Why Real Estate Profitable
Using other people’s money, or use the financing is just one of convenience that can be utilized invest into property. But other than that there are many benefits of investment in property that makes it very attractive in comparison to other investments.

• Cash Flows, “Cash Flow”,

Cash flow is the money you receive on a regular basis on the money you invested in an investment. for example interest on savings and deposits are cash flow because it provides income to you. In property, the rent could be income or cash flow for you. More and more buildings can you rented the greater your cash flow.

• Value of your ownership of the house increases.

Value your rights of ownership or property investment is financed from the concept of using other people’s money was going to increase, far exceeds your debt or obligation. Person’s ownership rights in an investment is known as equity. For example if the purchase of your property investment amounted to USD 100 million, financed by the bank’s USD 70 million, the remaining Rp 30 million to use your own money. So your ownership rights to the investment worth USD 100 million had amounted to USD 30 million or 30% of it. The ownership will increase in value because of the reduced debt repayment obligations. In addition, your property rights are also increasing because of rising property values. Your property value will go up due to inflation makes the prices of goods and services has increased, including property. As a result of this inflation is not just a property value goes up but you also have the opportunity to increase cash flow or your regular income through increased house rents in line with inflation earlier. The increase in the value of this property can even increase your borrowing power. Banks are usually happy to give additional loans based on collateral or property price increases. You can use this money to pay off old debt balance, and the rest of the money from these loans can get your bag. Then to adjust to a new loan installment of rent income.

If you are an employee, of course, want to get a salary as possible, if the salary was paid by the company which you are not within your capabilities, then you will find another company who is able to pay you higher. Or you are looking for other income such as catering business, selling and other pulses.

Besides the issue of salaries, to compete with fellow employees who are younger are other problems you face in addition to salary. With more knowledge ‘ADVANCED’, with the idea of the new, higher work motivation, and are willing to pay with lower salaries. Of course, your boss or owner of the company will ‘look’ to your colleagues, and eventually you will get to sink.

Besides, another problem which we may not realize is INFLATION. For example, if your salary increase of 10%, and the rate of inflation was 12.5%, the actual salary will be reduced 2.5%. In order for your income is not reduced, that you are doing you should  your income with the following formula:

(Inflation – increase in salary)
———————————- x salary
(investment interest)

By assumption, the bank rate = 8%, and with income above formula which should be set aside for savings is 31.25% of your salary. Value which is high enough for most employees in Indonesia. Look for investment instruments other than savings / deposits.

Then repeat the question, What good is investing? Or rather, why?

The purchasing power of money:

Suppose you have $ 30 in his home, kept in a box, you are saving in a month to spend on something you want. Every day she leaves home to work and return at 9 am.

During the time that is out of work, a thief enters and takes a single peso. So throughout the month without you knowing. Arriving later this month will find their $ 30 when you open the box and realize that is empty.

Congratulations, you’ve come to understand in some ways the concept of “inflation.” This topic discussed in the media but who may not know much.

The above explains so little story in a rather absurd as inflation is “eating” our savings Inflation is a sustained increase in price of an economy. So if you now with $ 30 could buy a book, perhaps within 10 years this book out $ 150. This is the power of inflation and hence the decrease of “purchasing power of money.”

Then when we are looking to invest that money we could save for a time, serve tomorrow and not less purchasing power. This is the main cause of the need for investment, seeking the possibility that the purchasing power does not diminish our money and even to increase.

The other option is to leave it under the cushion or in a savings account, but know that you will be losing money anyway. For those of us in Argentina, we left a bit rotund some data on the subject to realize the reduced purchasing power in recent years.

Annual inflation rate (Source INDEC) Years 2001 to 2005 = 75% Year 2005 = 12.3%

Also along the blog I commented on the IRR NPV and ROI in today’s topic I will place special emphasis on the NPV (Net Present Value). This formula is usually employed to calculate in a planned project or business over time and know how much will be worth our money.

Assuming a business that gives fixed income and $ 5,000 monthly, we win the $ 5,000 compared to $ 5,000 to win in 5 years, symbolically are the same (5000 = 5000) but it will not financially. Think that inflation will decline from day to day purchasing power.

