Panache Privée.


From Wikipedia, the free encyclopedia

Monday, September 1, 2008

Mortgage loan

A mortgage loan is a loan secured by real property through the use of a mortgage (a legal instrument). However, the word mortgage alone, in everyday usage, is most often used to mean mortgage loan.

A home buyer or builder can obtain financing (a loan) either to purchase or secure against the property from a financial institution, such as a bank, either directly or indirectly through intermediaries. Features of mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying off the loan, and other characteristics can vary considerably.

Mortgage loan basics


Basic concepts and legal regulation

According to Anglo-American property law, a mortgage occurs when an owner (usually of a fee simple interest in realty) pledges his interest as security or collateral for a loan. Therefore, a mortgage is an encumbrance on property just as an easement would be, but because most mortgages occur as a condition for new loan money, the word mortgage has become the generic term for a loan secured by such real property.

As with other types of loans, mortgages have an interest rate and are scheduled to amortize over a set period of time; typically 30 years. All types of real property can, and usually are, secured with a mortgage and bear an interest rate that is supposed to reflect the lender's risk.

Mortgage lending is the primary mechanism used in many countries to finance private ownership of residential property. For commercial mortgages see the separate article. Although the terminology and precise forms will differ from country to country, the basic components tend to be similar:

  • Property: the physical residence being financed. The exact form of ownership will vary from country to country, and may restrict the types of lending that are possible.
  • Mortgage: the security created on the property by the lender, which will usually include certain restrictions on the use or disposal of the property (such as paying any outstanding debt before selling the property).
  • Borrower: the person borrowing who either has or is creating an ownership interest in the property.
  • Lender: any lender, but usually a bank or other financial institution.
  • Principal: the original size of the loan, which may or may not include certain other costs; as any principal is repaid, the principal will go down in size.
  • Interest: a financial charge for use of the lender's money.
  • Foreclosure or repossession: the possibility that the lender has to foreclose, repossess or seize the property under certain circumstances is essential to a mortgage loan; without this aspect, the loan is arguably no different from any other type of loan.

Many other specific characteristics are common to many markets, but the above are the essential features. Governments usually regulate many aspects of mortgage lending, either directly (through legal requirements, for example) or indirectly (through regulation of the participants or the financial markets, such as the banking industry), and often through state intervention (direct lending by the government, by state-owned banks, or sponsorship of various entities). Other aspects that define a specific mortgage market may be regional, historical, or driven by specific characteristics of the legal or financial system.

Mortgage loans are generally structured as long-term loans, the periodic payments for which are similar to an annuity and calculated according to the time value of money formulae. The most basic arrangement would require a fixed monthly payment over a period of ten to thirty years, depending on local conditions. Over this period the principal component of the loan (the original loan) would be slowly paid down through amortization. In practice, many variants are possible and common worldwide and within each country.

Lenders provide funds against property to earn interest income, and generally borrow these funds themselves (for example, by taking deposits or issuing bonds). The price at which the lenders borrow money therefore affects the cost of borrowing. Lenders may also, in many countries, sell the mortgage loan to other parties who are interested in receiving the stream of cash payments from the borrower, often in the form of a security (by means of a securitization). In the United States, the largest firms securitizing loans are Fannie Mae and Freddie Mac, which are government sponsored enterprises.

Mortgage lending will also take into account the (perceived) riskiness of the mortgage loan, that is, the likelihood that the funds will be repaid (usually considered a function of the creditworthiness of the borrower); that if they are not repaid, the lender will be able to foreclose and recoup some or all of its original capital; and the financial, interest rate risk and time delays that may be involved in certain circumstances.


From Wikipedia, the free encyclopedia

Wednesday, August 27, 2008

Short sale (real estate)

A short sale is when a bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank's Loss mitigation department. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove of a proposed sale.

Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market climate and the individual borrower's financial situation.

A short sale typically is executed to prevent a home foreclosure. Often a bank will choose to allow a short sale if they believe that it will result in a smaller financial loss than foreclosing. For the home owner, the advantages include avoidance of having a foreclosure on their credit history and the partial control of the monetary deficiency. Additionally, a short sale is typically faster and less expensive than a foreclosure. In short, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount.

Creditors, their surrogates, and those who politically benefit from the mortgage industry -- especially those in the real-estate, mortgage servicing, and banking -- wrongly portray short sales as difficult to complete or morally questionable[citation needed]. This is simply untrue if the value of the underlying asset, a home, has fallen dramatically and the debtor has limited assets. Short sales are extraordinarily common in standard business transactions in recognition that creditors are not doing debtors a favor but, rather, engaging in a business transaction when extending credit. When it makes no business sense or is economically not feasible to retain an asset businesses default on their loans (called bonds). It is not uncommon for business bonds to trade on the after-market for a small fraction of their face value in realization of the likelihood of these future defaults.

Negotiatons

Lenders have a department (typically called a loss mitigation department) that processes potential short sale transactions. Typically, lenders do not accept short sale offers or requests for short sales until a Notice of Default has been issued or recorded with the locality where the property is located.

