You might have heard of the phrase, “real estate cycles.” But understanding WHY they occur, what influences value change and what variables are important to watch may help investors with the ability to gauge the anticipated future performance of their market and their investment.
Millions of property tax protests, both by homeowners and industry specialists, occur every single year. However, most cant process more than a few thousand clients protests. Information processed through computer systems can give property tax consulting firms the necessary tools to be successful. But only a handful of companies have these resources.
Notoriously difficult appraisals occur annually and are prepared by qualified professionals. The profession is regulated by the U.S. Government through laws mandating state licensing and continued education. Intended to provide some transparency and act as an in between among lenders and borrowers, these regulations are a huge help.
The residential lending market is pegged in about $17,000,000,000,000, more than the US Treasury. The commercial lending market is reported to be around $11,000,000,000,000. Mortgage loans and other factors affect the state of real estate. The loan they people get to purchase real estate becomes a mortgage instrument that they are required to pay off. Second mortgages occur when the equity in the real estate is pledged for additional debt.
For investment property owners, cost segregation is a vehicle for accelerating federal tax depreciation on improved property, providing for higher depreciation offsets sooner, like three, five and seven years. Cost segregation is an IRS-approved method for calculation of property components, segregating each building components correct depreciation life, including short life classifications. Accelerating (shorter) depreciation lowers or defers taxable income. Upon an investment property purchase, buyers should look to federal tax reduction companies to prepare these reports, which are then provided to accountants to “build into” tax returns.
Researching local property rental and occupancy statistics can be found on the Internet access of various real estate survey companies databases of residential, apartment, office, retail, and industrial property characteristics. Subscribers have access to rent data, sale comps, and mortgages (maturing dates can be searched), tenant data and market reports. However, these subscriptions can cost thousands of dollars per month. Even the largest real estate firms use multiple search engines to get the totality of the data available in each market. The industry is moving to data collectors where all public records become “enriched” through industry professionals use of the data and big data’s ability to capture and store those “in the field” enhancements back into big databases. Appraiser’s field inspections while preparing appraisal reports, crowdsourcing sales and rent comparables from lenders and brokers input allow the industry some transparency. However, nobody knows a property like an owner and once the big database collects the body of knowledge, real estate knowledge will then be truly transparent.