Any solution?

The issue is to seek investment alternatives so that our savings are always at or above inflation.

Like any investment you get a benefit from off its money today and putting aside for later consumption, it is recognized as “the value of money over time” or by its other name “interest.” That “interest” is what you are looking for every time you invest, and obviously it may be higher than inflation, it is always better to have saved their savings.

The theory is that the long-term inflation and interest tends to be equal. This is because today people are paying money, they want it back when not losing their purchasing power. So if inflation is 5% and the interest rate is 5% not bother to invest my money to a year, since I know at the end of that time, I lose my purchasing power.

Obviously it is not so simple. To do this we must speak of the “nominal interest rate” which is precisely the interest rate without the negative effect of inflation, in other words, the interest rate you see in the newspaper or banks. But if what interests the investor is to maintain the purchasing power of money entoces need to know what happens to that interest rate minus inflation and there is the “real interest rate”

Real interest rate = nominal interest rate – Inflation rate

With this you know whether you are investing well or not because if the real interest rate is negative, it means that inflation is so great that even when investing in this system, continues to lose money. Come to the numbers

Nominal interest rate (6%) – Inflation rate (8%) = real interest rate (-2%)

Then you will lose 2% of their money every year. I hope this topic helps you understand, is why the importance of investing today. Imagine those people who has a savings account or safe with money for years. Furthermore imagine that this person lived in Argentina and had to endure inflation of 75% between 2001 and 2005 period. So you have a proper response for you or for anyone who wants to know about your need to invest.

Credit to: Mariano Cabrera Lanfranconi

Investment model 4 – Create Value

One of the activities or hobbies that I always had in my life was drawing.

I remember as a kid and I was at school into cartoon or comics that after many I ended up buying. While not the style of Marvel comics, my friends wanted them and that caused a lot of grace and had the courage to be unique.

At this point in my life I realized there are few professions or activities in life which we can create value. Precisely this was what I did, took some sheets, pencils and began to draw (Register value)

So the latest model of investment that I will discuss will be to create value, but from the standpoint of the investor, since if we work and create value, we are not investing.

* How does this model?

Its operation is very simple, has a low level of risk and it is two or more parties together to create value and make a profit there. These parties may be individuals or different resources to fulfill the same purpose.

In this type of model, investment is often low. What we put at stake is our ability to build relationships with others and our ability to negotiate.

For example, if I have a friend who owns a club on weekends and at night he has closed and turn I have other friends who is a producer of small bands, I can talk to both parties and reach an agreement . This agreement may be that weekend at the club, my friend takes about 2 or 3 bands, copper input and then everyone wins. I earn a small commission for each event held since I was in charge of convincing the two parts to this series of events.

It is a simple example, but it describes perfectly how this model.

* What happens to the strategies of entry and exit?

The entry strategy clearly depends able to detect the opportunity. In the above example I knew very well that if you joined my two friends could make a profit.

However, the output is very simple and even be given without planning it a long time. If instead of doing many events, my friends just want to make one, the exit strategy is clear.

The problem with this model is often stay in business. This example may be able to make money the first events, but I did not offer any special value that these events are held, so my friends could chat with them and do the show without my being in the middle. Another option is to help with assembly, and other ideas, but in this case would not be thinking as an investor, but I would be becoming a self-employed business of this new event.

Finally the theme of creating value we can apply to many things, but the main thing is to have clearly defined our relationships and negotiation skills since they are going to be worth at the time of creating value.

Credit to: Mariano Cabrera Lanfranconi

Investment Model 3 – Retain value

So far I comment on two investment models that can be used at any time, they are “the price” and “seed capital.” Today I shall discuss another model called the “hold value.”

If you look at the photo that I added today can distinguish the surname of a player known “Messi.” If you are not aware of who is this guy, tell him your story summary:

“This young man began to show football skills when he was 5 years. After being in Newells how in River, ended up playing for FC Barcelona at age 17, becoming the youngest player in the history of FC Barcelona”

Very brief, but goes straight to the point of what I want to make, the model of “Hold Value”:

* How does this model?