Lenders have a varying tolerance for short sales and mitigated losses. The majority of lenders have a pre-determined criteria for such transactions. Other distressed lenders may allow any reasonable offer subject to a loss mitigator's approval. "Red tape" is very common in short sales, requiring potentially multiple levels of approvals and conditions. Junior liens - such as second mortgages, HELOC lenders, and HOA (special assessment liens) - may need to approve the short sale. Frequent objectors to short sales include tax lieners (income, estate or corporate franchise tax - as opposed to real property taxes, which have priority even when unrecorded) and mechanic's lien holders. It is possible for junior lien holders to prevent the short sale.

Recent Changes to Federal Laws Affecting Mortgages

When the lender decides to forgive all or a portion of a borrower's debt and accept less, the forgiven amount is considered as income for the borrower and is liable to be taxed.

However, after the signing of The Mortgage Forgiveness Debt Relief Act of 2007, amendments have been made to remove such tax liability and allow the borrower and lender to work freely together to find a common solution that is beneficial to both parties. This protection is limited to primary residences -- rental properties are ineligible for relief -- so consultation with a tax advisor is necessary to ensure that a borrower qualifies.[1]

More recent legislation provides for a specialized type of refinancing option, available for mortgages made after in 2006 or later, for owner-occupied homes. Under this program a debtor provides information similar to that necessary for a short-sale but rather than selling the house to a third-party an FHA guaranteed loan at a fixed-rate is available if the original lender is willing to write-off all but 85-percent of outstanding of the debtor's obligations (including principal, interest, late-fees, prepayment penalties, and all other fees). FHA-backed refinance packages are available beginning October, 2008, and carry a fee equal to 1.5% of the value of the house. Debtors who exercise this option must sacrifice 50-100 percent of equity that builds in a house, and may not participate in home equity loan programs. This program is only available to owner-occupied residences. This program requires consent from a lender: consent is not automatic and may be freely withheld, though withholding consent can result in a foreclosure with adverse financial results.

Credit reporting

A short sale does adversely affect a person's credit report, though the negative impact is typically less than a foreclosure. Short sales are a type of settlement. Like all entries except for bankruptcy, short sales remain on a credit report for seven years. Depending upon other credit information it is typically possible to obtain another mortgage 1-3 years after a short sale.

While it is frequent if not common for a lender to forgive the balance of the loan in question, it is unlikely that a lien holder that is not a mortgagee will forgive any of their balance. Further, it is common for a lender to omit updating mortgage balances to reflect a zero balance after a short sale. However, willfully misrepresenting information on a credit report constitutes libel in many states, and lenders may be sued in civil court for engaging in this behavior.


From Wikipedia, the free encyclopedia

Monday, August 25, 2008

Island


An island (IPA: /ˈaɪlənd/) or isle (/ˈaɪl/) is any piece of land that is completely surrounded by water in two dimensions, above high tide, and isolated from other significant landmasses. Very small islands such as emergent land features on atolls are called islets. A key or cay is another name for a small island or islet. An island in a river or lake may be called an eyot, /ˈaɪət/. There are two main types of islands: continental islands and oceanic islands. There are also artificial islands. A grouping of geographically and/or geologically related islands is called an archipelago.

The word island comes from Old English ī(e)gland (literally, "watery land"). However, the spelling of the word was modified in the 15th century by association with the etymologically unrelated Old French loanword isle.[1]

There is no standard of size which distinguishes islands from islets and continents.

Types


Continental islands

Angel Island in San Francisco Bay
Angel Island in San Francisco Bay

Continental islands are bodies of land that lie on the continental shelf of a continent. Examples include Greenland and Sable Island off North America; Barbados and Trinidad off South America; Great Britain, Ireland and Sicily off Europe; Sumatra and Java off Asia; and New Guinea, Tasmania and Kangaroo Island off Australia.

A special type of continental island is the microcontinental island, which results when a continent is rifted. Examples are Madagascar off Africa; the Kerguelen Islands; and some of the Seychelles.

Another subtype is an island or bar formed by deposition of tiny rocks where a water current loses some of its carrying capacity. An example is barrier islands, which are accumulations of sand deposited by sea currents on the continental shelf. Another example is islands in river deltas or in large rivers. While some are transitory and may disappear if the volume or speed of the current changes, others are stable and long-lived.


Oceanic islands

The islands of Hawai'i are volcanic islands.
The islands of Hawai'i are volcanic islands.
Wake Island is a volcanic island that has become an atoll.
Wake Island is a volcanic island that has become an atoll.
Subterranean isle in Križna jama
Subterranean isle in Križna jama

Oceanic islands are ones that do not sit on continental shelves. They are volcanic in origin. One type of oceanic island is found in a volcanic island arc. These islands arise from volcanoes where the subduction of one plate under another is occurring. Examples include the Mariana Islands, the Aleutian Islands and most of Tonga in the Pacific Ocean. Some of the Lesser Antilles and the South Sandwich Islands are the only Atlantic Ocean examples.

Another type of oceanic island occurs where an oceanic rift reaches the surface. There are two examples: Iceland, which is the world's largest volcanic island, and Jan Mayen — both are in the Atlantic.

A third type of oceanic island is formed over volcanic hotspots. A hotspot is more or less stationary relative to the moving tectonic plate above it, so a chain of islands results as the plate drifts. Over long periods of time, this type of island is eventually eroded and "drowned" by isostatic adjustment, becoming a seamount. Plate movement across a hot-spot produces a line of islands oriented in the direction of the plate movement. An example is the Hawaiian Islands, from Hawaii to Kure, which then extends beneath the sea surface in a more northerly direction as the Emperor Seamounts. Another chain with similar orientation is the Tuamotu Archipelago; its older, northerly trend is the Line Islands. The southernmost chain is the Austral Islands, with its northerly trending part the atolls in the nation of Tuvalu. Tristan da Cunha is an example of a hotspot volcano in the Atlantic Ocean. Another hot spot in the Atlantic is the island of Surtsey, which was formed in 1963.

An atoll is an island formed from a coral reef that has grown on an eroded and submerged volcanic island. The reef rises to the surface of the water and forms a new island. Atolls are typically ring-shaped with a central lagoon. Examples include the Maldives in the Indian Ocean and Line Islands in the Pacific.


When defining islands as pieces of land that are completely surrounded by water, narrow bodies of water like rivers and canals are generally left out of consideration[citation needed]. For instance, in France the Canal du Midi connects the Garonne river to the Mediterranean Sea, thereby completing a continuous water connection from the Atlantic Ocean to the Mediterranean Sea. So technically, the land mass that includes the Iberian Peninsula and the part of France that is south of the Garonne River and the Canal du Midi is completely surrounded by water. For a completely natural example, the Orinoco River splits into two branches near Tamatama, in Amazonas state, Venezuela. The southern branch flows south and joins the Rio Negro, and then the Amazon. Thus, all of the Guianas (Guyana, Suriname, and French Guiana) and substantial parts of Brazil and Venezuela are surrounded by (river or ocean) water. These instances are not generally considered islands.

This also helps explain why Africa-Eurasia can be seen as one continuous landmass (and thus technically the biggest island): generally the Suez Canal is not seen as something that divides the land mass in two.

On the other hand, an island may still be described as such despite the presence of a land bridge, e.g., Singapore and its causeway or the various Dutch delta Islands, such as IJsselmonde. The retaining of the island description may therefore be to some degree simply due to historical reasons - though the land bridges are often of a different geological nature (for example sand instead of stone), and thus the islands remain islands in a more scientific sense as well.


From Wikipedia, the free encyclopedia

Wednesday, August 20, 2008

Land trust

A land trust is an agreement whereby one party (the trustee) agrees to hold ownership of a piece of real property for the benefit of another party (the beneficiary). Land trusts are used by nonprofit organizations to hold conservation easements, by corporations and investment groups to compile large tracts of land, and by individuals to keep their real estate ownership private, avoid probate and provide several other benefits.

A community or conservation land trust is an organization established to hold land and to administer use of the land according to the charter of the organization. A land trust is a useful way to manage complex divisions of the Bundle of Rights that people can own in real estate, and can be used to manage something as large and complex as a multi-state REIT, or as common and small as a single-family home.

Corporations sometimes set up land trusts when they want to compile large tracts of land without arousing suspicion or alerting people to their plans (which would cause the asking price to rise). For example, the land for Walt Disney World near Orlando Florida was put together by using many land trusts to buy smaller tracts of land.

Individuals use land trusts mainly for privacy and to avoid probate. No one knows what one's bank balance or stock investments are, yet anyone with an internet connection can look up a person's real estate holdings. A person who has an auto accident or a doctor who accidentally injures a patient is a much better target for a lawsuit if he or she owns real estate investments. So some investors buy their properties in land trusts so their name does not appear in the public records. The land trust also allows the property to immediately pass to their heirs at the moment of death, rather than go through a long probate process.

Some of the other advantages of land trusts for individuals are:

  • Sales price of the property can be kept off the public records
  • Property taxes are lower if the purchase price is kept private
  • Judgments or liens (such as IRS liens) against an individual's name are not a lien against their land trust property
  • Partners can more easily continue a project if one dies or is divorced
  • Interests can be transferred quickly without recording a deed
  • Managing a rental property is easier when the trustee can be blamed
  • Negotiating a purchase or sale can be easier when the trustee can be blamed
  • Liability on financing can be limited to the assets of the trust

Investment trust companies hold property for investment purposes and non-citizens who want long-term access to land in Mexico often enter real-estate trust agreements, called fideicomiso, with Mexican citizens, but land trust more often refers to a community scale organization. Community land trusts are established to provide low- and moderate-income families access to affordable housing while conservation trusts protect environmentally, historically or culturally valuable places. Land trusts are also in place to protect farmland and ranchland. Despite the use of the term "trust," many if not most land trusts are not technically trusts, but rather non-profit organizations that hold simple title to land and/or other property and manage it in a manner consistent with their non-profit mission.

History

Land trusts have been around at least since Roman times but their clearest history is from the time of King Henry VIII in England. At that time people used land trusts to hide their ownership of land so they would not have to serve in the military or suffer the other burdens of land ownership. For example an elder uncle would hold his nephew’s land so they would not have to join the king’s army. To put an end to this King Henry in 1536 passed the Statute of Uses. The statute declares that if one party holds land "to the use of" or in trust for another ("beneficiary"), legal title is vested in the beneficiary. Obviously, if the statute had been given literal effect, there would be no trust law. Shortly after the statute was enacted, however, English courts declared that the statute only applied if the trust was passive, that is the trustee didn’t do anything but hold the land.