It is very simple, perhaps at first not realize the potential you have and can not find any way to retain value, but must bear in mind the possibility. This model operates under the idea of retaining anything that we can generate a value later. This value will obviously be a return on the investment we have made. When Messi was the story of just wanted to show the age at which it was purchased this played for FC Barcelona. Obviously the price at the time (17 years) he certainly has been much lower than today. This will capture value, today is worth much more than last time.

There are many ways to capture value can be antiques, furniture, homes, land, classic cars, etc, etc, etc.

* What happens to the Exit and Entry strategies?

In this model the problem is not so much at the entrance but in the end. Assuming the case of an old, may be too easy to retain and grow their value over time. The problem is to see who can sell it tomorrow. To raise the exit strategy, you should use all possible options, talking to contacts, acquaintances, strangers, businesses, foundations, associations and any contact you have in mind. So the difficulty here is not to go but out.

There is also a problem in the case of a length that eventually begins to deteriorate and it’s really hard to fix, or a football player is injured for life, or a property that causes the problems. In this case the value begins to be lost, that’s why this model is not as easy as the previous two.

Finally, this model for its disposition, is the closest thing to a gamble if we put these strategies.

Credit to: Mariano Cabrera Lanfranconi

Investment model 2 – Buy cheap sell high

In the previous topic I commented on the first investment model we can use. This was the “price” and basically trying to follow the technique of “buy low, sell high” and are getting good prices by chance, or simply search through our contact network.

But now we’ll see the model of the “seed”, and how it works. Obviously this model of investment is very different from before, but if you know how to use his techniques, you will generate better returns than using the previous model.

How does this model?

This model is used when you want to help by providing a quantity of capital, an entrepreneur in his project for a launch how to improve the activity being performed. In this case we have a difficulty that is the “risk” because if the project is not launching, we do not know if they really work or not.

What about strategies for entry and exit?

In this case the problem is not the front, and we can negotiate or to generate a way to get into the business that is truly effective in achieving our objectives. The problem that actually generates is how we make our exit strategy. As learned and studied, there are three ways out of this type of investment:

* Repurchase:

The entrepreneur manages to meet its objective and therefore the investor’s share repurchase in the business. In this way the money is returned with interest and entrepreneur and owns the entire company. An example would be if I lend a friend money for his venture and he gives me 20% of your project (say, me to earn a 20% gain). One day my friend comes and buys me that 20% of the project, therefore he will get all of your project and 100% of the net. This type of All forms must be clarified at the time that investment is being negotiated, usually is established at that time.

* Sell to others:

Many investors prefer to invest in projects that are already operating in this way ensure that the business is up and is actually profitable. We can offer these investors such participation.
Come to the previous case as an example. The same as above, but this time my friend does not buy me, but after 1 year I decide not to want to be longer in business because they need the money. Then comes a friend and seeing that the business is running gives me an interesting sum. I decide to take it and go, she acquired its stake in the business.

* Your Money or Funding:

Long SMEs in Argentina could not leave the bag until you have a reasonable size or better, stop being SMEs. Today this is possible and is a good option for both parties. If the bag is very simple. Based on our actions, we can offer them in the bag for other people to buy.

It can also occur financing by the entrepreneur. The repurchase difference is that in this case the entrepreneur buys our part using their own money or fund to buy us instead in the financing, once the business is running, the entrepreneur can borrow money and this how to buy us.

Then you are out options that you should have designed and arranged so as not to stay in business. You must come and go constantly and businesses to take advantage of the good and leave before the bad times happen. In other words, enter the time that the business profits and leave before the loss. When not run the risk of becoming a financial partner and lose the focus of investors “come and go.” Anyway this is at your discretion.

Why is it important to get out?

The best explanation is an example:
A friend asks you to start your venture $ 10,000. He also puts his $ 10,000 so the two have 50% of the venture. The following year the enterprise has a value or is priced in $ 40,000 or twice the previous year. You already recouped its investment of $ 10,000 and is holding half of a business ($ 20,000), or won another $ 10,000. But if you do not find who to sell it no use for it therefore must have well thought out strategy. Now suppose that does not leave the business and the following year is based, say good-bye to their $ 20,000, and has been lost.