In the late 19th century in Chicago some people figured out that land trusts would be good things for buying property for investors to build skyscrapers on, and city aldermen figured they would be a good way to hide their ownership in land since they were forbidden to vote on city building projects when they owned land nearby. Since the law of England including the Statute of Uses was the law of America the question arose whether a land trust would be valid. This question went to the Illinois Supreme Court which ruled that if a land trust was set up with some minor duty on the trustee (such as to deed the property to the beneficiaries 20 years later), then the trust would not be considered passive and would be valid. Thus the land trust in America today is often called an “Illinois-type” land trust.

Land trusts have been actively used in Illinois for over a hundred years and in recent decades have begun to be used in other states. The creation of land trusts is not a recorded document, however the declaration of a trust is through a "deed to trustee". Many believe that the trust is to be filed as a public document, however this removes all of the asset protection provided by the formation of the land trust.

Community land trusts

Main article: community land trust

Community land trusts trace their conceptual history to India's gramdans where villages held property in the community interest, and to European and North American land banks, which are quasi-public agencies that invest in land often to help build family farms or to encourage economic development. "The ideas behind the community land trust...have historic roots" in the indigenous Americas, in pre-colonial Africa, and in ancient Chinese economic systems, as Robert Swann and his co-authors saw it in 1972. The introduction in their book, "The Community Land Trust: A Guide to a New Model of Land Tenure in America" continues, "...we can say the goal is to "restore" the land trust concept rather than initiate it." Residential land trusts emerged in the United States after calls among civil rights leaders in the 1950s and 1960s in the American South for economic reforms to reverse rampant poverty. An Institute for Community Economics was organized in the late 1960s to help residential trusts:

  • Gain control over local land use and reduce absentee ownership
  • Provide affordable housing for lower income residents in the community
  • Promote resident ownership and control of housing
  • Keep housing affordable for future residents
  • Capture the value of public investment for long-term community benefit
  • Build a strong base for community action

Residential community land trusts are now widespread in the United States, but seldom gain much notice beyond occasional local news accounts. The Institute for Community Economics in 2004 reported nearly 120 community land trusts of varied sizes in 30 states, the District of Columbia and in five Canadian provinces. While a few earlier trusts faltered, the number of land trusts in North America overall nearly tripled between the 1987 and 2004.

Community land trusts rely on community members, word of mouth and strategic communications to attract new residents, members and supporters. In residential land trusts, the CLT usually owns the land, leasing it long-term to the land user who owns the home and other improvements on the land. CLTs usually retain rights to buy buildings from residents who move out of the community. The goal of residential trusts is often to protect housing prices from real estate speculation and gentrification but to allow residents to accrue equity, including sweat equity.

Conservation land trusts

The goal of conservation trusts is to perpetually preserve sensitive natural areas, farmland, ranchland, water sources, or notable landmarks. These include enormous international organizations such as The Nature Conservancy or World Land Trust, as well as smaller organizations that operate on national, state/provincial, county, and community levels. Conservation trusts often, but not always, target lands adjacent to or within existing protected areas.

Many different strategies are used to provide this protection, including outright acquisition of the land by the trust. In other cases, the land will remain in private hands, but the trust will purchase a conservation easement on the property to prevent development, or purchase any mining, logging, drilling, or development rights on the land. Trusts also provide funding to assist like-minded private buyers or government organizations to purchase and protect the land forever.

As most land trusts are non-profit, they rely on endowments or donations to provide capital to acquire land or easements. Donors often provide cash, but it is not uncommon for conservation-minded landowners to donate an easement on their land, or the land itself. Some trusts also receive funds from government programs to acquire, protect, and manage land. Some trusts can afford to pay employees, but many others depend entirely on volunteers.

When land is acquired, trusts will sometimes retain ownership of the land in perpetuity, or sell the land to a third party. This third party is often the government, which will usually add the land to an existing protected area, or create a new one entirely. Land trusts were instrumental in the 2004 creation of Great Sand Dunes National Park in Colorado, as well as the expansion of Hawaii Volcanoes National Park by 50% in 2003. Land trusts also sell land to private buyers, usually with a strict conservation easement attached. Keeping the land under private ownership has the added benefit of maintaining the land on local property tax rolls, providing income to the local government.

Some areas have extremely limited public access for the protection of sensitive wildlife, or to allow recovery of damaged ecosystems. Many protected areas are still under private ownership, which tends to limit access as well. However, in many cases, land trusts work to eventually open up the land in a limited way to the public for recreation in the form of hunting, hiking, camping, wildlife observation, watersports, or other responsible outdoor activities. This is often with the assistance of community groups or government programs. Some land is also used for sustainable agriculture or ranching, or even for sustainable logging. While important, these goals can be seen as secondary to protection of the land from development.

The Land Trust Alliance, formed in 1981, provides technical support to the growing network of land trusts in the United States. The Alliance performs a National Land Trust Census that keeps track of the land protected by local and regional land trusts[1]. The last Census, conducted in 2003, reported that these trusts have protected almost 9.4 million acres (38,000 km²) of land in the United States, double the 4.7 million acres (19,000 km²) recorded in the 1998 survey. Over 5 million acres (20,000 km²) of that was protected by conservation easement in 2003. Although it does not include national or international land trusts in its Census, the LTA estimates another 25 million acres (100,000 km²) in the U.S. have been protected by those organizations. The largest amount of land protected by local and regional trusts is in the Northeast with 2.9 million acres (12,000 km²), while the fastest growing region between 1998 and 2003 was the Pacific (consisting of California, Nevada, and Hawaii), with protected land increasing 147% to 1.5 million acres (6,100 km²) in 2003.

In 1891, the Trustees of Reservations was founded, perhaps the first conservation land trust in the entire world. Conservation land trusts now operate in all 50 U.S. states, as well as many other countries. Since then, the number of land trusts has steadily increased, with most forming in the last 25 years. Over 300 new local and regional trusts were formed in the period from 1998 to 2003 alone, with the last LTA Census counting 1,537 operating in the United States. Over 1,000 of these are members of the LTA. California now has the most land trusts, with 173 operating statewide in 2003. Massachusetts, despite being much smaller, was a close second with 154 land trusts that year.

In October 2002, Property and Environment Research Center published a report by Dominic P. Parker entitled Cost-Effective Strategies for Conserving Private Land. This paper identified numerous ways for operating land trusts more efficiently, pointing out that conservation easement and other tools for land preservation may be less costly than ownership. Sometimes the various rights associated with land ownership are separable. A preservationist organization may, for instance, buy only the extraction rights on a property with oil or minerals, and then rent those rights to extracters on the organization's terms. The terms might include requirements to protect the environment and pay the organization royalties on materials extracted. Many land trust organizations had already been using these strategies for years when this report was published.


From Wikipedia, the free encyclopedia


Tuesday, August 12, 2008

Villa

Villa


A villa was originally an upper-class country house, though since its origins in Roman times the idea and function of a villa has evolved considerably. After the fall of the Republic, a villa became a small, fortified farming compound, gradually re-evolving through the Middle Ages into luxurious, upper-class country homes. In modern parlance it can refer to a specific type of detached suburban dwelling.
The Albertian Villa Medici in Fiesole: terraced grounds on a sloping site.
The Albertian Villa Medici in Fiesole: terraced grounds on a sloping site.


Roman

An old Italian wall surrounded by flowers near a Villa.
An old Italian wall surrounded by flowers near a Villa.
Main article Roman villa.

A villa was originally a Roman country house built for the upper classes. According to Pliny the Elder, there were several kinds of villas: the villa urbana, which was a country seat that could easily be reached from Rome (or another city) for a night or two, and the villa rustica, the farm-house estate, permanently occupied by the servants who had charge generally of the estate, which would centre on the villa itself, perhaps only seasonally occupied. There was the domus, a city house for the middle class, and insulae, lower class apartment buildings. Petronius Satyricon describes a wide range of Roman dwellings. There were a concentration of Imperial villas near the Bay of Naples, especially on the Isle of Capri, at Monte Circeo on the coast and at Antium (Anzio). Wealthy Romans escaped the summer heat in the hills round Rome, especially around Tibur (Tivoli) and Frascati (cf Hadrian's Villa). Cicero is said to have possessed no fewer than seven villas, the oldest of which was near Arpinum, which he inherited. Pliny the Younger had three or four, of which the example near Laurentium is the best known from his descriptions.

Roman writers refer with satisfaction to the self-sufficiency of their villas, where they drank their own wine and pressed their own oil. This was an affectation of urban aristocrats playing at being old-fashioned virtuous Roman farmers, but the economic independence of later rural villas was a symptom of the increasing economic fragmentation of the Roman empire. When complete working villas were donated to the Christian church, they served as the basis for monasteries that survived the disruptions of the Gothic War and the Lombards. An outstanding example of such a villa-turned-monastery was Monte Cassino.

Numerous Roman villas have been meticulously examined in England. Like their Italian counterparts, they were complete working agrarian societies of fields and vineyards, perhaps even tileworks or quarries, ranged round a high-status power center with its baths and gardens. The grand villa at Woodchester preserved its mosaic floors when the Anglo-Saxon parish church was built (not by chance) upon its site. Burials in the churchyard as late as the 18th century had to be punched through the intact mosaic floors. The even more palatial villa rustica at Fishbourne near Winchester was built uncharacteristically as a large open rectangle with porticos enclosing gardens that was entered through a portico. Towards the end of the 3rd century, Roman towns in Britain ceased to expand: like patricians near the centre of the empire, Roman Britons withdrew from the cities to their villas, which entered on a palatial building phase, a "golden age" of villa life. Villae rusticae are essential in the Empire's economy.

Two kinds of villa plan in Roman Britain may be characteristic of Roman villas in general. The more usual plan extended wings of rooms all opening onto a linking portico, which might be extended at right angles, even to enclose a courtyard. The other kind featured an aisled central hall like a basilica, suggesting the villa owner's magisterial role. The villa buildings were often independent structures linked by their enclosed courtyards. Timber-framed construction, carefully fitted with mortices and tenons and dowelled together, set on stone footings, were the rule, replaced by stone buildings for the important ceremonial rooms. Traces of window glass have been found as well as ironwork window grilles.