The important thing is to analyze before entering the market, business, risk, product, the entrepreneur, through the techniques I have mentioned in previous issues. Remember to start looking for projects and analyze them in this way can keep the one that gives a better return on investment in the desired time.

Credit to: Mariano Cabrera Lanfranconi

In truth the problem lies in the model 1 and 4. The solution is to put in the URL address “N” at the end of the word “INVESTMENT” so that it is “Inversin.” The other and more convenient solution was to create the post again to have the four models together and print them all in one step if you want.

Then the explanation of each model.

An investment model – the price

In the previous topic I commented on the entry and exit strategies which we have to at the time of investment. In this issue I will discuss one way (or models) of investment we have in mind to grasp opportunities.

This model is the famous system of buying cheap to sell to a higher. Many people do this activity for example, those going to stores that sell products on a wholesale, then sell. I can buy a soda at a store, but surely if I buy a whole pack to get a better price.

* How does this system?

It’s basically what I mentioned above, “buy low to sell more expensive.” But obviously we need to consider strategies for entry and exit in this process and we will see why. As I mentioned earlier we won at the entrance and the exit.

This model is a clear example, as by selling the products at full price (or to which we like), we’re getting a lower cost. But not only think about having to go to a store that sells wholesale way. Perhaps you can use your network and get great prices for the relationship it has with them.

You may leave a pledge, a computer, or imagine what the cost price for being you. In this way you are already winning at the entrance.

You can also use auctions, see the classifieds in the newspaper, talk to people and a lot of ideas where to get good prices. But precisely should be alert to grasp the opportunity and use it. But we also see another important point in this process, the exit strategy.

Suppose a friend of his stops at cost 100 000 wallets. What happens if you do not manage to sell them all? Already have prepared and know the market?. It is safest to finish selling 50 and need to stay with others. So if it is a silly example, we have thought out how not to lose the opportunity. This model has a very fluid market and we may not have a lot of problems to think about an exit strategy, always be taken into account before making a move and put their money.

For example if I comment that I spend a long time:

A friend of mine wanted to buy a piece of furniture in a well-known design store, specializing in the renovation of furniture in the old state. The one he liked out about $ 300. One day walking along Buenos Aires, I met an American show (open house where they sell things) I went and saw a very striking piece of furniture, but old. I bought it for $ 50, I painted it again with the style he liked my friend for $ 25. The furniture was perfect and my friend offered $ 150, even more than he liked the furniture you saw in that famous design store. Results just took me to 100% of what they invested, and had my exit strategy in advance and then look for the input.

So with this clear example of a small investment, you can see how important it is to keep in mind the strategies of entry and exit. After that, get a good price is up to you and capabilities that evolves over time.

Credit to: Mariano Cabrera Lanfranconi

Do you plan to open an estate? It’s almost more profitable to buy an apartment
Today almost is more profitable to launch and maintain a business to sell or rent properties to buy one. The initial investment to create an estate does not usually move from the 60,000 euros, which can be recovered within five years.

To meet these deadlines is required an annual return of between 20 and 50 percent while real estate agents say the seasonality of the business income does vary according to season and location of the property on the map.

Renting a room: 800 euros

The location, preferably to rent, you must have an average area of 70 square meters plus a showcase of “at least two square meters,” explains Julio Pradera, a member of real estate group’s expansion Perfect Floor. Spending will be the first to list on the list and remember that it is permanent throughout the life of the business. Some 800 euros a month is the approximate cost but varies according to the city in which it decides to make the agency and the types of properties that interest you.

For example, if you have decided that industrial buildings are your product, your business will have better reception on the outskirts of town in the midst of the city, whose public demand for more local stories and urban.

Computers, one for each worker, totaling around 6,000 euros, decoration and furniture totaling 7,000 euros.

Licenses and Certificates: Euro 1000

Elected local paperwork is time. The procedures and costs to start the business are: the municipality must obtain a license for opening the room (400 euros), negative certificate name in the register of companies (260 euros), the notarial act of establishment of the company (380 euros) and entry into the trade register.

Also do not forget to pay the Business Tax and enlist his new venture in Social Security and employees in the General Scheme of Social Security.