Sub-Roman

As the Roman Empire collapsed in the fourth and fifth centuries, the villas were more and more isolated and came to be protected by walls. Though in England the villas were abandoned, looted, and burned by Anglo-Saxon invaders in the fifth century, other areas had large working villas donated by aristocrats and territorial magnates to individual monks that often became the nucleus of famous monasteries. In this way, the villa system of late Antiquity was preserved into the early Medieval period. Saint Benedict established his influential monastery of Monte Cassino in the ruins of a villa at Subiaco that had belonged to Nero; there are fuller details at the entry for Benedict. Around 590, Saint Eligius was born in a highly-placed Gallo-Roman family at the 'villa' of Chaptelat near Limoges, in Aquitaine (now France). The abbey at Stavelot was founded ca 650 on the domain of a former villa near Liège and the abbey of Vézelay had a similar founding. As late as 698, Willibrord established an abbey at a Roman villa of Echternach, in Luxemburg near Trier, which was presented to him by Irmina, daughter of Dagobert II, king of the Franks.

Post-Roman

In post-Roman times a villa referred to a self-sufficient, usually fortified Italian or Gallo-Roman farmstead. It was economically as self-sufficient as a village and its inhabitants, who might be legally tied to it as serfs were villeins. The Merovingian Franks inherited the concept, but the later French term was basti or bastide.

Villa (or its cognates) is part of many Spanish placenames, like Vila Real and Villadiego: a villa is a town with a charter (fuero) of lesser importance than a ciudad ("city"). When it is associated with a personal name, villa was probably used in the original sense of a country estate rather than a chartered town. Later evolution has made the Hispanic distinction between villas and ciudades a purely honorific one. Madrid is the Villa y Corte, the villa considered to be separate from the formerly mobile royal court, but the much smaller Ciudad Real was declared ciudad by the Spanish crown.

Renaissance

In 14th and 15th century Italy, a 'villa' once more connoted a country house, sometimes the family seat of power like Villa Caprarola, more often designed for seasonal pleasure, usually located within easy distance of a city. The first examples of Renaissance villa dates back to the age of Lorenzo de' Medici, and they are mostly located in the Italian region of Tuscany (the "Medici villas") such as the Villa di Poggio a Caiano by Giuliano da Sangallo (begun in 1470) or the Villa Medici in Fiesole (since 1450), probably the first villa created under the instructions of Leon Battista Alberti, who theorized in his De re aedificatoria the features of the new idea of villa. The gardens are from that period considered as a fundamental link between the residential building and the country outside. From Tuscany the idea of villa was spread again through Italy and Europe.

Rome had more than its share of villas with easy reach of the small sixteenth-century city: the progenitor, the first villa suburbana built since Antiquity, was the Belvedere or palazzetto, designed by Antonio Pollaiuolo and built on the slope above the Vatican Palace. The Villa Madama, the design of which, attributed to Raphael and carried out by Giulio Romano in 1520, was one of the most influential private houses ever built; elements derived from Villa Madama appeared in villas through the 19th century. Villa Albani was built near the Porta Salaria. Other are the Villa Borghese; the Villa Doria Pamphili (1650); the Villa Giulia of Pope Julius III (1550), designed by Vignola.

However, many among the most beautiful Roman villas, like Villa Ludovisi and Villa Montalto, were destroyed during the late nineteenth century in the wake of the real estate bubble that took place in Rome after the seat of government of a united Italy was established at Rome.

The cool hills of Frascati gained the Villa Aldobrandini (1592); the Villa Falconieri and the Villa Mondragone.

The Villa d'Este near Tivoli is famous for the water play in its terraced gardens. The Villa Medici was on the edge of Rome, on the Pincian Hill, when it was built in 1540.

List of famous villas

Palladio's usage

Main article Palladian Villas.

In the later 16th century the villas designed by Andrea Palladio around Vicenza and along the Brenta Canal in Venetian territories, remained influential for over four hundred years. Palladio often unified all the farm buildings into the architecture of his extended villas (as at Villa Emo).

Later usage

Heritage villas, late 19th century, Auckland, New Zealand.
Heritage villas, late 19th century, Auckland, New Zealand.

In the early 18th century the English took up the term. Thanks to the revival of interest in Palladio and Inigo Jones, soon neo-palladian villas dotted the valley of the River Thames. In many ways Thomas Jefferson's Monticello is a villa. The Marble Hill House in England was conceived originally as "villas" in the 18th-century sense.

In the nineteenth century, villa was extended to describe any large suburban house that was free-standing in a landscaped plot of ground. By the time 'semi-detached villas' were being erected at the turn of the twentieth century, the term collapsed under its extension and overuse. The second half of the nineteenth century saw the creation of large "Villenkolonien" in the German speaking countries, wealthy residential areas that were completely made up of large mansion houses and oftentimes built to an artfully created masterplan. The Villenkolonie of Lichterfelde West in Berlin was conceived after an extended trip by the architect through the South of England.

With the changes of social values in post-colonial Britain after World War I the suburban "villa" became a "bungalow" and by extension the term is used for suburban bungalows in both Australia and New Zealand, especially those dating from the period of rapid suburban development between 1920 and 1950. The villa concept lives on in the German speaking countries, southern Europe, Latin America and particularly on the American westcoast, where villas are associated with upper-class social position and lifestyle.

Modern architecture also produced some important examples of buildings called "villas":


From Wikipedia, the free encyclopedia

Friday, August 8, 2008

Real estate investing



Real estate investing
involves the purchase, ownership, management, rental and/or sale of real estate for profit. Improvement of realty property as part of a real estate investment strategy is generally considered to be a sub-specialty of real estate investing called real estate development. Real estate is an asset form with limited liquidity relative to other investments, it is also capital intensive (although capital may be gained through mortgage leverage) and is highly cash flow dependent. If these factors are not well understood and managed by the investor, real estate becomes a risky investment. The primary cause of investment failure for real estate is that the investor goes into negative cash flow for a period of time that is not sustainable, often forcing them to resell the property at a loss or go into insolvency.