Fixed expenses

These workers are the image of his estate and also an important part of expenditure that should have at the end of the month. A property type must have a responsible and an administrative degree will cost about 1100 euros a month and about 600 junior, and at least one commercial.

These usually have a base salary and commissions vary between 5 and 10 percent of the value of the property sold but in some coastal areas such as Malaga, soars to 15 percent of each sale. “It is essential that employees have academic training in this business because it is important to know how and be willing to work,” says Meadow.

700 euros in advertising

Although most real estate operating in Spain have a showcase, all invest about 15 percent of what they charge for advertising. By the phone, “the biggest expense is advertising,” note from Perfect Floor. It is the most efficient way to reach customers, especially if one considers that about 80 percent of land transactions occur not between individuals but between realtor and particular.

Some 700 euros a month is enough to be promoted through advertisements in local press pages (more coverage is not within reach), and small mailshot campaigns sending emails.

Of that universe, Fortune selects Broadcom, Viacom and Univision. The first figure in this list because the items manufactured connectors that allow other applications and products to arrive before television. Thus, in the coming years, their products will help to complete the integration of television and the internet.

Viacom appears among the favorites thanks to the large number of brands and resources to have their label: CBS, MTV, VH1, Nickelodeon, TNN, Paramount Television and Showtime, among others. Univision brings a new element: demography.

Absolute leader among media groups for hispanoparlantes, will benefit the growth of this population, particularly in North America, where it is based. In addition, analysts believe it is in a position to triple its purchasing power in the next decade.

Kings of Wall Street

The next trend has to do with the base metal. Thus, large banks and financial firms will benefit from savings lso new generations and continue to have a powerful ally: globalization, allowing them to continue conquering new markets. Only one fact: it is expected that the medium term the number of U.S. citizens age maximum savings (between 45 and 60 years) spend 60 to 80 million.

In fact, one of the firms that more can take advantage of that growth is Charles Schwab. Manage portfolios with an average of $ 120,000 in January and took a punch line to buy U.S. Trust, a company that advises on finance to some of the largest U.S. asset.

With respect to globalization, no one like Morgan Stanley. His greatest strength is that is a leader in investment banking … and at a time when many of the giants of Wall Street have died or have been merged by the crisis.

It is also more diversified than the other competitors and is less exposed to market fluctuations.
Biotech Explosion

The last sector that will arouse much interest in the coming years is biotechnology. Not surprisingly, in recent years there has been an explosion of this market, which has already launched 126 and has another 280 drugs being tested.

There are many interesting companies in this industry, but the most powerful is Genentech. Eight drugs are currently marketed. In addition, four are about to license the drug agency (FDA) and another dozen are being tested.

In addition, while others are dedicated only to biotechnology research and drug development, Genentech has a very powerful segment sales and a wide distribution network, particularly in treatments for cancer, heart disease and endocrine disorders.

However, although in the past failed to catch any of those big winners in the market, never too late to build a portfolio that will lead to success.

Thus, Fortune magazine has identified the trends that have the potential to transform the economy over the next ten years, and the ten values that you can take advantage of them.

According to American publication, these trends are basically four: the rapid changes in communications networks, the new and challenging entertainment industry, the boomerización financial services and the renewed importance of biotechnology.

Alone are powerful, but more interesting is that combined can really transform the way we work and interact.

Hand in hand with some of the best fund managers in the U.S., first class signature as Janus Capital and Franklin Templeton, have selected more companies can benefit from these trends, but they also have exceptional management skills to function whatever the economic environment.

As market volatility, some of those companies making losses in recent months and even years, but this, according to Fortune, is not something that should worry investors if they are largoplacistas.

No matter how much technology advances, as soon breaker is hopelessly obsolete. Thus, there are huge market opportunities for companies that know their way and make a difference making life and business easier.

From this point of view, companies are better positioned the Finnish Nokia, Nortel Networks, Enron, and Oracle.

They all have very different business models (wireless, telecommunications equipment, broadband connections and software), but they all offer various products, which can play in their favor against competitors less diversified.

To sample a button. Nokia, which tops the list, controls 27% of the telephony market. And what is more important: the consensus of experts that follows considers that in the next five years, its profits will continue to increase at least 30%.
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