Sources and Acquisition of Investment Property

Real estate markets in most countries are not as organized or efficient as markets for other, more liquid investment instruments. Individual properties are unique to themselves and not directly interchangeable, which presents a major challenge to an investor seeking to evaluate prices and investment opportunities. For this reason, locating properties in which to invest can involve substantial work and competition among investors to purchase individual properties may be highly variable depending on knowledge of availability. Information asymmetries are commonplace in real estate markets. This increases transactional risk, but also provides many opportunities for investors to obtain properties at bargain prices. Real estate investors typically use a variety of appraisal techniques to determine the value of properties prior to purchase.

Typical sources of investment properties include:

Once an investment property has been located, and preliminary due diligence (investigation and verification of the condition and status of the property) completed, the investor will have to negotiate a sale price and sale terms with the seller, then execute a contract for sale. Most investors employ real estate agents and real estate attorneys to assist with the acquisition process, as it can be quite complex and improperly executed transactions can be very costly. During the acquisition of a property, an investor will typically make a formal offer to buy including payment of "earnest money" to the seller at the start of negotiation to reserve the investor's rights to complete the transaction if price and terms can be satisfactorily negotiated. This earnest money may or many not be refundable, and is considered to be a signal of the seriousness of the investor to purchase. The terms of the offer will also usually include a number of contingencies which allow the investor time to complete due diligence and obtain financing among other requirements prior to final purchase. Within the contingency period, the investor usually has the right to rescind the offer with no penalty and obtain a refund of earnest money deposits. Once contingencies have expired, rescinding the offer will usually require forfeit of earnest money deposits and may involve other penalties as well.


Sources of Investment Capital and Leverage

Real estate assets are typically very expensive in comparison to other widely-available investment instruments (such as stocks or bonds). Only rarely will real estate investors pay the entire amount of the purchase price of a property in cash. Usually, a large portion of the purchase price will be financed using some sort of financial instrument or debt, such as a mortgage loan collateralized by the property itself. The amount of the purchase price financed by debt is referred to as leverage. The amount financed by the investor's own capital, through cash or other asset transfers, is referred to as equity. The ratio of leverage to equity (often referred to as "LTV", or loan to value for a conventional mortgage) is one mathematical measure of the risk an investor is taking by using leverage to finance the purchase of a property. Investors usually seek to decrease their equity requirements and increase their leverage, so that their return on investment (ROI) is maximized. Lenders and other financial institutions usually have minimum equity requirements for real estate investments they are being asked to finance, typically on the order of 20% of appraised value. Investors seeking low equity requirements may explore alternate financing arrangements as part of the purchase of a property (for instance, seller financing, seller subordination, private equity sources, etc.)

Some real estate investment organizations, such as real estate investment trusts (REITs) and some pension funds, have large enough capital reserves and investment strategies to allow 100% equity in the properties they purchase. This minimizes the risk which comes from leverage, but also limits potential ROI.

By leveraging the purchase of an investment property, the required periodic payments to service the debt create an ongoing (and sometimes large) negative cash flow beginning from the time of purchase. This is sometimes referred to as the carry cost or "carry" of the investment. To be successful, real estate investors must manage their cash flows to create enough positive income from the property to at least offset the carry costs.

Sources and Management of Cash Flows

A typical investment property generates cash flows to an investor in four general ways:

Net operating income, or NOI, is the sum of all positive cash flows from rents and other sources of ordinary income generated by a property, minus the sum of ongoing expenses, such as maintenance, utilities, fees, taxes, debt service payments, and other items of that nature. The ratio of NOI to the asset purchase price, expressed as a percentage, is called the capitalization rate, and is a common measure of the performance of an investment property.

Tax shelter offsets occur in one of three ways: depreciation (which may sometimes be accelerated), tax credits, and carryover losses which reduce tax liability charged against income from other sources. Some tax shelter benefits can be transferable, depending on the laws governing tax liability in the jurisdiction where the property is located. These can be sold to others for a cash return or other benefit.

Equity build-up is the increase in the investor's equity ratio as the portion of debt service payments devoted to principal accrue over time. Equity build-up counts as a positive cash flow from the asset where the debt service payment is made out of income from the property, rather than from independent income sources.

Capital appreciation is the increase in market value of the asset over time, realized as a cash flow when the property is sold. Capital appreciation can be very unpredictable unless it is part of a development and improvement strategy. Purchase of a property for which the majority of the projected cash flows are expected from capital appreciation (prices going up) rather than other sources is considered speculation rather than investment.

Foreclosure investment

Main article: Foreclosure investment

Some individuals and companies are engaged in the business of purchasing properties at foreclosure sales. According to the legal foreclosure stages when the process is completed, the lender may sell the property and keep the proceeds to satisfy its mortgage and any legal costs. The foreclosing bank has the right to continue to honor the client’s lease, but customary as a rule the bank wants the property vacant, in order to sell it easier.[1] Thus distressed assets (such as foreclosed property or equipment) are considered by some to be worthwhile investments because the bank or mortgage company is not motivated to sell the property for more than is pledged against it.

Foreclosure statistics

The number of households in foreclosure increased 79 percent in 2007, with about one of every 100 U.S. households at some stage of the foreclosure process, according to the latest numbers from data aggregator RealtyTrac. [2]


From Wikipedia, the free encyclopedia

Wednesday, August 6, 2008

Asian Property Market

Asian Property Market

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Ever since the 1997 Asian financial crisis, property markets have greatly developed through the years. Asian governments have improved the financial stance associated with the structure of hosing finance, allowing more access to a diverse range of mortgages products.[1]

Housing in Asia has an important role in economic growth. In the early 1990’s large urbanization in Hong Kong, Singapore, Thailand, Philippines and other Southeast Asia countries brought about a large housing price appreciation. Asia attracted global economic interest up until the economic crash of 1997. A decade later, the Asian economy has been stabilized, and has allowed the property market to advance. As a result, foreign investment is continuing to grow. The market is currently experiencing a 50% increase in the amount being invested into Asian countries globally.[2] [3]Although some countries in Asia may not be stable enough for international investment, the majority of the markets are expected to boom.

Indonesia

Property development news has been mainly focused in Jakarta, the nation’s capital. In 1970s, Jakarta's governor Lieutenant General Ali Sadikin focused on rehabilitating plublic services and re-housing. The government were able to provide low cost housing for residents in the low income bracket as well as providing subsidised loans for low cost housing through state owned mortgage banks.[12] Jakarta became the focus of a real estate boom in the late 1980s, however suffered during the Asian financial crisis, to which the city majorly suffered from. However, the market has slowly rejuvenated. Within the residential sector, there is an ever increasing trend of investment into new builds. Many of the ongoing projects are middle-lower and middle-upper class (dominating the market at 73% in 2008).[13] New builds are located in the north of the city. The demand has been increasing as worsening traffic into Jakarta has influenced commuters decisions to move closer to the workplace, many of the new apartment towers are located adjacent to business centers.

Thailand

The property market in Thailand, first boomed in the 1980s, this was thanks to a well performing economy, that attracted many people into property investment. A few years later the government encouraged commercial banks to sell their mortgage services and products. Thailand suffered great economic losses during the Asian economic crisis and the market did not regain again until 2000, were the property market saw US$ 2 billion being invested into Thai property. Property prices in Thailand are considerably low compared to other southeast Asian locations, attracting foreign investors, may of which for tourism. For the nationals of Thailand, there are currently commercial banks and government housing banks are dominant in the mortgage lending services with a commercial share of 80-90%.[14] The surge has been observed and analyst believe that Thailand's property market may well be in it's infancy.

Philippines

The Philippines was arguably the worst effected by the 1997 Asian financial crisis, with the biggest drop in property market, and has not yet managed to recover fully to this day. Despite this, with a predicted GPD growth of 7.4% in 2007, the Philippines' economy is strongly growing in both Manila and Cebu City. A growing trend in the economy in 2004 [15] resulted in a small property boom, where all office space, luxury residential and retail markets are still on the rise. This is surprising as Philippines is still perceived as an un-desirable place to do business in Asia [16] although there are plenty of professionals coming into the country and joining the expatriate community. Economic growth is heavily reliant on private consumption and investment. There are 8 million overseas nationals who continue to invest into property in the Philippines, but growth may be vulnerable due to the recent 10% depreciation of the US dollar against the Peso. Manila's CBD (Central Business District), Makati City, is the most expensive district in the city for office space. On the contrary, Manila still remains to be one of the cheapest places in Asia to buy luxury residential property. A recent surge in supply for this will trouble the market and pervious investors within the next few years.

Hong Kong

Hong Kong has one of the most developed mortgage market in Asia. [4] Mortgage loans account for 25-30% of bank loans in Hong Kong.[5] Land ownership and land restrictions by the government risk inefficiencies with housing supply and demand. In 1998 there was a property price collapse; from 1997 to 2003 Hong Kong residential property prices fell by 61% [6] following the Asian economic crisis. Investigations show that there is a distinct correlation between lending and property prices and that the influence is thought to have come from the property prices to the bank credit rather than the other direction. [7] Hong Kong is known for having one of the most expensive real estate sector in the world, in both commercial and residential space. As property value increase, the tendency with Hong Kong property owners is to leave property vacant whilst waiting for a better time to sell it on. This subsequently raises the vacancy rate. (For example in 2007, the vacancy rate for residential properties in Hong Kong was close to 2.5% with an 11 % increase in the value of residential properties) [8].

Singapore

The Singapore property market has an 11 year price cycle. The current cycle is expected to peak in 2010. [9]. The Singapore’s property market is however, vulnerable to turbulence in its local economy. The threats that face this include, raising inflation, under performance in forecast economic growth and weaker export business out of the country.

Due to the nature of the country, the majority of property is in the public sector accounting for 85% of the total households.[10] In the 1990’s, the government had schemes to encourages development of private housing, which was successful as private housing share increased rapidly. In 2007, Singapore’s residential property market boomed due to strong economic growth and an influx of professional migrants to Singapore, which particularly boosted the financial service industry. The demand for Singapore office space is driven by the tight supply issue in the Singapore property market and the expanding financial facilities available to service private wealth in Asia. (For example in 2008, according to the Singapore Land Authority the availability of Singapore residential property was tight with only 4,457 new units are under construction or planned for 2008 to 2013).[11]

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